The Bet

0:01Narrator Monday, March eleventh, two thousand nineteen. OpenAI publishes a blog post with a two-word title. OpenAI LP.

0:11Narrator It's signed by Greg Brockman and Ilya Sutskever. The two men who, eighteen months earlier, told Elon Musk they were willing to give up their equity rather than give him control. And this post is about equity.

0:26Greg Brockman (post) Our solution is to create OpenAI LP as a hybrid of a for-profit and nonprofit, which we are calling a capped-profit company.

0:36Narrator A capped-profit company. Investors can make money. Employees can get something like startup stock. But only up to a point. And for the very first investors, the post names the point.

0:50Greg Brockman (post) Returns for our first round of investors are capped at one hundred x their investment.

0:57Narrator A hundred times. Put in ten million dollars, and the most you can ever take out is a billion. Everything past that, the post says, belongs to the nonprofit. And the post adds a line that's either very modest or not modest at all, depending on how you hear it. If they succeed, it says, they expect to generate "orders of magnitude more value" than they'd owe the people who invest in or work at the company.

1:25Narrator Think about what a cap of a hundred times means. It's only a limit if you think you might blow through it.

1:37Narrator From Will Sigmon Media, this is The Role Models. Season one: OpenAI. Episode five. The Bet.

1:49Narrator To understand the bet, go back eleven weeks, to where we left off. December twenty-eighteen. Musk is gone from the board. And Sam Altman sends him an update, which OpenAI later published. Dota. Robot hands. Fast progress on language. And near the end, one sentence about where the computers would live.

2:12Sam Altman (email) Finally, I am working on a deal to move our computing from Google to Microsoft, in addition to our own data centers.

2:20Narrator Nine days later, Musk wrote back to Sutskever and Brockman. You heard this at the end of last episode.

2:28Elon Musk (email) Even raising several hundred million won't be enough. This needs billions per year immediately or forget it.

2:36Narrator Billions per year. The nonprofit didn't have that. So the March post opens by admitting it.

2:43Greg Brockman (post) We'll need to invest billions of dollars in upcoming years into large-scale cloud compute, attracting and retaining talented people, and building AI supercomputers.

2:54Narrator And then it says the thing every founder in this story has circled for three years.

3:00Greg Brockman (post) We want to increase our ability to raise capital while still serving our mission, and no pre-existing legal structure we know of strikes the right balance.

3:10Narrator No structure they knew of. So they built one. But before we open it up, there's something that happened four weeks earlier. Because for one week in February, OpenAI was the most talked-about AI lab in the world, and not because of money.

3:29Narrator Thursday, February fourteenth, two thousand nineteen. Valentine's Day. OpenAI announces a language model called GPT-2.

3:40Narrator It had one job. Read some text, and predict the next word. That's it. It was trained on forty gigabytes of internet text, about eight million web pages. And it had one point five billion parameters, more than ten times as many as the GPT that came before it.

4:01Narrator What came out surprised people. Give it the opening of a news story, and it would keep going, in the voice of a news story, for paragraphs. It wasn't perfect. OpenAI's own post listed the failure modes. Repetitive text. Sudden changes of subject. And, in one of the best lines in any AI announcement, the model, quote, "sometimes writes about fires happening under water."

4:29Narrator But the headline wasn't the model. It was what OpenAI decided not to do with it.

4:35Narrator "Due to our concerns about malicious applications of the technology, we are not releasing the trained model."

4:42Narrator They released a much smaller version, and a paper. The full model stayed locked up. The post called this "an experiment in responsible disclosure." And it was honest about not knowing whether it was right: "we are not sure that it is the right decision today."

5:00Narrator The press heard it differently. The Guardian's headline that day read, "New AI fake text generator may be too dangerous to release, say creators." Notice those words, "too dangerous to release." They're the Guardian's. OpenAI's post never used them. But that's the phrase that stuck, and it's the phrase people still remember.

5:26Narrator In the same Guardian piece, OpenAI's head of policy, Jack Clark, gave the reporter a phrase of his own. Hold on to it. It's the title of our next episode. "I have a term for this," he said. "The escalator from hell."

5:42Narrator One more detail from that February post, and it matters later. At the bottom, in the list of authors, between Jeffrey Wu and Daniela Amodei, is the name Dario Amodei.

5:57Narrator Back to March, and the new company. How do you build a business that's allowed to make money, but promises not to put money first? OpenAI's answer was paperwork. Literally.

6:11Greg Brockman (post) Our employee and investor paperwork start with big purple boxes like this.

6:17Narrator The purple box, as the post describes it, says the company's first duty is to the OpenAI Charter, their mission statement, and not to the investors. Everyone who invests or joins signs agreements that the Charter comes first, quote, "even at the expense of some or all of their financial stake."

6:39Narrator And there was a second guardrail, in the boardroom. The nonprofit's board controls the company. Only a minority of that board can hold a financial stake. And on any decision where the investors' interests and the mission might collide, including payouts, only the board members without a stake get to vote.

