The opaque investment empire making OpenAI’s Sam Altman rich (2024)

As the chief executive and co-founder of OpenAI, the 39-year-old oversees an artificial-intelligence startup valued at $86 billion that is spearheading a technological revolution. He owns no stake in the ChatGPT developer, saying he doesn’t want the seductions of wealth to corrupt the safe development of artificial intelligence, and makes a yearly salary of just $65,000.

Less publicly, Altman is one of Silicon Valley’s most prolific and aggressive individual investors, managing a sprawling investment empire that is becoming a direct beneficiary of OpenAI’s success. The holdings he controls were worth at least $2.8 billion as of early this year, according to company filings and Wall Street Journal reporting. Much of the portfolio isn’t widely known.

Altman and his venture funds have invested in more than 400 companies, by Altman’s own estimate, including big names such as Stripe, Airbnb and Reddit. The holdings are managed by his family office and rival the value and size of some full-blown venture firms.

Altman has added to his startup stakes by drawing on a debt line from JPMorgan Chase, his longtime personal bank, allowing him to pour hundreds of millions of dollars more into private companies. Altman’s strategy, not previously reported, is rare among venture capitalists given the volatile nature of startup investing, where high percentages of young companies go bust. Taking on such personal levels of debt is a risky gamble.

A growing number of Altman’s startups do business with OpenAI itself, either as customers or major business partners. The arrangement puts Altman on both sides of deals, creating a mounting list of potential conflicts in which he could personally benefit from OpenAI’s work.

OpenAI is in talks for a deal with Helion, a nuclear-energy startup that is chaired by Altman, in which it would buy vast quantities of electricity to provide power for data centers.

The 11-year-old company is planning to build nuclear-fusion power plants, a technology that doesn’t yet exist in a usable format. Altman invested $375 million in Helion in 2021, his largest startup check ever written. The startup signed on Microsoft, its first customer and OpenAI’s largest investor, last year.

Altman has recused himself from the deal talks between OpenAI and Helion, which haven’t been previously reported.

Last month, OpenAI announced a partnership with Reddit in which it would pay to bring the messaging site’s content to ChatGPT and other AI products. Altman and entities he controls own 7.6% of Reddit, making him the third-largest outside shareholder, and he briefly served as its CEO in 2014.

Reddit’s stock shot up 10% after the announcement, boosting Altman’s stake by $69 million to $754 million. Altman didn’t lead the partnership talks, OpenAI said in a blog post.

Altman’s more recent investments have focused on companies that aim to capitalize on the artificial intelligence boom being driven by OpenAI. Apex Security, in which Altman invested an undisclosed amount last summer, aims to sell cybersecurity software to companies using AI products such as ChatGPT. He also invested an undisclosed amount in Exowatt, a startup tackling the clean-energy needs of big data centers used by AI companies.

Through a spokesperson, Altman declined to comment on any potential conflicts of interest between OpenAI and his personal investments.

Altman has “consistently followed policies and been transparent about his investments," said Bret Taylor, the chairman of OpenAI’s board.

“Sam is fully focused on his role as CEO. We carefully manage any potential conflicts and always put OpenAI and our mission first," Taylor said. “Our fully independent audit committee reviews all potential conflicts involving directors and officers to ensure the best outcomes for OpenAI." (News Corp,owner of TheWall Street Journal,has a content-licensing partnership with OpenAI.)

Public company boards typically bar executives from taking large stakes in outside ventures. The worry is that executives will follow incentives and strike deals or favor partnerships that help the companies they own. Even if a CEO recuses him or herself, staff is put in the awkward position of negotiating against their boss’ personal financial interests.

In November, Altman was temporarily ousted by OpenAI’s other board directors, who cited a lack of candor in his communications. Among the concerns that had piled up were his mounting list of side projects and potential conflicts of interest.

Altman was reinstated later that month, after prevailing in a leadership battle with the board. Three of the four board members who had voted to remove Altman left when the CEO returned. Taylor, the current board chairman, joined at that time.

Some of the directors who ousted Altman felt he was giving them so little information about the size and scope of his startup holdings that it was becoming impossible to understand how he might personally benefit from deals the company pursued, people familiar with their thinking said.

Investment empire

This article is based on interviews with dozens of founders, investors and friends who are close to Altman, as well as investment filings.

