5 ms·

The replies that say "well the profits go to the non-profit, all's good" miss the reality of these high profit nonprofits: the profits invariably end up in the

The replies that say "well the profits go to the non-profit, all's good" miss the reality of these high profit nonprofits: the profits invariably end up in the pockets of management. Most of those are essentially scams, but it doesn't mean that OpenAI isn't just a more subtle scam. The hype and the credulity of the general public play right into this scam. People will more or less believe anything Sam the Money Gushing Messiah says because the neat demos keep flowing. The question is what's we've lost in all this, which no-one really thinks about.

emodendroket 3y ago
If your beef with this structure is that executives get paid handsomely I have bad news about the entire category of nonprofits, regardless of whether they have for-profit arms or not.
- nerdponx 3y ago
  I think they're making the same point as you: "nonprofit" is usually a scam to enrich executives anyway.
  - WalterBright 3y ago
    The D Language Foundation is a non-profit. We formed it so that businesses could have a proper legal entity to donate to. The executives don't get any compensation.
  - binonsense 3y ago
    [flagged]
- dkjaudyeqooe 3y ago
  I really wouldn't give a shit how much they were paid if we got something more than vague promises. They could release the source with a licence that restricted commercial use, anything they wanted, that still allowed them to profit. Instead we get "AI is too dangerous for anyone else to have." The whole thing doesn't inspire confidence.
  - LordDragonfang 3y ago
    >I really wouldn't give a shit how much they were paid if we got something more than vague promises. "We" got a free-as-in-beer general knowledge chat system leagues better than anything at the time, suitable for most low-impact general knowledge and creative work (easily operable by non-technical users), a ridiculously cheap api for it, and the papers detailing how to replicate it. The same SOTA with image generation, just hosted by Microsoft/Bing. Like, not to defend OpenAI, but if the goal was improving the state of general AI, they've done a hell of a lot - much of which your average tech-literate person would not have believed was even possible. Not single-handedly, obviously, but they were major contributors to almost all of the current SOTA. The only thing they haven't done is release the weights, and I feel like everything else they've done has been lost in the discussion, here.
    - kaoD 3y ago
      > The only thing they haven't done is release the weights. Not at all. With GPT-3 they only released a paper roughly describing it but in no way it allowed replication (and obviously no source code, nor the actual NN model, with or without weights). GPT-4 was even worse since they didn't even release a paper, just a "system card" that amounted to describing that its outputs were good.
    - whaleofatw2022 3y ago
      > "We" got a free-as-in-beer general knowledge chat system leagues better than anything at the time Where can I go get or drink from my free as in beer chat system from them then?
      - LordDragonfang 3y ago
        https://chat.openai.com/ https://chat.openai.com/ (No, having to create an account does not mean it's "not free")
        remotefonts 3y ago
        I have to login? Sorry but that's not free, as they want my PII to be able to use it. Yes, I'm from the EU.
- dasil003 3y ago
  GP clearly understands this and said it explicitly, hence “OpenAI more subtle scam” part.
  - emodendroket 3y ago
    Isn't OpenAI a less subtle scam in that case?
    - j16sdiz 3y ago
      It's more. It give empty promise.
- cobertos 3y ago
  Not many people seem to understand this. Here's an example from a previous rabbit hole. The Sherman Fairchild Foundation (which manages the post-humous funds of the guy who made Fairchild Semiconductor) pays its president $500k+ and chairman about the same. https://beta.candid.org/profile/6906786?keyword=Sherman+fair https://beta.candid.org/profile/6906786?keyword=Sherman+fair... (Click Form 990 and select a form) I do love IRS Form 990 in this way. It sheds a lot of light into this.
  - jdblair 3y ago
    That salary for managing $1B in assets doesn't seem high to me. Am I missing something?
    - smallnamespace 3y ago
