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A non profit board absolutely calls the shots at a non profit, in so far as the CEO and their employment goes. Non profit boards are not beholden, structurally,

A non profit board absolutely calls the shots at a non profit, in so far as the CEO and their employment goes. Non profit boards are not beholden, structurally, to investors and there are no shareholders. No stakeholder would walk away from OpenAI for want of sam Altman. They don’t license OpenAI technology or provide funding for his contribution. They do it to get access to GPT4. There is no comparable competitor available. If anything they would be miffed about how it was handled, but to be frank, unless GPT4 is sam Altman furiously typing, I don’t know he’s that important. The instability caused by the suddenness, that’s different.

airstrike 3y ago
This is not just a "non-profit"... it's a non-profit that owns a $90B for-profit company developing revolutionary, once-in-a-century technology. There is a LOT of money at play here. Others have commented on how Microsoft actually has access to the IP, so the odds that they could pack their toys and rebuild OpenAI 2.0 somewhere else with what they've learned, their near infinite capital and not have to deal with the non-profit shenanigans are meaningful. I'm not saying Sam is needed to make OpenAI what it is, but he's definitely "the investors' guy" in the organization, based on what has surfaced over the last 24 hours. Those investors would rather have him there over someone else, hence the pressure to put him back. It doesn't matter whether you and I think he's the man for the job -- what matters is whether investors think they are. TL;DR the board thinks they have leverage, but as it turns out, they don't
- fnordpiglet 3y ago
  Microsoft doesn’t have ownership rights to OpenAI IP. They license it. They can’t pack up anything as they just have an IAM and billing model on top of GPT4 they use to resell OpenAI tech.
  - vitorgrs 3y ago
    Not really. They run custom GPT model lol
    - fnordpiglet 3y ago
      Not one they own they don’t. OpenAI owns all of the GPT IP. Microsoft has a licensing arrangement with OpenAI. I’d note that azure GPT is not a custom model, only the bing chat is custom. And even the customizations aren’t owned by Microsoft.
  - sainez 3y ago
    > Microsoft doesn’t have ownership rights to OpenAI IP. They license it. Honest question, do you have a source for that? Is it conceivable that Microsoft has some clause that grants them direct access to IP if OpenAI does not meet certain requirements. It is difficult to believe that Microsoft handed over $10B without any safeguards in place. Surely they did their due diligence on OpenAI's corporate structure.
    - braiamp 3y ago
      OpenAI for-profit main purpose is to fulfill the desires of the non-profit. If there's a contract that goes against that, the contract would be void if necessary or that stipulation just crossed out.
  - fulladder 3y ago
    I would expect that Microsoft would have negotiated terms like a perpetual license to the IP, given that they were the main investor and were in a strong negotiating position. Microsoft has a lot of experience interacting with small companies, including in situations like this one where the small company implodes. The people there know how to protect Microsoft's interests in such scenarios, and they definitely are aware that such things can happen.
ergocoder 3y ago
They officially call the shot. But right now they get a lot of shitstorm for this inexperience handling. And it doesn't look good from the board that looks inexperienced. Gordon-Levitt's wife?? Helen who? D'Angelo with a failing quora and a history of a coup. Doesn't look good. I'd bet it starts impacting their personal lives. This is equivalent to them coming out to support Donald Trump. It is that bad.
tsunamifury 3y ago
Nothing matters if you don’t have the money to enforce the system. Come on get real. Whatever the board says MS can turn off the money in a second and invalidate anything.
- fnordpiglet 3y ago
  Microsoft depends on OpenAI much more than OpenAI depends on Microsoft. If you work with OpenAI as a company very often this is extraordinarily obvious.
  - aluminum96 3y ago
    Microsoft is also OpenAI's main cloud provider, so they certainly have some leverage.
    - fnordpiglet 3y ago
      Aws is JP Morgan’s main cloud provider, and Apples too. Do you think aws has leverage over JPMC and Apple due to that? Or does JPMC and Apple have leverage over aws? Azure gets a hell of a lot more out of OpenAI than OpenAI gets out of azure. I’ll bet you GPT4 runs on nvidia hardware just as well regardless of who resells it.
      - cthalupa 3y ago
        I think the larger issue here is that there's just not enough of that nvidia hardware out there if Microsoft decided to really play hardball, even if it hurts themselves in the short term. I don't know that any of the other cloud providers have the capacity to immediately shoulder OpenAI's workloads. JPMC or Apple have other clouds they can viably move to - OpenAI might not have anyone else that can meet their needs on short notice. I think the situation is tough because I can't imagine there aren't legal agreements in place around what OpenAI has to do to access the funding tranches and compute power, but who knows if they are in a position to force the issue, or if I'm write in my supposition to begin with. Even if I am, a protracted legal battle where they don't have access to compute resources, particularly if they can't get an injunction, might be extremely deleterious to OpenAI. Perhaps Microsoft even knows that they will take a bath on things if they follow this, but don't want to gain a reputation of allowing this sort of thing to happen - they are big enough to take a total bath on the OpenAI side of things and it not be anything close to a fatal blow. I was more skeptical of this being the case last night, but less so now.
karmasimida 3y ago
Yes the board could claim OpenAI is nonprofit. But who is going to pay for the operation and salaries of its employees. Definitely not OpenAI itself. They still need massive capital. With this drama, its future is put in serious doubt
- fnordpiglet 3y ago
  The board can and does claim it because it is legally a non profit. There is no wishy washy space this isn’t true in. Sam Altman isn’t the source of their funds, regardless. Finally, OpenAI has a pretty successful business model already without outside investment, and without sam or with sam they will not have trouble accessing customers or investors should they need it, even from Microsoft. Let’s be real Altman isn’t OpenAI.
  - kelsey9876543 3y ago
    [flagged]
qaq 3y ago
So they are trying to backtrack which makes them look pretty foolish for no apparent reason ?
- fnordpiglet 3y ago
