Featured Article

Elon Musk used to say he put $100M in OpenAI, but now it’s $50M: Here are the receipts

Years of tax filings give the most complete picture yet of OpenAI’s early finances

Comment

Elon Musk and Sam Altman
Image Credits: Collage by TechCrunch / Getty Images

It’s no secret that Elon Musk has been deeply frustrated with OpenAI since stepping down from its board in February 2018, culminating in an open letter calling for the organization to pause work on more powerful systems.

“It does seem weird that something can be a nonprofit, open source and somehow transform itself into a for-profit, closed source,” Musk said in a CNBC interview Wednesday, following a Tesla shareholder’s meeting. “This would be like, let’s say you funded an organization to save the Amazon rainforest, and instead they became a lumber company, and chopped down the forest and sold it for money.”

The power of his criticism hinges on the fact that Musk helped launch the AI research organization. But exactly how much support he gave, even Musk seems unsure about.

“I’m still confused as to how a non-profit to which I donated ~$100M somehow became a $30B market cap for-profit. If this is legal, why doesn’t everyone do it?” he tweeted in mid-March. A week later he complained on Twitter again: “I donated the first $100M to OpenAI when it was a non-profit, but have no ownership or control.”

The $100 million figure has been widely reported as fact. But in the same CNBC interview yesterday, Musk abruptly shrank his claim. When asked how much he had donated to OpenAI, he replied: “I’m not sure the exact number but it’s some number on the order of $50 million.”

So what changed in the last eight weeks?

Following his original tweets in March, TechCrunch began an investigation into the funding behind the original OpenAI nonprofit, including Musk’s contributions. Our analysis of documents filed with the IRS and a state regulator show that Musk could not have given the nonprofit the $100 million he originally claimed.

In fact, while the source of much of OpenAI’s funding remains unclear, filings contain only around $15 million of donations that can be traced definitively back to Musk.

TechCrunch did not receive a response from Musk’s lawyer when presented with our analysis and asked for details of his financial support.

The tax filings also reveal previously unreported details about one of the most valuable and well-known technology ventures operating today, including the level of investment by Reid Hoffman, free Teslas for early OpenAI engineers and the skyrocketing computing bill that may have prompted it to take a $1 billion investment from Microsoft.

Nowhere near a billion-dollar effort

The financial side of OpenAI has been murky ever since the organization was announced by AI researchers Greg Brockman and Ilya Sutskever in December 2015. They wrote that OpenAI’s goal was to “advance digital intelligence in the way that is most likely to benefit humanity as a whole, unconstrained by a need to generate financial return.” The nonprofit would be co-chaired by Musk and Sam Altman.

The blog claimed that Altman, Musk and Brockman would donate to the new 501(c)3, along with Reid Hoffman, Peter Thiel, Amazon, Infosys, Y Combinator partner Jessica Livingston and YC Research, another nonprofit spun out of the startup accelerator. “In total, these funders have committed $1 billion,” they wrote. The next year, Wired duly reported OpenAI as a “billion dollar effort,” and that figure was subsequently widely shared.

But “committed” is not the same as “actually donated.” According to federal tax filings, at least one of the named donors, YC Research, never gave a single dollar, and the total amount donated to OpenAI’s nonprofit from its inception through 2021 was only $133.2 million. The vast majority of those funds arrived before the launch of OpenAI’s for-profit arm in 2019, and the nonprofit itself is now largely defunct. It received just $3,066 of donations in 2021.

Musk’s share

So how much of OpenAI’s $133 million did Musk donate? A good place to start is with his own 501(c)3 organization, the Musk Foundation.

In 2016, the Musk Foundation made a $10 million donation to yet another nonprofit associated with Altman, called YC.org. YC.org, in turn, made a $10 million donation to OpenAI. The reason for this roundabout route, explained an OpenAI spokesperson in 2019, was a delay in establishing OpenAI’s tax-exempt status with the IRS.

That $10 million donation remains the only publicly disclosed cash contribution from Musk to OpenAI. However, an audited financial statement filed by YC.org with California charity regulators in 2020 reveals that $15 million of the organization’s 2016 revenue came from a single contributor. Given that YC’s revenue for the whole year totaled $16.6 million, Musk is very likely to have been that contributor. YC subsequently gave OpenAI another $16 million in 2017, of which at least $5 million was likely Musk’s.

