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I think it would be helpful for you to clarify which part of the chain you found objectionable: - in 2015, OpenAI was founded as a Delaware nonprofit - in 201

I think it would be helpful for you to clarify which part of the chain you found objectionable: - in 2015, OpenAI was founded as a Delaware nonprofit - in 2017, OpenAI discovered the scaling laws and realized they needed far more compute (and thus money) than they had initially anticipated - that discovery precipitated a series of negotiations between the founders on how to restructure OpenAI to raise more money for compute, ultimately resulting in Musk’s departure when the other founders would not give him control - in 2018, OpenAI attempted to dramatically increase its fundraising despite Elon ending his contributions, but raised only $50M of its $100M goal - in 2019, OpenAI created a capped-profit subsidiary in order to attract funding from commercial entities - the nonprofit hired an independent assessor to value its IP, and then transferred that IP to the for-profit for fair value (around $60 million in 2019) - the OpenAI nonprofit received a right to 100x capped return on its IP investment, or $6B, once the for-profit began making a profit. The nonprofit also received the right to the residual profit after all future investors reached their caps - in 2019, OpenAI’s capped-profit received $1B in investment from Microsoft. OpenAI later received $2B from Microsoft in 2021 and $10B in 2023 as compute scaling continued - Microsoft received a cap of 20x on its $1B investment, and 6x on its $2B and $10B investments, for a total of $92B target redemption - in 2025, OpenAI’s for-profit entity recapitalized from a capped-profit entity with residuals flowing to the nonprofit to a traditional public benefit corporation with traditional equity - in exchange for the residual (and 100x profit cap on the original $60M transfer) the nonprofit received a 26% equity stake in the for-profit. That stake is currently valued at around $200B All of the above is from the record in Musk v. Altman, thanks to which we now have all the details. The upshot for the nonprofit is that it transferred IP worth around $60M in 2019 for rights to $6B in future profit, and then ended up with $200B in equity after the recapitalization. I see a lot of people in this thread assuming that the nonprofit no longer exists, which is not true.

beering 4mo ago
The OpenAI non-profit is now one of the biggest non-profits in dollar-denominated assets. If the goal was to make the non-profit really big and well-funded then that seems on track. But not clear to me what it would do to advance its mission.
- senordevnyc 4mo ago
  They seem to think they need trillions in investment to reach AGI. Putting aside whether reaching AGI is feasible, it seems pretty clear how this move enables them to advance their mission, at least in their eyes.
dooglius 4mo ago
The objectional part would be: - in 2019, OpenAI created a capped-profit subsidiary in order to attract funding from commercial entities Particularly if it creates a conflict of interest for anyone making decisions on behalf of the nonprofit
- 93po 4mo ago
  worse than that is the $60 million sale price, which was comically and absurdly low. Elon himself said he was willing to buy it for significantly more than that and the fact that it wasn't able to go to the highest bidder just shows that it was bullshit
  - deleted 4mo ago
    [deleted]
  - tyre 4mo ago
    Wait, no, not at all. A non-profit shouldn’t have to take the highest bidder regardless. The whole _point_ of a non-profit is to act beyond purely short-term financial gains. “Elon buying this doesn’t align with the mission” is a completely normal, reasonable, and healthy response for most non-profits. What’s great is that we don’t need to speculate about a counter factual. He did end up building a chatbot! Whose defining differentiating feature is revenge porn.
    - achierius 4mo ago
      But the decision is still subject to heavy scrutiny; in fact, more than with normal for profit corporations. It does not seem like the board acted in the best interests of the nonprofit here, they acted in their own.
      - senordevnyc 4mo ago
        How did the board personally benefit?
        4mo ago
bix6 4mo ago
The whole process has been a circus but I found the AG waiver rather frustrating. Nothing like negotiating with a charity to get an IOU that it’ll be charitable. https://oag.ca.gov/news/press-releases/attorney-general-bonta-issues-statement-openai%E2%80%99s-recapitalization-plan https://oag.ca.gov/news/press-releases/attorney-general-bont...
senordevnyc 4mo ago
This is super valuable, thank you so much. It makes it clear just how misinformed 99% of HN seems to be when ranting about how Altman perpetrated the greatest theft in history or some such bullshit (conveniently always failing to mention that he holds NO equity in OpenAI, despite how easy it would have been for him to do so). Appreciated!
overgard 4mo ago
I find it unsettling that a company who wants to eradicate the middle class's ability to make a living, possibly bring about the singularity (I don't think they'll accomplish it, but they want to), and are actively creating one of the most massive bubbles we've ever seen is somehow a "public benefit" company. Absolutely nothing they're doing is to the public's benefit.
- bwhiting2356 4mo ago
  How can something be both a bubble and also eradicate the middle class's ability to make a living? There are reasonable people making the case for both of these things, that investment in AI will fall flat and that AI will be too powerful. Coalition forces are pushing them together into an anti-AI camp, but there's a contradiction. Is it too powerful or not powerful enough?
  - mannanj 4mo ago
    It can represent a few peoples interests, who aren't middle class, and eradicate the middle class. AI can fall flat in its affect and benefit for most people, while helping a few people. It can thusly be powerful for a few people, and not powerful enough for most people. (I feel we may see special models that most people will never access, while a few get those most powerful models). Did that answer your questions and address the contradictions?
    - bwhiting2356 4mo ago
      The parent comment referred to AI as a bubble, and what you're describing I would not call a bubble.
      - mannanj 4mo ago
        You would not, and I would say what I am saying doesn't support nor deny a bubble's existence. I think that would be an error in thinking to conclude what I said supports bubbles.
      - 4mo ago
55555 4mo ago
Thanks for listing all this out. I took issue with it in theory, but now that I see it written out, I don't find any of it objectionable. People act we though the nonprofit doesn't exist anymore.

