Elon Musk used to say he put $100m into OpenAI, but now it’s $50m: here are the receipts

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It’s no secret that Elon Musk has been deeply frustrated with OpenAI since stepping down from its board of directors in February 2018, culminating in an open letter calling for the organization to pause work on more powerful systems.

“It seems strange that something could be a nonprofit, open source organization, and somehow transform itself into a closed source of profit,” Musk said in an interview with CNBC on Wednesday after a Tesla shareholder meeting. “Suppose you fund an organization to save the Amazon rainforest, and instead it becomes a lumber company and they cut down the forest and sell it for money.”

The strength of his critique rests on the fact that Musk helped launch an AI research organization. But exactly how much support he gave, even Musk seems unsure.

“I’m still confused about how a nonprofit you donated ~$100 million to somehow became a $30 billion market cap profit. If it’s legal, why isn’t everyone doing it?” tweeted in mid-March. after a week complained On Twitter again: “I donated my first $100M to OpenAI when it was a nonprofit, but has no ownership or control.”

The $100 million figure was widely reported as fact. But in the same interview with CNBC yesterday, Musk abruptly scaled back his claims. When asked how much he donated to OpenAI, he replied, “I’m not sure of the exact number but it’s a figure in the region of $50 million.”

So what has changed in the past eight weeks?

Following his original tweets in March, TechCrunch launched an investigation into the funding behind the original OpenAI nonprofit, including Musk’s contributions. Our analysis of documents provided to the IRS and the government regulatory body shows that Musk could not have given the nonprofit the $100 million he originally claimed.

Indeed, while the source of much of OpenAI’s funding remains unclear, the filings contain only about $15 million in donations that can be definitively traced back to Musk.

TechCrunch did not receive a response from Musk’s attorney when submitting our analysis and requesting details of his financial support.

The tax returns also reveal previously unreported details about one of the most high-profile and valuable tech projects in operation today, including an investment level by Reid Hoffman, free Teslas for early OpenAI engineers, and a rocket computing bill you may have paid to take on an investment. $1 billion from Microsoft.

Nowhere near a billion dollar effort

OpenAI’s financial side has been murky since AI researchers Greg Brockman and Ilya Sutskever announced the organization in December 2015. OpenAI’s goal, they write, is “to develop digital intelligence in the manner most likely to benefit humanity as a whole, unconstrained by the need to generate a financial return.” Musk and Sam Altman, co-founder of Y Combinator, will co-chair the nonprofit.

The blog claimed Altman, Musk, and Brockman will donate to the new 501(c)3, along with Reid Hoffman, Peter Thiel, Amazon, Infosys, Y Combinator partner Jessica Livingston, and YC Research, another nonprofit. It emerged from the company’s startup accelerator. “In all, these financiers have committed $1 billion,” they wrote. The following year, Wired reported that OpenAI was a “billion-dollar effort”, and this figure was subsequently widely publicized.

But “committed” is not the same as “actually donated”. According to federal tax returns, at least one of the identified donors, YC Research, did not give a single dollar, and the total amount donated to the OpenAI nonprofit from its inception through 2021 was just $133.2 million. The vast majority of that money arrived before OpenAI’s for-profit arm launched in 2019, and the nonprofit itself is now largely defunct. It only received $3,066 in donations in 2021.

Musk share

So how much of the $133 million did Musk donate to OpenAI? A good place to start is his 501(c)3 organization, the Musk Foundation.

In 2016, the Musk Foundation donated $10 million to another Altman-related nonprofit called YC.org. YC.org, in turn, donated $10 million to OpenAI. An OpenAI spokesperson explained in 2019 that the reason for this circuitous path was the delay in establishing OpenAI’s tax-exempt status with the IRS.

This $10 million donation remains Musk’s only publicly disclosed cash contribution to OpenAI. However, an audited financial statement YC.org filed with California charitable organizers in 2020 reveals that $15 million of the organization’s 2016 proceeds came from a single contributor. Given that YC’s total revenue for the full year was $16.6 million, Musk is very likely to be that contributor. And YC later awarded OpenAI another $16 million in 2017, of which at least $5 million was likely to be Musk.

The only other donation that can be linked to Musk is a previously unreported gift to OpenAI in 2017 of $248,295 in Tesla cars, and a subsequent donation in 2018 of $14,105 in vehicle upgrades. The audited financial statement indicates that the vehicles were provided to the employees as compensation.

However, there are also ways to give money to a nonprofit without revealing your identity. Wealthy individuals can hide their gifts by funneling money through what are called Donor Advised Funds (DAF). The Musk Foundation donated $12.4 million in 2017, and $6.3 million in 2018, to a DAF called Fidelity Investments Charitable Gift Fund. That fund then donated $7.8 million to OpenAI between 2018 and 2020. There’s no way to know if any of that money was owned by Musk — the fund has multiple donors and tens of billions of dollars in assets — but it’s impossible to rule that out.