Altman began startup investing while running Loopt, the social-networking startup he founded shortly before dropping out of Stanford University in 2005. While Altman didn’t have deep sources of cash, he got access to up-and-coming startups thanks to his mentor Paul Graham, the co-founder of the influential venture firm Y Combinator, which had invested in Loopt.

Altman had luck with his second-ever startup investment. In 2009, Graham introduced him to John and Patrick Collison, two young Irish entrepreneurs who were dreaming up a new payments processing startup called Stripe. Altman invested $15,000 for 2% of the company.

Stripe is now the third-most valuable U.S. startup outside SpaceX and OpenAI, with a valuation of $65 billion. Altman’s stake, which is now smaller than 2%, marks his most successful investment to date. Last year, Stripe also announced a deal to help commercialize OpenAI’s technology.

In 2012, Altman sold Loopt and used the small profits to help raise his first venture fund, named Hydrazine after the chemical used for rocket fuel. Hydrazine’s largest outside investor was the billionaire PayPal co-founder Peter Thiel, another early mentor of Altman’s.

In 2014, Altman became president of Y Combinator. By then he had already invested in 40 companies, he wrote in a blog post, adding that five of them increased in value by 100 times or more.

His personal wealth had also skyrocketed. These days, he has vacation homes in Napa Valley and Hawaii, and owns a collection of sports cars from luxury manufacturers such as Koenigsegg and McLaren. On an April business trip to Abu Dhabi, Altman raced GT4 race cars with his husband, Oliver Mulherin, around the F1 track.

Altman continued to run Hydrazine even while running Y Combinator—an unconventional setup in Silicon Valley, where venture fund leaders are typically barred from managing their own venture funds in order to stay focused on making money for their firms.

The arrangement fueled allegations of hypocrisy among other partners at Y Combinator, including its current president Garry Tan, who were banned by Altman from also managing their own venture funds, according to people familiar with the matter. Tan declined to comment.

Hydrazine bought out a portion of startup shares owned by Graham, a transaction that gave Altman stakes in some of the hottest companies backed by Y Combinator. The sale hasn’t been previously reported.

In September 2014, Hydrazine also made a $28 million investment into Reddit, the messaging-board site Altman had grown obsessed with ever since meeting the company’s founders in 2005 through Y Combinator. Altman assembled the rest of the funding round, bringing in investors ranging from Thiel and the rapper Snoop Dogg to the venture firm Andreessen Horowitz.

Altman joined Reddit’s board of directors and helped appoint its current chief executive, Steve Huffman, the following year. Altman built his position over the years through various funds and holding companies, giving him a stake worth $413 million when the startup went public in March. Reddit announced in January 2022 that Altman had recently stepped down from the board.

Founders came to revere Altman’s bold thinking and decisive style. He often made the decision to invest on the spot—sometimes before founders even finished pitching their companies.

“Sam was more aggressive with his investments than most," said Walker Williams, the founder of Teespring, a social commerce startup backed by Hydrazine. “He is aiming for a grand slam every time. He was dreaming about how Teespring would be a company that took over the world."

Altman recruited startups in advanced fields like energy and biotechnology into Y Combinator, declaring that the funding model for ambitious scientific projects was broken. On the side, he personally invested his own money as well—sometimes increasing his involvement by taking board seats in the most promising companies.

In 2014, he recruited Helion to join Y Combinator’s startup incubator. He also put his own money into the nuclear-fusion startup, becoming its chairman the following year.

Altman became one of Helion’s most loyal backers. He has described fusion as an energy breakthrough that could give humanity a path out of the climate crisis and also power the training of large AI models that gobble up electricity.

“Helion is, like, more than an investment to me," he said in an interview with media firm StrictlyVC last year. “That’s the other thing besides OpenAI I spent a lot of time on."

In the field of artificial intelligence, Altman invested in Y Combinator-backed startups such as the chip makers Cerebras Systems and Rain AI. He also began spending more and more of his time overseeing OpenAI, the nonprofit he co-founded in 2015 with Elon Musk.

In 2019, Altman was asked to resign from Y Combinator after partners alleged he had put personal projects including OpenAI ahead of his duties as president, the Journal reported.

Wealth in outside ventures

Altman dialed up his startup investing in 2019, when he left Y Combinator to run OpenAI full-time.

That year, he negotiated the debt line with JPMorgan, pledging his growing portfolio of private startups as collateral through a limited liability company called Altman HoldCo.