7:00Narrator Keep that design in your head. A nonprofit board, mostly people with no money in the game, sitting on top of a company that might one day be worth more than almost anything. Four and a half years later, that board will use exactly that power. But that's episode ten.

7:20Narrator Who was on the board in March twenty-nineteen? The post lists them. Three employees: Greg Brockman, chairman and CTO. Ilya Sutskever, chief scientist. And Sam Altman, now listed with one word after his name. CEO. Then five people from outside: Adam D'Angelo, Holden Karnofsky, Reid Hoffman, Shivon Zilis, and Tasha McCauley.

7:47Narrator And there's one more line, about the man who isn't on that list.

7:53Greg Brockman (post) Elon Musk left the board of OpenAI Nonprofit in February twenty eighteen and is not formally involved with OpenAI LP. We are thankful for all his past help.

8:04Narrator Years later, in the middle of a lawsuit, OpenAI published its account of what happened before that post went up. They say they sent Musk an advance copy. And they say his only feedback was one sentence. "Please be explicit that I have no financial interest in the for-profit arm of OpenAI."

8:25Narrator That's OpenAI's telling, written by a party to the lawsuit, about a man who was by then suing them. Musk's case argues the opposite story: that the for-profit itself was a betrayal of what he funded. Both of those things can be in the record at once. We'll keep them side by side.

8:47Narrator Saturday, April thirteenth, two thousand nineteen. A month after the purple boxes. On a livestream, OpenAI's Dota bots, called OpenAI Five, play the reigning world champion team, a team called OG.

9:04Narrator They win. Two games, back to back. By OpenAI's account, it's the first time an AI has beaten the world champions in an esports game.

9:15Narrator The bots had lost to pros at the big tournament the summer before. So what changed? OpenAI's answer is one word.

9:25Narrator Compute. Eight times more training compute than the version that lost. In total, the post says, OpenAI Five had experienced about forty-five thousand years of Dota, playing itself, over ten real months.

9:40Narrator And then the line that explains this whole episode. They had expected to need clever new algorithms. Instead, they wrote, "the fundamental improvement we needed for this problem was scale."

9:56Narrator Scale. That is what the capped-profit company was built to buy. And three months later, someone would sell it to them.

10:05Narrator Four months later. Monday, July twenty-second, two thousand nineteen. A second announcement, again signed by Greg Brockman. And this time the number has a B in it.

10:19Greg Brockman (post) Microsoft is investing one billion dollars in OpenAI to support us building artificial general intelligence, with widely distributed economic benefits.

10:29Narrator In the same paragraph comes the part that matters as much as the money.

10:33Greg Brockman (post) We'll jointly develop new Azure AI supercomputing technologies, and Microsoft will become our exclusive cloud provider.

10:42Narrator Exclusive. Remember Altman's December email: "move our computing from Google to Microsoft." Seven months later, it isn't a vendor anymore. It's a partner, and the only cloud.

10:57Narrator Microsoft's chief executive, Satya Nadella, said in the joint announcement that the ambition was "to democratize AI, while always keeping AI safety front and center, so everyone can benefit."

11:11Narrator And Brockman's post reaches for the biggest picture it can. An AGI, it says, would be like a tool that combines the skills of three people.

11:22Greg Brockman (post) Like a tool which combines the skills of Curie, Turing, and Bach.

11:27Narrator What the post doesn't say is how the billion breaks down: how much is cash, and how much is computing time on Microsoft's own cloud. At the time, neither company said.

11:41Narrator Meanwhile, GPT-2 was getting out, a piece at a time. In May, OpenAI released a bigger version, three hundred forty-five million parameters, and shared the larger ones privately with partners. They gave the plan a name: staged release. The idea, in their words, was to "give people time to assess the properties of these models, discuss their societal implications, and evaluate the impacts of release after each stage."

12:14Narrator In August, a bigger one still. And some people in the field started asking whether the caution was the point, or the publicity was. Coverage that month pointed out the timing: a lab that had just taken a billion dollars from Microsoft, now drip-feeding a model the press had called too dangerous. OpenAI's answer was the same as in February. It's an experiment. We might be wrong.

12:43Narrator So here is where the bet stands, in the summer of twenty-nineteen. A capped-profit company, with a cap of a hundred times. A nonprofit board on top. A billion dollars, and one exclusive cloud. A model they wouldn't fully release. And one more sentence from that July post, which most people skimmed past. It's about how they'd pay for all that computing.

13:10Greg Brockman (post) The most obvious way to cover costs is to build a product, but that would mean changing our focus.

13:17Narrator So no product, then.

13:19Greg Brockman (post) Instead, we intend to license some of our pre-AGI technologies, with Microsoft becoming our preferred partner for commercializing them.

13:29Narrator Pre-AGI technologies. Things that are not the mission, but are on the way to it. Things you can sell. In less than a year, they would build the next one: a hundred times bigger than GPT-2. And this time, they wouldn't lock it up. They'd rent it out.

13:47Narrator Next time, on The Role Models. The Escalator.