  I didn’t see any actual evidence of that other than speculation and outside and uninvolved investors advocating for him in the article. I suspect this is a bait for your click.
  - qaq 3y ago
    "Ilya Sutskever @ilyasut I deeply regret my participation in the board's actions. I never intended to harm OpenAI. I love everything we've built together and I will do everything I can to reunite the company."
Terretta 3y ago
> No stakeholder would walk away from OpenAI for want of sam Altman. They don’t license OpenAI technology or provide funding for his contribution. They do it to get access to GPT4. There is no comparable competitor available. The implication in Microsoft's statement is clear that they have what they need to use the tech. I read it to mean OpenAI board does not have leverage.
- fnordpiglet 3y ago
  Microsoft has licensing rights to OpenAI tech. They do not “have it” in the sense they control it.
  - lordfrito 3y ago
    Well I read Nadella threatened to turn off OpenAI's servers, so yeah, Microsoft does in fact control it. Not your premises not your compute?
    - fnordpiglet 3y ago
      Even threatening that, if disclosed publicly, would entirely threaten Azures business model. Cloud providers try to stay entirely neutral to their users business insofar as they don’t breach a ToS, law, or regulation forcing their actions. The entire business model is trusting a third party with the keys to your business. In my time working as a senior person at a cloud provider, then as a person setting system for major customers of cloud providers, this specific point was sacrosanct and invariant. Crossing that line would be a huge breach of the business model. I think in this case I would need to see a source to believe you, and if substantiated, it would make me question Nadellas fitness to lead a cloud computing business.
      - lordfrito 3y ago
        Can't find the original thing I read with a more direct statement, I remember it being an anonymous source (on twitter maybe?) with inside info. I did more digging and found a few other things. There's this [1], a NYT article saying that Microsoft is leading the pressure campaign to get Altman reinstated. And there's this [2], a Forbes article which claims the playbook is a combination of mass internal revolt, withheld cloud computing credits from Microsoft, and a lawsuit from investors. [1] https://archive.is/fEVTK#selection-517.0-521.120 https://archive.is/fEVTK#selection-517.0-521.120 [2] https://www.forbes.com/sites/alexkonrad/2023/11/18/openai-investors-scramble-to-reinstate-sam-altman-as-ceo/?sh=5273e9a260da https://www.forbes.com/sites/alexkonrad/2023/11/18/openai-in...
icelancer 3y ago
> A non profit board absolutely calls the shots at a non profit... Doesn't look like it right now in this case.
- fnordpiglet 3y ago
  Because of a news article saying a prior VC firm is pushing to reinstate sam or fund his new venture and didn’t care which way it goes? That’s not a lot to hang your hat on. They legally have every right to do what they did and no one can force them to change their mind under any circumstance. They might choose to, but OpenAI has all the cards. Sam Altman is a talking head, and if they churn some senior folks, OpenAI has the technology and brand to replace them. If I were the OpenAI board, I would be sleeping like a baby, especially if sam were acting out of sync with the charter of the non profit. I imagine his antics caused a lot of stress the further they drifted from their mission and the more he acted autonomously.
  - icelancer 3y ago
    > If I were the OpenAI board, I would be sleeping like a baby Well, they're all about to be out of a job, so it's a good time to catch up on sleep.
Infinitesimus 3y ago
> A non profit board absolutely calls the shots at a non profit, in so far as the CEO and their employment goes. Non profit boards are not beholden, structurally, to investors and there are no shareholders. There is theory and there is reality. If someone is paying your bills by an outsized amount and they say jump, you will say how high. The influence is rarely that explicit though. The board knowing that X investor provides 60% of their funding, for instance, means the board is incentivized to do things that keep X investor happy without X having to ask for it. 9 times out of 10, money drives decisions in a captilist environment
- fnordpiglet 3y ago
  OpenAI hasn’t received much funding from Microsoft or other investors, and is profitable already with no lack of interested suitors for funding and partnership. Microsoft’s leverage is grossly overstated mostly because it suits Microsoft to appear important to OpenAI when it’s the other way around.
  - ipaddr 3y ago
    They received a 10 billion dollar investment that allows the product to operate plus they provide the servers. Without that your $20 a month goes to 2,000
    - fnordpiglet 3y ago
      They’ve actually drawn very little of that $10b. They are profitable at the moment, and would have no trouble raising funds from anywhere at the moment in any quantity they wanted.
      - profile53 3y ago
        What’s the source on this?
    - sudosysgen 3y ago
      They received much less than 10 billion, and it's mostly in credits (so really about half the value), in exchange for exclusive access to the world's most advanced LLM?
pbadams 3y ago
Something I don't fully understand, from [1], Altman was an employee of the for-profit entity. So to fire him, wouldn't the non-profit board be acting in it's capacity as a director of the for-profit entity (and thus have a fiduciary duty to all shareholders of the for-profit entity)? Non-profit governance is traditionally lax, but would the other shareholders have a case against the members of the non-profit board for acting recklessly w/ respect to shareholder interests in their capacity as directors of the for-profit? This corporate structure is so convoluted that it's difficult to figure out what the actual powers/obligations of the individual agents involved are. [1] https://openai.com/our-structure https://openai.com/our-structure
- cthalupa 3y ago
  LLCs do not require rights be assigned fairly to all shareholders if the operating agreement and by-laws say otherwise. This is the case with OpenAI, where the operating agreement effectively makes the fiduciary duty of the for-profit the accomplishment of the non-profit's charter. The pinkish purpleish block of text on the page you linked goes into more detail here. (Remember, fiduciary does not necessarily have anything to do with money)
Cyberfit 3y ago
A company is just legalese + people. And people are notoriously for-profit, especially in this day and age. The board can maintain control of the legal aspects (such as the org itself), but in the end, people are much more important. Organizations are easy to duplicate. Persons, less so.

