Better Offline - The Talented Mr. Altman

Episode Date: June 12, 2024

Sam Altman has used his power and influence to become a multi-billionaire with stakes in hundreds of startups, but behind the curtain, he's never run a successful company, fired from both Y Combinator and, briefly, OpenAI. In this episode, Ed Zitron digs into the history of Silicon Valley's most popular confidence man, and talks to the Wall Street Journal's Tom Dotan about Altman's many, many investments. EPSIODE LINKS: https://tinyurl.com/betterofflinelinksSee omnystudio.com/listener for privacy information.

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has craved a messiah since the death of Steve Jobs in 2011, but in OpenAI's CEO, Sam Altman, I think they've discovered more of a false profit, a seedy little grifter that uses his remarkable ability to impress and manipulate people, specifically in Silicon Valley, to mask a total lack of technical and business acumen. I realize this sounds a little dramatic and definitely a little inflammatory, but the air around Sam Altman has, for years, been that he's somehow a magical special creature, a man who, and I quote, is wise beyond his years and was so at the tender age of 19, and who, to quote, startup incubator white combinator's Paul Graham,

could be parachuted into an island full of cannibals and come back in five years and be king. In the next two episodes, I'm going to dig into Sam Altman's really specious success story, and it's one that was built on the back of being in the right place at the right time, deftly dodging accountability and responsibility in basically every job he's ever had. including, by the way, the two that he was fired from and the failed startup he had. And I believe he's used his political power as leverage to scare away anyone who's going to ask any nasty questions or, of course, dare to stand against him. In a stunning in-depth piece by Ellen Hewitt of Bloomberg, Sam Altman is repeatedly framed by his contemporaries as some sort of genius.

Without anyone ever asking why or explaining why, other than there's this vague sense of intellectual, intellectual and philosophical superiority. With Ycombinator founder John Coogan, claiming that Altman had, and I quote, an uncanny ability to listen intently and diagnose problems, and that he was, and this is a real quote, I'm not kidding, the Michael Jordan of listening. Sit with that for a moment. Just sit with that. These laughable and completely stupid accolades aside,

there doesn't actually appear to be a single story that I can find of some genius moment of clarity ushered in by Sam Altman. There are none of these fantastical situations where his remarkable mind brilliantly delivers the exact solution to a problem or some sort of concrete accomplishment that required these descriptive, pre-natural levels of vision and clarity.

No, I just found this torrent of platitudes about this man who always gets what he wants, which is, by the way, another quote from Ellen Hewitt's story. And he just appears to be this unstoppably pushy young man that excelled not necessarily at building things because he really has not built any great companies, nor have they done any great things. It's mostly about, and I quote Alan Huitt again,

Samoam and bending the world to his will. If this all sounds familiar, by the way, it's because I've really said this before. Many CEOs, especially in tech, had this amazing ability to make these bold proclamations and that have people pretty much accept them at face value. even by the media that's meant to hold them to account. With the earliest days of Facebook's Metaverse pivot,

probably the best example I can give you. I really encourage you to go back to the rockcom bubble and the Facebook episodes to look into it. But even by Mark Zuckerberian standards, Zuckurbian? And we'll get to that later. Sam Altman exists in his own pantheon of bullshit. There are many, many, many examples of him saying that Open AI,

or I should be more specific AI broadly, will do something it cannot and likely will not do, such as think for itself or be that super smart companion, I keep quoting. And the fourth estate just kind of accepts it without any pushback. And this is really Sam Altman's history. Being in the right place, saying the right thing, and even when the thing in question is kind of hollow, people saying, oh, this boy is so smart. And there's just, there's just no limit, it seems, to this phenomenon. When Sam Orkman says something or does something genuinely truly insane, like how he wants to raise $7 trillion for futuristic chips, which is, by the way, the combined GDP of Germany and France, or that he needs $100 billion from Microsoft to build a supercomputer for the future of AI, people just say, yeah, sounds about right, yeah, that's classic Sam Altman stuff, is just the smart bloke going. The response is never to dismiss it and say this is absolutely bloody stupid,

but to actually discuss it with a level of seriousness that just is not warranted for anyone, let alone Sam Altman. And that might be Altman's real skill, creating colopsia, the appearance of things being more beautiful than they really are, hiding the weakness of his arguments, and indeed generative AI writ large, and beguiling those around him with this nasty instinctual ability to tell them exactly what they want to hear, giving them the words to tell other people in his name, to get in exactly the room he needs to be in exactly the right time to connect with exactly the right people, all without ever having to actually do anything or create anything.

