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- [00:01]
Ellen Hewitt
In today's data driven world, you need real data to shape an effective marketing strategy. That's where Ahrefs comes in. Ahrefs is a marketing intelligence platform powered by big data. It shows you exactly what your target audience is searching for and how you measure up to your competitors. Whether you're making day to day marketing decisions or defining your long term digital strategy, Ahrefs delivers real time insights that help you grow your brand. Head over to ahrefs.com to get started. That's a h r e f s.com.
- [00:30]
Max Chavkin
We just lived through a truly wild presidential race, pitting a Democrat who wasn't on the ballot until June and a Republican who was convicted on 34 felony counts just before receiving his party's nomination for president. But the wildest thing might have been this guy.
- [00:44]
Elon Musk
If you already believe in the Constitution, you're just signing something you already believe and you can win a million dollars. That's awesome.
- [00:50]
Max Chavkin
I'm Max Chavkin and this is Citizen Elon, a three part series from Elon, Inc. Where we investigate Elon Musk's unprecedented support for Donald Trump. Follow Elon, Inc. On Apple podcasts or wherever you like to listen. It's a Wednesday in November 2023. I'm standing in a dark restaurant in San Francisco. There are a few dozen people. It's the after party for an AI conference. People are standing and chatting in small circles. Waiters are bringing trays of hors d'oeuvres around. I'm biting into a tiny porcini mushroom donut when I hear a whisper. Sam Altman has walked into the restauran. I try to spot him in the dim lighting. I've talked to Sam here and there over the years. He's been around the startup scene for more than a decade and he's friendly to journalists. And over time, Sam Altman has become basically the most Silicon Valley man Alive. He's the CEO of OpenAI, which shot to tech stardom a year ago with the release of ChatGPT. His company is worth $86 billion. It's one of the most valuable startups in the world. For the past six months, Sam had been everywh it seemed like every major news outlet wanted to profile him, and he was saying yes to each one. Headlines referred to him as the ChatGPT king, the Oppenheimer of our age, and an AI overlord. He was like an ambassador for the AI future, zipping around the globe, meeting with world leaders. He testified in front of Congress, and amid all that, he decided to pop by this AI conference party. A little surprise visit. So I see him standing in a corner of the restaurant. A few people have already clustered around him. I decide to say hi. He's wearing a suit and a tie, more dressed up than usual, and he's shorter than I remember. We shake hands. He eyes my conference badge and says, it's good to see you. I'm surprised by how personable he is, how friendly he comes across. He acts like he remembers me. He already knows I'm working on this podcast. So I say to him, I'm about to put in a request to your comms team to see if we can find a time to interview you. He's like, sure, sounds good. Several people are hovering, hoping to get his attention for a minute. So I step away, and after about 10 minutes at the party, he leaves, too. The next day, Sam continues his tour as the statesman of AI. He speaks at apec, a big conference that President Biden and China's leader Xi Jinping both attended. Here's Sam at that conference, talking about AI.
- [03:31]
Sam Altman
I think this will be the most transformative and beneficial technology humanity has yet invented. I think this is like the greatest leap forward of any of the big technological revolutions we've had so far. So I'm super excited. I can't imagine anything more exciting to work on. And getting to do that is like the professional honor of a lifetime. It's so fun to get to work on that.
- [03:53]
Max Chavkin
The most transformative technology humanity has yet invented. The professional honor of a lifetime. Sam clearly believes the world is about to change dramatically and fast. And he's aware that a lot of that change is connected to him. And the day after that, less than 48 hours after I saw Sam at that party, less than 24 hours after he spoke at a major international gathering of world leaders, he was fired. Breaking news. Sam Altman is out as CEO of OpenAI. This is a stunner.
- [04:31]
Ellen Hewitt
The tech world has been thrown into.
- [04:33]
Max Chavkin
Chaos over the weekend when the company that gave us ChatGPT fired its CEO. The move came as a complete surprise.
- [04:40]
Ellen Hewitt
To everyone, including OpenAI's biggest investor.
- [04:43]
Ron Kruszewski
Microsoft Board says it pushed Altman out.