airstrike 3y ago

This is not just a "non-profit"... it's a non-profit that owns a $90B for-profit company developing revolutionary, once-in-a-century technology. There is a LOT of money at play here. Others have commented on how Microsoft actually has access to the IP, so the odds that they could pack their toys and rebuild OpenAI 2.0 somewhere else with what they've learned, their near infinite capital and not have to deal with the non-profit shenanigans are meaningful. I'm not saying Sam is needed to make OpenAI what it is, but he's definitely "the investors' guy" in the organization, based on what has surfaced over the last 24 hours. Those investors would rather have him there over someone else, hence the pressure to put him back. It doesn't matter whether you and I think he's the man for the job -- what matters is whether investors think they are. TL;DR the board thinks they have leverage, but as it turns out, they don't

fnordpiglet 3y ago
Microsoft doesn’t have ownership rights to OpenAI IP. They license it. They can’t pack up anything as they just have an IAM and billing model on top of GPT4 they use to resell OpenAI tech.
- vitorgrs 3y ago
  Not really. They run custom GPT model lol
  - fnordpiglet 3y ago
    Not one they own they don’t. OpenAI owns all of the GPT IP. Microsoft has a licensing arrangement with OpenAI. I’d note that azure GPT is not a custom model, only the bing chat is custom. And even the customizations aren’t owned by Microsoft.
- sainez 3y ago
  > Microsoft doesn’t have ownership rights to OpenAI IP. They license it. Honest question, do you have a source for that? Is it conceivable that Microsoft has some clause that grants them direct access to IP if OpenAI does not meet certain requirements. It is difficult to believe that Microsoft handed over $10B without any safeguards in place. Surely they did their due diligence on OpenAI's corporate structure.
  - braiamp 3y ago
    OpenAI for-profit main purpose is to fulfill the desires of the non-profit. If there's a contract that goes against that, the contract would be void if necessary or that stipulation just crossed out.
- fulladder 3y ago
  I would expect that Microsoft would have negotiated terms like a perpetual license to the IP, given that they were the main investor and were in a strong negotiating position. Microsoft has a lot of experience interacting with small companies, including in situations like this one where the small company implodes. The people there know how to protect Microsoft's interests in such scenarios, and they definitely are aware that such things can happen.

