"We Once Again Need to Raise More Capital than We Had Imagined": Watching OpenAI Say It Needs a New Structure
Attempting to tap risk-lovers and those needing savings vehicles for nine figures. I think somebody should do this, and that that somebody should not be an organization laser-focused on preserving...
Attempting to tap risk-lovers and those needing savings vehicles for nine figures. I think somebody should do this, and that that somebody should not be an organization laser-focused on preserving its own particular & peculiar tech-platform money-gusher; but it is not clear how to convince those seeking savings vehicles promising expected returns with calculable risks that they should contribute; rather, the pitch has to be to those who are risk-lovers comfortable with Knightian uncertainty...
Why? because OpenAI’s quest for AGI has turned into as much a financial marathon as a technological race. The stakes? Transforming our world is the agenda. But what about the sub-agenda of making & keeping promises to those seeking a comfortable and not too uncertain return on their investment? What strategy can they devise, up against rivals like DeepMind and Apple all eager to collect the AI platform tax for themselves, and facing other platforms from Facebook to Oracle all desperate to avoid having to pay any substantial permanent AI platform tax?…
A smart catch from the wise John Gruber:
John Gruber: OpenAI’s Board, Paraphrased: ‘To Succeed, All We Need Is Unimaginable Sums of Money’: ‘Un-bylined post from OpenAI’s board of directors…. “The hundreds of billions of <https://www.investopedia.com/meta-says-it-is-making-progress-with-ai-as-spending-grows-8737166> <https://www.bloomberg.com/news/articles/2024-04-16/deepmind-ceo-says-google-will-spend-more-than-100-billion-on-ai> <https://carboncredits.com/larry-ellisons-100-billion-bet-nuclear-power-to-drive-oracles-ai-revolution/ https://artsmart.ai/blog/how-much-has-microsoft-invested-in-ai/> dollars… major companies are… investing into AI… show… we once again need to raise more capital than we’d imagined. Investors want to back us but, at this scale of capital, need conventional equity and less structural bespokeness…”. My take[:]. OpenAI currently offers, by far, the best product experience of any AI chatbot assistant. There is no technical moat <https://daringfireball.net/linked/2024/07/26/zuck-open-source-ai>… and so OpenAI is the epicenter of an investment bubble…. OpenAI is to this decade’s generative-AI revolution what Netscape was to the 1990s’ internet revolution… <https://daringfireball.net/2024/12/openai_unimaginable>
Most noteworthy passages in the OpenAI Board’s… I am not sure what to call the document:
OpenAI Board of Directors: Why OpenAI’s Structure Must Evolve To Advance Our Mission: ‘To best support the mission of ensuring artificial general intelligence (AGI)1 benefits all of humanity… choose a non-profit / for-profit structure… best for… the mission[;] make the non-profit sustainable[;] equip each arm to do its part…. We began in 2015 as a research lab…. Eventually, it became clear that the most advanced AI would continuously use more and more compute and that scaling large language models was a promising path to AGI rooted in an understanding of humanity…. In 2022, we launched ChatGPT…. In 2024, we discovered a new research paradigm, with our o-series models demonstrating new reasoning capabilities that scale with “thinking” compute, stacking together with compute for training.
Our impact is not just what we create… but how we influence others… [also undertaking] vigorous innovation… [here at] the start of an AI-charged economy…. OpenAI’s pursuit of leadership in the field can inspire other organizations to advance the mission too. The hundreds of billions of dollars that major companies are now investing into AI development show what it will really take for OpenAI to continue pursuing the mission. We once again need to raise more capital than we’d imagined. Investors want to back us but, at this scale of capital, need conventional equity and less structural bespokeness….
Our plan is to transform our existing for-profit into a Delaware Public Benefit Corporation (PBC) with ordinary shares of stock and the OpenAI mission as its public benefit interest… to balance shareholder interests, stakeholder interests, and a public benefit interest…. It will enable us to raise the necessary capital with conventional terms….
The mission as a continuous objective…. We seek to evolve in order to take the next step in our mission, helping to build the AGI economy and ensuring it benefits humanity… <https://openai.com/index/why-our-structure-must-evolve-to-advance-our-mission/>
What do I think? That Gruber is probably right here, and that the Netscape analogy is apposite.
More thoughts below the fold:
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