- [04:46]
Max Chavkin
After a review found he was, quote, not consistently candid in his communications with the board. It's hard to emphasize enough how shocking this was. Sam Altman got fired. It was the juiciest tech news of the year and completely unexpected. The news came on a Friday afternoon, and my colleagues and I all immediately knew our weekends were out the window. The next few days felt like a hurricane of News. The board implied Sam had lied to them. They announced a new CEO. Then came a regretful public apology by someone who had fired Sam. There were pledges of loyalty, an employee revolt, and at the same time, something else was happening. It started to seem like Sam was actually going to come back. He was rallying the support of his employees and Microsoft. It was looking like Sam could win. On Tuesday night, Sam was reinstated as CEO at the company that just five days earlier had basically tried to destroy him. Sam managed to get the upper hand once again. It was high drama, a jaw dropping turn of events. But for those who know Sam, it actually made perfect sense. One of Sam's mentors is an investor named Paul Graham. He once told a reporter, Sam is extremely good at becoming powerful. To me, this seems like Sam's defining characteristic. Often in Silicon Valley, we talk about tech visionaries who are programming geniuses or obsessed with the details and design of the product. That's not Sam. His strongest, most unique skill is wielding power. And that might have consequences for all of us. You're listening to Foundering. I'm Ellen Hewitt. In this season of Foundering, we're gonna chronicle the rise of Sam Altman. The all out arms race to build the leading AI company, the claim that this new technology could threaten to wipe out all of humanity if we're not careful. And then the coup that almost took down the guy at the top of it all before he managed to claw his way. For this season, you'll hear reporting done by me and my colleagues at Bloomberg who have been covering AI during the boom of the last few years. We interviewed some of the leading minds in AI to try to cut through the hype and understand the debate about whether AI will be a tool to improve human existence or to extinguish it. But this is also the story of Sam, the man at the center of it all. And we spoke with Sam's friends, family and collaborators to demystify him and how he rose to power. This first episode is all about how Sam got here. He's a man who has always understood the importance of being in the right room at the right time with exactly the right few people. The full story of Sam's rise is important because understanding who he is and what he believes will shed light on an urgent question. Should we trust this man to oversee this technology? In the summer of 2023, about five months before he was fired, my colleague Emily Chang asked him this exact question at a Bloomberg conference.
- [08:19]
Ellen Hewitt
You have an incredible amount of power at this moment in time. Why should we trust you?
- [08:26]
Max Chavkin
You shouldn't.
- [08:27]
Sam Altman
If this really works, it's like quite a powerful technology, and you should not trust one company and certainly not one person with it.
- [08:35]
Max Chavkin
You shouldn't trust me. If he believes that, then why did Sam fight his way right back to the top of OpenAI, back into that position of control, as if to insist he should be the person to lead this company as they develop AI as fast as possible? To a lot of people, the stakes are terrifying. They're higher than anything else, really. In the Valley, some people refer to artificial general intelligence, or AGI, as the last invention. Something so potent that everything that comes after will look unrecognizable compared to everything leading up to it. Inside OpenAI, some employees talk about how they are building. God. We'll be right back.
- [09:23]
Matt Levine
Hi, I'm Ron Kruszewski, Chairman and CEO of Stifel Financial Advisors. If you're not growing your practice, you're losing market share. Stifel is a growing entrepreneurial advisor centric firm built for successful advisors like you. Imagine having the resources of the largest wire houses and the support of the boutique shops, but none of the bureaucracy to get in the way of you serving your clients. At Stifel, it's your business, your book, your clients. I always tell the advisors we're recruiting, I want you to come to Stifel and double or triple your business. Most of them laugh and shake their heads, but I'm serious. Don't take it from me. Take it from Stifel's number one finish in J.D. power's 2023 U.S. financial Advisor Satisfaction Study. So there's a reason why 148 financial advisors joined Stifel last year. Come join us and find out why Stifel is the firm where success meets success. Visit www.choosestif.com Stifel Nicholas & Co. Inc.
- [10:20]
Max Chavkin
Member SIPC and NYSE Are you looking.
- [10:24]
Ron Kruszewski
For a new podcast about stuff related to money?
- [10:28]
Max Chavkin
Well, today's your lucky day. I'm Matt Levine. And I'm Katie Greifeld and we are the hosts of Money Stuff, the podcast. Every Friday we dive into the top.
- [10:37]
Ron Kruszewski
Stories about Wall street, finance and other stuff.
- [10:40]
Max Chavkin
We have fun, we get weird and we want you to join us.
- [10:44]
Ron Kruszewski
You can listen to Money Stuff, the podcast on Apple Podcasts, Spotify or wherever you get your podcast.