Despite the fact that his location-based social network looped failed to get any traction or build any meaningful product, it appears, it allowed him to get in the door at famed Silicon Valley Incubator Y Combinator and dazzle Paul Graham, its creator, who, for reasons I cannot understand. I've read so much of Paul Graham's stuff now. Paul Graham became convinced that Sam Orton was the future and in turn helped Sam Morton get in on these huge VC deals in companies like Stripe and Airbnb making him hundreds of millions of dollars. This is, by the way, a very Silicon Valley problem and a problem with the Valley writ large and a precursor to the growth that all costs rot economy that I talk about seemingly every minute. When you're strictly

a way, Sam Orton's ability to convince people that he's smart. He doesn't appear to have done anything. He's done very, very little. He was a college dropout with a failing then failed startup, one where employees tried to get him fired twice because he kept diverting resources to other places and focusing on his own personal products and projects. And the reason they sound so flus that is, this is Sam Orkman's entire existence. In a podcast discovered by Ellen Hewitt at Bloomberg, Twitch co-founder Emmett Shear, appear from Altman's Y Combinator cohort, the first one, and briefly,

his replacement as CEO of OpenAI, described his surprise that Sam Alton was able to close deals of Boost Mobile without any actual product. Yet because Altman fit a template, he resembled the kind of guy that got things done. Powerful people in Silicon Valley have fallen over themselves to give him the opportunities that made him look like a kingmaker. And at some point, the funny thing is,

Valley is when you get to the prominence where people just feel like you should be in on these things, you are. That's why all these guys all kind of look and act the same and all get in on the same things. And honestly, I think the truth might be a little grimmer. Altman was, from a relatively early age, chosen by Silicon Valley to be their next Messiah, which allowed him to wield this incredible power over the startup ecosystem without really ever meaningfully contributing to it. His ascent to the apex of the valley and the budding flowers of a Sam Ormuntman cult, which we see today everywhere, feels random and arbitrary without any real force behind it. Well, there's one thing, though. Sam Alman, he's a master manipulator. He's

incredibly adept at saying things that sound profound, like your rate of learning should always be high, and yes, that's a quote, as are the rest of these, and that each unit of work you do should generate more and more results, while also knowing that the self-reinforcing prophecies of the tech industry are what makes someone rich and powerful, rather than achievements or founder great companies or doing things for people. In essence, his whole vacuous platitude buffet, the kind that can be cut into 10-second clips for TikTok and YouTube and Twitter,

they're really good ways to feel intelligent when people already, want you to be. And they're just really useful for tricking extremely disconnected and credulous morons. People that don't really participate in the grander scheme of building software and hardware. People like Reid Hoffman of LinkedIn, of Brian Chesky of Airbnb, people that aren't coders or builders or anything. They're just people that vaguely fell into success. Perhaps they built useful companies, but they didn't really make the companies, they didn't really do the work. Sam Altman is really good at saying the things that reinforce their biases, and in the process kind of helps them disguise their nepotism and his real superpower, which is, by the way,

another form of nepotism. Sam Orman didn't find the startups that made him so rich and wealthy and influential. He was being shown them by other powerful people that wanted him in on these deal so that he could give them advice based on a career of specious management bullshit. And because the Valley liked how he looked and how he acted, how he talked, the things he resembled, the things they were reminded of when they heard Sam Orman speak. And it's funny because a lot of these people are Paul Graham's of the world, especially they're big-time meritocratic people. They love the meritocracy.

Yet when you look deeper, the people succeeding are not actually building the things. Ilya Sutskhava over OpenAI. He is the actual technology. He's the actual guy the, and by the way, no longer at Open AI, that kind of deserves this. But Sam Ormuntman's the one that got invited in early to Stripe and Airbnb and all these things. And as I'll get into, kind of rat fucked his way around a bit. And nowhere is this more obvious than in Hydrazine Capital,

Altman's venture capital fund that he created with the $5 million he got from selling looped, his failed startup, by the way, and backing, of course, from Peter Thiel. Hydrazine invested 75% of its funding in Y Combinator companies, including Reddit and Instacart, even after Sam Ormottman became the president of Y Combinator, which is weird because the other partners at Ycombinator like Gary Tan, they were forbidden from managing their own investment funds at the time, according to reporting from the Wall Street Journal. But I guess Sam Orton just felt right. It's cool that he gets rid of. right? Not to say Gary Tan hasn't, but the other people just didn't seem to get these opportunities

for some reason. Could be anything. And he became head of Wycombinator, by the way, despite being one of the, he was, Looped was one of the first companies in Y Combinator. And they, to explain how this works, Y Combinator would invest a little in a few early stage startups and much larger number these days. And the first cohort was one that included Sam Altman's Loop. And he was made president of Y Combinator. Despite the fact that Looped was terrible, it didn't have a good product, they couldn't sell it. He retasked engineers at one point

to work on a dating app somewhere else. Sam Alton was a terrible CEO. But you know what? He's capable of saying stupid shit, like, and I quote, competitors are one of the last monsters that haunt your dreams to New York magazine, shortly before predicting

that there was absolutely no reason to believe that we would not. not have a computer by 2029 that could replicate his brain. You know what, though? Putting that aside, I do think Sam Orman's right on that one, though, in the sense that Chat GPT kind of seems capable of producing this kind of nonsense too. But again, because Sam Mortman's the affable, friendly, amicable, white guy who's known by the right people, he keeps going. He keeps on trucking. And I think that Sam Altman is on some level, he's a monument to the rot at the core of the valley, and he's a product of this growing distance between the tech industry and actually creating things of value.

