OpenAI: Who is REALLY in charge? – Company Forensics
OpenAI, the company behind chat GPT, has become synonymous with artificial intelligence in today’s world. But is OpenAI truly making AI beneficial to humanity? The recent firing of Sam Altman, the key person and face of the company, has brought attention to the power dynamics within OpenAI.
The roots of OpenAI go back to 2015, when a group of AI enthusiasts came together to create an organization dedicated to making AI beneficial to humanity. The company was structured as a nonprofit charity, with the goal of sharing research and patents with the public. However, as time went on, the company underwent a major restructuring to fund its operations and stay afloat.
This restructuring led to the creation of OpenAI Global LLC, a for-profit company under the nonprofit organization. This move allowed OpenAI to generate profits while still maintaining their nonprofit status. However, this change in structure raised eyebrows, especially with major investors like Microsoft, who expected a substantial return on their investment.
The firing of Sam Altman and the subsequent reorganization of OpenAI have raised questions about who truly holds the reins of power within the company. With AI becoming an integral part of our daily lives, it is crucial to understand who is really in charge of shaping the future of artificial intelligence for humanity. The story of OpenAI is a cautionary tale about the complexities of balancing profit and purpose in the world of AI.
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Video Transcript
This is the number of people that use chat GPT every month the company behind it open AI has become the face of artificial intelligence for good or worse because the question the reason for this whole mess is simple is open AI making AI beneficial to humanity it’s
Not a simple dilemma but we’ll get back to that through most of this timeline the key person the face of the company has been this guy Sam ultman until he got fired last week the company that gave us chat GPT fir un expected firing of open AI the last three days have been
Unlike anything I’ve seen being fired from your own company is is a startup Founder’s worst nightmare but it’s real it happens it’s not just Hollywood drama that’s it like I might I might like I might die but stop for a second let’s fast forward so in order to give you guys
Like a good video but also a video that’s not outdated a week later we’re going to be jumping between future me and past me cuz making these diagrams and explainers takes time and because Sam is already back at open AI like the thing is The Echoes of this attempted
Coup have redefined what open AI is and if the board was right Sam being back is an existential threat to humans which sounds very exaggerated but it’s not and and we’ve been working tirelessly this week to capture the story for you to publish a somewhat up toate version
We’ve gone back to 2015 to the very origins of open AI as believe it or not a nonprofit charity organization we needed to understand boards and their power over Founders and over the CEO so here’s a timeline of the open AI Fiasco and more importantly what this means for the future of
AI 2023 being the year of artificial intelligence things are about to get really really wild now ai can write anything just like humans do it’s pretty crazy AI is going to take your job before tra gbt artificial intelligence was this abstract remote like this imaginary thing for the average human
Being a machine that was really good at playing chess but only at playing chess the the Black Mirror or the Hollywood dystopia that was probably too far off in the future to even worry about or think about AI has been creeping its way into our daily lives like long before
GPT existed artificial intelligence was putting videos on your YouTube feed or doing a not so great job at spying at your home Chad GPT not only made AI tangible it put it in the palm of everyone’s hands and and this is not your typical startup MVP because open AI
Is not your typical startup so it’s the summer of 2015 and and a group of AI Geeks get together in California in Silicon Valley to grab dinner and and when I say Geeks I mean like deep learning PhD scientists some of the smartest people alive but yeah Geeks so
They wanted to get together and build something build a company or or an organization that would make AI beneficial to humanity and so by the end of the year this idea had taken shape and Ilia Greg and a few other Geeks were listed as co-founders of the company and
Open AI was to be this open company to make their research and their patents public and to be a nonprofit business and according to Sam to keep the AI out of the hands of the bad guys and then Sam and Elon Musk would both run the
Board of directors I am the reason open eye exists and this is super important but we’ll get back to it and then a few other Silicon Valley billionaires and companies would pledge $1 billion to this nonprofit organization to make this happen and since the company was a nonprofit charity they’d be able to
Write these pledges off as donations and that was the reason why they would invest but pledging is not the same as giving we’ve learned I use Pledge and donation synonymous so the company only really got a portion of that $1 billion the whole nonprofit concept and and approach was absolutely key it it