      $1bn in assets isn’t much, at the high end you can charge maybe $20mm a year (hedge fund), at the low end a few million (public equity fund). That needs to pay not just execs but accountants, etc. Put another way, a $1bn hedge fund is considered a small boutique that typically only employs a handful of people.
      - tomp 3y ago
        Those $20m are literally to keep the lights on (base salary, law firm, prime brokers, data feeds, exchange connectivity). Nobody in the hedge fund world works for salary. They work for bonuses. Which for $1bn fund should be another $20m or so (20% profit share of 10% returns), otherwise you suck. If bonuses aren’t available in non-profits, the base salaries should be much higher.
    - bugglebeetle 3y ago
      One cool thing is that the these funds don’t actually need active management and that in itself is a form of predatory graft. You could stick them all in a diverse array of index funds and call it a day, as pretty much no fund managers outperform those.
- rvba 3y ago
  The Mozilla management seems to be disinterested in doing anything to improve Firefox market share (by for example doing what users want: customization), they waste money on various "investments" and half-bake projects that are used by developers to stat-pad their CVs - and at the end of the day, they are paid millions. IMO you could cut the CEOs salary from 6 million to 300k and get a new CEO - and we probably wouldnt see any difference in Firefox results. Perhaps improvement even. Since the poorly paid CEO would try to demonstrate value - and this best is done by bringing back firefox market share.
  - psychoslave 3y ago
    >300k [...] poorly paid The median annual wage in 2021 in the US was $45,760, https://usafacts.org/data/topics/economy/jobs-and-income/jobs-and-wages/median-annual-wage/ https://usafacts.org/data/topics/economy/jobs-and-income/job... Just to put bit of perspective...
    - rvba 3y ago
      300 thousand is a "poor" pay for a CEO Current CEO earns 20 times more -> 6 million per year
- billywhizz 3y ago
  the way openai structure their pay is dubious to say the least. maybe they will find a way to make money someday but rn everything they are doing is setting my alarm bells off. "In conversations with recruiters we’ve heard from some candidates that OpenAI is communicating that they don’t expect to turn a profit until they reach their mission of Artificial General Intelligence" https://www.levels.fyi/blog/openai-compensation.html https://www.levels.fyi/blog/openai-compensation.html
- mcint 3y ago
  It has mattered in other cases, https://en.wikipedia.org/wiki/VSP_Vision_Care https://en.wikipedia.org/wiki/VSP_Vision_Care > In 2003 the Internal Revenue Service revoked VSP's tax exempt status citing exclusionary, members-only practices, and high compensation to executives.[3] Or later in the article https://en.wikipedia.org/wiki/VSP_Vision_Care#Non-profit_status https://en.wikipedia.org/wiki/VSP_Vision_Care#Non-profit_sta... > In 2005, a federal district judge in Sacramento, California found that VSP failed to prove that it was not organized for profit nor for the promotion of the greater social welfare, as is required of a 501(c)(4). Instead, the district court found, VSP operates much like a for-profit (with, for example, its executives getting bonuses tied to net income) and primarily for the benefit of its own member/subscribers, not for some greater social good and, thereafter, concluded it was not entitled to tax-exempt status under 501(c)(4).[16]
samstave 3y ago
"Why is the NFL a non-profit: https://www.publicsource.org/why-is-the-nfl-a-nonprofit/ https://www.publicsource.org/why-is-the-nfl-a-nonprofit/ The total revenue of the NFL has been steadily increasing over the years, with a significant drop in 2020 due to the impact of the COVID-19 pandemic12. Here are some figures: 2001: $4 billion 2010: $8.35 billion 2019: $15 billion 2020: $12.2 billion 2021: $17.19 billion 2022: $18 billion
- sfmz 3y ago
  https://www.cbssports.com/nfl/news/nfl-ends-tax-exempt-status-after-73-years-3-things-to-know/ https://www.cbssports.com/nfl/news/nfl-ends-tax-exempt-statu... Every dollar of income generated through television rights fees, licensing agreements, sponsorships, ticket sales, and other means is earned by the 32 clubs and is taxable there. This will remain the case even when the league office and Management Council file returns as taxable entities, and the change in filing status will make no material difference to our business.
