There was a rule[1] pre-2012 that forced public disclosure (akin to listed companies) for private companies when it had >500 shareholder (which counted employees with shares). This made it so that companies had a choice to stay private with all obligation of public disclosure or go public for added benefit of tapping public market.

In 2012 this was relaxed in JOBS Act which relaxed the 500 threshold to 2000 but more importantly it ignored employees so now private companies of gargantuan trillion dollar valuation and thousands of employees have no disclosure requirements.

So, this is a classic case of regulation that did well but was relaxed and now creates hidden risks.

[1]: https://www.investopedia.com/terms/5/500-shareholder-thresho...

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bko 2 hours ago | parent [-]

I think they would have kept it under 500 if they had to. I doubt this is the determining factor. In fact a lot more than 2k investors have exposure through SPVs or holding companies on top of holding companies. So no, I don't think this was the determining factor that allowed OpenAI to stay private longer.

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einszwei 2 hours ago | parent [-]

I disagree. Not counting employees as shareholders was the main kicker. There was a reason Google and Meta went public so early in their growth story.

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bko 2 hours ago | parent [-]

Seems really unfair to early stage employees as without this they would be much less likely to receive equity from employers. I guess it would force some companies to go public earlier but at the expense of employees who would get virtually none of the upside, and startups can't compete for talent.

	▲	georgemcbay an hour ago \| parent \| next [-]
		> Seems really unfair to early stage employees as without this they would be much less likely to receive equity from employers. We have historical data on how it worked out for companies that were pushed into going public by the old regulations... Microsoft, Google, Facebook, et al. Their early stage employees did... pretty well... financially. The only real difference from the employee perspective is that a lot of the money that made them rich came from public investors (who also had a chance to make a lot of money), whereas now it only comes from private investors and the public is locked out.
	▲	2 hours ago \| parent \| prev [-]
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