Allowed this free collaboration it convinced people and and institutions to help them to share data with them to to let them crawl their websites the scientists would joined were turning down like 2X and 3X offers precisely for that reason because the research was going to help Mankind and it was going
To be open for everyone to use and as soon as April 2016 open aai was already releasing papers and tools for people to experiment with what they were building around artificial intelligence and they released dozens of these papers and and tests and and mockups and betas through
The years which went completely on to radar for normies like us but were absolutely crucial developments for the scientist Community gpt1 released in 2018 but don’t worry you also didn’t miss that boat because this really wasn’t chat GPT it was just a GPT model and it wasn’t built for the average joke
Now gpt1 was mostly a a paper that laid out some discoveries stuff that I’m not going to pretend to understand cuz you know when on a pitch deck people say like hey we we use machine learning no like this is the real deal these guys were redefining how machines learn now
Gpt2 came a few months later as the AI was getting more powerful they started to be a little bit more careful about it they started to release this thing in stages and they were really concerned of what this thing could do what people with ill intentions could do with gpt2
Because it was the first Model that was a little bit more widely available to developers to integrate on their platforms but a challenge Rises as you release these products to the public as you release these features how do you fund the servers and how do you fund this expensive team of
Scientists or beer at the office so a major company restructure had to happen and to break how this works we have arrived at today’s explainer time so by definition a nonprofit company can generate profits can charge people for things it just can’t pay those profits back to the founders or to
The shareholders they need to be reinvested in the company and that’s not great if you want people to invest in your business I have some faith in this idea so they did this kind of workaround they opened a new business called open AI Global LLC under the nonprofit
Organization and then that new business was definitely a for-profit company but they came up with this thing called capped profits this model that helped them stay on brand I guess and so in a nutshell if you invested in this company you could get no more than 100 times your investment still for Microsoft’s
2019 $1 billion investment into open AI it’s a100 billion payback yeah no wait this is actually a very big deal Elon who donated money to the original open AI spoke out complaining about this logic I am the reason open AI exists I was instrumental in in recruiting the the key uh
Scientists and Engineers most notably ilas ssky um how much money did you give he donated $50 million to this nonprofit and suddenly it’s a for-profit startup valued at what $90 billion and he has no stake in this company yeah I I I fully admit to being a huge idiot here say you
Funded an organization to save the Amazon rainforest and said they became a a lumber company and chopped down the forest and sold it for money you can hate El all you want but he kind of has a point and and and more philosophically like how much AI democratization how much making
AI beneficial to humanity can happen when your new focus is keeping your investors keeping Microsoft happy even more critically if this business and and its investors are now able to make profits from this company do other companies still want to share all that data with them so that they can use it
To train their language models now to try and keep this to try and keep this illusion of nonprofit the company defined a new board of directors independent from the for-profit business by this time Elon had already left and then Sam quit y combinator who he was running at the
Time to become the CEO of openi and then YZ appointed our YouTube Nemesis as CEO I’m have kidding but yeah then the idea here was that their goals and their focus was to serve the interest of the nonprofit business and that they operated independently from The for-profit Entity and actually these
Board members were they were forbidden from owning equity in the for-profit business to avoid this thing of this conflict of interest Sam famously doesn’t own any equity in open AI in the for-profit side of it okay so now let’s go over how this board of directors works so I guess it’s explainer time
Again explainer time on a normal business the shareholders are the owners but getting shareholders to vote on every decision is just very impractical so board members are elected to make the big business decisions normally the board hires the CEO to run day-to-day operations which is also a lot of
Decisions that the board doesn’t need to get involved it and then a board is a bit like a tiny government There are rules for votes for minimum votes aition and and when when dealing with conflicts of interest and then for example in early 2023 Reed Hoffman was asked to
