Sam Altman, CEO of OpenAI participates in the “Charting the Path Forward: The Future of Artificial Intelligence” at the Asia-Pacific Economic Cooperation (APEC) Leaders’ Week in San Francisco, California, on November 16, 2023.
Andrew Caballero-Reynolds | AFP | Getty Images
OpenAI’s tender offer, which would allow employees to sell shares in the start-up to outside investors, remains on track despite the leadership tumult and board shuffle, two people familiar with the matter told CNBC.
The tender offer will value OpenAI at the same levels as previously reported in October, around $86 billion, and is being led by Josh Kushner’s Thrive Capital, according to the people familiar, who spoke anonymously to discuss private communications freely.
The round and previously reported valuation were jeopardized by Sam Altman’s temporary ouster earlier in November, but his return cleared the way for the tender offer to proceed.
Tender offers do not involve the issuance of new equity. Instead, Thrive and other involved investors will buy existing units belonging largely to employees, giving them liquidity. The $86 billion round is three times OpenAI’s previous fundraise in April, which valued the company at around $28 billion.
Another person familiar told CNBC that the round had been extended to January 5.
The extension of the tender offer comes after a rollercoaster couple of weeks for the company. OpenAI’s nonprofit board argued that Altman “was not consistently candid in his communications with the board” as CEO, and his subsequent departure incited uproar from investors and employees alike, especially after Microsoft CEO Satya Nadella said Altman and OpenAI president Greg Brockman would lead a new AI lab under Microsoft. Employees threatened to walk en masse, signing an open letter and commenting in support of Altman on social media, which led in part to a significant turnover of OpenAI’s board.
On Wednesday, OpenAI announced Altman and Brockman’s official return to their previous roles, along with a new board, including former Salesforce co-CEO Bret Taylor, former Treasury Secretary Larry Summers and Quora CEO Adam D’Angelo.
Microsoft obtained a non-voting board observer position, OpenAI said Wednesday. Nadella had previously told CNBC that new governance would be required at the startup. Microsoft holds a 49% stake in OpenAI.
Not all major backers will receive a director position. Tiger Global will not likely pursue a board seat, a person familiar with the matter said, in line with the firm’s longstanding practice. OpenAI’s other major backers include Founders Fund, Sequoia Capital and, following the completion of the tender offer, Thrive Capital.
Sequoia Capital declined to comment on whether it would be involved in the upcoming tender. Founders Fund will not participate in the tender offer either, a person familiar with the firm said. A spokesperson for Thrive declined to comment beyond saying it remained “committed” to OpenAI.
OpenAI did not immediately respond to CNBC’s request for comment.
— CNBC’s Ari Levy & Jordan Novet contributed to this report.
OpenAI says in memo that Musk’s claims ‘stem from Elon’s regrets’ that he’s not part of company
Sam Altman, CEO of OpenAI, at the Hope Global Forums annual meeting in Atlanta on Dec. 11, 2023.
Dustin Chambers | Bloomberg | Getty Images
“We believe the claims in this suit may stem from Elon’s regrets about not being involved with the company today,” wrote OpenAI Chief Strategy Officer Jason Kwon in an internal memo on Friday that was viewed by CNBC. “It is deeply disappointing to see Elon take this action against a company he helped start, especially given his close collaboration with some of you who are still here working towards the mission.”
Musk co-founded OpenAI in 2015 and stepped down from its board in 2018, four years after saying that AI is “potentially more dangerous than nukes.”
Musk is now suing Microsoft–backed OpenAI and CEO Sam Altman, among others, alleging they abandoned the company’s founding mission to develop artificial intelligence “for the benefit of humanity broadly.”
Since releasing the ChatGPT chatbot to the public in late 2022, OpenAI has become one of the hottest startups on the planet, with a valuation reportedly over $80 billion. The company’s convoluted “capped-profit” structure resulted in Altman being briefly ousted by the board late last year, before an uproar among investors and employees led to his quick reinstatement.
Musk has long wanted recognition for his central role in the creation of OpenAI, and he spent large chunks of the lawsuit telling his version of events. His lawyers said in the suit that Musk was approached in 2015 by Altman and OpenAI co-founder Greg Brockman and agreed to form a nonprofit lab that would develop artificial general intelligence, or AGI, outside of the corporate sphere.
Musk’s attorneys said their client contributed over $15 million to OpenAI in 2016, which was “more than any other donor” and helped the startup build a team of “top talent.” The next year, Musk gave nearly $20 million to OpenAI, which the attorneys reiterated was more than other backers. In total, Musk invested over $44 million into OpenAI from 2016 through September 2020, according to the suit.
Additionally, Musk leased OpenAI’s initial office space “and paid the monthly rental expenses,” the suit said. He was also “present for important company milestones.”
