In recent news, OpenAI has been found to be attempting to prevent ex-employees from saying bad things about the company, by threatening to take away their vested equity. We break down how startups get funded and what exactly vested equity means. We describe the three stages of receiving equity.

Sam Altman claims to have known nothing about these equity clawback attempts. We examine the evidence that suggests that he knew at least something about the scheme. We discuss the legality of OpenAI attempting this maneuver. Fortunately, the policy has now been reversed.

Finally, we talk about how companies can define their own culture, charter, ethics, etc. This has led to a need for whistleblowers within AI companies, at least in the view of an open letter that was recently published, endorsed by big names in AI.

#openai #equity #startups

OpenAI insiders blast lack of AI transparency
https://insiderpaper.com/openai-insid...

OpenAI, DeepMind Workers Warn Of AI Risks In Open Letter
https://www.silicon.co.uk/e-innovatio...

A Right to Warn about Advanced Artificial Intelligence
https://righttowarn.ai/

OpenAI Creates AI Safety Committee After Criticism
https://www.silicon.co.uk/e-innovatio...

Leaked OpenAI documents reveal aggressive tactics toward former employees
https://www.vox.com/future-perfect/35...

OpenAI tells employees it won't claw back their vested equity
https://www.theregister.com/2024/05/2...

How Many People Work at Microsoft? Statistics & Facts (2024)
https://seo.ai/blog/how-many-people-w...

ChatGPT can talk, but OpenAI employees sure can’t
https://www.vox.com/future-perfect/20...

The AI craze is no dot-com bubble. Here’s why
https://qz.com/ai-stocks-dot-com-bubb...

OpenAI revenue, valuation & growth rate
https://sacra.com/c/openai/

The Complete List Of Unicorn Companies
https://www.cbinsights.com/research-u...

@Daniel Kokotajlo: “1/15: In April, I resigned from OpenAI after losing confidence…”
https://x.com/DKokotajlo67142/status/...

simeon_c's Shortform – LessWrong
https://www.lesswrong.com/posts/kovCo...

U.S. Regulators Are Looking Into Microsoft, Nvidia And OpenAI
https://www.forbes.com/sites/jackkell...

0:00 Intro
0:19 Contents
0:25 Part 1: How startups work
0:41 Funding in exchange for equity
1:20 Funding from venture capitalists
2:02 Startups going public on a stock exchange
2:34 OpenAI is a Series E startup
2:40 How equity for employees works
3:16 The three stages of giving equity
3:34 Stage 1: receiving an equity grant
3:46 Stage 2: vesting the grant over time
4:00 Stage 3: exercising equity by paying for it
4:27 Recap of equity stages
4:45 Equity vests over a four year period
5:21 Exercise share price
5:52 Why exercised is different from vested
6:30 OpenAI is a unicorn
7:05 OpenAI has been in hyper growth mode
7:51 OpenAI revenue also increasing quickly
8:04 Why growth puts stress on employees
8:50 Part 2: Clawing back equity
9:18 OpenAI asked departing employees to sign agreement
9:54 Could employees just exercise all their stock?
10:25 Limited to saying "I resigned"
10:44 Sam Altman claiming no knowledge
11:20 One employee may have had equity revoked
11:49 One employee was told selling their stock could be forbidden
12:49 OpenAI's motivations
13:03 But it's standard to revoke equity upon firing
13:31 Part 3: Why this is a big deal
13:56 Not illegal but a bad look
14:07 Companies are modern day kingdoms
14:38 Sam Altman's kingdom
14:55 Tallying up the lies
15:48 Why we need whistleblowers
16:07 Famous whistleblowers
16:39 Open letter for a right to warn about AI
17:38 Department of justice antitrust investigations
18:31 How far will OpenAI get before then?
19:01 Conclusion
19:27 Clawing back vested equity
20:12 Right to warn about advanced AI
20:27 Outro