> Before OpenAI’s switch late last year to become a public benefit corporation, investors in the company received convertible interest rights rather than conventional equity. Under US accounting rules, those interests were treated as liabilities and periodically revalued as the company’s valuation increased.

As OpenAI’s worth rose, the increased value of those investor rights created a roughly $30bn charge, added the person. The charge is not expected to recur following the restructuring, they said.

Stripping out the charge and other non-cash expenses, such as stock-based compensation of staff and computing credits from Microsoft, OpenAI’s losses were $8bn, according to the person.

I presume that this is what you're talking about, right?

That doesn't actually disagree with what I noted above using the (more detailed) figures from Ed's article. I noted that their revenue scaled by about 3x, while many costs (cost of revenue, sales & marketing, r&d) scaled by either equal (r&d) or greater than their revenue scaled. That's the point I was (apparently badly) making, nothing to do with the stock based compensation causing their losses. In any case, the loss was actually driven by treatment of the non-profit shares.

> Also it should be obvious that you shouldn’t extrapolate stock based compensation in a scale up. People make a one time bounty but that is not recurring obviously.

Correct, in some sense this is a once-off, however, most tech companies continue granting stock over time, so it's definitely worth including in actual margins. (This is a more general point that's not exclusive to Open AI).