While Wycombinator founder Paul Graham may be a decorated and successful computer scientist, by the time he made Sam Altman president of Wycombinator in 2014, he was already more than a decade removed from selling his software startup via web to Yahoo. As he drifted further away from actually building things on the computer, so too did Paul Graham's essays drift away from the philosophical measures of software development. Towards a far darker management philosophy, one where he admitted in a blog from 2003, that intelligence itself is not a factor in popularity because smart kids don't want to be popular, and that popularity is much more about alliances and doing things that bring you closer to other

popular people. Huh. Maybe you did like Sam, or for real reasons then. Anyway, Two years before he made Sam Orman President, Paul Graham would publish a piece called Startup Equal Growth, claiming that growth drives everything in this world and that growth makes the successful companies so valuable that the expected value is high even though the risk is too. A statement that could only make sense if you believe that there will always be hypergrowth companies and indeed that the opportunities for those high growth companies would keep emerging, say, for the next forever. none of these people ever thought about it. It's so strange to read this stuff. To go back even five years, but especially ten, and reading these things,

and reading these people talking about how dogged Sam Mortman is and how great he is at this, and then reading their other philosophies, and it's all stuff like, well, you see, uh, intelligence comes from the mind, and building businesses, it's all about growth and business.

And you read them and you're like, huh, are these people, smart or stupid, I can't tell they're using smart people language, but they seem kind of stupid. Maybe that's also the problem. Maybe the problem's just a little simpler. While Samo was a specious opportunist and very much a manipulator, the time he entered Silicon Valley was this period where pretty much all you needed to do was sound smart and be in the right rooms. Companies were being created that could enter these giant markets and just dominate

because all they really needed was money and enough handshakes. Altman is adept at using connections to make new connections, in finding new ways to make others owe him favours in saying the right thing at the right time when he knew that nobody would think about it too hard, something he continues to this day. All one was early on Stripe and Reddit and Airbnb. All seemingly brilliant moments of investment in a life of a man who's had many things handed to him, who knew how to look and sound to get put in the room

and to get the capital to make his next move. It's easy to conflate investment returns with intellectual capital, even though the truth is that people just liked Sam Altman enough to give him the opportunity to be rich, and he took it. And he had the ability to hand the money to. In 2009, when he put $15,000 into Stripe, which I'll get to it a bit, he had 15 grand he could pull out in the middle of founding a startup. He was working on loop for years at this point. Where did he get the 15 grand?

I didn't have 15 grand sitting around then. Jesus Christ. He didn't, like, this is the thing. No one digs deeper into these things. No one asks where the privilege truly comes from. And when that happens, guys like this get popular. Now, look, those who might defend Sam Ortonman might suggest. that he may not have been a creator,

but he gave his time and his energy to those he backed. Maybe he was a value creator, right? Wrong. According to the Washington Post, Sam Orman's time at Wicombinator, it ended because he developed a reputation for favoring personal priorities over official duties and for an absenteeism that rankled his peers

and some of the startups he was supposed to nurture. Much as he had, as I've mentioned, once diverted engineers at Lute to work on a dating app, instead of working on the company he was running. To give Sam Altman credit, he really is able to talk for hours without saying anything. Just ask, LinkedIn co-fund of Reid Hoffman, an investor in Open AI and early ally of Sam Altman,

and a man who was critical to getting Sam Altman returned to the helm of OpenAI when he was fired, who also let Sam Orman ramble for over an hour on his podcast master, of scale, with all one at one point saying that he was, and I quote, he was in a developing world country shortly after the iPhone came out, and despite their poverty, everyone had smartphones. Now, I just want to be clear this is so obviously, completely and utterly stupidly false, it made me genuinely angry.

Why? Because what? So the iPhone comes out. So the rollout of smartphones in other countries has been incredibly useful. It's been great. It didn't happen in a goddamn year, Sam. lying sack of shit. I'm sorry. I just really hate this stuff. I really hate that these people who can go around getting money seemingly at will just go on each other's podcasts and jack off

and whack about this nonsense who say these patently obviously fake things. He'd probably say in his defense by the way, oh, it was four years later, which might have made sense. It's always vague with this goddamn guy. It's always vague with these goddamn guys. And it's just so, offensive. Because regular people do not get these opportunities. Regular people don't get put in these rooms, people that are undoubtedly smarter and more accomplished and harder working than Sam Altman. But because Sam Altman fits the template, he's allowed to go and he's allowed to be rich, a hundred times over. And it really shouldn't come as a surprise that Reid Hoffman of LinkedIn, investor in OpenAI and so much, had such affection for Altman. After all,

he's the founder of LinkedIn, which is basically the one place that you know you can go to read 600 words that mean nothing. These massive, cringeworthy paragraphs, broken into a staccato style that hurts the brain and the mind, but makes people who don't really know why they're doing their job or care about what they're doing very happy because it makes it all feel far more important than it really is. Moving on through Altman's power structures,

