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- [00:01]
Ron Kraszewski
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.
- [00:32]
Ilya Sutskever
Presidential race, pitting a Democrat who wasn't.
- [00:35]
Max Chavkin
On the ballot until June and a.
- [00:36]
Ilya Sutskever
Republican who was convicted on 34 felony.
- [00:39]
Max Chavkin
Counts just before receiving his party's nomination for president. But the wildest thing might have been this guy. 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. 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. I want to start by talking about a dream. The dream of building an artificial mind. It's something people have imagined and written about for decades, humans working together to construct a new entity more powerful than ourselves. And some researchers think this dream may be within reach.
- [01:23]
Sam Altman
The day will come when the digital brains that live inside our computers will become as good and even better than our own biological brains. Computers will become smarter than us. We call such an AI an AGI, Artificial General Intelligence.
- [01:45]
Max Chavkin
That's Ilya Sutskever, one of the co founders of OpenAI, in a TED talk he gave last year. And he often sounds like a religious mystic when he talks about the future of artificial intelligence. But right now he's just talking about this quest to build artificial general intelligence, an AI that can think and and solve a variety of problems like a person. It could switch between playing games, solving science problems, creating beautiful art, and driving a car. OpenAI's goal is to build AGI. It's a pretty out there idea in the AI world, or at least it used to be. Ilya frames AGI as this almost mystical, momentous leap forward, like Prometheus channeling fire. And the consequences will be huge. It will usher us into technological glory and at the same time into chaos. In this tape from the documentary film I Human, he sounds certain of the tidal waves that will come.
- [02:44]
Sam Altman
Now, AI is a Great thing, because AI will solve all the problems that we have today. It will solve employment, it will solve disease, it will solve poverty, but it will also create new problems. The problem of fake news is going to be a million times worse. Cyberattacks will become much more extreme. We will have totally automated AI weapons.
- [03:13]
Max Chavkin
Ilya is an incredibly accomplished AI researcher. Before OpenAI, he worked at Google. And he has several passions that I see as a celebration of being human. He plays the piano, he draws and paints. One of his paintings hangs in the OpenAI office. It's a flower in the shape of the company's logo. At the same time, he's also hyper focused on his AI research. He told a reporter once, I lead a very simple life. I go to work, then I go home. I don't do much else. There are a lot of social activities one can engage in. Lots of events one could go to which I don't. He spends a lot of time looking at the current trajectory of AI and extrapolating to try to predict the future. In particular, Ilya is worried about what happens if AGI gets its own desires and its own goals. You can hear this dreamy quality in his voice.
- [04:11]
Sam Altman
It's not that it's going to actively hate humans and want to harm them, but it is going to be too powerful. And I think a good analogy would be the way humans treat animals. It's not that we hate animals, but when the time comes to build a highway between two cities, we are not asking the animals for permission. Imagine you have this huge unstoppable force. And I think it's pretty likely the entire surface of the earth will be covered with solar panels and data centers.
- [04:50]
Max Chavkin
I want to pause here for a minute. This is a really intense, powerful image that we are creating some new kind of being that would view us with interest, but ultimately with indifference, like the way we look at deer. What strikes me most in this audio is Ilya's tone of voice isn't one of fear. It sounds more like awe. Ilya imagines an AGI that we create that would be likely to bulldoze over us in order to reach its own desires. It's a dramatic vision, hard to really grasp. And it has a religious quality in its conception of a supernatural, all powerful entity. I should mention this is all totally theoretical. We are still Nowhere close to AGI. OpenAI's best efforts are statistical models that convincingly mimic humans. And mimicry is a far cry from AI that can think for itself. Still, OpenAI wants to do this and do it right and do it first. Here's Sam Altman testifying in front of Congress in 2023.
- [05:58]
Ashley Vance
My worst fears are that we cause significant, we, the field, the technology, the industry cause significant harm to the world. It's why we started the company. I think if this technology goes wrong, it can go quite wrong.