  - samstave 3y ago
    Gee... I wonder if that had anything to do with the internet and so many people becoming aware of their Mega Church Model due to the Information SuperHighway?
- swasheck 3y ago
  > Update April 28, 2015: In the midst of several National Football League scandals last October, PublicSource asked freelance writer Patrick Doyle to take a look at the nonprofit status of the league. On April 28, NFL Commissioner Roger Goodell said the league will no longer be tax exempt, eliminating a “distraction.” no longer a non-profit but no less hypocritical
  - samstave 3y ago
    [dead]
- zelias 3y ago
romeros 3y ago
The reality was that nobody could have predicted the A.I breakthroughs when OpenAI first got started. It was a moonshot. Thats why Musk gave $50m dollars without even asking for a seat at the board. OpenAI had to start as a non profit because there was no clear path forward. It was research. Kind of like doing research with the goal of curing cancer. The unexpected breakthroughs came a bit quicker than anticipated and everybody was seeing the dollar signs. I believe OpenAIs intial intention at the beginning was benign. But they just couldn't let go of the dollars.
- deleted 3y ago
  [deleted]
- burnerthrow008 3y ago
  I have a slightly more cynical take: Training LLMs requires a lot of text, and, as a practical matter, essentially all LLMs have committed copyright infringement on an industrial scale to collect training data. The US has a fair-use exception with a four-part test: The second and third parts (nature of the work (creative) and how much of the work is used (all of it)) strongly favor copyright owners. The fourth part (which SCOTUS previous said is the most important part, but has since walked back) is neutral to slightly favoring the copiers: Most LLMs are trained to not simply regurgitate the input, so a colorable argument exists that an LLM has no impact on the market for, say, NY Times articles. Taken together, parts 2 through 4 are leaning towards impermissible use. That leaves us with the first part: Could it make the difference? The first part really has two subparts: How and what are you using it for? "How" they are using it is clearly transformational (it defeats the purpose of an LLM if it just regurgitates the input), so that argues in favor of copiers like OpenAI. But where I think Altman had a brilliant/evil flash of genius is that the "what" test: OpenAI is officially a non-profit, dedicated to helping humanity: That means the usage is non-commercial. Being non-commercial doesn't automatically make the use fair use, but it might make the difference when considering parts 2 through 4, plus the transformativity of the usage.
matt-p 3y ago
Also it /doesn't/ all go back to openAI. Microsoft for example will make 100X ROI.
treflop 3y ago
Not to speak about OpenAI specifically, but people who know what they’re doing still cost a buttload of $$$$. Even I as a software engineer have a minimum salary I expect because I’m good at my job. Just because it’s a non-profit doesn’t mean I’m going to demand a smaller salary. And if the non-profit can’t afford me and gets a more junior dev and they’re not very good and their shit breaks… well, they should have paid full price. That said, there ARE a lot of dirty non-profits that exist just to pay their executives.
- y_gy 3y ago
  You're thinking about the wrong thing. It's not about salaries for staff. The fact that it's a non-profit means no corporate taxes. That's where the profits go into the pockets of management, practically.
tehjoker 3y ago
Non-profits, the big ones at least, are a scam by rich people to privatize what should essentially be nationalized government services. They get to pretend they're helping the public at a fraction of their capability to paper over their ill gotten gains elsewhere. It's like a drug lord buying a church, but they get to take the spend out of their taxes. Alternatively, they are a way to create a tax free pool of money for their children to play with by putting them on the board. Non-profits weren't really as much of a thing until the neoliberal era of privatizing everything. Of course, there are "real" non-profits, those kinds of activities are a real thing, such as organizing solely member funded organizations to serve the people, but in America, this is a marginal amount of the money in the system.

