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In recent news, Elon Musk has publicly expressed his deep frustration with OpenAI, an AI research organization he helped launch but stepped down from its board in February 2018. Musk’s criticism centers around OpenAI’s transition from a nonprofit, open-source entity to a for-profit, closed-source company. In a CNBC interview following a Tesla shareholder’s meeting, Musk likened this transformation to funding an organization to save the Amazon rainforest only to see it turn into a lumber company, exploiting the forest for profit.
Musk’s criticism carries weight due to his involvement in the establishment of OpenAI. However, the extent of his support for the organization remains uncertain, even to Musk himself. He expressed confusion on Twitter about how his donation of approximately $100 million to the nonprofit resulted in a for-profit entity with a market capitalization of $30 billion. Musk clarified later in an interview that his contribution was around $50 million.
An investigation conducted by Grey Journal delved into the funding sources of the original OpenAI nonprofit, including Musk’s donations. Documents filed with the IRS and a state regulator indicate that Musk’s claimed $100 million donation cannot be substantiated. The analysis reveals only around $15 million in donations traceable directly to Musk.
Grey Journal reached out to Musk’s lawyer for comment on their findings but did not receive a response. The tax filings also shed light on various aspects of OpenAI, including the involvement of other investors like Reid Hoffman, provision of free Teslas to early OpenAI engineers, and the significant computing costs that prompted a $1 billion investment from Microsoft.
OpenAI’s financial situation has been shrouded in uncertainty since its inception in 2015. While the organization initially aimed to advance digital intelligence for the benefit of humanity without a focus on generating financial returns, the exact funding details remained unclear. The blog post announcing OpenAI mentioned commitments of $1 billion from multiple donors, but federal tax filings suggest that only $133.2 million in donations were received by the nonprofit until 2021.
To ascertain Musk’s actual contributions, researchers examined the Musk Foundation, his own 501(c)3 organization. In 2016, the Musk Foundation donated $10 million to YC.org, another nonprofit associated with Sam Altman. YC.org, in turn, contributed $10 million to OpenAI. This remains the only publicly disclosed cash donation from Musk to OpenAI. However, financial statements filed by YC.org suggest that Musk may have contributed an additional $5 million in 2017.
Another previously undisclosed contribution was a donation of Tesla vehicles worth $248,295 in 2017, along with an additional $14,105 for vehicle upgrades in 2018. These vehicles were provided to OpenAI employees as compensation. However, it is worth noting that wealthy individuals can anonymously donate to nonprofits through donor-advised funds (DAFs). The Musk Foundation donated substantial sums to a DAF called Fidelity Investments Charitable Gift Fund, which then contributed $7.8 million to OpenAI between 2018 and 2020. It remains unclear whether any of Musk’s funds were included in this donation.
Apart from Musk’s contributions, other founding donors such as Sam Altman and Reid Hoffman made notable contributions. Altman loaned $3.75 million to OpenAI in its early stages, which he later forgave, resulting in a total gift of $3,784,637. Hoffman’s Aphorism foundation donated $1 million to YC in 2016, which was subsequently passed on to OpenAI. Aphorism made additional direct donations of $5 million to OpenAI in 2017 and 2018.
The investigation also revealed corporate contributions including donations from companies like Amazon and Microsoft. While the exact amounts of their contributions were not disclosed, they provided at least $800,000 in cloud computing services to OpenAI. Other corporate donations in-kind included a high-performance computer worth $129,000 from Nvidia, as well as software and services from several other companies.
OpenAI’s soaring costs were primarily driven by its exponential increase in computing expenses. In 2016, the organization spent $2.3 million on cloud computing, which surged to $7.9 million in 2017 and a staggering $30.6 million in 2018. In February 2018, OpenAI switched cloud providers from Amazon to Google, signing a contract to spend a minimum of $63 million with Google over the next two years. Interestingly, Musk’s departure from OpenAI’s board coincided with this switch, although the precise reasons behind it remain unclear.
Insiders familiar with the situation claim that Musk stopped making donations at that point, which prompted OpenAI to spin off a for-profit entity called OpenAI LP to attract external investments. By mid-2019, OpenAI had exhausted its Google computing budget and was actively seeking new funding opportunities. In July of that year, Microsoft invested approximately $1 billion in the for-profit entity, with half of the funds provided in the form of credits for Microsoft’s Azure cloud computing service.
Musk has publicly expressed his disapproval of OpenAI’s transition to a for-profit model. Another major donor, Dustin Moskovitz, also appears to have become disillusioned with the effort, stating his skepticism about the impact they have made. However, Reid Hoffman’s Aphorism foundation made an additional, previously undisclosed investment of $50 million in OpenAI’s for-profit venture in 2018. Aphorism justified the charitable investment by stating that the new business aimed to provide AI technology to the public through open-source licensing, benefitting society at large.
Following Musk’s departure, OpenAI appointed six new board members, all of whom also made contributions to the organization. While the specific amounts of their donations were not disclosed, OpenAI received its final major public gift of $30 million from a donor-advised fund called the Silicon Valley Community Foundation. There is no record of Musk or his foundation donating to that specific fund.
Considering all non-Musk contributions to OpenAI, which includes the Silicon Valley Community Foundation’s donation, the total comes to $75.8 million out of the organization’s $133.2 million funding. This suggests that Musk’s actual donations likely amounted to around $57.4 million, significantly lower than his initial claim of $100 million but closer to the figure he mentioned in the recent interview.
While the discrepancies in Musk’s contributions are relatively small in the context of his overall finances, they highlight the complexities and uncertainties surrounding OpenAI’s funding. As Musk continues to make headlines with his business ventures, it is clear that OpenAI’s financial journey and its transition to a for-profit model remain subjects of interest and debate.