another of his close friends is Airbnb, CEO Brian Chesky, who helped, by the way, also get Sam Altman put back in Open AI. And he's helped Altman peddle these vague, rubbish promises about artificial intelligence at one point with Chesky calling it bigger than the internet, mobile and cloud combined, and saying that AI will, by the way, non-specifically change Airbnb, which is a company that has, and this is what kills me as well, only got worse over time. I think Airbnb really crested about four, four, five years ago, and then it just became the same but worse over time. Put my grievances to the side. And as you can kind of tell what I'm getting at here, Ormonds used his political maneuvering to

become super rich, and he's grown, according to the Wall Street Journal, a portfolio of more than 400 companies worth nearly $3 billion. Now, what's really worrying is that he's partially funded it with hundreds of millions of dollars of debt, of loans from J.P. Morgan, chase. Now, almost anyone can see why this is insane. Borrowing money from a bank and putting it into an industry where the majority of companies fail, it's just completely bonkers. I don't understand what's going on. Well, I mean I do, which is the rich reinforce the rich and they put money with people who don't necessarily qualify for it and aren't necessarily smart or good at stuff or have done things. But because they're in the right company, it works for.

them. A regular person, they can barely get a mortgage, let alone what's likely, I'm guessing, by the way, a low interest rate loan to sink hundreds of millions of dollars into companies like Helion, which is a nuclear fusion company that Sam Altman put $375 million into in 2021. He serves as both the chairman of Helion's board and potentially one of its largest customers, because OpenAI is now and just announced a deal with Helion. And I quote Matthew Connitzer from the register here to get access to Helion's not yet possible nuclear fusion-driven electricity generators. Just it's so cool that that, and tons of people reported that without Matt's necessary bile there. I love the register because they're willing to say stuff like this.

Nuclear fusion has not happened yet. That's a sci-fi thing that he has put all that money into. Nevertheless, plenty of people credulously accepted this. like Sam, Altman, they're doing a deal, Open AI, Open AI and nuclear fusion. Just to be clear, there's no deal there, the nuclear fusion. Oh, my God. The Wall Street Journal also reported that Open AI is happily cutting multiple deals with other things that Sam Altman's invested in, including Reddit, which Altman owns hundreds of millions

of dollars of stock in, thanks to an investment from Hydrazine Capital when he worked at Wycompania. Along with AI device companies limitless and humane, the latter of which Altman owns a 15 stake in, according to the journal. It's just obvious naked self-dealing, the kind of stuff that should be something that disqualifies you that gets critiqued further than, of course, the journal. And I'm not seeing it. I'm not seeing enough of it, at least. But I wanted to dig further into this investment portfolio, so I sat down with Tom

Dutant of the Wall Street Journal to kind of go through it. Another podcast from some SNL, late-night comedy guide, not quite on human, me with Robert Smygel and friends, me and hilarious guests from Jim Gaffigan to Bob Odenkirk, to David Letterman, help make you funnier. This week, my guest, SNL's Mikey Day and headwriter Streeter Seidel, help an acapella band with their between songs banter. There's the worst singer in the group? The worst?

Yeah. Me. Is there anything to the idea that because you're from Harvard, you only got in because your parents made a huge donation. To the group. The yard birds, right? That's the name. The Harvard yard, but they're open.

Do you have a name suggestion? We're open. Since you guys are middle aged, one erection. Listen to humor me with Robert Smigel and Friends on the IHeart Radio app, Apple Podcasts, or wherever you get your podcast. Humor me. I need some jokes to make me seem funny. Run a business and not thinking about podcasting, think again. More Americans listen to podcasts than ad-supported streaming music from Spotify and Pandora.

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There are times when the mind becomes a difficult. place to live. This is David Eagleman with the Inner Cosmos podcast, and for Mental Health Awareness Month, we're dedicating a series to understanding the mind when it struggles. I'm joined by doctors, researchers, and those with lived experience. We'll talk with singer-songwriter Jewel about anxiety. I started living in my car, and then my car got stolen. I was shoplifting. I was having panic attacks. I was agoraphobic. And making it through hardship. To be present is a learned skill and it's hard to be present. We'll talk with John Nelson about clinical depression and the brain implant that saved his life.

What I learned is that procedure made me happy because I'm disease-free. And we'll talk with leading experts like Judd Brewer about anxiety and John Herschfield about obsessive-compulsive disorder and the science of how the brain can change. This is a month of deeply personal and honest conversations about what happened when the brain goes off course and what we can do about it. Listen to Inner Cosmos on the IHeart Radio app, Apple Podcasts, or wherever you get your podcasts. So in your story, you were talking about how Sam Altman had this massive credit line, I think, from J.P. Morgan. Is this standard for investment? Have you seen this before?

No, it's incredibly not standard. And in the course of reporting out this story with my colleagues, we talked to a lot of venture capitalists and investors, other kinds of investors and founders in the tech industry. And they either had never heard of something like this before or found it to be so incredibly risky, not just investing in startups off of credit, but using as collateral your holdings in privately held tech companies. Both of those things together are like not, you do not see that very often in the tech industry. And why don't you? Just to be clear, why is this usually a bad idea. Because it's incredibly risky. I mean, if you think about an investment in a startup, what percentage of startups not only don't get acquired or go public, but straight up fail

will go to zero. The numbers, I don't want to quote a specific one, but it's like the majority. And that's kind of the way the venture capital system works is that you invest in a bunch of unprofit or zero profit, zero revenue companies, hoping that, you know, a few home runs or grand slams or whatever is enough to justify your entire fund. But if you were to use those holdings in those kinds of companies in which a huge majority of them go under, and then a huge majority of them do go under, and suddenly you are having to use as collateral holdings in a company that is worth zero, you're in big trouble. So yes, it is not done very commonly. Very strange. And it seems the strange financial relationships are kind of Altman's motorcycle brandy. So tell me about hydrazine.