- [10:55]
Max Chavkin
To get a better sense of the kind of person Sam is and how he got where he is now, I want to take you back to his adolescence. Sam had a privileged upbringing in St. Louis. He's the oldest of four siblings. His mom was a dermatologist. His dad was a real estate developer. He attended a private high school called John Burroughs. There's an anecdote about him from that period that sticks out. When some students wanted to boycott an assembly about sexuality, Sam stood up in front of the whole school and announced he was gay. It's a pretty gutsy move for a teenager in the early 2000s. And unsurprisingly, Sam was smart.
- [11:32]
Andy Abbott
And generally, Sam, he was. He was an exceptional student. He was an exceptional writer. He was an exceptional big personality.
- [11:44]
Max Chavkin
That's Andy Abbott. He was one of Sam's English teachers, and he's now the head of school. And this is a pretty nerdy school where it's cool to get good grades and be a high achiever. And even in that environment, Sam stood out.
- [11:58]
Andy Abbott
Sam's just a really natural leader, Incredibly charismatic, curious guy. He's atypical. You know, he was the editor of the yearbook, and he represented the school and the model United Nations. He designed our website, you know, before we hired people to do our website. He could just do that stuff.
- [12:24]
Max Chavkin
Sam even played water polo.
- [12:25]
Andy Abbott
He was pretty good. I'm not a connoisseur, but I'm like, he was pretty good.
- [12:31]
Max Chavkin
He remembers Sam as being really confident and apparently for good reason. Sounds like Sam was just this exceptional kid.
- [12:39]
Andy Abbott
Well, he. He's the smartest guy in the room, and he's charismatic. I remember thinking. And I'm just. This is just an embarrassing confession. I hope he doesn't go into technology. He's so creative, and he's such a good writer. And I hoped he would be an author or something like that. And, I mean, nobody could have anticipated the magnitude of. Of open AI, but everybody knew that this guy's better at most things than most of us are.
- [13:17]
Max Chavkin
This speaks to a pattern that'll become a crucial factor in Sam's career. He's very good at impressing people, especially the right people, older people, people with influence, people who are in a position to help him. Someone who knows Sam says his superpower is figuring out who's in charge and charming them. So we have young Sam. Even though he was a teenager, he acted like someone older, with more agency and confidence. Adults found this quality of his admirable, and he acted like this toward his three younger siblings, too. In a big New Yorker profile on Sam, his younger brother said that as kids, they used to play a board game called Samurai, and Sam always won because he declared himself the leader and said, I have to win. And I'm in charge of everything. When Sam's brother told this story, it was a jocular exchange. But Annie, their youngest sibling and only sister, sees it differently. These days, she's estranged from Sam and the rest of her immediate family. But when she was a kid, she remembered that same quality of Sam'swanting to be in charge. And to her it wasn't funny, it was domineering.
- [14:30]
Annie Altman
From my perspective, with the nine year age difference, he very much wanted to be and acted like the third parent and liked being the oldest sibling in charge, in control.
- [14:44]
Max Chavkin
For instance, even though the family was Jewish, they used to get a Christmas tree until Sam put his foot down.
- [14:51]
Annie Altman
I don't have memories of a Christmas tree because when Sam got bar Mitzvahed at 13, he decided that we, as a family unit were Jews and needed to no longer celebrate Christmas. There were no more Christmas trees when.
- [15:07]
Max Chavkin
Their dad passed away in 2018. Annie remembers that Sam dictated to each of his younger siblings how many minutes they could talk at the funeral.
- [15:16]
Annie Altman
To be at your dad's funeral, to be like, oh, I'm the oldest sibling, so I get to choose how long all the sibling. Which it is bizarre. And there's a level of it that's so hilarious and so benign. Surface level, classic older sibling bullshit, where it's like, all right, older sibling wanting to make up the rules to the game. There's a level of it that's very light and funny and there's also a level of it that's very dark and deeply unsettling of how does that behavior come up in other places if you believe that you get to be the authority on something that you are not the authority on.