The deal allowed Altman for the first time to write personal checks at the scale of a large venture firm, while reducing his reliance on Hydrazine, where he had to share profits with outside investors. In 2022, shortly after he poured hundreds of millions into Helion, Altman also invested $180 million into the life-extension lab Retro.

Altman also used the debt line to back a new venture firm he co-founded in 2020 with his brother Max, called Apollo Projects.

Altman’s arrangement—where much of his wealth is tied up in outside ventures but not OpenAI—pushes the boundaries of traditional corporate governance, according to tech lawyers and venture capitalists. Most startup founders have their wealth tied to their companies, fueling motivation to make their companies succeed. Few are ever in a position where they stand to make more money by benefiting the business on the other side of the table.

Beyond Helion, Altman has steered OpenAI’s business to at least one other startup he backed. In 2019, OpenAI signed a letter of intent to buy $51 million worth of AI chips from Rain AI, a startup he backed the prior year. Wired earlier reported on the deal.

“Is he going to have OpenAI acquire these companies at big prices? Is he going to leverage OpenAI resources to help his other companies? That’s what you kind of really worry about, especially if he owns zero of OpenAI," said Louis Lehot, a partner at the law firm Foley and Lardner, where he advises startups on corporate governance.

Humane, which makes a wearable device called the Ai Pin, an AI-powered virtual assistant, relies on OpenAI’s software. Altman first invested in Humane in 2020. Holding companies controlled by him own 15% of the company’s equity—a greater amount than each of the company’s founders, Bethany Bongiorno and Imran Chaudhri, according to a Federal Communications Commission filing.

Altman himself has expressed interest in creating his own AI device with Jony Ive, Apple’s former chief design officer, the Journal reported. He is also an investor in Limitless, an AI startup that offers a device worn like a necklace that can record and transcribe conversations and also uses OpenAI’s software.

The founder of Limitless, Dan Siroker, said Altman invested in his company, formerly called Rewind, long before it began using OpenAI’s technology.

“He is almost a victim of his own success," Siroker said. “He’s built such a meaningful company, and he’s invested in smart people. It’s almost impossible to imagine how those smart people wouldn’t have found a way to integrate with OpenAI."

The issue of conflicts is more acute at OpenAI, which operates a for-profit arm that has raised billions of dollars from Microsoft but remains governed by a nonprofit board of directors.

OpenAI is in the process of overhauling its governancestructure, though it hasn’t announced any changes.

In March 2023, the prominent venture capitalist Reid Hoffman, who co-founded the rival AI company Inflection AI the previous fall, said he stepped down as a director of OpenAI’s board to avoid the perception that he and his venture firm Greylock were profiting off the software sold by OpenAI, called application program interfaces, or APIs.

“As OpenAI’s APIs become more important to the next wave of AI applications, Greylock and I will be investing in companies, like Tome and Coda, that will use the OpenAI APIs," Hoffman wrote in a post on LinkedIn. “I started to wonder: Will my position as a 501c3 board member of OpenAI potentially look like it’s leading to differential economic advancement?"

Hoffman said in an email that his role as a general partner at Greylock meant he had more direct responsibility for maximizing the equity value of his investments, which he saw as very different from Altman’s role as an investor.

In April 2023, Altman suggested to board members that Adam D’Angelo, the CEO of the question-and-answer site Quora, step down from the board after Quora began developing its own generative AI chatbot called Poe, which is also an OpenAI customer, people familiar with the discussions said. Other directors disagreed that the move was necessary. D’Angelo is the only director still on the board among those who temporarily ousted Altman in November.

Among the new provisions established following Altman’s return was a strengthened conflicts policy and a new, independent audit committee that reviews potential conflicts involving directors and officers. The board hasn’t publicly disclosed any details about the conflicts policy.

While not publicly addressing questions about his own outside interests, Altman discussed the issue of conflicts in a November post on X, shortly after he was restored as CEO, as it related to D’Angelo and his efforts developing Poe.

“We expect that if OpenAI is as successful as we hope it will touch many parts of the economy and have complex relationships with many other entities in the world, resulting in various potential conflicts of interest," Altman said. “The way we plan to deal with this is with full disclosure and leaving decisions about how to manage situations like these up to the Board."

Deepa Seetharaman and Jim Oberman contributed to this article

Write to Berber Jin at berber.jin@wsj.com, Tom Dotan at tom.dotan@wsj.com and Keach Hagey at Keach.Hagey@wsj.com