Elon Musk’s $97.4 Billion Power Play: A Battle for OpenAI’s Soul
09:40 Share

This is an ad from BetterHelp Online Therapy. We always hear about the red flags to avoid in relationships, but it's just as important to focus on the green flags. If you're not quite sure what they look like, therapy can help you identify those qualities so you can embody the green flag energy and find it in others. BetterHelp offers therapy 100% online, and sign-up only takes a few minutes. Visit BetterHelp.com today to get 10% off your first month. That's BetterHelp, H-E-L-P dot com.

This episode is brought to you by Nerds Gummy Clusters, the sweet treat that always elevates the vibe. With a sweet gummy surrounded with tangy, crunchy nerds, every bite of Nerds Gummy Clusters brings you a whole new world of flavor. Whether it's game night, on the way to a concert, or kicking back with your crew, unleash your senses with Nerds Gummy Clusters. This episode is brought to you by Shopify. Shopify.

Forget the frustration of picking commerce platforms when you switch your business to Shopify, the global commerce platform that supercharges your selling wherever you sell. With Shopify, you'll harness the same intuitive features, trusted apps, and powerful analytics used by the world's leading brands. Sign up today for your $1 per month trial period at shopify.com slash tech, all lowercase. That's shopify.com slash tech.

Hey everybody, welcome back to the Elon Musk podcast. This is a show where we discuss the critical crossroads that shape SpaceX, Tesla, X, The Boring Company, and Neuralink. I'm your host, Will Walden. So remember months and months ago when Elon Musk was grouchy about OpenAI and he never wanted to be a part of it and he was yelling about Sam Altman and the company and how it changed from an

open AI structure to a closed AI structure from a nonprofit to a profit-driven company. Well, now Elon Musk is possibly going to try and buy OpenAI. And could this bid disrupt OpenAI's massive new funding plans? And what does this mean for Sam, who has been steadily consolidating his control over the company?

Now, at the center of this is personal feelings between Elon Musk and Sam Altman. Sam holds Elon in high regard for the things that he's done, but I believe Elon Musk doesn't hold Sam in the same regard.

A group of investors led by Elon Musk has made an unsolicited $97.4 billion offer to acquire the assets of the nonprofit entity that governs OpenAI, according to two individuals familiar with this bid. This move marks the latest chapter in Musk's long-running rivalry with OpenAI's chief executive, Sam Altman, and the investment group includes OpenAI.

Vi Capital, Elon Musk's AI company, XAI, and Hollywood executive Ari Emanuel, among others. Now, the bid presents a challenge to OpenAI's current leadership and its efforts to raise additional capital. And all of them responded with a dismissive tone, posting on X, no thank you, but we will buy Twitter for $9.74 billion if you want. Now, Musk replied with a single word, swindler.

While the bid has yet to be formally reviewed by OpenAI's board, it arrives at a critical moment as the company works to secure a $40 billion investment from SoftBank, which would bring its valuation to $300 billion.

Now, I was looking through our statistics here at the Elon Musk podcast, and I noticed that some of you that listen to this are already subscribed to the show. It's about 50% of you that listen to the show are already subscribed. So thank you for subscribing to the show or following whatever podcast platform you're on right now. The other 50% of you come in, hang out, listen to a bunch of episodes, but never take the small step of

the free step of hitting subscribe or follow. Now, if you do that for me, I'm going to guarantee you that I will continue working as hard as humanly possible to continue bringing you new episodes every single day. And each one will be better than last. So that's all I ask. Just hit the subscribe or follow button and in

In turn, you'll get more episodes. Now, the Wall Street Journal first reported on this offer, which is viewed as a direct counter to OpenAI's ongoing fundraising efforts. SoftBank's proposed investment would be one of the largest ever made in a private AI company.

And if successful, OpenAI would be valued alongside major tech firms from Elon Musk, SpaceX, and also another one not from Elon, ByteDance, the parent company of TikTok. According to three individuals with knowledge of the negotiations, SoftBank intends to contribute up to $40 billion, with other investors covering the remaining portion of this deal.

Now, Musk's big bid introduces a layer of uncertainty to OpenAI's current transition. Since his departure from OpenAI in 2018, Musk has been openly critical of the company's direction. Initially founded in 2015 as a non-profit focused on AI research, OpenAI later shifted to a for-profit structure under Altman's leadership to attract the substantial funding required to develop AI technologies.

However, the nonprofit board still maintains ultimate control over the organization, creating an unusual governance structure.

Now, back in November of 2023, this dynamic became apparent when the nonprofit board unexpectedly fired Sam Altman, setting concerns about whether he was staying true to OpenAI's mission of benefiting humanity. And his dismissal was met with strong backlash. And after five days, Altman returned to his position, reinforcing his control by reshaping the board to include his allies, firing everybody that didn't agree with him.

