Esse Quam Videri

Managing Editor’s Note: A quick note before we get to today’s Bleeding Edge on the implications of the Musk v. Altman trial that began this week…

First, we’d like to thank everyone who attended our Dark AI Summit with the Chaikin Analytics team yesterday evening.

We had a great time with Marc and Jeff as they discussed the paradigm shift coming for the artificial intelligence industry… and the private AI company that sits at the epicenter of this shift and is preparing to IPO very soon.

In light of how important this message is – and how quickly the looming AI IPO approaches – Marc and Jeff are keeping a replay available open for a short time…

You can still go here to access it if you want to learn more.

The Musk v. Altman trial is well underway this week.

It’s hard not to think about the importance of this battle, and of course, the fate of OpenAI.

The trial itself is expected to run for four weeks, roughly to the 21st of May, during which the selected jury will hear the arguments that support Musk’s allegations.

Just before the trial began, Musk dropped his fraud claims against Sam Altman and Greg Brockman.

Most of the media interpreted that as a sign of weakness in Musk’s case against Altman and Brockman.

This resulted in headlines at popular media outlets, like “a trial almost no one thinks Musk can win.”

They don’t care about the facts and circumstances of what Altman and Brockman did with OpenAI. They just want Musk to lose, and they are trying to influence, indirectly, the jury in the process.

And they are missing the point of Musk’s tactic completely.

Narrowing the Focus

Musk isn’t looking for a monetary payout.

Altman and Brockman legally breached the structure of the non-profit charitable trust that OpenAI was built upon.

Musk’s goal is simply to revert OpenAI to its original structure and mission, upon which OpenAI raised charitable donations. A mission that Musk contributed generously to when he helped found OpenAI.

Removing the claims of fraud from the case was a tactical legal maneuver to narrow the scope of the trial and give Musk’s arguments a further advantage.

The two claims that will be the focus of the trial will be unjust enrichment and breach of charitable trust.

The tactical advantage that this gives is that the jury will only be issuing an advisory verdict.

And that verdict is not binding on the judge, who will ultimately make the decision.

In other words, it’s the judge who decides this case – not the jury, whose decision may or may not be a data point used in the final verdict. It’s up to the judge whether she’ll weigh the jury’s opinion or not.

This is important because if the jury doesn’t fully understand the laws that were broken, the judge is fully empowered to make the final decision regardless of the jury’s verdict.

The implications of this trial are not to be understated with regard to charitable trust laws, which is why this case isn’t a silly “billionaire vs. billionaire” battle.

It is actually about the abuse of charitable trusts and non-profits in general.

How to Gut Charitable Trusts & Non-Profits, 101

If Musk doesn’t prevail in court, the negative implications for charitable trusts and non-profits are issues like:

• Donor trust will be eroded – large philanthropic donors expect that their donations will only be used to serve the non-profit’s mission and that those assets will be preserved and maintained in perpetuity for the originally stated public benefit. If Altman and Brockman prevail, it sets a precedent that founders and executives of a non-profit can use donations for self-enrichment, personal gain, and to generate profit for insiders and employees of the non-profit.
• Reduced charitable giving – given the previous point, charitable donations would be expected to decline. No philanthropist wants to donate funds that will not be used for the original purpose, but to enrich the people who are supposed to be running the non-profit and carrying out the mission. It completely defeats the purpose.
• Undermine charitable trust laws – If Altman and Brockman prevail, it would turn charitable trust law on its head. It would make it easy for charitable trusts to restructure – basically conduct a bait and switch – and prioritize commercial returns, profit, and self-enrichment over the mission of the charitable trust. It’s like the “non-profit” label becomes the “teaser rate” of charitable giving. What you’re signing up for is not what you end up getting.
• Moral hazard – An Altman/Brockman win will set a precedent for start-ups to “fleece” others by claiming non-profit status for tax benefits, donations, and talent, while maintaining the clear long-term plan to prioritize profit over the charitable mission. This would just be a way to virtue signal, while at the same time becoming extremely wealthy. It has nothing to do with charitable activity and everything to do with the self-enrichment of the trust’s executives and insiders.

I can’t help but think, why?!?!

What’s the purpose of all this nonsense?

After all, if anyone wants to build a successful company, there are no barriers to doing so, especially in the U.S. Just start the company, raise capital, and build.

There is no need for the ridiculous cat and mouse. The bait and switch. The veil of a charitable trust.

Why even bother defrauding charitable donors for self-enrichment?

The Virtuous Veil

Sam Altman would tell you that it’s necessary for the survival of OpenAI – this totally altruistic, “for humankind” company.

According to Sam Altman, this transition to a for-profit entity – rather than a charitable entity – is so that he and OpenAI can secure the massive capital required to scale artificial intelligence and general intelligence.

And again, all of this can be done via a for-profit company. This is literally what made Silicon Valley the most important tech and capital hub in the world. Altman’s “excuse” is completely bogus.

The true purpose of the for-profit flip, of course, is ego-driven.

The desire to be seen as virtuous, rather than actually being virtuous.

In other words: Altman and Brockman never meant for it to be truly virtuous in the way Elon Musk meant it – i.e., for the benefit of humankind, open-sourced, and mission-driven.

Sam Altman, Greg Brockman, and others at OpenAI have used this thin veneer to become extraordinarily wealthy.

Meanwhile, they have programmed their AI models with bias and their own political views of the world – a point that has been extremely well-documented.

The goal is to manipulate the users’ worldview and brainwash a population, while at the same time making hundreds of billions of dollars.

Esse Quam Videri

As I watch all this unfold, I can’t help but be reminded of North Carolina’s state motto, which I love:

Esse Quam Videri

The meaning is to be, rather than to seem to be.

What’s important is who we really are. How we behave when no one is looking. Our character.

The same can and should be applied to non-profits and charitable trusts.

If you raise money as a non-profit and a charitable trust, then you must be a charitable trust and carry out your stated non-profit mission.

Fake appearances don’t matter.

Substance does.

I know a wolf in sheep’s clothing when I see one.

And that’s why the outcome of this case is so important.

Jeff