- [15:54]
Max Chavkin
A spokeswoman for OpenAI told us that Sam recalls these incidents differently, but she declined to elaborate. And so when Sam finished high school, he started down this path that's pretty textbook for the tech industry. Studying computer science at Stanford, founding a startup and dropping out of Stanford. And he made one incredibly important decision. He applied to Y Combinator. Y Combinator is a startup accelerator. It's basically a boot camp for startups. You and your co founders apply and if you're accepted, you spend three months hacking away trying to build a company. At the end of that period, you give a demo to investors and try to raise venture capital. Sam was actually in the first ever group of founders at Y Combinator. Everyone calls it YC, by the way. It was 2005, so YC was totally unknown. Just a bunch of young guys hanging out in Cambridge, Massachusetts for a Summer writing code. But YC would eventually become this enormously powerful network. Now it's basically the number one elite program for startups. It's really hard to get in, and the alumni network is incredibly strong. Sam was 19 years old when he joined YC, and once again, he impressed just the right person. Paul Graham, the head of yc. The first batch included some other really impressive people, like the founders of Reddit and Twitch. But someone who knows Sam says that he was immediately Paul's favorite. Paul later wrote, within about three minutes of meeting him, I remember thinking, ah, so this is what Bill Gates must have been like when he was 19. The startup Sam was building was called Looped. Looped is one of the forgotten apps of its time, the early 2000s, when people were really excited about having GPS on their phones for the first time. It used location data to connect people to their friends and local businesses, kind of like a mix of Yelp and Foursquare. Here's Sam making the pitch at a developers conference.
- [17:54]
Sam Altman
Looped is about connecting with people on the go, which is, after all, the main reason you have a phone. We show you where people are, what they're doing, and what cool places are around you.
- [18:03]
Max Chavkin
Sam started building the startup in 2005. The iPhone didn't exist yet, so Looped was trying to do this for flip phones, and it was kind of hard to get traction. At one point early on, Sam's company was in a desperate situation. They really needed to get a deal with a mobile carrier. They learned that Boost Mobile, which was part of Sprint, was looking to add a location feature and needed a partner, but they were about to sign with someone else. So Sam flew down to Boost's headquarters in Irvine in Southern California. When he tells the story, he says that he just showed up, waited outside the Wright executive's office, and asked for just 10 minutes. Here's how that executive remembers it.
- [18:48]
Lowell Weiner
As I recall, I got a phone call from Sam when he was in Irvine, and he said he explained who he was and what Loopt was. Somebody at Sprint had told him to get in touch with us.
- [19:02]
Max Chavkin
That's Lowell Weiner. He was at the time the head of business development for Boost, and he's going to tell a story that has a few asides, but that I think captures a lot about what Sam was like.
- [19:14]
Lowell Weiner
Early on, we were a day or two away from signing a contract with another startup that was further along than Looped. He asked to come by that day, which is incredibly unusual, but given the timing that we were at the 11th hour, we were about to sign this contract. He had come referred to us by our parent company. It was worth at least a meeting. So Sam shows up at the office with one or two other guys from Looped. We go sit in the conference room. We share what we were looking to do. Sam started to share about Looped. He was I think 19 at the time. You know, I think maybe in cargo shorts, sitting cross legged in a chair in the conference room and just kind of holding court.
- [20:03]
Max Chavkin
I want to pause here for a second on this Cargo Shorts detail. For a lot of Sam's young life, he was a Cargo Shorts devotee. Wore them all the time. People kind of poked fun at him for it to the point where he felt the need to address it on a podcast called Masters of Scale.
- [20:21]
Sam Altman
Honestly, I don't think they're that ugly and I find them incredibly convenient. Like I. You can like put a lot of stuff. Like I like to. I'd still read paperback books. I like paperback books. I like to carry on around with me. I have like a iPhone 7 plus which is kind of like works really well in cargo pockets. I carry like computer chargers, cables. They're just like, you know, efficient. Why people care about that so much.
- [20:46]
Max Chavkin
That I can't tell you that last comment. That's very Sam to remark that the things normal people might talk about don't make sense or aren't rational. It's like he has no patience for the things most of us might think are funny. He has more important things to think about. Anyway. Here he is, a 19 year old in a meeting with mobile network executives, wearing cargo shorts, sitting cross legged in a conference room chair. Even though this encounter was almost 20 years ago, Lowell remembers vividly what Sam looked like in that moment because it was such an odd picture.
- [21:21]
Lowell Weiner
He's. He was small in stature. I don't think he's a big guy now, but he was, you know, he was quite slim at the time. You know, it's no easy feat to sit cross legged in a conference chair. I mean, he looked like he could have still been in high school.
- [21:40]
Max Chavkin
I've heard other people describe Sam's weird way of sitting. He's older now, so he doesn't do it as much, but one person who knows him told me he used to squat on the seat of a chair like a perched bird with his knees up toward his chin. Despite this unconventional way of presenting himself, or because of it, he almost immediately convinced Lowell that Boost Mobile should switch plans at the 11th hour and go with this other partner.
- [22:07]
Lowell Weiner
It was Pretty clear within a half hour of this meeting starting that Luke and Sam were the right partner to do this. There was both excitement and like, shit, we have to go sell it internally. But I recall stepping outside of the room with the colleague that I was in the meeting with and saying to him, we need to switch gears.
