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Aaron Greenspan
Firing Sam makes a lot of sense if you sit on the OpenAI Board. Sure, the organization could lose its tax-exempt status, and that would be bad, but the California AG could also sue you for breach of fiduciary duty, or worse, if there's real financial fraud, start filing criminal charges.
This is the kind of risk mitigation strategy intended to reduce a Full Clusterfuck to a Slap On The Wrist.
(And most employees, who are not lawyers, would probably not even be aware of it.) |
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November 18, 2023 at 3:16 PM EST •  Reply • ▲0▼ |
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Aaron Greenspan
OpenAI's press release reads to me like a letter to the California Attorney General's office:
1. Sam lied to us, the Board, about financial issues. Not our fault.
2. We want to keep our non-profit status.
3. Sam is toast, so we're cool, right?
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November 18, 2023 at 3:02 PM EST • Reply • ▲0▼ |
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Aaron Greenspan
Firing Sam makes a lot of sense if you sit on the OpenAI Board. Sure, the organization could lose its tax-exempt status, and that would be bad, but the California AG could also sue you for breach of fiduciary duty, or worse, if there's real financial fraud, start filing criminal charges.
This is the kind of risk mitigation strategy intended to reduce a Full Clusterfuck to a Slap On The Wrist.
(And most employees, who are not lawyers, would probably not even be aware of it.) |
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November 18, 2023 at 3:16 PM EST • Reply • ▲0▼ |
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Aaron Greenspan
But then there's something else. OpenAI, Inc. is a non-profit organization that is required to be, and is, registered with the State of California Office of the Attorney General, which manages tax-exempt organizations. Its exemption was granted on November 15, 2017 at the state level.
You're supposed to file a Form RRF-1 each year four months and 15 days after the end of your accounting period. So if you're on a standard calendar year accounting cycle, that means May 15th. Except that OpenAI has been filing six months late each year since 2018 for some reason.
In 2021, they filed on November 18th. In 2022, they filed on November 17th.
Hey, yesterday was November 17th! How weird!
My theory is that a lawyer got extremely nervous around question 2 on Form RRF-1, which should have been filed yesterday. According to the California AG at least so far, it wasn't.
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November 18, 2023 at 3:00 PM EST • Reply • ▲0▼ |
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Aaron Greenspan
OpenAI's press release reads to me like a letter to the California Attorney General's office:
1. Sam lied to us, the Board, about financial issues. Not our fault.
2. We want to keep our non-profit status.
3. Sam is toast, so we're cool, right?
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November 18, 2023 at 3:02 PM EST • Reply • ▲0▼ |
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Aaron Greenspan
Firing Sam makes a lot of sense if you sit on the OpenAI Board. Sure, the organization could lose its tax-exempt status, and that would be bad, but the California AG could also sue you for breach of fiduciary duty, or worse, if there's real financial fraud, start filing criminal charges.
This is the kind of risk mitigation strategy intended to reduce a Full Clusterfuck to a Slap On The Wrist.
(And most employees, who are not lawyers, would probably not even be aware of it.) |
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November 18, 2023 at 3:16 PM EST • Reply • ▲0▼ |
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Aaron Greenspan
So one thing that has been bugging me about the Big News is that it doesn't make any sense. Company has disagreement with star CEO, decides to part ways. But 30 minutes before the close of trading on a Friday? Sending the NASDAQ down? Surprising Microsoft?!?! Come on. Something is up.
There are only two things that can make a corporate board of directors react suddenly like someone just poked them in the eye: a real threat of criminal penalties or proof of financial fraud.
In this case, if you look beyond the mainstream coverage, there's evidence to suggest both. First, the suggestion of financial issues comes from a pseudonymous user on Reddit.
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November 18, 2023 at 2:59 PM EST • Reply • ▲0▼ |
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Aaron Greenspan
But then there's something else. OpenAI, Inc. is a non-profit organization that is required to be, and is, registered with the State of California Office of the Attorney General, which manages tax-exempt organizations. Its exemption was granted on November 15, 2017 at the state level.
You're supposed to file a Form RRF-1 each year four months and 15 days after the end of your accounting period. So if you're on a standard calendar year accounting cycle, that means May 15th. Except that OpenAI has been filing six months late each year since 2018 for some reason.
In 2021, they filed on November 18th. In 2022, they filed on November 17th.
Hey, yesterday was November 17th! How weird!
My theory is that a lawyer got extremely nervous around question 2 on Form RRF-1, which should have been filed yesterday. According to the California AG at least so far, it wasn't.
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November 18, 2023 at 3:00 PM EST • Reply • ▲0▼ |
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Aaron Greenspan
OpenAI's press release reads to me like a letter to the California Attorney General's office:
1. Sam lied to us, the Board, about financial issues. Not our fault.
2. We want to keep our non-profit status.
3. Sam is toast, so we're cool, right?
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November 18, 2023 at 3:02 PM EST • Reply • ▲0▼ |
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Aaron Greenspan
Firing Sam makes a lot of sense if you sit on the OpenAI Board. Sure, the organization could lose its tax-exempt status, and that would be bad, but the California AG could also sue you for breach of fiduciary duty, or worse, if there's real financial fraud, start filing criminal charges.
This is the kind of risk mitigation strategy intended to reduce a Full Clusterfuck to a Slap On The Wrist.
(And most employees, who are not lawyers, would probably not even be aware of it.) |
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November 18, 2023 at 3:16 PM EST • Reply • ▲0▼ |
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Aaron Greenspan
I am very used to being simultaneously bemused and disgusted by the piggish bacchanalia of Silicon Valley venture capital. The libertarianism, the technological solutionism, the colossal, pathological egos, the MBA worship...none of it surprises me. It makes sense in its own way. VC is just another investment class where the investors want their money, and they want a lot of it, now. Of course they're going to be cuthroat jerks.
So with that context I'm sure that what I'm about to describe has been going on for a long time and I just didn't notice it. But there's a company I hadn't heard of that just raised $20 million (which, by the way, is a lot of money!) in funding and I wanted to see who the co-founders were.
Surprise!
One of them is a former...venture capitalist. At one of the firms that led the company's funding round. Before that, Goldman Sachs. And Stanford. Of course. The only proper pedigree for a Silicon Valley "thought leader."
I interpret this to mean that we have reached the inflection point at which there aren't enough smart people out there to invest in. "That's right boys, we can't find any more smart people. Guess we'll just have to start funding ourselves! Who would make a better CEO, after all, than one of us!"
Just incredible. Add incestuousness to the list of descriptors above.
They definitely did not need $20 million for this company. Or even $1 million. |
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May 12, 2022 at 1:47 AM EDT • Reply • ▲0▼ |
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