emodendroket 3y ago

If your beef with this structure is that executives get paid handsomely I have bad news about the entire category of nonprofits, regardless of whether they have for-profit arms or not.

nerdponx 3y ago
I think they're making the same point as you: "nonprofit" is usually a scam to enrich executives anyway.
- WalterBright 3y ago
  The D Language Foundation is a non-profit. We formed it so that businesses could have a proper legal entity to donate to. The executives don't get any compensation.
- binonsense 3y ago
  [flagged]
dkjaudyeqooe 3y ago
I really wouldn't give a shit how much they were paid if we got something more than vague promises. They could release the source with a licence that restricted commercial use, anything they wanted, that still allowed them to profit. Instead we get "AI is too dangerous for anyone else to have." The whole thing doesn't inspire confidence.
- LordDragonfang 3y ago
  >I really wouldn't give a shit how much they were paid if we got something more than vague promises. "We" got a free-as-in-beer general knowledge chat system leagues better than anything at the time, suitable for most low-impact general knowledge and creative work (easily operable by non-technical users), a ridiculously cheap api for it, and the papers detailing how to replicate it. The same SOTA with image generation, just hosted by Microsoft/Bing. Like, not to defend OpenAI, but if the goal was improving the state of general AI, they've done a hell of a lot - much of which your average tech-literate person would not have believed was even possible. Not single-handedly, obviously, but they were major contributors to almost all of the current SOTA. The only thing they haven't done is release the weights, and I feel like everything else they've done has been lost in the discussion, here.
  - kaoD 3y ago
    > The only thing they haven't done is release the weights. Not at all. With GPT-3 they only released a paper roughly describing it but in no way it allowed replication (and obviously no source code, nor the actual NN model, with or without weights). GPT-4 was even worse since they didn't even release a paper, just a "system card" that amounted to describing that its outputs were good.
  - whaleofatw2022 3y ago
    > "We" got a free-as-in-beer general knowledge chat system leagues better than anything at the time Where can I go get or drink from my free as in beer chat system from them then?
    - LordDragonfang 3y ago
      https://chat.openai.com/ https://chat.openai.com/ (No, having to create an account does not mean it's "not free")
      - remotefonts 3y ago
        I have to login? Sorry but that's not free, as they want my PII to be able to use it. Yes, I'm from the EU.
dasil003 3y ago
GP clearly understands this and said it explicitly, hence “OpenAI more subtle scam” part.
- emodendroket 3y ago
  Isn't OpenAI a less subtle scam in that case?
  - j16sdiz 3y ago
    It's more. It give empty promise.
cobertos 3y ago
Not many people seem to understand this. Here's an example from a previous rabbit hole. The Sherman Fairchild Foundation (which manages the post-humous funds of the guy who made Fairchild Semiconductor) pays its president $500k+ and chairman about the same. https://beta.candid.org/profile/6906786?keyword=Sherman+fair https://beta.candid.org/profile/6906786?keyword=Sherman+fair... (Click Form 990 and select a form) I do love IRS Form 990 in this way. It sheds a lot of light into this.
- jdblair 3y ago
  That salary for managing $1B in assets doesn't seem high to me. Am I missing something?
  - smallnamespace 3y ago
    $1bn in assets isn’t much, at the high end you can charge maybe $20mm a year (hedge fund), at the low end a few million (public equity fund). That needs to pay not just execs but accountants, etc. Put another way, a $1bn hedge fund is considered a small boutique that typically only employs a handful of people.
    - tomp 3y ago
      Those $20m are literally to keep the lights on (base salary, law firm, prime brokers, data feeds, exchange connectivity). Nobody in the hedge fund world works for salary. They work for bonuses. Which for $1bn fund should be another $20m or so (20% profit share of 10% returns), otherwise you suck. If bonuses aren’t available in non-profits, the base salaries should be much higher.
  - bugglebeetle 3y ago
    One cool thing is that the these funds don’t actually need active management and that in itself is a form of predatory graft. You could stick them all in a diverse array of index funds and call it a day, as pretty much no fund managers outperform those.
rvba 3y ago
The Mozilla management seems to be disinterested in doing anything to improve Firefox market share (by for example doing what users want: customization), they waste money on various "investments" and half-bake projects that are used by developers to stat-pad their CVs - and at the end of the day, they are paid millions. IMO you could cut the CEOs salary from 6 million to 300k and get a new CEO - and we probably wouldnt see any difference in Firefox results. Perhaps improvement even. Since the poorly paid CEO would try to demonstrate value - and this best is done by bringing back firefox market share.
- psychoslave 3y ago
  >300k [...] poorly paid The median annual wage in 2021 in the US was $45,760, https://usafacts.org/data/topics/economy/jobs-and-income/jobs-and-wages/median-annual-wage/ https://usafacts.org/data/topics/economy/jobs-and-income/job... Just to put bit of perspective...
  - rvba 3y ago
    300 thousand is a "poor" pay for a CEO Current CEO earns 20 times more -> 6 million per year
billywhizz 3y ago
the way openai structure their pay is dubious to say the least. maybe they will find a way to make money someday but rn everything they are doing is setting my alarm bells off. "In conversations with recruiters we’ve heard from some candidates that OpenAI is communicating that they don’t expect to turn a profit until they reach their mission of Artificial General Intelligence" https://www.levels.fyi/blog/openai-compensation.html https://www.levels.fyi/blog/openai-compensation.html
mcint 3y ago
It has mattered in other cases, https://en.wikipedia.org/wiki/VSP_Vision_Care https://en.wikipedia.org/wiki/VSP_Vision_Care > In 2003 the Internal Revenue Service revoked VSP's tax exempt status citing exclusionary, members-only practices, and high compensation to executives.[3] Or later in the article https://en.wikipedia.org/wiki/VSP_Vision_Care#Non-profit_status https://en.wikipedia.org/wiki/VSP_Vision_Care#Non-profit_sta... > In 2005, a federal district judge in Sacramento, California found that VSP failed to prove that it was not organized for profit nor for the promotion of the greater social welfare, as is required of a 501(c)(4). Instead, the district court found, VSP operates much like a for-profit (with, for example, its executives getting bonuses tied to net income) and primarily for the benefit of its own member/subscribers, not for some greater social good and, thereafter, concluded it was not entitled to tax-exempt status under 501(c)(4).[16]

