It’s no secret that Elon Musk has been deeply annoyed 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 seem weird that something can be a nonprofit, open source, and somehow transform itself into a for profit, closed source,” Musk mentioned in a CNBC interview Wednesday, following a Tesla shareholder’s assembly. “This would be like, let’s say you funded an organization to save the Amazon rainforest, and instead they became a lumber company, and chopped down the forest and sold it for money.”
The energy of his criticism hinges on the truth that Musk helped to launch the AI analysis group. But precisely how a lot help he gave, even Musk appears uncertain about.
“I’m still confused as to how a non-profit to which I donated ~$100M somehow became a $30B market cap for-profit. If this is legal, why doesn’t everyone do it?” he tweeted in mid-March. Per week later he complained on Twitter once more: “I donated the first $100M to OpenAI when it was a non-profit, but have no ownership or control.”
The $100 million determine has been broadly reported as reality. But 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 not sure the exact number but it’s some number on the order of $50 million.”
So what modified within the final eight weeks?
Following his authentic 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.
In reality, whereas the supply of a lot of OpenAI’s funding stays unclear, filings include 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 help.
The tax filings additionally reveal beforehand unreported particulars about some of the invaluable and well-known expertise ventures working right now, together with the extent of funding by Reid Hoffman, free Teslas for early OpenAI engineers, and the sky-rocketing computing invoice that will have prompted it to take a $1 billion funding from Microsoft.
Nowhere close to a billion-dollar effort
The monetary aspect of OpenAI has been murky ever because the group was introduced by AI researchers Greg Brockman and Ilya Sutskever in December 2015. They wrote that OpenAI’s purpose was to “advance digital intelligence in the way that is most likely to benefit humanity as a whole, unconstrained by a need to generate financial 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 Research, one other non-profit spun out of the startup accelerator. “In total, these funders have committed $1 billion,” they wrote. The subsequent yr, Wired duly reported OpenAI as a “billion dollar effort,” and that determine was subsequently broadly shared.
But “committed” shouldn’t be the identical as “actually donated.” According to federal tax filings, at the least one of many named donors, YC Research, by no means gave a single greenback, and the entire quantity donated to OpenAI’s non-profit from its inception by means of 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 acquired simply $3,066 of donations in 2021.
Musk’s share
So how a lot of OpenAI’s $133 million did Musk donate? An excellent place to begin is along with his personal 501(c)3 group, the Musk Foundation.
In 2016, the Musk Foundation 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 cause for this roundabout route, defined 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. However, 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. Given that YC’s income for the entire yr totaled $16.6 million, Musk may be very prone to have been that contributor. YC subsequently gave OpenAI one other $16 million in 2017, of which at the least $5 million was possible Musk’s.
The solely different donation that may be tied to Musk is a beforehand unreported present to OpenAI in 2017 of $248,295 value of Tesla automobiles, and a subsequent donation in 2018 for $14,105 in automobile upgrades. An audited monetary statement notes that the automobiles have been offered to staff as compensation.
However, there are additionally methods to offer cash to a non-profit anonymously. Rich people can cloak their presents by funneling cash by means of so-called donor suggested funds (DAFs). The Musk Foundation donated $12.4 million in 2017, and $6.3 million in 2018, to a DAF known as Fidelity Investments Charitable Gift Fund. That fund then donated $7.8 million to OpenAI between 2018 and 2020. There isn’t any approach to inform whether or not any of that cash was Musk’s – the Fund has many donors and tens of billions of {dollars} in belongings – however it’s inconceivable to rule out.
Companies and people can donate to non-profits instantly with out their identities being made public. Musk possible did this with the extra $5 million present to YC.org in 2016. Perhaps he merely topped up his OpenAI donations to $50 or $100 million the identical method?
Several weeks in the past, Musk’s consultant was introduced with TechCrunch’s reporting however didn’t reply to requests for remark. The solely approach to put a restrict on Musk’s contributions was to depend up the presents to OpenAI from different donors and see how a lot was left over.
The different founders’ share
Sam Altman, now OpenAI’s CEO, made a contribution, the group’s 2016 IRS submitting exhibits. He loaned the younger group $3.75 million to get it began — after which forgave the total quantity, with curiosity, for a complete present of $3,784,637.
Hoffman used his personal basis, Aphorism, to offer $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 providers, and Infosys confirmed to TechCrunch that it had made a donation. None of the businesses would put a greenback quantity on their contributions. There have been different company presents in-kind, together with a $129,000 excessive efficiency laptop from Nvidia, in addition to software program and providers from over a dozen different corporations.
OpenAI wouldn’t share particulars of contributions made by Brockman or Livingston. Likewise, there isn’t a document of Peter Thiel offering any funds to OpenAI, nor did his VC agency reply to a request for data. However, there was a modest $100,000 donation in 2018 from Donor’s Trust, 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 means of a non-profit managed by Facebook co-founder Dustin Moskovitz. Open Philanthropy’s CEO, Holden Karnofsky, was given a seat on OpenAI’s board.
“We see some risks, both from unintended consequences of AI use, and from deliberate misuse), and believe that we — as a philanthropic organization, separate from academia, industry, and government — may be well-placed to support work to reduce those risks,” 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. According to 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 big over the subsequent two years. Musk left OpenAI’s board the identical month. The occasions could also be unconnected, though Semafor reported not too long ago that Musk thought OpenAI was slipping behind Google, and walked away after the opposite founders rejected his supply to run the nonprofit.
According to insiders at OpenAI contacted by Semafor, Musk stopped making donations at that time, precipitating the spin-out of a for-profit OpenAI LP that will welcome exterior buyers. By the summer season of 2019, OpenAI had already spent its Google computing cash and was on the lookout for 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 scores for its personal Azure cloud computing service.
Musk has publicly decried OpenAI’s transition to a for-profit enterprise.
Its different large donor, Moskovitz, additionally appears to have soured on the hassle. In a dialog on a philanthropy discussion board in March, he posted: “My hope is we actually slowed acceleration by participating but I’m quite 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 supply AI “technology to the public through open source licensing where appropriate to benefit the public.”
None of the current 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 yr, OpenAI acquired its final main public present: $30 million from a DAF known as the Silicon Valley Community Foundation. There isn’t any document of Musk or his basis ever donating to that DAF.
The backside line
Adding up all of the non-Musk contributions to OpenAI (together with the Silicon Valley Community Foundation cash) provides a complete of $75.8 million, out of $133.2 million. That means essentially the most Musk might have donated to OpenAI would possible have been $57.4 million — a far cry from the $100 million he initially claimed, however near the determine he talked about Wednesday.
However, 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.
In 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 not too long ago valuing Twitter at simply $20 billion, the world’s second richest particular person has misplaced effectively over $100 million each day since shopping for the corporate final fall.
Correction: Sam Altman was president of Y Combinator, not a co-founder.