Elon Musk and OpenAI: Funding Mysteries and Unanswered Questions

A Closer Look at Funding Claims

Elon Musk’s relationship with OpenAI has been fraught with tension since he stepped down from its board in 2018. In a recent CNBC interview, Musk expressed confusion about the transformation of OpenAI from a nonprofit, open-source entity to a for-profit, closed-source organization.

Discrepancies in Musk’s Donation Claims

Musk initially claimed that he had donated approximately $100 million to OpenAI when it was a nonprofit. However, in the same CNBC interview, he unexpectedly lowered his claim to around $50 million. This raised questions about the actual amount he contributed to OpenAI, prompting further investigation.

Investigating OpenAI’s Funding

According to federal tax filings and documents filed with the IRS, the total amount donated to OpenAI’s nonprofit from its inception through 2021 was only $133.2 million. Despite Musk’s claim of a $100 million donation, filings only show around $15 million of donations traced definitively back to him.

The Funding Puzzle

While the sources of much of OpenAI’s funding remain unclear, it is known that Sam Altman, Reid Hoffman, Amazon, Microsoft, and others contributed to the organization. For example, Altman forgave a $3.75 million loan to OpenAI, effectively donating the amount with interest. Hoffman’s foundation, Aphorism, donated $1 million to OpenAI through another nonprofit, YC.org.

The Rising Costs of OpenAI

As OpenAI’s operations grew, its costs increased significantly. The organization’s computing bill alone rose from $2.3 million in 2016 to $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 Google over the next two years. This coincided with Musk’s departure from OpenAI’s board, possibly due to disagreements about the direction of the nonprofit.

OpenAI’s Transition to a For-Profit Model

As part of its transition to a for-profit model, Microsoft invested around $1 billion in OpenAI in July 2019, with about half of the funds in the form of credits for its Azure cloud computing service. Musk has publicly criticized OpenAI’s move to a for-profit business. Meanwhile, Reid Hoffman’s Aphorism foundation invested an unreported $50 million in OpenAI’s for-profit venture in 2018.

The Bottom Line

Based on the current available information, Musk’s total contributions to OpenAI would likely have been around $57.4 million. This number assumes that several other founding donors and corporate supporters gave nothing at all, which is highly unlikely. Nevertheless, there remains a discrepancy between Musk’s initial claim of $100 million and the later figure of around $50 million, leaving questions about the full extent of his contributions to OpenAI unresolved.