The only other donation that can be tied to Musk is a previously unreported gift to OpenAI in 2017 of $248,295 worth of Tesla vehicles, and a subsequent donation in 2018 for $14,105 in vehicle upgrades. An audited financial statement notes that the vehicles were provided to employees as compensation.

However, there are also ways to give money to a nonprofit anonymously. Rich individuals can cloak their gifts by funneling money through so-called donor advised funds (DAFs). The Musk Foundation donated $12.4 million in 2017, and $6.3 million in 2018, to a DAF called Fidelity Investments Charitable Gift Fund. That fund then donated $7.8 million to OpenAI between 2018 and 2020. There is no way to tell whether any of that money was Musk’s — the Fund has many donors and tens of billions of dollars in assets — but it is impossible to rule out.

Companies and individuals can donate to nonprofits directly without their identities being made public. Musk likely did this with the additional $5 million gift to YC.org in 2016. Perhaps he simply topped up his OpenAI donations to $50 or $100 million the same way?

Several weeks ago, Musk’s representative was presented with TechCrunch’s reporting but did not reply to requests for comment. The only way to put a limit on Musk’s contributions was to count up the gifts to OpenAI from other donors and see how much was left over.

The nonprofits accelerating Sam Altman’s AI vision

The other founders’ share

Sam Altman, now OpenAI’s CEO, made a contribution, the organization’s 2016 IRS filing shows. He loaned the young organization $3.75 million to get it started — and then forgave the full amount, with interest, for a total gift of $3,784,637.

Hoffman used his own foundation, Aphorism, to give $1 million to YC in 2016, which the organization seems to have passed on to OpenAI in 2017. Aphorism then followed up with a $5 million donation direct to OpenAI in 2017 and 2018.

Amazon and Microsoft donated at least $800,000 in cloud computing services, and Infosys confirmed to TechCrunch that it had made a donation. None of the companies would put a dollar amount on their contributions. There were other corporate gifts in-kind, including a $129,000 high-performance computer from Nvidia, as well as software and services from over a dozen other companies.

OpenAI would not share details of contributions made by Brockman or Livingston. Likewise, there is no record of Peter Thiel providing any funds to OpenAI, nor did his VC firm reply to a request for information. However, there was a modest $100,000 donation in 2018 from Donor’s Trust, a DAF favored by conservatives and libertarians, among whom Thiel has been counted.

In 2017, Open Philanthropy announced a $30 million donation to OpenAI, which was delivered in three $10 million gifts in 2017, 2018 and 2019, through a nonprofit controlled by Facebook co-founder Dustin Moskovitz. Open Philanthropy’s CEO, Holden Karnofsky, was given a seat on OpenAI’s board.

“We see some risks, both from unintended consequences of AI use, and from deliberate misuse, and believe that we — as a philanthropic organization, separate from academia, industry, and government — may be well-placed to support work to reduce those risks,” the organization wrote at the time.

The cost of computing

As OpenAI scaled, its costs began rising fast. On top of employing super-star AI researchers with multimillion-dollar salaries, OpenAI’s computing bill had increased exponentially and in-kind computing donations were just a drop in the bucket. According to its tax filings, OpenAI spent $2.3 million on cloud computing in 2016, $7.9 million in 2017 and $30.6 million in 2018.

In February 2018, OpenAI switched cloud providers from Amazon to Google, signing an agreement to spend at least $63 million with the tech giant over the next two years. Musk left OpenAI’s board the same month. The events may be unconnected, although Semafor reported recently that Musk thought OpenAI was slipping behind Google, and walked away after the other founders rejected his offer to run the nonprofit.

According to insiders at OpenAI contacted by Semafor, Musk stopped making donations at that point, precipitating the spin-out of a for-profit OpenAI LP that would welcome outside investors. By the summer of 2019, OpenAI had already spent its Google computing money and was looking for another deal.

In July, Microsoft invested around $1 billion in the new for-profit entity — with about half the funds in the form of credits for its own Azure cloud computing service.

