Controversy Brews Over Sam Altman’s Stake in OpenAI

**Jaeden Schafer** (0:05)
Welcome to the AI Chat Podcast. I'm your host, Jaeden Schafer. Today on the podcast, we're talking about the fact that Sam Altman, who famously told Congress he never owned any equity, might actually have owned some equity in OpenAI. In addition to that, a whole bunch of drama in converting them from a non-profit to a for-profit. Some lawsuits recently launched against them and some letters that Metta has sent to the government over in California, kind of trying to get in the way of this move by OpenAI. There's a lot of drama, a lot of interesting things to unpack here. Before we get into it, I wanted to say, if you've ever wanted to start an online side hustle or grow and scale your current business using AI tools, I would love to have you as a member of the AI Hustle School Community. Every single week, me and my co-host, Jamie, we create an exclusive piece of content over there that we don't share anywhere else, that breaks down a tool, a strategy, or a way that we're using AI to grow and scale and make money. It's $19 a month. Last week, it was $100 a month. We dropped the price for a holiday special. So if you've ever been interested in making money online, this would be an amazing time to do it. There's a link in the description where you can find out more about this. And we have a classroom section with dozens and dozens of videos we've already created. We've been doing this for about a year now. We have videos all about AI marketing, all of the strategies that we've used to grow our businesses. We have videos about becoming an AI consultant. I have a friend that made over $500,000 consulting companies as an AI consultant. We have a bunch of different ideas from that in here, as well as all sorts of ideas for podcasting, a strategy I used to make $12,000 within a few months with just a few videos on a program called the Amazon Influencer Program. There's a whole bunch of really great ideas in here. So if you're interested, you can click the link in the description to find out more. Let's get back to the podcast. So a lot of the really interesting stuff happening here really stems from the fact that, you know, in my opinion, if Sam Altman was just like, yo, look, I have a company, I'm making money like everybody else. There'd be no controversy here. The controversy with OpenAI is really how they got started as a nonprofit. They raised hundreds of millions of dollars and I didn't realize just how big of a valuation they had back in those early days. So recently, of course, Sam Altman, back in 2023, he went to Congress and he testified to Congress saying that he owned no equity in OpenAI. He told them that he was doing this because he loved it, that there was nothing that he really got out of it. And I'll play a little clip from him saying just that.
Okay. You make a lot of money, do you? I make, no, I'm paid enough for health insurance, I have no equity in OpenAI. Really? That's interesting. You need a lawyer. I need a what? You need a lawyer or an agent. I'm doing this because I love it.
Okay. So Sam Altman says he's doing this because he loves it. That's the only reason that he's doing this. Some people were skeptical back then, and it turns out it wasn't actually quite true because he recently did an interview with Barry Weiss where he said that he actually did have some equity in OpenAI through a Sequoia fund at one point. He said that he's since sold this stake, but there might actually be even more equity that he owns through other ways. So to me, this is very, very interesting. Kind of what's going on here just for the fact that I feel like all the time I'll see these tech executives go and kind of testify before Congress about different things. And sometimes they say the most shocking things like, oh, I have no equity in this company I'm working on and then come to find out later. They do, for example. And I feel like nothing ever happens to them. I think the TikTok CEO went to Congress and allegedly lied to them about some of the Chinese ties. I just feel like this is happening with Margaret Zuckerberg. A lot of people say has done the same thing. So anyways, I just feel like there's not a ton of accountability. And I also feel like there's nothing wrong with having equity. But the way he started this company definitely makes it seem like there's some suspicious here. So here's what he specifically said. He said, I have a tiny sliver of equity from an old YC fund. I used to have some via Sequoia Fund, but that one turned out to be easier to sell and not keep the position. And so I have a very small amount that's quite insignificant to me. In terms of what I will or won't have going forward, I don't know. There's no current plan of promise for me to get anything. Okay. So this breaks it all down. He had some of the Sequoia Fund. He sold that allegedly. He said he has a sliver of equity from an old YC Fund. And that one, he said, you know, wasn't as easy as the Sequoia one to sell, aka, he still has some equity from the YC Fund. So, I mean, I'm not trying to nitpick and be like, oh, I don't know. Like, there's nothing wrong with having equity, but this should have been disclosed a long time ago. How come this is just being disclosed in a brand new podcast with Barry Weiss this week, when this is something that's been going on for forever. He's had this forever and he went to Congress. He never testified. So to me, that's the only shady thing about this. Like, how did this news come out? Maybe he's worried other people would realize and he was trying to front run it. I don't know. In any case, what's really interesting here is that they posted this on their own website, that he had this kind of indirect investment in Y Combinator. So they have a little bit of that published, and I'm not exactly sure when this went live or when people exactly found out about this, but there is a bit of a chart that they kind of have outlined and some of this stuff is a little bit public, so that's very interesting. Okay, so how much was this actually worth? How much was the stake actually worth in this? Did it actually go up? Is this even significant? No one will actually tell us exactly how much money it's worth. Sequoia first invested in OpenAI back in 2021, and that's according to its website. And this is two years after Sam Altman essentially became the CEO, meaning when they made this initial investment, Sequoia, into OpenAI, OpenAI's valuation was $14 billion. Now, today, it's obviously grown significantly. Today, OpenAI's valuation, according to TechCrunch, and according to the latest rounds of funding that they've done, is at $150 billion. This is the latest funding round. They just did it this year. They raised $6.6 billion raised, and so now it's valued at $157 billion. So essentially, what that means from the $14 billion when Sequoia got in is that they are up 10x from this, you know, from this original point that he got in. How much did he put in? How much is it worth? I don't know. All of that's kind of convoluted, but it's like regardless of all of that, he's made 10x on his money. So which some people might say isn't that much since, I don't know, 2021, but that's only three years ago. So anyways, it's very interesting. So obviously this has grown a lot, but because of the way Sequoia works, it's very difficult. You know, they're not required to disclose their limited partners. So it's very unclear how much Altman actually sold his stake for, how much money he made from this. Even if he went to Congress and said he has no equity, he sold his equity. So he has made money from it one way or another. And he obviously had the hopes of making more money because he's, as they're converting the student a for-profit, a lot of people are saying he's going to get equity in that. And they're sort of denying it. But something really telling is what he said in his interview with Barry Weiss. He said, in terms of what I will or won't have going forward, I don't know. There's no current plans or promises for me, for me to get anything. I don't know is a lot different than I'm not going to ever take any equity, like I've been saying to everyone forever. There's no current plan. I mean, I can imagine them commerce to a for-profit in a year or two. They give them a package. So there's no current plan. But he's definitely not really now getting equity in this in the future. And again, nothing wrong with that. It's just, you know, a lot of people are rubs them the wrong way because of the way this company started. So what is really interesting is exactly what an OpenAI spokesperson recently said about this. They said, Sam has never had any direct ownership in OpenAI. He held a negligible stake less than a fraction of a percent in a general Sequoia fund with a broad portfolio, which he later learned included minimal exposure to OpenAI. Sam no longer has any ongoing commitments to the fund. So could theoretically be, you know, whatever they just, he had some money in a fund and they ended up go, you know, investing in OpenAI. I find it hard to believe since he'd been CEO for two years that he didn't know, actually impossible to believe he didn't know that Sequoia was investing and he had money in Sequoia, but whatever.