- [22:28]
Max Chavkin
And Lowell still remembers this way. That Sam looks unassuming, but he's not.
- [22:35]
Lowell Weiner
On the one hand, visually, he looked incredibly young. But if you'd shut your eyes and were just listening to him, his command of the material and his ability to communicate and engage was on par with anyone I had met with over the course of my tech career. It was freakish. Yeah, it was freakish. Not his appearance, but his poise and.
- [23:01]
Max Chavkin
Command for that age, Sam's relentlessness paid off. He knew he had to get that deal, and he did what he needed to do to get it, including flying across the state to surprise someone at their office. Sam later said he learned an important lesson. The way to get things done is to just be really f persistent. So he inks this deal for Looped. It's going to power location sharing for Boost Mobile. It's the partnership that led to this 2006 ad campaign. Yo, you see where I'm at? Yeah, but I know where you at. Boost Looped with gps. Now you know where your friends are at. Sam's peers at YC were surprised that he pulled this off. Looped's business model was pretty wobbly, and the product wasn't all that impressive. But Sam's particular strength was starting to become clear. It was obvious Sam was an incredible deals guy. That's a clip from a podcast interview with Emmett Shear, one of the other guys in that very first YC batch. You can hear how impressed he was by Sam's particular talent. He was somehow convincing the phone companies to give his startup that didn't really have a product like deals. I still don't know how he did that.
- [24:15]
Lowell Weiner
And that was the only obvious thing.
- [24:17]
Max Chavkin
About Sam at the time, was that he was ambitious, but most of us were pretty ambitious. And he was great at great, great deals, guy. For the next few years, Looped kept growing. Sam presented at Apple's developer conference in 2008 in a very unique outfit. He wore two polo shirts layered on top of each other. So he's in a hot pink polo with a second lime green collar poking out underneath. I'd like to invite up Sam Altman. Sam. Thanks, Scott.
- [24:52]
Sam Altman
We are incredibly psyched about Looped on the iPhone. Looped is about connecting with people and what cool places are around you. The orange pin up there is where I am right now, and the blue pins represent my friends. We make serendipity happen.
- [25:05]
Max Chavkin
And when you listen to Sam pitching Looped, you can hear this other part of him, this earnest and optimism. I've listened to and read a lot of interviews with Sam, and he's always using the words super and excited, sometimes super excited.
- [25:21]
Sam Altman
It's super cool, super easy to make, super important. It's been super great. I'm super excited to announce. I'm super excited, super excited for that.
- [25:30]
Max Chavkin
But he was not super excited about what happened next at Looped. After several years, Looped fizzled out. Sam made a deal to sell the company for a modest sum in 2012. He walked away with a reported $5 million. Most people would be pretty happy with this outcome, but in Silicon Valley terms, Looped was kind of a failure. But that's okay, because by then, Sam had won over other people who could help him. One was Peter Thiel, who was a billionaire and investor and the co founder of PayPal and Palantir. He's also one of the most powerful gay men in Silicon Valley, which lent him and Sam a sense of camaraderie. When Sam left Looped, Peter gave him a bunch of money to invest. They were close, and Sam's peers noticed because Peter Thiel is notoriously pessimistic and even nihilistic. And Sam's public image, by contrast, is pretty earnest and optimistic. At the same time, Sam was deepening his relationship with Paul Graham, the head of yc, and that closeness was giving Sam tangible benefits. When Paul had the chance to invest very early on in Stripe, the payments startup, he invited Sam to invest, too. Sam later said that that was by some measures, his most profitable angel investment ever, and he got it purely because of this personal relationship he had built. Hall is known for writing essays about how to build startups, essays filled with blunt, quotable entrepreneurial wisdom. Often in those essays, he praised Sam. He advised young, eager founders to emulate Sam. And Paul is also responsible for one of the most infamous quotes about Sam. You could parachute him into an island full of cannibals and come back in five years and he'd be the king. At first, this quote sounded to me like a compliment, but lately I've wondered if maybe it's not. Anyway, around 2012, YC had become very influential. It had relocated its headquarters from Cambridge to Silicon Valley and was now a breeding ground for some of the most successful Internet businesses. Airbnb, Dropbox and Stripe all got their start at yc. And from the outside it looked as though Sam was beginning to mimic Paul as a startup guru. He was also advising young founders at yc. And just like Paul, he started writing essays filled with mysterious, often perplexing advice for startup founders, such as the most successful founders do not set out to create companies. They are on a mission to create something closer to a religion. Or here's another A big secret is that you can bend the world to your will a surprising percentage of the time. Most people don't even try. In a blog post called how to Be Successful, Sam told founders that they should, quote, have almost too much self belief. The most successful people I know believe in themselves almost to the point of delusion. That last point will sound familiar to people who know Sam. One of them told me that Sam has complete self belief that Sam gives off the impression that he believes in himself 100% without that nagging feeling most of us have, like a little voice of fear or uncertainty. And here's Lowell again, the former Boost Mobile executive.