Step down from the board because he was investing in companies who were using open aai software and where is this was a controversial thing and he didn’t like it a bit what I said [ __ ] you and your eyebrows now under this kind of for-profit business model and under
Sam’s leadership open AI made strides and I don’t need to tell you about it gpt3 in 2020 codex and Del in 2021 whisper for speech recognition in 2022 and finally towards the end of the year GP GP g chat GPT this is perhaps the most critical inflection point in this story
Because chat GPT or or gpt3 was incredible like the backbone of hundreds of startups it was accessible and easy to use and perhaps more importantly it I think it transformed our minds as entrepreneurs it’s perhaps the most game-changing truly disrupting piece of tech since the smartphone like 33% of
Business Leaders think that GPT will cause layoffs at their companies it’s happening already like I remember the first D image I generated I remember asking Chad gbt to detect my writing style for these scripts and I think all of us had had a blown away moment at
Some point this past year probably more than once this is a very personal story but when we started SBE our our pitch Builder one of our biggest advantages was that we had online collaboration because at the time PowerPoint didn’t have online collaboration that’s that’s how long we’ve been in business but then the
First AI that we brought into our product was um we were using a genetic algorithm to help design slides to help come up with the best possible slide design and at the time this was pretty Cutting Edge this is around um 2017 we cannot dream at the time of a piece of
Tech that would help Founders summarize their ideas that would come up with new ideas for their pitch dech heck generated from just typing in a website and then we were skeptical we were maybe in denial because how could this piece of tech replace what we’ve been doing and trying
To learn and understand our human brains for for 10 years um and so when we tried it with gbt 3 it was okay like results were great I mean it was surprising what this machine could do but when we plugged GPT 4 into this thing we we realized the magnitude of this
Transformation like we’ve we’ve now FedEd everything we know like every article every video on our YouTube channel every pitch Tech analysis into this thing and we just keep getting surprised on what it can accomplish it’s not human level but the fact that it’s 90% there the fact that it’s a simple
API that you connect it’s not some we don’t have any scientists in our in our staff the fact that this is now accessible to entrepreneurs everywhere is revolutionary if you’re a startup founder by the way you you should check out our GPT 4 powered pitch sck
Generator cuz I think it’s going to be very useful getting back to GPT 4 this is at scale the amount of data points that gp21 analyzed versus gpt2 N3 and finally GPT 4 the evolution of computing power the fact that Microsoft built them a superc computer
To run this massive llm and then add to that you what they announced at at at demo day a few weeks ago custom gbts and and Microsoft’s co-pilot Integrations and plugins and permanent GPT or chat GPT access to the web the past year not only the models themselves but axess and
What we’ve discovered that we can do with these things has taken a massive shift that is nothing short of revolutionary and then add a new fresh1 billion investment from Microsoft and other investors that gave them in Cas Microsoft 49% control of the for-profit company now is this too much and is it
Happening too fast the problem of fake news is going to be a million times worse cyber attacks will become much more extreme we will have totally automated AI weapons I think AI has the potential to create infinitely stable dictatorships now we still don’t know what got Sam fired we might have some
More clues for future me but all the company said on Friday was that Sam wasn’t consistently candid with his Communications but the theory that makes the most sense to me connects to this when you’re a for-profit startup when 100 million people use your product every month when you’re the fastest
Growing startup in history you want to move fast and break things and that’s exactly what Sam was doing and from all the entrepreneurial Community from all the investor Community this was fine move fast and break things but is that aligned with open ai’s goal and and more
Critically is it dangerous for us human beings that there’s an AI That’s moving so fast that it could break I think if this technology goes wrong it can go quite wrong uh and we want to be vocal about that we want to work with the government to prevent that from happing
El musk came out in support of the decision precisely for this reason cuz AI was moving so fast and it needed to be stopped and this is why maybe we should be worried now that Sam is back the board of directors was made up of six people just prior to Sam’s firing
Now we know that Greg was offered to stay with the board but he quit in solidarity with Sam so he definitely didn’t vote to remove him now open AI byos establish that a majority and written consent is needed for any decision the board makes so the only way