Musk has publicly decried OpenAI’s transition to a for-profit business.

Its other big donor, Moskovitz, also seems to have soured on the effort. In a conversation on a philanthropy forum in March, he posted: “My hope is we actually slowed acceleration by participating but I’m quite skeptical of the view that we added to it.”

Not every founding donor felt the same. Reid Hoffman’s Aphorism foundation invested a previously unreported $50 million in OpenAI’s for-profit venture in 2018. Aphorism justified the charitable investment by writing that the new business aimed to provide AI “technology to the public through open source licensing where appropriate to benefit the public.”

None of the recent versions of OpenAI’s ChatGPT chatbot have been open source.

With Musk’s departure, OpenAI welcomed six new board members, each of whom also became a donor, according to the organization. Neither they nor OpenAI would share how much they gave, but the next year, OpenAI received its last major public gift: $30 million from a DAF called the Silicon Valley Community Foundation. There is no record of Musk or his foundation ever donating to that DAF.

The bottom line

Adding up all the non-Musk contributions to OpenAI (including the Silicon Valley Community Foundation money) gives a total of $75.8 million, out of $133.2 million. That means the most Musk could have donated to OpenAI would likely have been $57.4 million — a far cry from the $100 million he originally claimed, but close to the figure he mentioned Wednesday.

However, this number assumes that three founding donors (including Thiel), six newer donors and multiple corporate supporters like Infosys, gave nothing at all.

In the bigger scheme of Musk’s finances, a discrepancy of $35 million, $50 million or even $85 million is little more than a rounding error. With Musk recently valuing Twitter at just $20 billion, the world’s second richest person has lost well over $100 million every day since buying the company last fall.

Correction: Sam Altman was president of Y Combinator, not a co-founder.

More TechCrunch

Welcome back to TechCrunch’s Week in Review. This week had two major events from OpenAI and Google. OpenAI’s spring update event saw the reveal of its new model, GPT-4o, which…

OpenAI and Google lay out their competing AI visions

Expedia says Rathi Murthy and Sreenivas Rachamadugu, respectively its CTO and senior vice president of core services product & engineering, are no longer employed at the travel booking company. In…

Expedia says two execs dismissed after ‘violation of company policy’

When Jeffrey Wang posted to X asking if anyone wanted to go in on an order of fancy-but-affordable office nap pods, he didn’t expect the post to go viral.

With AI startups booming, nap pods and Silicon Valley hustle culture are back

OpenAI’s Superalignment team, responsible for developing ways to govern and steer “superintelligent” AI systems, was promised 20% of the company’s compute resources, according to a person from that team. But…

OpenAI created a team to control ‘superintelligent’ AI — then let it wither, source says

A new crop of early-stage startups — along with some recent VC investments — illustrates a niche emerging in the autonomous vehicle technology sector. Unlike the companies bringing robotaxis to…

VCs and the military are fueling self-driving startups that don’t need roads

When the founders of Sagetap, Sahil Khanna and Kevin Hughes, started working at early-stage enterprise software startups, they were surprised to find that the companies they worked at were trying…

Deal Dive: Sagetap looks to bring enterprise software sales into the 21st century

Keeping up with an industry as fast-moving as AI is a tall order. So until an AI can do it for you, here’s a handy roundup of recent stories in the world…

This Week in AI: OpenAI moves away from safety

After Apple loosened its App Store guidelines to permit game emulators, the retro game emulator Delta — an app 10 years in the making — hit the top of the…

Adobe comes after indie game emulator Delta for copying its logo

Meta is once again taking on its competitors by developing a feature that borrows concepts from others — in this case, BeReal and Snapchat. The company is developing a feature…

Meta’s latest experiment borrows from BeReal’s and Snapchat’s core ideas

Welcome to Startups Weekly! We’ve been drowning in AI news this week, with Google’s I/O setting the pace. And Elon Musk rages against the machine.