Sure. Hydrazine was a fund that Sam started around the time that he joined Y Combinator, the accelerator incubator in Silicon Valley. And he got some funding from Peter Thiel for it. And basically, it was a way for him to invest in other Y Combinator startups. So it was largely using outside money, but it was like just an access line to capital that he, he could put into these seed stage investments in startups. As I've mentioned previously, since leaving White Combinator, Altman's investment portfolio has ballooned to hundreds of startups with billions of dollars. How many of these companies have you seen that have a direct relationship with OpenAI that's he's invested in?

Well, in the story, we laid out a couple of clear overlaps between, you know, Open AI as a business and companies that he's invested in. like the most obvious one that we brought up, I shouldn't say obvious, but the most like apparent one of this kind of overlap was Helion, which is this nuclear fusion energy startup that he's put hundreds of millions of dollars into. And they worked out a deal as we broke in the story for Helion to provide, be the energy provider for future open AI data centers. So these data centers, when they're built and I guess when nuclear fusion exists, you know, would be powered by clean, nuclear fusion energy. And so that's something in which Sam, obviously, as one of the largest, by far the largest investor in Helion, you know, there's, there's an overlap there between that and Open AI's business. And then the other one that also kind of stuck out to us was Reddit, where he is one of the largest outside shareholders in the company. And OpenAI announced a licensing deal with Reddit a couple of weeks ago. And, you know, Reddit stock popped on announcement of

this deal and Sam as a major shareholder saw his net worth increase, you know, within the course of a day. I mean, that's kind of how it goes when you hold stock, but, you know, notably, on announcement of this deal. Surely any future deals between OpenAI and Reddit would mean that Sam Altman would be, there must be some kind of insider trading. How is that possibly legal? I mean, I don't know. I don't want to get into what's legal or isn't legal. It's questionable. Yeah. I guess. guess what was interesting to me and to the other reporters about the way that Reddit and OpenAI announced this licensing deal was they didn't say that Sam recused himself from the conversations

between Reddit and OpenAI. They said something to the effect of this deal was spearheaded or the person who was in charge of this deal was OpenAI COO. And I don't know what to make of that. I feel like the language of Sam recused himself would have been easy enough to do, but they didn't do it. They chose not to do it. Also it feels like saying Brad Lightcap took the deal. That doesn't feel like a disconnection from Sam Altman. Yeah, and it isn't regardless, even if he wasn't involved. And you could make a fair argument that like OpenAI probably should be licensing data from all of these providers because that's what they're using to train their models.

But the fact is they didn't, Sam didn't recuse himself. And whether it's his fault or not or this was intentional or not, the fact of the matter is he owns. a sizable, like disclosed percentage of Reddit through various holdings. And like those, you know, those shares went up on announcement of the deal. So with Helion, back to the nuclear energy startup, have they actually built anything yet? No. No. I mean, I'm so strange. I don't want to discount anything that Helion does because, you know, who wouldn't want nuclear energy to exist, right? Like that's, that's obviously a great boon for humanity to have. Nuclear fusion, you mean? Yeah, sorry, so nuclear fusion, yes.

like that would be a major technological breakthrough that would be a, you know, a sea change and how, you know, we derive energy from the grid and whatever. But, you know, aside from a couple of announcements in terms of partnerships or future purchase agreements between Helion and Microsoft and, you know, the thing that we reported, Helion and Open AI, this is not, like, they have not achieved it yet. These guys are not out there selling, you know, nuclear fusion energy to the mass public. Well, I think what gets me with that is Sam Altman puts $375 million into this company. He got them into Y Combinator, if I remember from you reporting.

He has been embedded with them. Now there is this deal between Helian, a company that is yet to build something and OpenAI, that they will theoretically do something in the future. It just feels like, I know we're not talking in legalities here, but it feels like there is just so much self-dealing here. it feels like he has been self, Altman has been self-dealing for years. Yeah, I mean,

I guess to make the argument that Sam or Open AI or other people in that circle would make is like, Sam is a prolific investor. He's been doing this for as long as he's been in tech. They say he's kind of slowed down quite a bit. You know, maybe numbers would show a different story. But regardless, he, you know,

this is a thing that he does. And like if you are going to be running, you know, the most consequential tech company at the moment or startup at the moment in open AI, there's just bound to be overlap between a vast investment empire and an open AI. So that's like the argument to the contrary. You know, self-dealing, I guess that's the interpretation of the reader. Yeah.

