Anthropic's IPO plan includes a 5% stock pledge. Who benefits?
The hosts of 8:30, Julie Hyman, Pras Subramanian, and Jake Conley, discuss Anthropic's (ANTH.PVT) plan to set aside 5% of its shares for a new public-benefit fund called the "Long-Term Benefit Trust" before the company goes public through an initial public offering (IPO).
The hosts discuss who would qualify for help from the fund, how it would be managed, and whether it could help people deal with changes caused by AI.
Let's talk about Anthropic, another big AI lab. Two major stories about the company came out over the weekend. I want to start with this one.
The company plans to set aside 5% of its shares for a new public-benefit fund when it goes public. It plans to do this before its IPO.
This comes after all the co-founders agreed to promise to donate 80% of their ownership in the company. They say they are not doing this for the money. But the most surprising part is this new public-benefit fund.
The company says shareholders would need to approve the plan, and the board would control the fund. The board could also choose to add money and shares to the fund over time. The fund would not be allowed to lobby politicians or make political donations. But that raises a question.
Part of the message seems to be this: If I were Anthropic, I might tell an accountant, "Yes, your job could be gone in two years because of AI. But we will have a public-benefit fund to help you." That seems like a weak promise. It's almost as if the company is saying, "If you don't believe what we say, here's some money to make you feel better."
Yes, it's not clear how this will work. The company is only giving examples of what it might do. It says it could make large donations to existing nonprofit groups or give money directly to certain groups of people.
Let's look at how this public-benefit fund would actually be set up. Based on the reports, it would be a limited liability company, or LLC.
It would be an LLC fully owned by the company, rather than a nonprofit.
Right. So it would not be a nonprofit.
That was one of the main issues with OpenAI.
Yes. They say this setup would let them choose between different ways of giving money.
Right. A nonprofit has to follow very strict federal rules for nonprofits.
Sure. The fund could support nonprofits, make donations, give money directly to people, and do other things. But we need to hear more about this.
We need to know which groups the fund plans to help and how it will be organized. Will it have to give away a certain amount of money every year, or can it just keep the money? There is still a lot we don't know. The idea sounds good at first, and the founders seem sincere when they say they want to give away most of the money they get from Anthropic's IPO. But
if AI disrupts as much of the economy as the company expects, this fund will be very small compared with the scale of the changes that could happen.
Well, they are going to increase the amount of stock they set aside as the company grows.
For each increase in the company's value, they plan to do something to add to the fund.
For every 50% increase in the company's value, they could add another 2% to the fund.
Isn't it possible that the growth of AI could affect the whole economy, including the country's overall economic output, or GDP? Are we really saying that one company, Anthropic, and its charitable fund can deal with all of that? I mean—
That depends on whether you think the company could be worth $100 trillion.
Even then, the fund would be just a tiny part of what's needed. They should call this LLC the "Drop in the Bucket LLC."