OpenAI shares Elon Musk’s emails urging startup to raise $1 billion, see Tesla as cash cow

On Tuesday, OpenAI publicly responded to a lawsuit filed by co-founder Elon Musk, highlighting the apparent hypocrisy on the part of the now-billionaire and early backer of the company.

In its response, OpenAI reproduces old emails from Musk in which Tesla and SpaceX’s CEO encouraged the growing startup to raise at least $1 billion in funding and agreed that it should “start being less open” over time and “not share” the company’s science with the public.

The replayed announcements follow a starkly different view that Musk presented last week when he sued OpenAI, CEO Sam Altman and president Greg Brockman, alleging breach of contract and unfair competition.

In the lawsuit, Musk’s lawyers argue that the inner workings of OpenAI’s GPT-4 AI model are “a complete secret except to OpenAI — and to the knowledge and belief of Microsoft,” and that the secrecy is driven by a commercial purpose, not safety. OpenAI said: “We intend to reject all of Elon’s claims.”

In November, Musk told an audience at The New York Times’ DealBook conference that he believed OpenAI had strayed from its original mission.

“OpenAI should be renamed ‘super closed source maximum profit AI,’ because that’s what it is,” Musk said on stage at the event. He noted that it had transformed from an “open source foundation” to a multi-billion dollar “closed source for-profit corporation.”

In contrast, Musk appeared to discourage OpenAI’s co-founders from taking too lenient an approach to fundraising, according to emails reproduced by the company from December 2018. He wrote that OpenAI has a zero percent chance of becoming a viable competitor to Google’s DeepMind. unless the startup makes a “dramatic change in performance and resources.”

“My assessment of the likelihood that OpenAI will be a good fit for DeepMind/Google without a drastic change in performance and resources is 0%. Not 1%. I wish it were different,” Musk wrote in an email to fellow OpenAI co-founders Sutskever, Brockman and Altman. “Even raising a few hundred million won’t be enough. It requires billions a year now or forget it.”

Musk is now CEO of automaker Tesla, defense contractor SpaceX and owner of X Corp., as well as the founder of computer interface startup Neuralink and a future competitor to OpenAI, which he calls xAI.

Before he left OpenAI, the company said in its response to his lawsuit, “Ilan wanted a majority stake, initial board control and to be CEO” of the AI ​​venture. The startup also said in its blog post that Musk wants to become CEO of OpenAI in 2017 as it changes its structure.

Musk’s companies sometimes attract talent from OpenAI. In the case of xAI, Musk positioned the company’s first product, Grok, as a competitor to OpenAI’s ChatGPT software.

In January 2018 emails reproduced by OpenAI, Musk agreed with an unnamed sender who encouraged the startup’s co-founders to rely on Tesla as their “cash cow.” As of the first quarter of 2018, Tesla reported a cash balance of $3.4 billion after reporting a full-year net loss of $2.24 billion in 2017 on revenue that year of $11.8 billion.

CNBC has not independently verified the authenticity of the emails included in OpenAI’s response on Tuesday, some of which contain partial redactions.

The “contract” at the heart of Musk’s recent lawsuit against OpenAI is not a formal written agreement signed by all parties involved in the creation of the company.

Instead, Musk, through his lawyers, argued that the early OpenAI team entered into agreements to develop artificial general intelligence, or AGI, “for the benefit of humanity” as a non-profit organization. However, the project was transformed into a company with a complex corporate structure, including a for-profit entity that Musk claims is largely controlled by Microsoft.

Musk used much of his legal complaint to remind the world of his central position in the creation of OpenAI, which has become one of the hottest startups on the planet, thanks in large part to the virality of ChatGPT and the image generator DALL-E.

OpenAI’s public response Tuesday night echoes executive memos sent to company employees last week.

Musk’s lawsuit and OpenAI’s response follow a rollercoaster of months for the company, including boardroom drama, a board reshuffle and an investigation by financial regulators.

Lawyers for Elon Musk were unavailable for comment Tuesday night after OpenAI posted its response.

— CNBC’s Jordan Novette contributed reporting.