Anthropic’s elaborate plan to keep Wall Street at bay
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Anthropic’s planned IPO raises questions over whether it can maintain its safe and responsible AI priorities.
Anthropic’s planned IPO raises questions over whether it can maintain its safe and responsible AI priorities.
Anthropic wants to have it both ways.With its impending IPO, it wants to tap the vast riches of the public markets and insists it doesn’t want to compromise its core mission of developing AI safely and for the benefit of humanity.
But greater model capabilities bring greater risks, and shareholders eager for returns may have little patience for costly safety measures that slow products on their way to market.
Sam Altman, the CEO of Anthropic’s archrival, OpenAI, has cited investor pressures as one reason the company is not pursuing an IPO this year. Anthropic hopes it can resist investor pressures with a mind-boggling governance structure.
A “unique and complicated governance structure that has not been used before…creatively designed for this founder-led and mission-driven company.”
University of Pennsylvania law professor Elizabeth Pollman told The Verge that Anthropic has proposed going public with a “unique and complicated governance structure that has not been used before” and that has been “creatively designed for this founder-led and mission-driven company.” Experts say it should give Anthropic freedom to pursue profits without letting shareholders force it to cut corners on safety or rush systems out before they’re adequately tested.
But even the strongest legal protections can only go so far, and no corporate structure, no matter how well designed, can completely insulate a public company from the demands of the market.
Foremost, Anthropic is a public benefit corporation.Simply put, it is legally required to focus on more than just maximizing shareholder returns, balancing these with its stated social mission and the interests of stakeholders, such as employees and specific communities.
Patagonia and Kickstarter are among the better-known examples, with missions centered on environmental conservation and supporting creative communities, respectively.
Another key safeguard aims to protect Anthropic’s mission by limiting shareholder influence over one of the biggest levers of corporate power: the company’s board of directors.Directors oversee the company and appoint its leadership, including the CEO.
Directors can also hold executive roles, as is the case with Anthropic, with CEO Dario Amodei and president Daniela Amodei both sitting on the board.
Shareholders typically have considerable sway over who sits on the board, giving them a means to replace directors or push for changes if they are unhappy with how the company is being run.For example, if shareholders are unhappy at what they perceive as unnecessary delays to market for optional safety testing, they may remove directors and replace them with ones more aligned with their interests, such as making money and being less cautious.
“Anthropic is entirely insulated from profit seeking pressures, in the sense that ordinary shareholders have no ability to select the board or make business decisions.”
Under Anthropic’s proposed governance structure, ordinary shareholders won’t have much of a say over who is on the board at all.Instead, four of the board’s seven directors will be chosen by a special body called the long-term benefit trust, explains Jens Dammann, a professor in business and commercial law at the University of Texas School of Law.
It is a highly unusual setup for a major technology company.
The trust is made up of “five financially disinterested voting trustees” with expertise in “AI safety, national security, public policy, and social enterprise.” Through a special class of share called Class T stock, the trustees can appoint or remove directors in pursuit of their stated purpose: ensuring “that Anthropic responsibly balances the financial interests of stockholders with the interests of those affected by Anthropic’s conduct and our public benefit purpose.” The trust is designed to operate independently of the company’s commercial pressures, allowing it, in theory, to put Anthropic’s mission first.
Ordinary shareholders technically have a say in the board’s three remaining seats. However, Anthropic has created another safeguard that keeps power firmly in the hands of its founders, called “Founder LLC,” which will control 50.1 percent of the voting power on shareholder matters. Given that many shareholder votes are decided by a simple majority, Founder LLC basically gives Anthropic’s foun