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Musk-led group makes $97B bid for control of OpenAI

706 points| jdoliner | 1 year ago |reuters.com

978 comments

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[+] irs|1 year ago|reply
Sam’s reply on twitter[0]

no thank you but we will buy twitter for $9.74 billion if you want

[0]https://x.com/sama/status/1889059531625464090?

[+] steve_adams_86|1 year ago|reply
I don't like petty internet arguments, I can't help appreciate him referring to it as Twitter.
[+] sumeno|1 year ago|reply
He should probably take that twitter deal, probably not getting better than that
[+] TaurenHunter|1 year ago|reply
0penAI having its 2008 Yahoo moment.
[+] emrah|1 year ago|reply
Can Sam reply on his own? Does he have controlling votes?
[+] artursapek|1 year ago|reply
Sam gives off incredibly strong “pride cometh before the fall” energy.
[+] gitaarik|1 year ago|reply
How can you see the parent message on Xitter?
[+] TheAlchemist|1 year ago|reply
"The bid is being backed by Musk's AI company xAI, which could merge with OpenAI following a deal, according to the Wall Street Journal which first reported Musk's offer earlier on Monday."

xAI is not making any money - it's a money furnace, so what does it mean the bid is backed by xAI ? The leverage and 'creativity' in the US is off the charts. Dotcom bubble starts to look reasonable.

[+] rozap|1 year ago|reply
If they merge two money furnaces, then they can make up for the losses with the higher volume :)
[+] bilbo0s|1 year ago|reply
This is an underrated comment.

And the key point in this news that punctuates the ridiculous farce that is the nature of this offer.

[+] reportgunner|1 year ago|reply
xAI is not making any money

This is normal at this point. Netflix also wasnt making any money when it was new, same with Uber and more. You can't run in the race to the bottom if you're climbing to the top.

[+] notatoad|1 year ago|reply
as i underestand it, xAI is essentially Elon's personal piggybank, and how he funnels money from his other companies back to himself. Tesla is public and Twitter is co-owned by a whole bunch of other billionaires, but xAI is just Elon.
[+] golergka|1 year ago|reply
> Dotcom bubble starts to look reasonable.

Given what happened to the internet afterwards, dotcom bubble was always reasonable. There were a lot of idiotic companies that made no sense, but the overall idea that internet is going to generate tons of value and money was completely true.

[+] averageRoyalty|1 year ago|reply
With first mover advantage disappearing for OpenAI and very good alternatives appearing, one wonders how long they can sustain a multi billion dollar per year loss[0].

The launch of ChatGPT was earth shaking, but what have they done since that impacts or excites the average consumer? Does their revenue even come from the average consumer, or primarily from API users that will lift and shift to a viable competitor?

I don't know, but I'm very curious to see how they can hold their lead and be attractive in the longer term.

0. https://www.cnbc.com/2024/09/27/openai-sees-5-billion-loss-t...

[+] Layvier|1 year ago|reply
> "It's time for OpenAI to return to the open-source, safety-focused force for good it once was," Musk said in the press release. "We will make sure that happens.""

From the creator of Grok, this is such an insane thing to say

[+] darknavi|1 year ago|reply
And Tesla, who (in)famously doesn't regularly publish their GPL-derived codebases.
[+] hn_throwaway_99|1 year ago|reply
None of these people have any shame anymore, it's just exponentially growing levels of unwarranted chutzpah.
[+] Jcampuzano2|1 year ago|reply
This is modern day tech ceo/politician playbook 101. And it's because of this that society in general is a shit hole. There is no semblance of honesty nor accountability at all anymore.

Grift and lie to everyone's faces because you know that it doesn't matter what the fuck you say, as long as your political stance aligns with the right people bootlickers will lick up anything you say for a chance at being noticed.

[+] chrisco255|1 year ago|reply
Grok-1 was open-sourced. Grok-2 has yet to be open sourced, but perhaps they will once they launch Grok-3.
[+] sghiassy|1 year ago|reply
Could you add more context? I’m unfamiliar with Grok. Is Elon being a hypocrite?
[+] smrtinsert|1 year ago|reply
Didn't X have to ban Grok output due to what their own users were making?
[+] mppm|1 year ago|reply
I think a relevant bit of context for this move are the restructuring negotiations with Microsoft. Matt Levine has some excellent commentary on this [1][2], as usual. In short, due to their unusual "capped-profit" investment, Microsoft has first dibs on a very large chunk of hypothetical future profit. While the details are not public, a "low" valuation of 100B would imply that Microsoft is entitled to a controlling stake in the restructured for-profit, while a 1T valuation would proportionally imply a much smaller slice of the pie.

Presumably, Musk is trying to throw a wrench into these negotiations, by putting a valuation on the low end on the table, while Altman's "counteroffer" to buy Twitter for 9.74B sort of claims that this is too low by a factor of 5 to 10-ish.

1. https://www.bloomberg.com/opinion/articles/2024-10-21/who-ow...

2. https://archive.is/nHG3P

[+] pcj-github|1 year ago|reply
The one thing Musk does not have in his drive for total world domination is AI.

Don't let him get it. Profoundly dangerous.

Watch as he attempts to use the levers of the now illegitimate US government to force the outcome.