- [06:18]
Max Chavkin
You're listening to Foundering. I'm your host Ellen Hewitt. And in this episode we'll take inside the messy and idealistic early years of OpenAI. We'll discuss this dream of building all powerful AGI. It's important because this is the destination that OpenAI is speeding toward. It's this generation's race to the moon. We'll discuss how AI technology changed dramatically and quickly and how that change made this dream of AGI feel closer than ever before. In just a few years, it went from an eccentric idea that people were scoffing at to a milestone some experts think could happen within a few years. Sam Altman has even suggested 2028. And we'll examine the compromises OpenAI made in its pursuit of this dream. At first, the company made promises to share its research widely and to not be corrupted by for profit incentives. But once their technology began to advance and it looked like there was serious power to be had, they made a U turn. Then this pivotal moment careened into a power struggle at OpenAI, and Sam Altman took charge. We'll be right back.
- [07:36]
Ilya Sutskever
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 Stifel Nicholas & Co.
- [08:28]
Max Chavkin
Incorporated member SIPC and NYSE wings, nuggets, eggs.
- [08:35]
Peter Abeel
No matter the form, Americans love their chicken.
- [08:38]
Max Chavkin
The chicken industry is one of the.
- [08:39]
Reid Hoffman
Largest and most complex supply chains that America has. These birds are big business and we wanted to get to the Bottom of.
- [08:46]
Peter Abeel
Welcome to Beat Capitalism brought to you by Odd Lots. In this special three part series from Bloomberg Podcast, we are going to examine some of the thorniest issues facing the U.S. economy through the medium of this humble bird examine. Get it?
- [09:02]
Reid Hoffman
So there's going to be chicken puns.
- [09:04]
Peter Abeel
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 and what is its say about the American economy that so many consumers are flocking to poultry. There's another one for you.
- [09:18]
Reid Hoffman
Listen to Beat Capitalism from Odd Lots out now on Apple Podcasts, Spotify or wherever you get your podcasts.
- [09:33]
Max Chavkin
We'll start in 2015. OpenAI had just been founded. It had a commitment from Elon Musk for a billion dollars in funding, plus some money from other donors as well. It was this small, scrappy research lab. Sam and Elon weren't around much in the early days. At the time Sam was actually still running Y Combinator, the startup accelerator, but he was beginning to position himself as a thought leader in the AI space. In particular, he was talking about AI doomsday scenarios. In 2015 he declared on his blog, development of superhuman machine intelligence is probably the greatest threat to the continued existence of humanity. He also wrote that AI could destroy every human in the universe. Here he is at a tech event the same year referencing the founding of OpenAI.
- [10:27]
Ashley Vance
I actually just agreed to fund a company doing AI safety research. You know, I think AI will probably like most likely sort of lead to the end of the world, but in the meantime there will be great companies created with serious machine learning.
- [10:41]
Max Chavkin
I want to talk about that comment for a second. He's saying AI might kill us all and he's asking us to trust his conclusions as an expert. But he's also being glib about making money along the way. In the beginning of OpenAI, Sam and Elon weren't around for the day to day. They were out glad handing recruiting and talking to journalists. They would pop in once a week or so to get progress updates. In those days Sam would swoop into a conversation then leave.
- [11:12]
Reid Hoffman
So he struck me as very, very sharp, incisive, and also super efficient with his time. When the conversation is done, it's done.
- [11:20]
Max Chavkin
That's Peter Abeel, a researcher who worked at OpenAI in its first two years. He says in the early days OpenAI looked like a typical startup. They didn't even have an office for a while. They met in the home of one of the co founders.
- [11:35]
Reid Hoffman
When we started out late 2015, early 2016. It was in Greg Brockman's apartment in San Francisco, Mission District. It was, you know, we're sitting essentially on a couch at a kitchen counter and on a bed, and that's pretty much it. That's where the work is getting done. It's kind of crazy to think that that's where something this big got started. We just had 20 of the world's best AI researchers together really focused on trying to get some things done that had never been done before.
- [12:06]
Max Chavkin
In the absence of Sam and Elon, the main leaders were two people who aren't famous, but who will play a mammoth role later on. There's Greg, whose apartment served as their office, and Ilya, the research scientist we heard from at the beginning of the episode. You can think of Greg as the workhorse in charge of business operations and ilya as the AI genius. And together they ran OpenAI. Peter remembers going on weekly walks with Ilya around the neighborhood in San Francisco, talking about big picture stuff, asking themselves, are we working on the right problems?