Startups Weekly: It’s the dawning of the age of AI — plus,  Musk is raging against the machine

IndieBio’s Bay Area incubator is about to debut its 15th cohort of biotech startups. We took special note of a few, which were making some major, bordering on ludicrous, claims…

IndieBio’s SF incubator lineup is making some wild biotech promises

YouTube TV has announced that its multiview feature for watching four streams at once is now available on Android phones and tablets. The Android launch comes two months after YouTube…

YouTube TV’s ‘multiview’ feature is now available on Android phones and tablets

Featured Article

Two Santa Cruz students uncover security bug that could let millions do their laundry for free

CSC ServiceWorks provides laundry machines to thousands of residential homes and universities, but the company ignored requests to fix a security bug.

1 day ago
Two Santa Cruz students uncover security bug that could let millions do their laundry for free

TechCrunch Disrupt 2024 is just around the corner, and the buzz is palpable. But what if we told you there’s a chance for you to not just attend, but also…

Harness the TechCrunch Effect: Host a Side Event at Disrupt 2024

Decks are all about telling a compelling story and Goodcarbon does a good job on that front. But there’s important information missing too.

Pitch Deck Teardown: Goodcarbon’s $5.5M seed deck

Slack is making it difficult for its customers if they want the company to stop using its data for model training.

Slack under attack over sneaky AI training policy

A Texas-based company that provides health insurance and benefit plans disclosed a data breach affecting almost 2.5 million people, some of whom had their Social Security number stolen. WebTPA said…

Healthcare company WebTPA discloses breach affecting 2.5 million people

Featured Article

Microsoft dodges UK antitrust scrutiny over its Mistral AI stake

Microsoft won’t be facing antitrust scrutiny in the U.K. over its recent investment into French AI startup Mistral AI.

1 day ago
Microsoft dodges UK antitrust scrutiny over its Mistral AI stake

Ember has partnered with HSBC in the U.K. so that the bank’s business customers can access Ember’s services from their online accounts.

Embedded finance is still trendy as accounting automation startup Ember partners with HSBC UK

Kudos uses AI to figure out consumer spending habits so it can then provide more personalized financial advice, like maximizing rewards and utilizing credit effectively.

Kudos lands $10M for an AI smart wallet that picks the best credit card for purchases

The EU’s warning comes after Microsoft failed to respond to a legally binding request for information that focused on its generative AI tools.

EU warns Microsoft it could be fined billions over missing GenAI risk info

The prospects for troubled banking-as-a-service startup Synapse have gone from bad to worse this week after a United States Trustee filed an emergency motion on Wednesday.  The trustee is asking…

A US Trustee wants troubled fintech Synapse to be liquidated via Chapter 7 bankruptcy, cites ‘gross mismanagement’

U.K.-based Seraphim Space is spinning up its 13th accelerator program, with nine participating companies working on a range of tech from propulsion to in-space manufacturing and space situational awareness. The…

Seraphim’s latest space accelerator welcomes nine companies

OpenAI has reached a deal with Reddit to use the social news site’s data for training AI models. In a blog post on OpenAI’s press relations site, the company said…

OpenAI inks deal to train AI on Reddit data

X users will now be able to discover posts from new Communities that are trending directly from an Explore tab within the section.

X pushes more users to Communities

For Mark Zuckerberg’s 40th birthday, his wife got him a photoshoot. Zuckerberg gives the camera a sly smile as he sits amid a carefully crafted re-creation of his childhood bedroom.…

Mark Zuckerberg’s makeover: Midlife crisis or carefully crafted rebrand?

Strava announced a slew of features, including AI to weed out leaderboard cheats, a new ‘family’ subscription plan, dark mode and more.

Strava taps AI to weed out leaderboard cheats, unveils ‘family’ plan, dark mode and more

We all fall down sometimes. Astronauts are no exception. You need to be in peak physical condition for space travel, but bulky space suits and lower gravity levels can be…

Astronauts fall over. Robotic limbs can help them back up.

Microsoft will launch its custom Cobalt 100 chips to customers as a public preview at its Build conference next week, TechCrunch has learned. In an analyst briefing ahead of Build,…

Microsoft’s custom Cobalt chips will come to Azure next week

What a wild week for transportation news! It was a smorgasbord of news that seemed to touch every sector and theme in transportation.

Tesla keeps cutting jobs and the feds probe Waymo