I can't believe I'm about to defend VCs and "senior management" but here goes.
I've worked for two start-ups in my life.
The first start-up had dog-shit technology (initially) and top-notch management. CEO told me early on that VCs invest on the quality of management because they trust good senior executives to hire good researchers and let them pivot into profitable areas (and pivoting is almost always needed).
I thought the CEO was full of shit and simply patting himself on the back. Company pivoted HARD and IPOed around 2006 and now has a MC of ~ $10 billion.
The second start-up I worked with was founded by a Nobel laureate and the tech was based on his research. This time management was dog-shit. Management fumbled the tech and went out of business.
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Not saying Altman deserves uncritical praise. All I'm saying is that I used to diminish the importance of quality senior leadership.
The interesting thing is you used economic values to show their importance, not what innovations or changes they achieved. Which is fine for ordinary companies, but OpenAI is supposed to be a non-profit, so these metrics should not be relevant. Otherwise, what's the difference?
A great analogy can be found on basketball teams. Lots of star players who should succeed sans any coach, but Phil Jackson and Coach K have shown time and again the important role leadership plays.
You're doing the same thing except with finances. Non-profit doesn't mean finances are irrelevant. It simply means there are no shareholders. Non-profits are still businesses - no money, no mission.
Of course you need the people who can deep dive and solve complex issues, none doubts that.
My take is its not cheap to do what they are doing and adding a capped for-profit side is an interesting take. Afterall, OpenAI's mission clearly states that AGI is happening and if thats true, those profit caps are probably trivial to meet.
The management skills which you potentiated differentiated the success of the two firms. I can see how the lack of this might be wildly spread out in academia.
You can see this at the micro level in a scrum team between the scrummaster, the product owner, and the tech lead.
Money is just a way to value things relative to other things. It's not interesting to value something using money.
Quality senior leadership is, indeed, very important.
However, far, far too many people see "their company makes a lot of money" or "they are charismatic and talk a good game" and think that means the senior leadership is high-quality.
True quality is much harder to measure, especially in the short term. As you imply, part of it is being able to choose good management—but measuring the quality of management is also hard, and most of the corporate world today has utterly backwards ideas about what actually makes good managers (eg, "willing to abuse employees to force them to work long hours", etc).
I could not convince them that this was actually evidence in favor of Coach K being an exceptional coach.
That’s it. Nonprofit corporations are still corporations in every other way.
You can get big salaries; and to push the money outside it's very simple, you just need to spend it through other companies.
Additional bonus with some structures: If the co-investors are also the donators to the non-profit, they can deduct these donations from their taxes, and still pocket-back the profit, it's a double-win.
No conspiracy needed, for example, it's very convenient that MSFT can politely "influence" OpenAI to spend back on their platform a lot of the money they gave to the non-profit back to their for-profit (and profitable) company.
For example, you can create a chip company, and use the non-profit to buy your chips.
Then the profit is channeled to you and your co-investors in the chip company.
Absolutely. The focus on the leadership of OpenAI isn't because people think that the top researchers and scientists are unimportant. It's because they realize that they are important, and as such, the person who decides the direction they go in is extremely important. End up with the wrong person at the top, and all of those researchers and scientists end up wasting time spinning wheels on things that will never reach the public.
Sure, you can talk about results in terms of their monetary value but it doesn’t make sense to think of it in terms of the profit generated directly by the actor.
For example Pfizer made huge profits off of the COVID-19 vaccine. But that vaccine would never have been possible without foundational research conducted in universities in the US and Germany which established the viability in vivo of mRNA.
Pfizer made billions and many lives were saved using the work of academics (which also laid the groundwork for future valuable vaccines). The profit made by the academics and universities was minimal in comparison.
So, whose work was more valuable?
Can you explain this further? So Microsoft pays $X to OpenAI, then OpenAI uses a lot of energy and hardware from Microsoft and the $X go back to Microsoft. How does Microsoft gain money this way?
For example, let's say I'm a big for-profit selling shovels. You're a naive non-profit who needs shovels to build some next gen technology. Turns out you need a lot of shovels and donations so far haven't cut it. I step in and offer to give you all the shovels you need, but I want special access to what you create. And even if it's not codified, you will naturally feel indebted to me. I gain huge upside for just my marginal cost of creating the shovels. And, if I gave the shovels to a non-profit I can also take tax write-offs at the shovel market value.
TBH, it was an amazing move by MS. And MS was the only big cloud provider who could have done it b/c Sataya appears collaborative and willing to partner. Amazon would have been an obvious choice, but they don't partnership like that and instead tend to buy companies or repurpose OSS. And Google can't get out of their own way with their hubris.
Because what you just described would happen the same way with a for-profit company, no?