- [12:44]
Reid Hoffman
I feel like he. He just kind of saw AI, what it could be doing, could be cable of more clearly and earlier than anybody else. He's seeing it more optimistic than everybody else. He would come up with analogies like, okay, a neural network is just a computer program. It's just a circuit. We're just programming it differently.
- [13:04]
Max Chavkin
Greg, meanwhile, was grinding away.
- [13:07]
Reid Hoffman
Greg is somebody who can just apply himself. He can just, you know, keep working and keep working and keep working. I've seen some people like that, but very few.
- [13:19]
Max Chavkin
Even after OpenAI moved out of Greg's apartment, he still practically lived at the office. One former employee said he would be hunched over his laptop when they showed up to work in the morning and was still tapping away when they went home at night. Years later, when Greg got married, he even held a civil ceremony in the office with a big backdrop made of flowers, again in the shape of the OpenAI logo. The ring bearer was a robot hand, and the officiant was Ilya. When Greg and Ilya joined OpenAI, they didn't need money. Ilya had sold a company to Google, and Greg owned a lot of shares of Stripe, and that company was worth tens of billions of dollars. In Silicon Valley, people usually create startups because they think they can build a lucrative business. But OpenAI was a nonprofit. Greg and Ilya were motivated by this dream. Here's Reid Hoffman, one of the earliest donors to OpenAI. There was no equity upside for that initial crew. It was like, look, we're doing this for humanity, doing it for humanity. OpenAI talks like this all the time. Their website says our mission is to ensure that artificial general intelligence benefits all of humanity. Okay, so it's well known that Silicon Valley loves grandiose mission statements. WeWork wanted to elevate the world's consciousness. But OpenAI's mission statement is even more sweeping, and it has this overtone of altruism. When Sam talks about the company's work, he often discusses potential disasters. Here he is with Rebecca Jarvis on abc. His voice sounds grave. Again, he's positioning himself as a thought leader in this space. So what is the worst possible outcome?
- [15:16]
Ashley Vance
There's like a set of very bad outcomes. One thing I'm particularly worried about is that these models could be used for large scale disinformation. I am worried that these systems, now that they're getting better at writing computer code, could be used for offensive cyber attacks.
- [15:32]
Max Chavkin
Wait, you raise an important point, which.
- [15:34]
Peter Abeel
Is the humans who are in control.
- [15:36]
Max Chavkin
Of the machine right now also have a huge amount of power.
- [15:40]
Ashley Vance
We do worry a lot about authoritarian governments developing this.
- [15:44]
Max Chavkin
Putin has himself said, whoever wins this artificial intelligence race is essentially the controller of humankind. Do you agree with that?
- [15:53]
Ashley Vance
So that was a chilling statement, for sure.
- [15:58]
Max Chavkin
Sam Singh. This stuff is so valuable that global superpowers are going to fight over it. The cynical take is that if you make what you're working on sound really important, you attract a lot more attention and money. We'll talk more about this dynamic in the next episode. In OpenAI's early years, their humanity saving plan wasn't that clear. Their strategy was a bit scattered. Here's Peter again.
- [16:25]
Reid Hoffman
We looked at robotics, did some work there. We looked at simulated robotics, did a bunch of work there. We looked at digital agents that navigate the web and do all kinds of tasks online, like booking flights. We looked at video games.
- [16:41]
Max Chavkin
OpenAI said one of its first goals would be to build a robot butler which could set and clear a table. Kind of like the maid on the Jetsons.
- [16:52]
Reid Hoffman
Coming, sir.
- [16:54]
Max Chavkin
Here I am, sir. The company also built a robot arm that could solve a Rubik's Cube single handedly. And they put a lot of effort into building bots that could play Dota 2, a massively popular multiplayer video game. They imagined that the complexity of the game environment could lead to an AI that could better navigate the real world. Here's someone testing the bot.
- [17:19]
Reid Hoffman
The bot is good.