- [29:01]
Lowell Weiner
He was extraordinarily self assured and not in an egotistical way, but just very comfortable with himself, with his capacity both intellectually and relationally.
- [29:16]
Max Chavkin
For years Paul had built up Sam's image, made him this kind of startup demigod. Then he decided to anoint him fully. Paul stepped down in 2014 and named SAM president of YC. This was a big deal. YC is the center of Silicon Valley and now Sam was its leader. He was 28 years old. With both Peter Thiel and Paul Graham. Sam cultivated these close relationships with people in positions of power. Then they gave him things like money, connections, influence, titles. Essentially they transferred some of their power directly to him. And that in turn gave Sam the ability to think big, even when he was working on something pretty silly. Sounding like looped, Sam had sky high ambitions. Paul noticed this. Here he is at a conference explaining why he picked Sam to be his successor at yc.
- [30:12]
Lowell Weiner
It's turned into this giant thing and I'm no good at running giant things. Sam, however, is going to be good at running a giant thing.
- [30:20]
Max Chavkin
At this point, there was no evidence Sam could run a giant thing or even a medium sized thing. But once he took over, Sam did make YC much bigger than before sprawling. He gave more money to more startups and he expanded overseas.
- [30:35]
Ron Kruszewski
The Sam Altman era at YC was about expansion.
- [30:40]
Max Chavkin
That's John Coogan. He's a startup founder who went through YC twice, including once for his company Soylent you know, the one that made food powder for tech people.
- [30:51]
Ron Kruszewski
YC went from, you know, a summer program for startups with just a couple companies to doing all sorts of things. Venture investing with the Continuity Fund, nonprofit work with YC research. There's definitely a, there's a feeling of like, okay, how much should YC really be doing? Should this organization be doing everything?
- [31:16]
Max Chavkin
During his time at yc, John noticed a couple things about Sam.
- [31:20]
Ron Kruszewski
He's very good at switching gears and listening very intently. I think that's what's really, that's, that's really like a superpower. I heard someone describe him as the Michael Jordan of listening.
- [31:33]
Max Chavkin
A lot of people have described this intensity of Sam's. To me, when he listens, he also stares. It can almost feel unsettling. And now that Sam was running yc, he could become kind of a covert operator. He had all of his deal making skills from his loop days and now his network and influence was way bigger. If there was ever a problem, he could make a call and fix it fast.
- [31:57]
Ron Kruszewski
Very early in my business career, I had a very tough negotiation going on. And I wrote Sam this email saying, like, hey, I'm in this negotiation. I just want to reality check some stuff with you. And he called me immediately. We talked for like five minutes and he completely solved my problem. And it was like one of the best business deals of my life. It was like actually left a really, really big impact on me. I've personally seen Sam resolve a hundred million dollar issue in a 30 minute phone call, 15 minute phone call. It's really remarkable. And I think Sam just thinks about it in human terms. It's like this person wants X, this person wants Y. How can we bring these two people together?
- [32:40]
Max Chavkin
YC was growing, but Sam's ambitions were even larger. When he became president, he started taking on pet projects. One of his interests was nuclear fusion. To encourage more people to build startups in this area, he expanded YC's scope to include hard tech startups, I.e. companies building tech, where there's some doubt that it'll work at all. Until that point, YC had been almost exclusively about Internet software. He also spun up a research arm at YC and assigned researchers to projects he wanted to explore. One example was Universal basic Income. The idea is to give every person a regular income, regardless of whether they work. So under Sam's command, YC created a study to give money, no strings attached to families in Oakland. This move is one that Sam turns to often. He'll have an idea for something he thinks should exist. And then he pulls in people and money to encourage someone to do it, bending the world to his will. As he wrote in his blog, he's kind of like the maestro of an orchestra, not playing the instruments himself, but conducting his Symphony. And in 2015, he'll have the chance to do this again. This pattern of finding an important topic, then arranging to get the right people and the right money on board to build it. This time, the focus is AI. It'll all take place at a dinner. A dinner that'll change everything. We'll be right back.
