It’s no secret that Elon Musk has been deeply pissed off with OpenAI since stepping down from its board in February 2018, culminating in an open letter calling for the group to pause work on extra highly effective techniques.
“It does appear bizarre that one thing generally is a nonprofit, open supply, and someway rework itself right into a for revenue, closed supply,” Musk said in a CNBC interview Wednesday, following a Tesla shareholder’s assembly. “This could be like, let’s say you funded a company to save lots of the Amazon rainforest, and as a substitute they grew to become a lumber firm, and chopped down the forest and offered it for cash.”
The ability of his criticism hinges on the truth that Musk helped to launch the AI analysis group. However precisely how a lot assist he gave, even Musk appears uncertain about.
“I’m nonetheless confused as to how a non-profit to which I donated ~$100M someway grew to become a $30B market cap for-profit. If that is authorized, why doesn’t everybody do it?” he tweeted in mid-March. Per week later he complained on Twitter once more: “I donated the primary $100M to OpenAI when it was a non-profit, however don’t have any possession or management.”
The $100 million determine has been broadly reported as truth. However in the identical CNBC interview yesterday, Musk abruptly shrank his declare. When requested how a lot he had donated to OpenAI, he replied: “I’m unsure the precise quantity however it’s some quantity on the order of $50 million.”
So what modified within the final eight weeks?
Following his unique tweets in March, TechCrunch started an investigation into the funding behind the unique OpenAI non-profit, together with Musk’s contributions. Our evaluation of paperwork filed with the IRS and a state regulator present that Musk couldn’t have given the non-profit the $100 million he initially claimed.
The truth is, whereas the supply of a lot of OpenAI’s funding stays unclear, filings comprise solely round $15 million of donations that may be traced definitively again to Musk.
TechCrunch didn’t obtain a response from Musk’s lawyer when introduced with our evaluation and requested for particulars of his monetary assist.
The tax filings additionally reveal beforehand unreported particulars about one of the vital invaluable and well-known expertise ventures working right this moment, together with the extent of funding by Reid Hoffman, free Teslas for early OpenAI engineers, and the sky-rocketing computing invoice which will have prompted it to take a $1 billion funding from Microsoft.
Nowhere close to a billion-dollar effort
The monetary facet of OpenAI has been murky ever for the reason that group was announced by AI researchers Greg Brockman and Ilya Sutskever in December 2015. They wrote that OpenAI’s purpose was to “advance digital intelligence in the best way that’s most definitely to profit humanity as an entire, unconstrained by a have to generate monetary return.” The non-profit could be co-chaired by Musk and Sam Altman.
The weblog claimed that Altman, Musk and Brockman would donate to the brand new 501(c)3, together with Reid Hoffman, Peter Thiel, Amazon, Infosys, Y Combinator accomplice Jessica Livingston and YC Analysis, one other non-profit spun out of the startup accelerator. “In complete, these funders have dedicated $1 billion,” they wrote. The subsequent 12 months, Wired duly reported OpenAI as a “billion dollar effort,” and that determine was subsequently broadly shared.
However “dedicated” will not be the identical as “really donated.” In keeping with federal tax filings, at the least one of many named donors, YC Analysis, by no means gave a single greenback, and the entire quantity donated to OpenAI’s non-profit from its inception by 2021 was solely $133.2 million. The overwhelming majority of these funds arrived earlier than the launch of OpenAI’s for-profit arm in 2019, and the non-profit itself is now largely defunct. It obtained simply $3,066 of donations in 2021.
Musk’s share
So how a lot of OpenAI’s $133 million did Musk donate? A great place to begin is together with his personal 501(c)3 group, the Musk Foundation.
In 2016, the Musk Basis made a $10 million donation to yet one more non-profit related to Altman, known as YC.org. YC.org, in flip, made a $10 million donation to OpenAI. The rationale for this roundabout route, explained an OpenAI spokesperson in 2019, was a delay in establishing OpenAI’s tax-exempt standing with the IRS.
That $10 million donation stays the one publicly disclosed money contribution from Musk to OpenAI. Nevertheless, an audited monetary assertion filed by YC.org with California charity regulators in 2020 reveals that $15 million of the group’s 2016 income got here from a single contributor. Provided that YC’s income for the entire 12 months totaled $16.6 million, Musk may be very more likely to have been that contributor. YC subsequently gave OpenAI one other $16 million in 2017, of which at the least $5 million was probably Musk’s.
The one different donation that may be tied to Musk is a beforehand unreported reward to OpenAI in 2017 of $248,295 price of Tesla automobiles, and a subsequent donation in 2018 for $14,105 in car upgrades. An audited financial statement notes that the automobiles have been supplied to workers as compensation.
Nevertheless, there are additionally methods to provide cash to a non-profit anonymously. Wealthy people can cloak their presents by funneling cash by so-called donor suggested funds (DAFs). The Musk Basis donated $12.4 million in 2017, and $6.3 million in 2018, to a DAF known as Constancy Investments Charitable Present Fund. That fund then donated $7.8 million to OpenAI between 2018 and 2020. There isn’t a strategy to inform whether or not any of that cash was Musk’s – the Fund has many donors and tens of billions of {dollars} in property – however it’s inconceivable to rule out.