samstave 3y ago

"Why is the NFL a non-profit: https://www.publicsource.org/why-is-the-nfl-a-nonprofit/ https://www.publicsource.org/why-is-the-nfl-a-nonprofit/ The total revenue of the NFL has been steadily increasing over the years, with a significant drop in 2020 due to the impact of the COVID-19 pandemic12. Here are some figures: 2001: $4 billion 2010: $8.35 billion 2019: $15 billion 2020: $12.2 billion 2021: $17.19 billion 2022: $18 billion

sfmz 3y ago
https://www.cbssports.com/nfl/news/nfl-ends-tax-exempt-status-after-73-years-3-things-to-know/ https://www.cbssports.com/nfl/news/nfl-ends-tax-exempt-statu... Every dollar of income generated through television rights fees, licensing agreements, sponsorships, ticket sales, and other means is earned by the 32 clubs and is taxable there. This will remain the case even when the league office and Management Council file returns as taxable entities, and the change in filing status will make no material difference to our business.
- samstave 3y ago
  Gee... I wonder if that had anything to do with the internet and so many people becoming aware of their Mega Church Model due to the Information SuperHighway?
swasheck 3y ago
> Update April 28, 2015: In the midst of several National Football League scandals last October, PublicSource asked freelance writer Patrick Doyle to take a look at the nonprofit status of the league. On April 28, NFL Commissioner Roger Goodell said the league will no longer be tax exempt, eliminating a “distraction.” no longer a non-profit but no less hypocritical
- samstave 3y ago
  [dead]
zelias 3y ago

romeros 3y ago

The reality was that nobody could have predicted the A.I breakthroughs when OpenAI first got started. It was a moonshot. Thats why Musk gave $50m dollars without even asking for a seat at the board. OpenAI had to start as a non profit because there was no clear path forward. It was research. Kind of like doing research with the goal of curing cancer. The unexpected breakthroughs came a bit quicker than anticipated and everybody was seeing the dollar signs. I believe OpenAIs intial intention at the beginning was benign. But they just couldn't let go of the dollars.

deleted 3y ago
[deleted]
burnerthrow008 3y ago
I have a slightly more cynical take: Training LLMs requires a lot of text, and, as a practical matter, essentially all LLMs have committed copyright infringement on an industrial scale to collect training data. The US has a fair-use exception with a four-part test: The second and third parts (nature of the work (creative) and how much of the work is used (all of it)) strongly favor copyright owners. The fourth part (which SCOTUS previous said is the most important part, but has since walked back) is neutral to slightly favoring the copiers: Most LLMs are trained to not simply regurgitate the input, so a colorable argument exists that an LLM has no impact on the market for, say, NY Times articles. Taken together, parts 2 through 4 are leaning towards impermissible use. That leaves us with the first part: Could it make the difference? The first part really has two subparts: How and what are you using it for? "How" they are using it is clearly transformational (it defeats the purpose of an LLM if it just regurgitates the input), so that argues in favor of copiers like OpenAI. But where I think Altman had a brilliant/evil flash of genius is that the "what" test: OpenAI is officially a non-profit, dedicated to helping humanity: That means the usage is non-commercial. Being non-commercial doesn't automatically make the use fair use, but it might make the difference when considering parts 2 through 4, plus the transformativity of the usage.

matt-p 3y ago

Also it /doesn't/ all go back to openAI. Microsoft for example will make 100X ROI.

treflop 3y ago

Not to speak about OpenAI specifically, but people who know what they’re doing still cost a buttload of $$$$. Even I as a software engineer have a minimum salary I expect because I’m good at my job. Just because it’s a non-profit doesn’t mean I’m going to demand a smaller salary. And if the non-profit can’t afford me and gets a more junior dev and they’re not very good and their shit breaks… well, they should have paid full price. That said, there ARE a lot of dirty non-profits that exist just to pay their executives.

y_gy 3y ago
You're thinking about the wrong thing. It's not about salaries for staff. The fact that it's a non-profit means no corporate taxes. That's where the profits go into the pockets of management, practically.

tehjoker 3y ago

Non-profits, the big ones at least, are a scam by rich people to privatize what should essentially be nationalized government services. They get to pretend they're helping the public at a fraction of their capability to paper over their ill gotten gains elsewhere. It's like a drug lord buying a church, but they get to take the spend out of their taxes. Alternatively, they are a way to create a tax free pool of money for their children to play with by putting them on the board. Non-profits weren't really as much of a thing until the neoliberal era of privatizing everything. Of course, there are "real" non-profits, those kinds of activities are a real thing, such as organizing solely member funded organizations to serve the people, but in America, this is a marginal amount of the money in the system.