I think what it is is that it doesn't feel like this would be tolerated in any other industry. Like, if you, politicians own stock, for example, I realize it's not an industry. And they are heavily criticized for it. But it almost feels like, and perhaps you can speak to this, it feels like Samoen gets reported on differently than many entrepreneurs and many investors. And I really do put the journal to the side here. I think the journal and the Washington Post have done a very good job, screw itizing it. But it feels writ large like he's given a much rosier and easier ride than most. It's hard to know with Sam, right?

I mean, he's such a figure at this point, which is kind of funny to me because, like, I've been reporting on tech for, let's say, 10 years or so. And Sam's always kind of been around. He's just this person that we all kind of knew as reporters because of, you know, his role at Y Combinator and showing up at Sun Valley almost every year and, you know, now open AI being this big deal that it is. he's this figure that everyone kind of has dealt with at certain points as a tech reporter. And there's just so many opinions on him.

I mean, you know, I think there are people maybe like you who see him as this nefarious character, self-dealing, someone who isn't really above board. But, you know, you report a story like this and you talk to founders and some venture capitalists and they love him. They think he's, you know, a great investor, a brilliant business person, has incredible insights. And, you know, is this also. kind of futuristic thinker who's who's kind of in that Elon Musk vein thinking 10, 20 years down the road and at a scale at the trillions of dollars level that they find very alluring and

exciting. And so, you know, it's always hard to know when you do these sort of stories, like what you're going to get in the course of reporting because you can talk to a certain group of people who think he's borderline criminal. And to be clear, I'm not saying that, but there people who will sit back. Just citing someone. Yeah. Yeah. And people who think he's the, you know, Nikolai Tesla of our time. What are you going to do? So here's my thing with that. Is he that successful a businessman, though? Like, he's a very clearly a successful investor. But as a businessman, the company, he's been attempted fired from looped, fired from Y Combinator, fired from Open AI. He seems like a very effective policy.

politician and a very good deal maker. But I wonder how much of this, because you say he's slowed down, I wonder how much of his success can be attributed to the fact that he just was inside of Y Combinator and had the money to play at the time. Because you've been around longer. So go ahead. Yeah, no, look, it's a fair point. And I think like, look, the numbers probably speak for themselves in terms of his net worth, right? You can you can stack deck however you want in Silicon Valley to say someone is or isn't a good investor. Like when you have deal flow, when you have access. That really is a scoreboard situation. Yeah. Well, no, but I'm saying, like, you can have access to early stage startups better than other people and you're just going to be

getting first looks at Uber and Stripe. No, he's not an Uber. I'm just giving an example. Yeah, like, if you, you know, or Stripe or Airbnb, which he is in, like, if you're in that inner circle of people who see these companies on the way up and like, you know, I don't think it takes a brain genius to look at something like Uber and be like, oh, well, I bet that's probably going to be a pretty big deal one day. So I'd like to invest in that. But, you know, I think to his credit, maybe his investment in Stripe was an incredibly risky one for him personally. I think it was like $15,000 or something. And, you know, he probably didn't have a ton in his bank account at the time. So that was a pretty... When was that? Early, early days. I mean, they were in, it was in 2009,

Paul Graham So before he sold looped. Yeah. Yeah, I think it was around the same time. Because that's what I'm saying there is not really much of a risk if he hadn't, but I feel like he sold loop later. But nevertheless, it is still a risk. I don't know if Sam would have been out on the streets, you know,

if this investment hadn't turned out. But, you know, in a world of investment where people get congratulated for, you know, going all in on something or, you know, being willing to bet it all on an unprofitable you know, unproven startup, you know, people give Sam a lot of credit. But yeah, I don't know. I think you bring up a good question, which is like if you have access to an Airbnb in the earliest days or a Reddit or even a company like Rippling, which I don't know if your listeners know about, but it's this very successful now HR startup that Sam has invested in and also made it. Wasn't it an offshoot of Gusto when it's complicated? Yeah, yeah, basically, I don't

know how interesting this is, but whatever. There was a kind of a big scandal a bunch of years back with this company called Xennafits, which was accused of shirking regulatory requirements for training its workers on, anyway, it was a big scandal a couple of years ago, and the CEO of that was pushed out very publicly, later replaced by David Sachs for what it's worth. And he went on to start this other company that was basically a direct competitor to that. And it's called rippling and it's done really well in terms of building up its valuation. And Sam is one of their earliest investors. And I think, you know, part of his Parker Conrad. Parker Conrad is the guy's name. Yeah. And anyway, Sam has made a bunch of money from that or at least, you know, his investment is

valuable from that. And my point is basically like when you, when you're in this inner circle, you have access to these companies and you can make these investments. Whether, you know, he is like standard deviation is a better business person than anyone else in tech. I don't know. No, it's not for me to say, but he is on paper. His holdings are worth billions, so I guess he got to give him something for that. So you mentioned in the story that Hydrazine, Sam Altman's firm, bought a portion of startup shares owned by Paul Graham versus Y Combinator. Would those have been Paul Graham basically doing the same, like he might have been investing in these companies too, or is it just early days Y Combinator shares? These were shares that were owned by Paul Graham, as we reported.