- [17:19]
Max Chavkin
The bot is better than I could have ever imagined. Those Dota bots even competed against professional players. A bot that could play Dota was technically impressive, but it didn't look very impressive to the average person. And the commercial applications for these products were not immediately clear. Here's how one former employee put it. We were doing random stuff and seeing what would happen. There were not really defined goals. Sometimes it felt like there was a big gap between what was being built and what was being imagined. People would spend their days programming bots that played video games. Then they would sit around the lunch table and talk about saving humanity. The prevailing wisdom in the AI world was that in order to make something powerful, you sometimes have to start with something. Video games and robot maids would pave the way to self driving cars and cancer, curing AI internally. At OpenAI, they sometimes compared themselves to the Manhattan Project, the team given the mission to create the first atomic bomb. And they meant it as a good thing, ambitious and important. Here's how one former employee described it. To me, it's an arms race. They all want to make the first AGI. They believe they can do it best. I didn't see a lot of fear of AI itself. I just saw excitement to build AI. Back in 2015, AI looked pretty different from today. It was weaker and harder to train. At the time, the major breakthrough was that a bot had been able to beat the world's best player in God, a complex strategy board game from China. But that AI could only play Go. It couldn't do anything else. Here's Oren Etzioni, a computer science professor and the former research director for an AI institute.
- [19:19]
Oren Etzioni
The thing about these is these were narrow systems, very highly targeted. So the system that played Go couldn't even play chess, certainly could not cross the street or understand language. And the system that understood airfare fluctuations and predicted very well whether airfares were going up or down, could not handle text either. Right. So basically, every time you had an application, you'd have to train up a new system. And this took a long time, took a lot of label data, et cetera.
- [19:51]
Max Chavkin
But then came a major breakthrough in AI technology. In 2017, a group of researchers from Google Brain published a paper called attention is all you need. And in it they describe a new kind of AI architecture called the transformer. And the transformer did something huge. At the time, AI systems needed to be fed very specific data. Each piece of data had to be labeled. This is correct, this is incorrect. Spam, not spam. Cancer, not cancer. But the transformer allowed AI to take in messy, unlabeled data, and it could actually do so even more efficiently than expected using less computing power than before. Now these transformer based models could just teach themselves in a way. It was like if you wanted to teach a kid to read and you used to have to hire a tutor to sit there with flashcards, and now instead you could just let the kid run through a library and they would emerge knowing how to read and write. This was, as one investor described to me, a surprising and bitter realization that the best AI would come not from the most specialized training techniques, but from whichever had the most data. Peter, the early OpenAI employee, says Ilya immediately saw its promise.
- [21:14]
Reid Hoffman
Ilya's reaction was pretty affirmative. Right away he's like, this is something special. We need to be looking at this. This seems a big breakthrough.
- [21:25]
Max Chavkin
Even in the early days of OpenAI, Ilya had always had this hunch that big advancements in AI wouldn't come from some specific tweak or new invention, but just from more data pouring more and more fuel into the engine. And now Ilya had the research that backed up his hypothesis. Here's Oren again.
- [21:45]
Oren Etzioni
Ilya from OpenAI is known as the person who said it's the data and it's the amount of data, and if we just scale that up tremendously by orders of magnitude, much, much more, we're going to achieve what we need. That was not the common perception. And some very smart and very famous people. I don't want to cast aspersions, but certainly I'm not that smart or that famous, but I'm one of the AI experts who did not see that coming.
- [22:18]
Max Chavkin
Because of Ilya, OpenAI started experimenting with the transformer. They were one of the earliest companies to do so. They made models with the now familiar acronym GPT Generative Pre Trained Transformer. And in particular, they started experimenting with how the transformer performed with written words, because they could basically feed the model anything written, any book, newspaper article, Reddit posts, blogs. Humans have spent a lot of time writing things down and those words now had another training data. The Internet wasn't created to train AI, but in the end, that may become its legacy. OpenAI's models got better and better at generating text, and they weren't limited to just one field of knowledge.