This really adds up is if the entire board met without Sam or Greg and agreed on this decision all four members must have voted in favor of the motion and it seems that it was Ilia Suk who orchestrated the vote now he interrupted Sam’s free weekend watching the Vegas
Grand Prix truly to fire him over Google me and that is a strange one by the way in a normal company if company shareholders think that the board is being dumb they can actually vote to replace the members but not an open AI cuz there are no shareholders in open AI
The nonprofit remember this is a nonprofit charity and again the bylaws which effectively work like a constitution like a rule book for a business and in open AI case the rules say that the board really has the ultimate word here and that there was nothing nobody could do about it was
There as the soap operate open AI continues here is a open season on employees from the leaders uh in AI technology to be fired uh instead and also threatening to quit if they don’t get what they want so the goals of these being be aligned with our
Goals okay so let’s just call this for what it is as a business decision firing Sam from open AI the way he was fired was idiotic and terribly handled blurry messages and communication no heads up to the investors who have poured billions into open AI on a Friday right
Before Thanksgiving week now a lot of these employees also have stock options in the company and they were looking forward to a secondary stock sale that was happening valuing the company at $90 billion that would net them millions of dollars from their stock options and how
Do you think that they would react if this possibility just disappeared overnight how did you expect people would react if you’re firing the CEO of probably the most important Tech startup of the decade and as the news broke Microsoft shares who let’s be real is betting their future as a business on
Open AI dropped by 2% which doesn’t sound like much but Microsoft is worth almost $3 trillion that’s $56 billion of value that we just erased in a second now SAA the CEO was reportedly Furious when he heard the news at the same time we all heard it came out doing some
Damage control they announced that they would hire Sam and Greg and pretty much anybody else who resigned the company a very Sprite move but by all means it damaged control to keep his own investors and shareholders chill yeah I’ve had conversations with EMT and again it’s the same thing there’s no
Real difference there from where we were when we were working with Mera and she was interim CEO when Sam was CEO here’s the gist of it this is the moment where the premise of open AI as a company broke if open AI is a nonprofit organization making AI beneficial to
Humanity put SpongeBob again like if their AI is endangering our existence by all means fire sound but let’s face the fact this nonprofit play is [ __ ] and it’s been [ __ ] for years like Sam also thinks that AI can kill us he agrees but he’s still moving so much faster than the
Board felt comfortable with and in the end employees worked there for a Payday investors pour money into this company for a Payday this company is a for-profit business and in a for-profit business money talks and money won yay like Sam and Greg are back and new boron has been appointed off the
Board fired with immediate effect this was perhaps more painful than anyone for Ilan who had to just what’s the vote shut up take the blame take the fall apologize and these guys were friends like they started this business together they were back there together at that launch like Ilia officiated Greg’s
Wedding at at the open AI office and he irreparably broke the trust of his partners and pretty much ruined his own reputation in the process he’s now out of the board and if he he was actually truly scared about the consequences of what they had created he doesn’t have a
Vote or a say in what the company chooses to do this new board seems to be just a temporary transition board but the expectation is that they will appoint more people including Sam and definitely someone from Microsoft and definitely not Ilia now I don’t know him
But I want to argue for him that maybe his intentions were good I mean Elan said that as well but we can’t really trust Elon anyway the brutal realization for Ilia and for people who agree with him is that capitalism has taken over research for the sake of
Research to make the world a better place is idealistic and utopic like you can’t have it both ways if you want billions of dollars to pay the very top scientists and to host supercomputers no one is going to give you that cash for free someone has to
Pay for it and whoever is paying for it calls the shots and if AI ever takes over I genuinely think that this is the moment in time that everybody will be looking back at now I love you Chad gbt you’re great please don’t kill us when
You take control I just still hope that the human touch makes these videos better so if you enjoyed our video today make another algorithm happy by doing the like and the comment stuff also you should check out our timeline on the story of Twitter and how Elon almost killed it but not exactly
We’ll see you guys next week
Video “OpenAI: who is REALLY in charge? – Company Forensics” was uploaded on 11/25/2023 to Youtube Channel Slidebean