beering 4mo ago

The OpenAI non-profit is now one of the biggest non-profits in dollar-denominated assets. If the goal was to make the non-profit really big and well-funded then that seems on track. But not clear to me what it would do to advance its mission.

senordevnyc 4mo ago
They seem to think they need trillions in investment to reach AGI. Putting aside whether reaching AGI is feasible, it seems pretty clear how this move enables them to advance their mission, at least in their eyes.

dooglius 4mo ago

The objectional part would be: - in 2019, OpenAI created a capped-profit subsidiary in order to attract funding from commercial entities Particularly if it creates a conflict of interest for anyone making decisions on behalf of the nonprofit

93po 4mo ago
worse than that is the $60 million sale price, which was comically and absurdly low. Elon himself said he was willing to buy it for significantly more than that and the fact that it wasn't able to go to the highest bidder just shows that it was bullshit
- deleted 4mo ago
  [deleted]
- tyre 4mo ago
  Wait, no, not at all. A non-profit shouldn’t have to take the highest bidder regardless. The whole _point_ of a non-profit is to act beyond purely short-term financial gains. “Elon buying this doesn’t align with the mission” is a completely normal, reasonable, and healthy response for most non-profits. What’s great is that we don’t need to speculate about a counter factual. He did end up building a chatbot! Whose defining differentiating feature is revenge porn.
  - achierius 4mo ago
    But the decision is still subject to heavy scrutiny; in fact, more than with normal for profit corporations. It does not seem like the board acted in the best interests of the nonprofit here, they acted in their own.
    - senordevnyc 4mo ago
      How did the board personally benefit?
      - 4mo ago

bix6 4mo ago

The whole process has been a circus but I found the AG waiver rather frustrating. Nothing like negotiating with a charity to get an IOU that it’ll be charitable. https://oag.ca.gov/news/press-releases/attorney-general-bonta-issues-statement-openai%E2%80%99s-recapitalization-plan https://oag.ca.gov/news/press-releases/attorney-general-bont...

senordevnyc 4mo ago

This is super valuable, thank you so much. It makes it clear just how misinformed 99% of HN seems to be when ranting about how Altman perpetrated the greatest theft in history or some such bullshit (conveniently always failing to mention that he holds NO equity in OpenAI, despite how easy it would have been for him to do so). Appreciated!

overgard 4mo ago

I find it unsettling that a company who wants to eradicate the middle class's ability to make a living, possibly bring about the singularity (I don't think they'll accomplish it, but they want to), and are actively creating one of the most massive bubbles we've ever seen is somehow a "public benefit" company. Absolutely nothing they're doing is to the public's benefit.

bwhiting2356 4mo ago
How can something be both a bubble and also eradicate the middle class's ability to make a living? There are reasonable people making the case for both of these things, that investment in AI will fall flat and that AI will be too powerful. Coalition forces are pushing them together into an anti-AI camp, but there's a contradiction. Is it too powerful or not powerful enough?
- mannanj 4mo ago
  It can represent a few peoples interests, who aren't middle class, and eradicate the middle class. AI can fall flat in its affect and benefit for most people, while helping a few people. It can thusly be powerful for a few people, and not powerful enough for most people. (I feel we may see special models that most people will never access, while a few get those most powerful models). Did that answer your questions and address the contradictions?
  - bwhiting2356 4mo ago
    The parent comment referred to AI as a bubble, and what you're describing I would not call a bubble.
    - mannanj 4mo ago
      You would not, and I would say what I am saying doesn't support nor deny a bubble's existence. I think that would be an error in thinking to conclude what I said supports bubbles.
    - 4mo ago

55555 4mo ago

Thanks for listing all this out. I took issue with it in theory, but now that I see it written out, I don't find any of it objectionable. People act we though the nonprofit doesn't exist anymore.