- [23:08]
Oren Etzioni
The amazing thing about these GPT systems is that they're very broad. They are actually generalists. You can ask them about virtually any topic and they'll produce surprisingly good answers. And that's because they've been trained on effectively the entire, or at least an approximation of the entire corpus of text that's available to humanity. Billions of billions of sentences, all the books you've read, all the documents, the memos, the silliness, Harry Potter fan fiction, it's all grist for the mill. And then once it's read all that, it's remarkably general. So for the first time we would have a system that you could ask it about anything and it would give you a surprisingly intelligent answer. So we went from narrow AI to a kind of general or broad AI.
- [24:02]
Max Chavkin
Through the massive amount of writing that they were feeding into their models, OpenAI found they could create AI that was much, much better at forming convincing sounding responses to questions. In fact, at some point they started to worry it was maybe too good. When OpenAI announced its language model, GPT2, they initially decided not to share the model more openly because they were concerned it could be dangerous. Here's Peter. He had by that time left OpenAI to start his own company. But he remembers the day of the release.
- [24:35]
Reid Hoffman
It was just obvious that it had a much better understanding of language than anything that had been trained before. Its release was indeed accompanied by a lot of, I guess, great marketing or caution or combination of both. It was, you know, headlined as too dangerous to be released. And so I think it was probably one of the first projects where OpenAI decided to not release some of the work because all of a sudden the thinking had become, well, what if it's something is so powerful that people could go misuse it in ways that we can't control.
- [25:09]
Max Chavkin
As soon as OpenAI had a product that was actually powerful, they started rethinking their openness.
- [25:16]
Reid Hoffman
OpenAI started with that name where the open really stood for. Everything's going to be open sourced. Anybody else can build on it.
- [25:25]
Max Chavkin
Openness was a crucial part of the company's brand when they were founded. Sam told the journalist Stephen Levy, it will just be open source and usable by everyone. He also told him that their AI would be freely owned by the world. Open source software in its broadest sense means that the source code is made available to the public freely and that anyone can tweak the code and distribute it themselves. But the company soon started walking back those commitments.
- [25:55]
Reid Hoffman
Obviously that evolved over time into something that is not so open source, if open source at all, for anything. I mean it's definitely not open sourcing it's work. Right now.
- [26:07]
Max Chavkin
That open source ethos seemed to fade away. Here's Sam giving a talk in Munich in 2023.
- [26:14]
Ashley Vance
I'm curious if we stay on the same like GPT 2 to 3 to 4 trajectory for 5 and 6, how many of you would like us to open source GPT6 the day we finish training it. Wow. Well, we're not going to do that, but that's interesting data.
- [26:31]
Max Chavkin
Honestly. Honestly, Sam sounds pretty arrogant here. He knows OpenAI started off with promises of being open source. Now he's polling the audience about open sourcing models and immediately dismissing their response. Over the years, Sam has subtly changed the meaning of openness. It's become fuzzier. Here he is at a VC firm.
- [26:54]
Ashley Vance
So I think that is. That's why we call open AI Open AI. We want this to be open technology made available to everyone.
- [27:02]
Max Chavkin
Open technology made available to everyone. He says it so plainly, as though that's obvious what open means, but his definition strikes me as so vague that it's essentially meaningless. I mean, Google search is available to everyone. It seems like OpenAI was happy to let people guess what they meant by opening in an internal email just months after it was founded. Ilya, as we get closer to building AI, it will make sense to start being less open. The open in OpenAI means that everyone should benefit from the fruits of AI after it's built. But it's totally okay to not share the science, even though sharing everything is definitely the right strategy in the short and possibly medium term for recruitment purposes. This email was really interesting because it shows that from the beginning OpenAI had planned not to freely share their science. They didn't want to be open source as they claimed, but they wanted to keep up the public appearance of openness because it gave them a recruiting advantage like don't go build AI for the bad guys, come work for us. The open virtuous choice. When we asked about their change definition of openness, a company spokesperson said, our mission has remained the same, but our tactics have had to change.
- [28:24]
Ilya Sutskever
Hi, I'm Ron Kraszewski, 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.choosestifel.com Stifel, Nicholas & Co.
- [29:21]
Max Chavkin
Incorporated member SIPC and NYSE.
- [29:25]
Peter Abeel
Wings, nuggets, eggs. No matter the form, Americans love their chicken.
- [29:30]
Reid Hoffman
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.