Since then, OpenAI leadership has been exploring ways to break away from the nonprofit's oversight. Musk's bid appears to exploit a potential weakness in OpenAI's structure. While OpenAI's for-profit business is valued in the hundreds of billions, the nonprofit that governs it is considerably smaller, with only two employees and $22 million in assets.

However, because the nonprofit holds legal authority over OpenAI, its control is valuable. Musk's offer aims to set a high market price for these assets, which could complicate OpenAI's ability to negotiate its independence. Imagine what's possible when learning doesn't get in the way of life.

At Capella University, our game-changing FlexPath learning format lets you set your own deadlines so you can learn at a time and pace that works for you. It's an education you can tailor to your schedule. That means you don't have to put your life on hold to pursue your professional goals. Instead, enjoy learning your way and earn your degree without missing a beat. A different future is closer than you think with Capella University. Learn more at capella.edu.

When the game tips off, the NBA action is just beginning on FanDuel, America's number one sportsbook. Because FanDuel is your home for NBA live betting, however you want to play. Now is the perfect time to join. Make every moment more with FanDuel, official sports betting partner of the NBA. 21 plus and present in Virginia. First online, real money wager only. $5 first deposit required. Bonus issued is non-withdrawable bonus bets which expire seven days after receipt. Restrictions apply. See terms at sportsbook.fanduel.com. Gambling problem? Call 1-800-GAMBLER.

Now, if Sam Altman and the present OpenAI Inc. Board of Directors are intent on becoming a fully for-profit corporation, it is vital that the charity be fairly compensated for what its leadership is taking away from it, control over the most transformative technology of our time. Now, that's from Mark Toperoff, a lawyer representing Elon Musk in a lawsuit against OpenAI.

Now, Ellen P. April, who's a nonprofit law expert at the University of California, Los Angeles, said that OpenAI's board has a legal responsibility to ensure it sells assets at fair market value. If it were to reject Musk's offer in favor of a lower deal from OpenAI's for-profit division, it could face scrutiny from state charity regulators. It's an enormous complication for the current plan.

Now, the issue has already drawn attention from regulatory authorities, both California, where OpenAI is based, and Delaware, where it's incorporated, are examining OpenAI's governance and whether the nonprofit can legally relinquish control. And beyond the financial and legal implications, Musk's bid is also deeply political. In 2023, he'll launch his own AI company, XAI, to compete with OpenAI, which is a

other major factors or players in artificial intelligence. While XAI has made progress, OpenAI remains far ahead in developing and deploying AI models. They're the gold standard. And at the same time, Altman has cultivated strong political connections, particularly in Washington, giving him an advantage in shaping AI policy. Mm.

maybe not now considering where Elon Musk is with the current administration. Musk, who is now a close advisor to President Donald Trump, has used his political influence to push back against OpenAI's growing dominance. Just days after Trump took office, he supported a $100 billion AI infrastructure project backed by OpenAI, SoftBank, and Oracle. Trump praised the initiative, calling it the largest AI infrastructure project by far in history.

And the timing of Musk's bid suggests he wants to complicate OpenAI's effort at a critical moment. And on the same day the offer was submitted, Altman was in Paris attending an AI conference with global political and business leaders.

now including French President Emmanuel Macron and U.S. Vice President J.D. Vance. For now, OpenAI has not officially responded to Elon Musk. However, the bid has introduced new challenges as the company tries to secure its independence from the nonprofit board while maintaining investor confidence. If the board acknowledges Musk's bid as a legitimate valuation, OpenAI may need to pay significantly more to remove the nonprofit's oversight.

And it's uncertain what's going to happen. We're going to keep you abreast of this over the coming weeks and months. So please hit that subscribe or follow button on whatever podcast platform you're on right now. But what is clear right now is that Musk's influence over the AI industry is far from over.

He is a staunch businessman. He will take over anything that he wants. He'll find a way. And because he's one of the richest people in the world, if not the richest single person in the world, he has the money to do it. And he can find the backers to help him do whatever he wants. His latest move ensures that OpenAI's future will remain a subject of intense debate for the coming months, possibly the next year. So stay tuned.

Hey, thank you so much for listening today. I really do appreciate your support. If you could take a second and hit this subscribe or the follow button on whatever podcast platform that you're listening on right now, I greatly appreciate it. It helps out the show tremendously and you'll never miss an episode. And each episode is about 10 minutes or less to get you caught up quickly. And please, if you want to support the show even more, go to patreon.com slash stage zero.

And please take care of yourselves and each other, and I'll see you tomorrow.