- [34:17]
Matt Levine
Success is more than the final destination. It's a path you take one step at a time. It's discipline. It's teamwork. And it's the drive and passion inside of us that comes before all recognition. It's what Stifel's been doing for over 130 years. Quietly yet strategically, Stifel has become one of the fastest growing wealth management and investment banking firms in the country. Our financial advisors go beyond traditional wealth management to provide clients with direct access to one of the industry's largest equity research franchises and a leading middle market investment bank. Because success is the drive it takes to keep climbing, the passion to keep investing the best of each of us, made better by the best in all of us. And that is where success meets success. Start your journey@stifel.com that's s t I f e l.com Stiefel, Nicholas & Co.
- [35:09]
Max Chavkin
Incorporated member SIPC and NYSE wings, nuggets, eggs. No matter the form, Americans love their chicken. The chicken industry is one of the largest and most complex supply chains that America has. These birds are big business and we wanted to get to the bottom of it.
- [35:27]
Ellen Hewitt
Welcome to Beat Capitalism, brought to you by Oddlocks.
- [35:30]
Max Chavkin
In this special three part series from Bloomberg Podcast, we are going to examine.
- [35:36]
Ellen Hewitt
Some of the thorniest issues facing the.
- [35:38]
Max Chavkin
U.S. economy through the medium of this humble bird. Examine. Get it. So there's going to be chicken puns. There are definitely going to be chicken puns. We're going to be asking why the chicken industry has evolved the way that it has.
- [35:51]
Ellen Hewitt
And what does it say about the.
- [35:53]
Max Chavkin
American economy that so many consumers are flocking to poultry? There's another one for you. Listen to Beat Capitalist from Odd Lot out now on Apple Podcasts, Spotify or wherever you get your podcasts. Okay, here's a bit of Silicon Valley lore. It's often told that in 2015, Elon Musk was worried. Or at least Elon was going around telling everyone he was deeply distraught over the state of artificial intelligence. Back then, the biggest powerhouse in AI was Google. It had so much money and it had hired all the best researchers. They had Google Brain and then they acquired DeepMind. It's a British lab that was working on some of the most exciting things in AI at the time. AI that could be more fluid and self taught. Google's early lead particularly disturbed Elon because he was worried about the possibility that AI could start to grow too powerful, especially if an AI entity began to improve itself. And he was really worried about the guy in charge of it all.
- [37:00]
Elon Musk
So I used to be close friends with Larry Page and I would stay at his house and we'd have these conversations long into the evening about AI. And I would be constantly urging him to be careful about the danger of AI and he was really not concerned about the nature of AI and was quite cavalier about it.
- [37:22]
Max Chavkin
That's Elon on cnbc. I'm always surprised by how casual he sounds when he's telling the story of basically ending a friendship. But he loves this anecdote because it makes him sound smart and forward thinking.
- [37:35]
Elon Musk
And at the time, Google, especially after their acquisition of DeepMind, had three quarters of the world's AI talent. They had obviously a lot of computers and a lot of money, but the, the person who controls that does not, or at least did not seem to be concerned about AI safety. That sounded like a real problem. And then the final straw was Larry calling me a species for being pro human consciousness instead of machine consciousness. And I'm like, well, yes, I guess I am.
- [38:08]
Max Chavkin
At the time, a lot of experts thought the idea of developing AI so powerful that it threatened the human species was laughable because AI was still having trouble distinguishing between a picture of a chihuahua and a picture of a blueberry muffin. But to Elon it was a real threat. Here he is speaking with Walter Isaacson at a conference. He sounds serious, even alarmed.
- [38:31]
Elon Musk
I don't think most people understand just how quickly machine intelligence is advancing. It's much faster than almost anyone realizes, even with insulin. Valley people really have no idea.
- [38:44]
Max Chavkin
Why is that dangerous.
- [38:46]
Elon Musk
If there's some digital superintelligence, particularly if it's engaged in recursive self improvement and its optimization or utility function is something that's detrimental to humanity, then it will have a very bad effect. You know, it could be just something like getting rid of spam email or something. And it's like concludes, well, the best way to get over spam is to get rid of humans, you know, but why Would we lose the source of all spam?
- [39:16]
Max Chavkin
I know we've all watched Cal in 2001. The audience actually laughed at him because what he was saying sounded so outlandish at the time. So Elon was increasingly feeling like he had to do something to dilute Google's power. But he might have also been driven by something else. Here's Ashley Vance, my colleague at Bloomberg, who wrote a biography of Elon 2013.