ergocoder 3y ago

They officially call the shot. But right now they get a lot of shitstorm for this inexperience handling. And it doesn't look good from the board that looks inexperienced. Gordon-Levitt's wife?? Helen who? D'Angelo with a failing quora and a history of a coup. Doesn't look good. I'd bet it starts impacting their personal lives. This is equivalent to them coming out to support Donald Trump. It is that bad.

tsunamifury 3y ago

Nothing matters if you don’t have the money to enforce the system. Come on get real. Whatever the board says MS can turn off the money in a second and invalidate anything.

fnordpiglet 3y ago
Microsoft depends on OpenAI much more than OpenAI depends on Microsoft. If you work with OpenAI as a company very often this is extraordinarily obvious.
- aluminum96 3y ago
  Microsoft is also OpenAI's main cloud provider, so they certainly have some leverage.
  - fnordpiglet 3y ago
    Aws is JP Morgan’s main cloud provider, and Apples too. Do you think aws has leverage over JPMC and Apple due to that? Or does JPMC and Apple have leverage over aws? Azure gets a hell of a lot more out of OpenAI than OpenAI gets out of azure. I’ll bet you GPT4 runs on nvidia hardware just as well regardless of who resells it.
    - cthalupa 3y ago
      I think the larger issue here is that there's just not enough of that nvidia hardware out there if Microsoft decided to really play hardball, even if it hurts themselves in the short term. I don't know that any of the other cloud providers have the capacity to immediately shoulder OpenAI's workloads. JPMC or Apple have other clouds they can viably move to - OpenAI might not have anyone else that can meet their needs on short notice. I think the situation is tough because I can't imagine there aren't legal agreements in place around what OpenAI has to do to access the funding tranches and compute power, but who knows if they are in a position to force the issue, or if I'm write in my supposition to begin with. Even if I am, a protracted legal battle where they don't have access to compute resources, particularly if they can't get an injunction, might be extremely deleterious to OpenAI. Perhaps Microsoft even knows that they will take a bath on things if they follow this, but don't want to gain a reputation of allowing this sort of thing to happen - they are big enough to take a total bath on the OpenAI side of things and it not be anything close to a fatal blow. I was more skeptical of this being the case last night, but less so now.

karmasimida 3y ago

Yes the board could claim OpenAI is nonprofit. But who is going to pay for the operation and salaries of its employees. Definitely not OpenAI itself. They still need massive capital. With this drama, its future is put in serious doubt

fnordpiglet 3y ago
The board can and does claim it because it is legally a non profit. There is no wishy washy space this isn’t true in. Sam Altman isn’t the source of their funds, regardless. Finally, OpenAI has a pretty successful business model already without outside investment, and without sam or with sam they will not have trouble accessing customers or investors should they need it, even from Microsoft. Let’s be real Altman isn’t OpenAI.
- kelsey9876543 3y ago
  [flagged]

qaq 3y ago

So they are trying to backtrack which makes them look pretty foolish for no apparent reason ?

fnordpiglet 3y ago
I didn’t see any actual evidence of that other than speculation and outside and uninvolved investors advocating for him in the article. I suspect this is a bait for your click.
- qaq 3y ago
  "Ilya Sutskever @ilyasut I deeply regret my participation in the board's actions. I never intended to harm OpenAI. I love everything we've built together and I will do everything I can to reunite the company."

Terretta 3y ago

> No stakeholder would walk away from OpenAI for want of sam Altman. They don’t license OpenAI technology or provide funding for his contribution. They do it to get access to GPT4. There is no comparable competitor available. The implication in Microsoft's statement is clear that they have what they need to use the tech. I read it to mean OpenAI board does not have leverage.