Corporations and people can donate to non-profits instantly with out their identities being made public. Musk probably did this with the extra $5 million reward to YC.org in 2016. Maybe he merely topped up his OpenAI donations to $50 or $100 million the identical means?
A number of weeks in the past, Musk’s consultant was introduced with TechCrunch’s reporting however didn’t reply to requests for remark. The one strategy to put a restrict on Musk’s contributions was to rely up the presents to OpenAI from different donors and see how a lot was left over.
The opposite founders’ share
Sam Altman, now OpenAI’s CEO, made a contribution, the group’s 2016 IRS filing shows. He loaned the younger group $3.75 million to get it began — after which forgave the complete quantity, with curiosity, for a complete reward of $3,784,637.
Hoffman used his personal basis, Aphorism, to provide $1 million to YC in 2016, which the group appears to have handed on to OpenAI in 2017. Aphorism then adopted up with a $5 million donation direct to OpenAI in 2017 and 2018.
Amazon and Microsoft donated at the least $800,000 in cloud computing companies, and Infosys confirmed to TechCrunch that it had made a donation. Not one of the corporations would put a greenback quantity on their contributions. There have been different company presents in-kind, together with a $129,000 excessive efficiency pc from Nvidia, in addition to software program and companies from over a dozen different corporations.
OpenAI wouldn’t share particulars of contributions made by Brockman or Livingston. Likewise, there isn’t any report of Peter Thiel offering any funds to OpenAI, nor did his VC agency reply to a request for info. Nevertheless, there was a modest $100,000 donation in 2018 from Donor’s Belief, a DAF favored by conservatives and libertarians, amongst whom Thiel has been counted.
In 2017, Open Philanthropy introduced a $30 million donation to OpenAI, which was delivered in three $10 million presents in 2017, 2018 and 2019, by a non-profit managed by Fb co-founder Dustin Moskovitz. Open Philanthropy’s CEO, Holden Karnofsky, was given a seat on OpenAI’s board.
“We see some dangers, each from unintended penalties of AI use, and from deliberate misuse), and imagine that we — as a philanthropic group, separate from academia, business, and authorities — could also be well-placed to assist work to scale back these dangers,” the group wrote on the time.
The price of computing
As OpenAI scaled, its prices started rising quick. On prime of using super-star AI researchers with multi-million greenback salaries, OpenAI’s computing invoice had elevated exponentially and in-kind computing donations have been only a drop within the bucket. In keeping with its tax filings, OpenAI spent $2.3 million on cloud computing in 2016, $7.9 million in 2017, and $30.6 million in 2018.
In February 2018, OpenAI switched cloud suppliers from Amazon to Google, signing an settlement to spend at the least $63 million with the tech large over the following two years. Musk left OpenAI’s board the identical month. The occasions could also be unconnected, though Semafor reported just lately that Musk thought OpenAI was slipping behind Google, and walked away after the opposite founders rejected his supply to run the nonprofit.
In keeping with insiders at OpenAI contacted by Semafor, Musk stopped making donations at that time, precipitating the spin-out of a for-profit OpenAI LP that might welcome exterior traders. By the summer time of 2019, OpenAI had already spent its Google computing cash and was in search of one other deal.
In July, Microsoft invested round $1 billion within the new for-profit entity — with about half the funds within the type of credit for its personal Azure cloud computing service.
Musk has publicly decried OpenAI’s transition to a for-profit enterprise.
Its different huge donor, Moskovitz, additionally appears to have soured on the hassle. In a dialog on a philanthropy forum in March, he posted: “My hope is we really slowed acceleration by collaborating however I’m fairly skeptical of the view that we added to it.”
Not each founding donor felt the identical. Reid Hoffman’s Aphorism basis invested a beforehand unreported $50 million in OpenAI’s for-profit enterprise in 2018. Aphorism justified the charitable funding by writing that the brand new enterprise aimed to offer AI “expertise to the general public by open supply licensing the place acceptable to profit the general public.”
Not one of the latest variations of OpenAI’s Chat-GPT chatbot have been open supply.
With Musk’s departure, OpenAI welcomed six new board members, every of whom additionally grew to become a donor, in accordance with the group. Neither they nor OpenAI would share how a lot they gave, however the subsequent 12 months, OpenAI obtained its final main public reward: $30 million from a DAF known as the Silicon Valley Neighborhood Basis. There isn’t a report of Musk or his basis ever donating to that DAF.
The underside line
Including up all of the non-Musk contributions to OpenAI (together with the Silicon Valley Neighborhood Basis cash) offers a complete of $75.8 million, out of $133.2 million. Which means probably the most Musk might have donated to OpenAI would probably have been $57.4 million — a far cry from the $100 million he initially claimed, however near the determine he talked about Wednesday.
Nevertheless, this quantity assumes that three founding donors (together with Thiel), six newer donors, and a number of company supporters like Infosys, gave nothing in any respect.
Within the larger scheme of Musk’s funds, a discrepancy of $35 million, $50 million and even $85 million is little greater than a rounding error. With Musk just lately valuing Twitter at just $20 billion, the world’s second richest individual has misplaced properly over $100 million on daily basis since shopping for the corporate final fall.
Correction: Sam Altman was president of Y Combinator, not a co-founder.