- [29:39]
Peter Abeel
Welcome to Beat Capitalism, brought to you by Odd Lots. In this special three part series from Bloomberg Podcast, we are going to examine some of the thorniest issues facing the U.S. economy through the medium of this humble bird. Examine. Get it?
- [29:55]
Reid Hoffman
So there's going to be chicken puns.
- [29:57]
Peter Abeel
There are definitely going to be chicken puns. We're going to be asking why the chicken industry has evolved, evolved the way that it has. And what does it say about the American economy that so many consumers are flocking to poultry? There's another one for you.
- [30:11]
Reid Hoffman
Listen to Beat Capitalism from Odd Lots out now on Apple Podcasts, Spotify or wherever you get your podcasts.
- [30:24]
Max Chavkin
Okay, so let me bring us back to 2017. It's two years after the company's founding and another problem was brewing at OpenAI. A power struggle. Elon wanted to take over. He's someone who's used to being in charge. According to OpenAI, he wanted to move the company under Tesla and he wanted to be CEO and he wanted majority equity. And if it couldn't be done his way, he was out.
- [30:51]
Satya Nadella
Like with everything Elon, as time goes on, he wants to assert more and more control and make sure the company is operating in exactly the image and way that Elon wants it to operate. And so this is going to create tension.
- [31:07]
Max Chavkin
That's Ashley Vance, my colleague, who has written a biography of Elon.
- [31:11]
Satya Nadella
Elon's preferred role in anything is to be the CEO and the dominant force and the one who controls what's going on day to day.
- [31:21]
Max Chavkin
And the guys actually running the day to day, Greg Brockman and Ilya Sutskever, were wary because Elon was reckless, impulsive and difficult. But he was also their main source of money. He had pledged them almost a billion dollars. OpenAI had other donors, but nothing close. One option was to go with Elon and keep the money.
- [31:43]
Satya Nadella
The employees weren't all on board with that idea and had some concerns. And so you get to this, you get to this decision point where it's kind of like, are we going to go on with Elon or without him? Almost always in recent years, people have kind of put up with Elon and his demands.
- [32:05]
Max Chavkin
Or another option was to split with Elon and figure out how to get a different source of cash, you know, who would probably be good at raising money. Sam Altman.
- [32:17]
Satya Nadella
It reached this point where Elon wanted the company to go one way and the employees wanted it to go another. Sam was picked as the person to lead OpenAI forward.
- [32:28]
Max Chavkin
Sam hadn't been that involved in OpenAI for the first few years. He was still president of YC actually. But in this jostling for power, Sam beat out Elon. And that's a big deal. Elon was much more famous and experienced, and notably, he hates losing.
- [32:47]
Satya Nadella
While in most conflicts, Elon reacts by trying to win at all costs. And whatever, whatever scorched earth you know may arise from that, Elon doesn't. He doesn't lose too many battles. Usually he either. If it's not within a company, he usually sues somebody into submission. If it is within a company, he throws his weight around in politics until he gets gets what he wants. It's hard to find too many examples in recent years where he did not get what he wants. And so the turmoil inside of the company must have been quite drastic in order for this not to happen.
- [33:31]
Max Chavkin
So in 2018, Elon walked away in a huff and took his money with him. Years later, he'll actually end up suing Sam and OpenAI, claiming they broke their original commitment about remaining nonprofit and open source. Soon after Elon left, Sam became CEO of OpenAI. There hadn't been a CEO before, but this power struggle crystallized Sam's new dominance over this company. Remember what the founder of YC once said? Sam is extremely good at becoming powerful. Sam's excitement about OpenAI kept growing. His attention started drifting away from his job running yc. Sure, running a world famous startup accelerator is a position of a lot of influence, but the race for building AGI was heating up. And if OpenAI succeeded in creating AGI before anyone else, it's hard to imagine a position in the world with more power than being its CEO. But Sam didn't give up his job at YC right away. This situation made some of the people running the accelerator grumble. They felt like Sam was spread too thin, pushing to expand too fast and prioritizing his own interests above those of yc. It earned him some enemies within his own ranks. In fact, according to a source, Sam's mentor, Paul Graham, the guy who put him in the job in the first place, flew in from the UK to ask Sam in person to step down. Paul had lost confidence in his former protege, but he also didn't want to create public drama. So Sam was ushered out and they kept the backstory quiet. Now focused only on OpenAI. Sam had one big to raise money to train OpenAI's models. They needed a lot of computing power, and computing power is expensive. Sam tried to raise money but wasn't getting traction. Here he is on the Lex Friedman podcast.