[+] eaglelamp|1 year ago|reply
ChatGPT gov launched in January. Musk is using DOGE to hoover up tons of government data and reportedly using 'AI' technology to analyze it. There seems to be a rush to insert 'AI' into government processes, and with the government, unlike the consumer market, being the first to market will build a significant moat.

Of course this will lead to conflict between Altman and Musk as they rush to entrench themselves within the current administration. This buyout offer could be an effective tactic to delay the pending funding from Softbank, and in turn the kick off of stargate, while DOGE gets up to speed. Even a short delay could be impactful in the early days of an aggressive and fickle administration.

[+] bpodgursky|1 year ago|reply
> Elon's offer to purchase the OpenAI nonprofit for $97.4billion isn't going to happen, but it may seriously complicate OpenAI's efforts to claim the nonprofit is fairly valued at $40billion. If you won't sell it for $97.4billion, that means you think it's worth more than that.

https://x.com/KelseyTuoc/status/1889064215710941594

[+] dmonitor|1 year ago|reply
That's a bad analysis. There's clearly non-market forces at play for why Sam Altman doesn't want to give control to a group associated with Elon.
[+] senordevnyc|1 year ago|reply
Didn't they already raise at a $157 billion valuation?
[+] m3kw9|1 year ago|reply
Maybe they want it for 5x, 2x is absolutely low ball for most businesses that isn’t making a loss. I would think sam is valuing that as low as possible
[+] tyre|1 year ago|reply
Given musk’s history (“funding secured” to take Tesla private; trying to back out of buying twitter), OpenAI can make a reasonable case that he’s full of shit and it’s not a real offer.
[+] alpha_squared|1 year ago|reply
It feels like Musk is single-handedly making a great case for why unlimited accumulation of wealth is a bad idea.

It's pretty colorful language, but my mind immediately jumps to "financial terrorist". He's using his enormous amount of wealth and influence as a weapon to bludgeon anyone and anything in his way.

[+] WiSaGaN|1 year ago|reply
I think this is a negotiation tactic that aims to eventually block OpenAI's transition to for-profit.
[+] graeme|1 year ago|reply
And at least at the stated valuation. They've valued it at $40 billion but if they decline larger offers it is hard to sustain the low valuation.
[+] gsibble|1 year ago|reply
So, from what I have read about spinning a for-profit off from a non-profit, the for-profit needs to be purchased from the non-profit at market value. There have been a lot of questions about how MSFT or OpenAI's other investors would fund the purchase of the for-profit entity.

I think what this does is set a floor valuation with a fully backed bid that the non-profit would get IN CASH for essentially buying the for profit.

This really messes up OpenAI's plans because it means someone else would have to bid more and be willing to part with the cash in order for OpenAI to spin off.

Actually a brilliant move that gums up OpenAI's plans.

[+] creddit|1 year ago|reply
A lot of people are unsurprisingly throwing shade on Musk being involved here but I think it's really important to understand what this is fundamentally about: stopping or fundamentally changing OpenAI's plans to be spun off.

The issue at hand is that OpenAI (the private, currently "capped profit" entity, henceforth in this post referred to as OpenAI-P) is trying to get spun out of control of the OpenAI non-profit (henceforth referred to as OpenAI-NP).

In order to do this, OpenAI-P must compensate OpenAI-NP for its ownership of OpenAI-P. Currently they are trying to value this at $40B. This is a swindling for numerous reasons. Firstly, OpenAI-NP has complete control over OpenAI-P. They OpenAI-NP board can do whatever it wants with OpenAI-P. OpenAI-P has some financial obligations to those who have purchased its PPU (its equity instrument) but ultimately OpenAI-NP controls OpenAI-P and could do whatever it wants with it (eg shut it down, fire Sam Altman on a whim, etc). Further, the cashflows that OpenAI-NP still has ownership of are, at least under the claims of people like Sam A, clearly worth dramatically more than the $40B valuation would imply.

In addition, the OpenAI-NP mission is "Our mission is to ensure that artificial general intelligence—AI systems that are generally smarter than humans—benefits all of humanity". The control of the leading AI Lab is the only way that they can possibly live up to their mission. To abdicate control of OpenAI-P is to abdicate their mission. If the OpenAI-NP board follows their mission as they are obligated to, they cannot possibly be willing to abdicate this control and they must surely value it far beyond $40B.

EDIT TO ADD TL;DR - Musk is trying to force OpenAI to value OpenAI-NP's stake in OpenAI-P at a reasonable level which is far greater than the current $40B which will help Musk by potentially derailing OpenAI-P's goal to be spun off.

[+] typs|1 year ago|reply
Notably a steep discount from their recent raise at a 157B. The board would never approve.
[+] kweingar|1 year ago|reply
Regardless of how you feel about the potential consequences of Musk being a significant shareholder of OpenAI, the alternative is not to let sama and other preferred investors buy the non-profit's stake at a >50% discount as they had planned to do before this offer.
[+] miramba|1 year ago|reply
Rather than discussing crazy Elon, I would like to hear insights on what this means? Why does he want OpenAI? Is there a chance to ever get this money back? Who is financing this after the twitter failure?
[+] Ajedi32|1 year ago|reply
> to buy the nonprofit that controls OpenAI

What does it mean to buy a nonprofit? Who owns it now? Does anyone?

[+] whatever1|1 year ago|reply
I see clear sentiment change in HN. And that is why I love this forum. People here do change their opinions when presented with facts :) Proud to be a member of the community.