Sarah Friar, the former chief executive of social networking platform Nextdoor, has taken on the role of chief financial officer at OpenAI amid the company’s preparation for a potential initial public offering (IPO). Her arrival at the artificial intelligence startup comes at a critical juncture as OpenAI navigates internal restructuring and intensifying competition in the AI sector.

Friar left Nextdoor earlier this year after the company’s stock declined sharply, trading around $2 per share in February 2024—more than 70% below its post-merger debut price when it went public via a special-purpose acquisition company (SPAC) under the ticker KIND. Despite Friar’s emphasis on kindness in community, Nextdoor struggled with controversial content and uneven user engagement during a period marked by a highly volatile IPO market influenced by the pandemic.

At OpenAI, Friar has played a strategic role in high-stakes negotiations with Microsoft, which stands as OpenAI’s largest shareholder and exercises significant control over the company’s operations. The two organizations have been restructuring their partnership amid OpenAI’s shift into a for-profit entity. Friar’s longstanding friendship with Microsoft CFO Amy Hood proved instrumental during the protracted and complex talks, helping to bridge gaps between the companies. Sources describe Hood as a formidable negotiator, often challenging to work with, whereas Friar brought a steady hand to keep discussions on course, sometimes traveling to Microsoft’s headquarters to advance the deal.

Since joining OpenAI, Friar has also collaborated with research lead Mark Chen to devise a more sustainable compensation framework designed to retain top talent amid aggressive recruiting efforts from competitors such as Meta, which reportedly offered packages surpassing $100 million to lure away OpenAI researchers.

Though OpenAI has refrained from publicly detailing its IPO timeline, Friar has been actively assembling a finance and accounting team and initiating confidential conversations with investment banks, including Goldman Sachs, which continues to advise the company. However, internal assessments suggest the business has encountered growth headwinds. OpenAI missed its target of reaching 1 billion weekly active users by the end of last year and has reportedly fallen short of some internal revenue forecasts. The company asserts it met its first-quarter plans but declined to provide specifics. Friar has reportedly advocated for postponing the IPO until 2027, citing the company’s need for greater preparedness to withstand the regulatory and reporting demands of going public.

OpenAI faces mounting pressure from competitors like Anthropic, which has launched successful AI products and is reportedly seeking a major IPO. Industry stakeholders suggest the first AI company to enter the public markets will set the benchmark for valuation and investor interest, intensifying the race for OpenAI.

Friar’s career spans leadership roles at prominent technology firms, including a decade at Goldman Sachs and executive positions at Salesforce and Square. She led Square through a challenging IPO in 2015 and later took the helm at Nextdoor, aiming to leverage the pandemic-driven surge in local social networking before the company’s stock declined. Her experience navigating public markets and complex corporate negotiations is viewed as critical to OpenAI’s ambitions in the evolving AI landscape.

OpenAI recently reiterated its commitment to expanding computing capacity and advancing AI capabilities, with Friar expressing optimism about the latest advancements, particularly in coding applications. As OpenAI continues to refine its business strategy and build investor confidence, Friar’s strategic financial leadership is likely to remain central to the company’s growth trajectory and public market aspirations.