fnordpiglet 3y ago
Microsoft has licensing rights to OpenAI tech. They do not “have it” in the sense they control it.
- lordfrito 3y ago
  Well I read Nadella threatened to turn off OpenAI's servers, so yeah, Microsoft does in fact control it. Not your premises not your compute?
  - fnordpiglet 3y ago
    Even threatening that, if disclosed publicly, would entirely threaten Azures business model. Cloud providers try to stay entirely neutral to their users business insofar as they don’t breach a ToS, law, or regulation forcing their actions. The entire business model is trusting a third party with the keys to your business. In my time working as a senior person at a cloud provider, then as a person setting system for major customers of cloud providers, this specific point was sacrosanct and invariant. Crossing that line would be a huge breach of the business model. I think in this case I would need to see a source to believe you, and if substantiated, it would make me question Nadellas fitness to lead a cloud computing business.
    - lordfrito 3y ago
      Can't find the original thing I read with a more direct statement, I remember it being an anonymous source (on twitter maybe?) with inside info. I did more digging and found a few other things. There's this [1], a NYT article saying that Microsoft is leading the pressure campaign to get Altman reinstated. And there's this [2], a Forbes article which claims the playbook is a combination of mass internal revolt, withheld cloud computing credits from Microsoft, and a lawsuit from investors. [1] https://archive.is/fEVTK#selection-517.0-521.120 https://archive.is/fEVTK#selection-517.0-521.120 [2] https://www.forbes.com/sites/alexkonrad/2023/11/18/openai-investors-scramble-to-reinstate-sam-altman-as-ceo/?sh=5273e9a260da https://www.forbes.com/sites/alexkonrad/2023/11/18/openai-in...

icelancer 3y ago

> A non profit board absolutely calls the shots at a non profit... Doesn't look like it right now in this case.

fnordpiglet 3y ago
Because of a news article saying a prior VC firm is pushing to reinstate sam or fund his new venture and didn’t care which way it goes? That’s not a lot to hang your hat on. They legally have every right to do what they did and no one can force them to change their mind under any circumstance. They might choose to, but OpenAI has all the cards. Sam Altman is a talking head, and if they churn some senior folks, OpenAI has the technology and brand to replace them. If I were the OpenAI board, I would be sleeping like a baby, especially if sam were acting out of sync with the charter of the non profit. I imagine his antics caused a lot of stress the further they drifted from their mission and the more he acted autonomously.
- icelancer 3y ago
  > If I were the OpenAI board, I would be sleeping like a baby Well, they're all about to be out of a job, so it's a good time to catch up on sleep.

Infinitesimus 3y ago

> A non profit board absolutely calls the shots at a non profit, in so far as the CEO and their employment goes. Non profit boards are not beholden, structurally, to investors and there are no shareholders. There is theory and there is reality. If someone is paying your bills by an outsized amount and they say jump, you will say how high. The influence is rarely that explicit though. The board knowing that X investor provides 60% of their funding, for instance, means the board is incentivized to do things that keep X investor happy without X having to ask for it. 9 times out of 10, money drives decisions in a captilist environment

fnordpiglet 3y ago
OpenAI hasn’t received much funding from Microsoft or other investors, and is profitable already with no lack of interested suitors for funding and partnership. Microsoft’s leverage is grossly overstated mostly because it suits Microsoft to appear important to OpenAI when it’s the other way around.
- ipaddr 3y ago
  They received a 10 billion dollar investment that allows the product to operate plus they provide the servers. Without that your $20 a month goes to 2,000
  - fnordpiglet 3y ago
    They’ve actually drawn very little of that $10b. They are profitable at the moment, and would have no trouble raising funds from anywhere at the moment in any quantity they wanted.
    - profile53 3y ago
      What’s the source on this?
  - sudosysgen 3y ago
    They received much less than 10 billion, and it's mostly in credits (so really about half the value), in exchange for exclusive access to the world's most advanced LLM?

pbadams 3y ago

Something I don't fully understand, from [1], Altman was an employee of the for-profit entity. So to fire him, wouldn't the non-profit board be acting in it's capacity as a director of the for-profit entity (and thus have a fiduciary duty to all shareholders of the for-profit entity)? Non-profit governance is traditionally lax, but would the other shareholders have a case against the members of the non-profit board for acting recklessly w/ respect to shareholder interests in their capacity as directors of the for-profit? This corporate structure is so convoluted that it's difficult to figure out what the actual powers/obligations of the individual agents involved are. [1] https://openai.com/our-structure https://openai.com/our-structure

cthalupa 3y ago
LLCs do not require rights be assigned fairly to all shareholders if the operating agreement and by-laws say otherwise. This is the case with OpenAI, where the operating agreement effectively makes the fiduciary duty of the for-profit the accomplishment of the non-profit's charter. The pinkish purpleish block of text on the page you linked goes into more detail here. (Remember, fiduciary does not necessarily have anything to do with money)

Cyberfit 3y ago

A company is just legalese + people. And people are notoriously for-profit, especially in this day and age. The board can maintain control of the legal aspects (such as the org itself), but in the end, people are much more important. Organizations are easy to duplicate. Persons, less so.