Kwon didn’t dispute Musk’s central role in the early days of OpenAI, but he added some other details. For example, Kwon wrote that Musk at one point indicated he needed “full initial control and majority equity” and later suggested that OpenAI merge with Tesla.
“We did not think either approach was right for the mission,” Kwon wrote.
In the memo, Altman called Musk a hero of his and said the he misses the old version of his co-founder. But he said the company’s mission continues.
While it’s the first time the dispute between the two sides has resulted in a fiery lawsuit, they’ve been at odds for a while.
Before he split with OpenAI, Tesla hired co-founder Andrej Karpathy as senior director of AI. Karpathy returned to OpenAI in 2023. And Musk has been notably vocal in his opposition to OpenAI and its Microsoft partnership in recent years, stating publicly in November that OpenAI had deviated from its original mission.
“OpenAI should be renamed ‘super closed source for maximum profit AI,’ because this is what it actually is,” Musk said onstage at The New York Times’ DealBook conference. Regarding OpenAI’s transformation from an “open source foundation” to a multibillion-dollar for-profit company, Musk said, “I don’t know, is this legal?”
Kwon insisted on Friday that OpenAI is independent and continues to work “to ensure AGI benefits all of humanity.”
Musk’s lawyers didn’t immediately respond to a request for comment.
— CNBC’s Lora Kolodny and Hayden Field contributed to this report
Waymo approved by regulator to expand robotaxi service in Los Angeles, San Francisco Peninsula
Passengers ride in an electric Waymo full self-driving technology in Santa Monica
Allen J. Schaben | Los Angeles Times | Getty Images
Alphabet’s Waymo robotaxi unit won approval from the California Public Utilities Commission to expand service to parts of Los Angeles and the Bay Area, according to a notice posted to the regulator’s website on Friday.
“Waymo may begin fared driverless passenger service operations in the specified areas of Los Angeles and the San Francisco Peninsula, effective today,” the release said.
In mid-February, Waymo initiated a voluntary recall filing notice with the National Highway Traffic Safety Administration, saying it would fix software issues. The recall followed two previously undisclosed incidents that occurred in Phoenix on Dec. 11, in which unmanned Waymo vehicles crashed into the same towed pickup truck within minutes of each other.
The collisions added to existing concerns about autonomous vehicle use in California. Competing taxi and transit service providers and labor activists are worried about the loss of drivers’ jobs, while safety advocates wrote letters to regulators and politicians asking them to thwart Waymo’s expansion in the state.
The CPUC in February had suspended Waymo’s expansion efforts for up to 120 days to provide for added review time.
In its letter on Friday, the regulator said it was approving the new proposal, due in part to “Waymo’s updated Passenger Safety Plan (PSP), submitted in connection with its expanded operational design domain (ODD) for deployment,” which was also approved by the California Department of Motor Vehicles.
“We’re grateful to the CPUC for this vote of confidence in our operations, which paves the way for the deployment of our commercial Waymo One service in Los Angeles and the San Francisco Peninsula,” a Waymo spokesperson said in a statement.
Waymo’s progress in California comes after General Motors-owned Cruise and Apple bowed out of the autonomous vehicle business in California, while Elon Musk’s Tesla has yet to develop an autonomous vehicle that can safely operate without a human driver at the controls.
California regulators halted operations of self-driving Cruise robotaxis in October after a series of incidents, including one that resulted in a robotaxi rolling over a pedestrian who had first been hit by a human-driven car and was then pulled forward about 20 feet by the Cruise vehicle.
Waymo’s new approvals allow the company’s robotaxis to operate close to Tesla’s Palo Alto engineering headquarters in San Mateo County.
The latest notice applies to the commercial ride-sharing service Waymo One. The company has deployed testing vehicles in those areas for several years.
Super Micro joining S&P 500 after stock price soars more than 20-fold in two years
David Paul Morris | Bloomberg | Getty Images
Super Micro Computer is joining the S&P 500 following a historic rally in the stock that has pushed the company’s market cap past $50 billion.
The shares, up more than 20-fold in the past two years and over 200% just since the start of 2024, climbed another 8% in extended trading on Friday.
Stocks added to the benchmark index often rise in value because funds that track the S&P 500 will add it to their portfolios. The median market cap for companies in the S&P 500 is $33.7 billion.
Super Micro has been one of the main beneficiaries of the artificial intelligence boom sweeping the technology industry. The company makes servers and other computer infrastructure, and it’s one of the primary vendors for building out Nvidia-based “clusters” of servers for training and deploying AI models.
In the quarter that ended December, Super Micro’s revenue more than doubled to $3.66 billion. Analysts expect sales in the current quarter to more than triple.
“We see Nvidia’s results as a positive data point for SMCI which is one of the leading partners that designs and manufactures servers to wrap around the GPUs and customizes racks to the specific needs of a customer,” Bank of America analyst Ruplu Bhattacharya wrote in a note last month. He has a buy rating on the stock.
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