- [39:40]
Ashley Vance
Elon was. He was not the guy we know today. I mean, he was doing okay, but Tesla was kind of just barely starting to hit its stride. SpaceX was doing pretty well. Elon was worth probably a few billion dollars. Definitely not the richest person in the world.
- [40:00]
Max Chavkin
Elon's friends at the time were among the richest people in the world. Larry Page and Sergey Brin, the co founders of Google.
- [40:08]
Ashley Vance
I was interviewing Elon a lot then. I was working on a book about him. And it was clear to me that he was looking over at his friends who were doing really well at everything they did. And they had these software empires and this growing AI empire. And my sense of where Elon's thoughts about AI started to originate was part jealousy. I thought. He looked at Google and all the success it was having and the success his friends were having, and he had nothing like that. But he would never admit this out loud, that he was jealous.
- [40:44]
Max Chavkin
Okay, so AI was top of mind for Elon. And in 2015, he attended this dinner at the Rosewood Hotel. It's this swanky place on Sandhill Road in Menlo park, right near some of the biggest venture capital firms in the Valley. There were about 10 people at this dinner. But for our purposes, here are the four most important ones. There's Elon, there's Sam. Then there are two other people, Ilya Sutskever and Greg Brockman. Ilya worked at Google and was a really well respected researcher in AI. And Greg had been one of the most important people at Stripe, taking it from a team of five people to a company worth billions of dollars. At dinner, they talked very seriously about AI and the threat that it could be misused or that it could lead to catastrophe. They talked about what it might take to build something that could compete with Google. They had the pieces there. Ilya's AI skills, Greg's operational experience, Elon's money. And Sam was there to orchestrate it all. At that dinner, Elon pledged to put a billion dollars toward this project. He came up with the name, too. You can hear the pride in his voice when he describes the idea on.
- [41:58]
Elon Musk
CNBC OpenAI refers to open source. So the intent was what's the. Okay, so what was the opposite? What's the opposite of Google? What would be a an open source nonprofit because Google is closed sourced for profit and that profit motivation can be potentially dangerous.
- [42:18]
Max Chavkin
So that's the birth of OpenAI. They had an initial vision. OpenAI would be a research lab and it would share its work openly with the public instead of trying to keep it private for its own gain. And it would be a nonprofit, not focused on enriching the company, but instead focused on building a safe AI that would benefit humanity. It sounds good in theory, but those nonprofit open source ideals were about to get complicated fast. OpenAI's co founders soon found themselves locked in a power struggle and then urgently racing to raise billions of dollars. And Sam would come out on top again in a way that cemented his power even further. That's next time on Foundering. Foundering is hosted by Ellen Hewitt. Sean Wen is our executive producer. Molly Nugent is our associate producer. Blake Maples is our audio engineer. Mark Millian, Ann Vandermay, Seth Vigerman, Tom Giles and Molly Schutz are our story editors. We had production help from Jessica Nicks and Antonia Mufarec. Thanks for listening. If you like our show, leave a review and most importantly, tell your friends. See you next time.
- [43:47]
Ellen Hewitt
In today's data driven world, you need real data to shape an effective marketing strategy. That's where Ahrefs comes in. Ahrefs is a marketing intelligence platform powered by big data. It shows you exactly what your target audience is searching for and how you measure up to your competitors. Whether you're making day to day marketing decisions or defining your long term digital strategy, Ahrefs delivers real time insights that help you grow your brand. Head over to ahrefs.com to get started. That's a h r e f s.com.
- [44:17]
Max Chavkin
This podcast is supported by BetterHelp, offering licensed therapists you can connect with via.
- [44:23]
Ellen Hewitt
Video phone or chat.
- [44:25]
Max Chavkin
Here's BetterHelp head of clinical Operations Hes Yu Jo discussing who can benefit from therapy. I think a lot of people think that you're supposed to be going to therapy once you're like having panic attacks every day. But before you get to that point, I think once you start even noticing that you feel a little bit off and you can't maintain this harmony that you once had in relationships. That could be a sign that maybe you want to go talk to somebody. There's always a benefit in talking to someone because we can all benefit from improved insight about ourselves and who we are and how we behave with other people. So if you're human, that's like a good indicator that you could benefit from talking to somebody.
- [45:06]
Ellen Hewitt
Find out if therapy is right for you.
- [45:08]
Max Chavkin
Visit betterhelp.com today. That's betterhelp.com.