And so it was probably a transaction for him to kind of take some money off of the table and offload them to Hydrazine so he could be, I guess, a little bit more liquid. But yeah, these were Paul Graham shares that ended up being bought up by the Hydrazine Fund. It's interesting because there's so, it feels like Altman at times doesn't have a focus, though, because he's done all of these investments and you, within the reporting, within the Washington Post's reporting, as well. There's this idea of him being absent, absent from Y Combinator, absent from looped at one point, retasking engineers to work on a dating app separately. It almost feels it almost feels hard to tell whether Altman is focused on anything other than just the number going up. But here is the real problem I see. What happens if, and we mentioned this earlier, these startups go to zero and he has these massive credit lines.

Yeah. It feels like House of Cards. Yeah. I think, you know, these people tend to be okay in the end, I find. So, you know, I don't know how many people are really all that worried about, you know, Sam's credit line and stuff. And, you know, obviously when interest rates go up, these things tend to be a lot riskier than they were going into it. You know, I can't go into all of the details there.

But, yeah, there's a reason why, you know, you know, using, you know, privately held shares or private, you know, shares in privately held companies as collateral is not commonly done. I mean, I talked to someone in the course of this story who was, like, shocked that someone would do that kind of thing. But, you know, again, to this Silicon Valley mindset in which risk, you know, quote unquote risk is really promoted and celebrated around here, that kind of thing is seen as like an example of how aggressive and cool Sam is, that he's willing to kind of take a risk on something like that in order to put more money into, well, I guess you could, some people would say put more money into the ecosystem.

Other people would be like give himself more examples to get rich. Yeah. And it's, it doesn't, actually, this is a question. Did you see a lot of, it was the general pattern of what you've seen a lot of smaller investments across a lot of companies or big fat ones generally like the 375 million in Helian? That one is a standout. the 375 million in Helion. But, you know, again, without going too specific into the numbers, because we didn't put them in the story. But, you know, some of them are in the, you know, millions and

tens of millions. You know, whether that's all his personal money or money that's raised through, you know, various LP funds that are, you know, in which there's capital put in by LPs can get a bit complicated. But no, this isn't, you know, one of those angel investors who's putting $10,000 in a bunch of different companies. I mean, when he really believes in a startup or he really thinks they're going to go somewhere, the number is in the millions and tens of millions. So a slightly different tack here. Yeah. Everyone is saying that OpenAI is the future, that chat GPT will be in everything. You've been reporting on the enterprise for a long time. Do you think that's actually the case? Do you think that this company is really, I know they're

making billions of revenue, but do you think they're ever going to go into the green? Do you think, think this is for real? I don't know. I mean, I guess I'd actually maybe even push that back to you because, you know, you're someone who's, you know, been around tech and, you know, reporters. And, and I mean, like, it's incredibly hypey right now. Like, of my time, you know, covering this industry, I've never really seen the level of high. You know, you, you know, crypto, obviously was a interesting moment in terms of there are people who believe that the entire financial system was about to be transformed because of these, you know, the blockchain and, you know, there was the on-demand era, you know, cloud. I didn't really cover tech at the time. And, you know,

that sort of proved out to really be in a very specific way transformative. I don't know with this one. I mean, I think the technology as it stands right now is very problematic in terms of its shortcomings. I think hallucinations are a major issue if it's going to be as valuable as search, which is like the most successful product, you know, tech is probably ever put out. And the other issue is the cost of training and deploying these models is tremendous. I mean, like you said, like I cover the enterprise. So part of my beat is writing about the cloud and data centers. I mean, to me, one of the biggest things that's going on right now is this multi-billion dollar build out of data centers that's happening at an unprecedented level across, not even the country, but the world, in order for there to be enough,

you know, AI warehouses, data centers, you know, outfitted with Nvidia chips to train and inference, you know, deploy all of these models. That's crazy. I mean, because that is all done in advance that there being enough demand to justify these investments, right? I mean, like, this is all because, you know, for a huge portion of last year, there was more demand than supply when it came to compute. And so all of these tech companies started saying, well, we need to build out in advance of, you know, this demand being unending and increasing. And it's like, well, okay, that's fine for now. But if in the future it doesn't, if, you know, this turns out to have been a fad or the years that it takes for this to be a widely, a widely used technology is way

longer than it is, you know, it could be one of the bigger boondoggles, I think we've seen in tech, you know, like all these data centers that were built out that lay unused because there's not enough people wanting to use chat GPT or any of the kind of similar, similar products. Is that happening now or is that something you fear for the future? More for the future. You know, I think the demand is still fairly high right now. And if you talk to startups like AI startups, they'll say it's still hard for us to get access to GPU clusters for us to train models or, you know, things like, you know, the technology

that we want to deploy is still much slower than we want because there isn't enough compute. But, yeah, Jerry is still out. Sorry, I know that's a really lame phrase, but like... No, no, no, for real. That's good, though, because what happens if the demand never arrives, though? Does this stuff get repurposed? Does it get sold off? Well, I think you actually saw a kind of interesting thing happening with crypto,

which I actually wrote a story about that with Berber, Jen, my colleague on this story who, you know, who was the lead on the Sam Altman piece. About, you know, with crypto mining, there were a lot of companies, at the height of, and specifically Ethereum mining, that were building up these rigs, these mining rigs that were, had GPUs at the heart of them, that were necessary when people thought that was going to be profitable, basically like. Wasn't CoreWeave, which is for the listeners, a huge, soon-to-IPO, a multi-billion dollar GPU provider?