- [35:36]
Ashley Vance
We started as a nonprofit. We learned early on that we were going to need far more capital than we were able to raise as a nonprofit to do what we needed to go do. We had tried and failed enough to raise the money as a nonprofit. We didn't see a path forward there. So we needed some of the benefits of capitalism, but not too much. I remember at the time someone said, you know, as a nonprofit, not enough will happen. As a for profit, too much will happen.
- [36:02]
Max Chavkin
They needed something in the middle. And honestly, Sam doesn't sound that hung up about leaving nonprofit life behind. He Frankensteined something together. Basically he created a for profit entity that lived under the umbrella of the original non profit. The for profit could do all the things normal companies do like raise investment and offer equity to employees. But its investors returns were capped, whereas at other companies they'd be unlimited. This corporate structure was grafted together. OpenAI was essentially now a for profit controlled by the board of the nonprofit, which sounds a little unstable. OpenAI has spent years saying they would be a non profit. Now they had come up with this for profit workaround. After that change, a lot of people were upset, but OpenAI was more focused on their end goal. They wanted to build AGI and they needed to raise money to do it. And then in 2019, Sam the Dealmaker made a big, hugely important deal. He raised a billion dollars from Microsoft. Here's Microsoft CEO Satya Nadella after they signed the deal.
- [37:19]
Ashley Vance
Hi, I'm here with Sam Altman, CEO of OpenAI. Today we are very excited to announce a strategic partnership with OpenAI.
- [37:27]
Max Chavkin
One important thing Microsoft had was lots of raw computing power. And OpenAI could now use it. Remember, OpenAI had originally been conceived to be an antidote to Google. They presented themselves as fundamentally different from profit hungry tech giants. And then overnight they became intimately enmeshed with a tech company worth more than a trillion dollars. Now OpenAI was in many ways an arm of Microsoft. This was a remarkable about phase. Reid Hoffman was on the board of OpenAI and on the board of Microsoft at the time of the deal. He didn't see this as an abdication of OpenAI's initial premise. There were parties who worried about would this corrupt the mission? But, you know, I think that's a little bit of like kind of a modern naivete is to say corporation equals bad or corrupt. And it's just naive because there's lots of ways that companies are collaborative with humanity in society. They have they try to serve the customers well, they hire employees, they have shareholders. They exist within societies. Okay. So Reid's perspective is that just because you want to make money doesn't mean you're bad, which is on brand for a billionaire venture capitalist. And I guess one way to look at it is that the Microsoft deal may have been the most practical way for OpenAI to continue its mission of creating safe AGI for all of humanity. But it also highlighted an important pattern that OpenAI often walked back its promises when it was convenient to do so. And amid all this, people started to doubt Sam's integrity both inside and outside the company. And that would lead to a major rift. That's next time on Foundering. Foundering is hosted by me, Ellen Hewitt. Sean Wen is our executive producer. Rachel Metz contributed reporting to this episode. Molly Nugent is our associate producer. Blake Maples is our audio engineer. Mark Millian, Ann Vanderme, Seth Vigerman, Tom Giles and Molly Schutz are our story editors. We had production help from Jessica Nix and Antonia Mufarec. Thanks for listening. If you like our show, leave a review and most importantly, tell your friends. See you next time.
- [40:09]
Ron Kraszewski
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- [40:40]
Max Chavkin
This podcast is supported by BetterHelp, offering licensed therapists you can connect with via.
- [40:46]
Ron Kraszewski
Video phone or chat.
- [40:48]
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.
- [41:29]
Ron Kraszewski
Find out if therapy is right for you.
- [41:31]
Max Chavkin
Visit betterhelp.com today.
- [41:33]
Ron Kraszewski
That's betterhelp.com.