Companies and individuals can donate directly to non-profit organizations without revealing their identities. Possibly Musk did this with the additional $5 million gift to YC.org in 2016. Maybe he simply increased OpenAI’s donation to $50 or $100 million in the same way?

Several weeks ago, a TechCrunch report was provided to a Musk representative but he did not respond to requests for comment. The only way to end Musk’s contributions was to count gifts to OpenAI from other donors and see how much was left.

share of other founders

Sam Altman, now CEO of OpenAI, made a contribution to the organization’s 2016 IRS filings. He lent the young organization $3.75 million to get it started — then gave away the entire amount, with interest, for a total gift of $3,784,637.

Hoffman used his own foundation, Aphorism, to give $1 million to YC in 2016, which the organization appears to have passed on to OpenAI in 2017. He then followed up with a statement with a $5 million donation to OpenAI in 2017 and 2018.

Amazon and Microsoft have donated at least $800,000 in cloud computing services, and Infosys confirmed to TechCrunch that it had made a donation. None of the companies will put a dollar amount on their contributions. There were other corporate gifts in kind, including a $129,000 high-performance PC from Nvidia, as well as software and services from more than a dozen other companies.

OpenAI will not share details of contributions made by Brockman or Livingston. Likewise, there is no record of Peter Thiel providing any funds to OpenAI, nor has his venture capital firm responded to a request for information. However, there was a modest $100,000 donation in 2018 from Donor’s Trust, a DAF favored by conservatives and liberals, Thiel among them.
In 2017, Open Philanthropy announced a $30 million donation to OpenAI, which was delivered in three $10 million gifts in 2017, 2018, and 2019, through a nonprofit controlled by Facebook co-founder Dustin Moskovitz. Open Philanthropy CEO Holden Karnofsky has been given a seat on OpenAI’s board of directors.

“We see some risks, both from unintended consequences of using artificial intelligence, and from intentional misuse), and believe that we – as a charitable organization, separate from academia, industry and government – may be well placed to support work to reduce those risks,” the organization wrote in a statement. that time.

computing cost

As OpenAI expands, its costs begin to rise rapidly. On top of hiring outstanding AI researchers with multi-million dollar salaries, OpenAI’s computing bill has increased exponentially, and in-kind computing donations have been just a drop in the ocean. According to tax returns, OpenAI spent $2.3 million on cloud computing in 2016, $7.9 million in 2017, and $30.6 million in 2018.

In February 2018, OpenAI switched cloud service providers from Amazon to Google, and signed an agreement to spend at least $63 million with the tech giant over the next two years. Musk left the OpenAI board of directors that same month. The events may be unconnected, though, as Semaphore recently reported that Musk believed OpenAI was slipping behind Google, and walked away after the other founders rejected his offer to run the nonprofit.

According to OpenAI insiders contacted by Semafor, Musk stopped making donations at that point, resulting in a for-profit OpenAI LP that would welcome outside investors. By the summer of 2019, OpenAI had already spent its money on Google computing and was looking for another deal.

In July, Microsoft invested about $1 billion in the new for-profit entity — with about half of the money in credits for its Azure cloud computing service.

Musk has publicly decried OpenAI’s transition to a for-profit company.

Its big donor, Moskowitz, also appears to have bungled the effort. In a conversation at the Philanthropy Forum in March, he posted: “I hope we’ve actually slowed the acceleration with engagement but I’m quite skeptical of the point of view we’ve added to it.”

Not every founding donor felt the same. Reid Hoffman’s Aphorism Foundation invested a previously unreported $50 million in the for-profit OpenAI project in 2018. The adage justified the philanthropic investment by writing that the new work aims to make AI technology available to the public through an open-source license where appropriate to benefit the public. . “

None of the recent versions of OpenAI’s Chat-GPT chatbot has been open source.

With Musk gone, OpenAI has welcomed six new board members, each of whom also became donors, according to the organization. They or OpenAI would not share the amount they gave, but the following year, OpenAI received its last major public gift: $30 million from a DAF called the Silicon Valley Community Foundation. There is no record of Musk or his foundation donating to this fund.

bottom line

Adding all non-mint contributions to OpenAI (including funds from the Silicon Valley Community Foundation) gives a total of $75.8 million out of $133.2 million. That means the largest amount Musk could have donated to OpenAI was likely $57.4 million — a far cry from the $100 million he originally claimed, but close to the number he reported on Wednesday.

However, this figure assumes that three founding donors (including Thiel) and six new donors and multiple corporate backers like Infosys, gave nothing at all.

In the larger scheme of Musk’s finances, the disparity of $35 million, $50 million, or even $85 million is little more than a rounding error. With Musk recently valuing Twitter at just $20 billion, the second richest person in the world has lost more than $100 million a day since buying the company last fall.

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