Weren't they previously crypto? Yeah, 100%. They're a fascinating company. I love CoreWeave because, yes, this was a company that is started up by people in finance, It's basically like traders, like energy traders. I shouldn't actually don't know if there's energy, but people with like a very financial background who realized like this amazing arbitrage that was happening in crypto and Ethereum mining,

which was that like the cost like the value of mining when Ethereum prices were high is greater than the electricity it takes to consume to do the mining. And so when that was at its peak, they were, you know, they were doing pretty well. And then they read the writing on the wall that, you know, Ethereum mining was probably going to decrease in value, and they made an early switch to retrofit all of their mining rigs into AI compute. And that was before ChatGPT and OpenAI became a household name. But anyway, I bring up that whole story because what a lot of Ethereum miners started to realize when there was this kind of shift in the nature of Ethereum mining that basically

meant they didn't need GPUs, like these very powerful GPU rigs to do the mining, is they were stuck with these kind of useless machines. And so a lot of them have tried to like jump over into AI compute and providing, you know, training and inferencing. And so it was an interesting example of like one trend jumping into another. And so I don't know what that could mean because the theory of mining is just not even close to the scale that we're talking at here with AI. But, you know, tech seems to find a way. I don't know. I, I, I, I, I, I, I, I, I, I don't have a good answer for it, but it would be a crazy outcome, honestly, if, you know, we're talking $30 billion a year of investment in infrastructure from a single company alone

in building up data centers. So if that ended up not being necessary, yeah, I don't know what to do with those things. Yeah, it feels like what I would worry about is the physical GPU equivalent of 2022, where you had all these companies in 2021 who hired every. everyone everywhere. And then they went, oh, crap, better fire them. But it almost feels like it could cause, I think Nvidia feels like they would be, or AMD to an extent, Micron, I guess, but would be most at risk from this. Because if there's just thousands, tens of thousands, hundreds of thousands of black whales,

or what have you, sitting around unused, feels like it could be catastrophic. Yeah, I mean, at least Nvidia is selling stuff. Like, at least they're pushing product, you know. Like, at least they're manufacturing or designing things that are manufactured and selling to the people who are paying cash for them. So that's better than some crypto or sorry, that's better than some AI companies that it's really just on like on hype and a hope and a prayer. But yeah, I mean, like as we're recording this, Nvidia is in and around a $3 trillion

company. It's more valuable than Apple. I mean, that's, there's crazy. Yeah, there's a lot going on in terms of the expectation of this sort of not stopping anytime soon. do you think the AI boom is a bubble? Oh yeah 100%. Like I don't even think that's a controversial statement.

Like I think Sam... I don't know if I... Go ahead. Yeah, no, I think Sam would even agree. And like most people that I talk to in AI, I think it's a bubble. Because look, the nature of... That doesn't mean that everything's going to go to zero. And that, you know, like the huge run-up in value that we've seen with Microsoft and and Nvidia is going to all, you know, disintegrate if it takes a lot longer or it doesn't even

catch on with AI. But, yeah, I mean, you're seeing money. And my colleague Berber wrote actually a good story about this a couple of weeks ago. I mean, you're seeing startups that have no, you know, no revenue, really, or not even a product raising at valuations in the billions. I mean, that's the very definition of a bubble. So, yeah, I don't even feel like I'm going out on a limb saying that. So I will push back on that.

Not to say you're not going, like, I believe you are, because if you look around, and this is crap on this one, I think, it feels like AI is humored on a level in the media right now that I have literally only seen on the Metaverse, where it was just this concert. Not saying that AI is useless, generative AI has uses, but it feels like everybody is giving Sandhapishai, for example, the benefit of the doubt about Google search, or at least they were until it's uses. told you to eat rocks. But especially with chat GPT, they're just kind of assuming these things will happen. And I don't know what it is. It feels almost like the, why do you think people are giving it so much space and believing that it will grow exponentially? Well, actually, I have two answers to that. I mean, one is, is like you are surrounded as a reporter by your sources. The people that you talk to day and day out who, you know, try to let you know what's going on in the space are people that a lot of the times are big believers.

in any new trend in technology. And so it's kind of easy as a reporter to hear about this stuff and want to at least explain it to readers, not necessarily be part of the hype. I mean, that's not our job, but at least say, like, well, this is why Anthropic is getting billions of dollars of investments or obviously open AI or anything like that.

I think if I had to just personally guess on a lot of this stuff, you know, it's been a bit slow in terms of transformational technologies in a while. I mean, honestly, you could maybe look back to probably the iPhone as the last thing that like fundamentally upended the way we live our lives. You know, in the enterprise, I guess you could look to the cloud, although most people don't care about that. But, you know, with AI and, you know, these kind of seemingly magical interactions that you've had with chat GPT where it can, you know, write poems and, you know, create images and, you know, SORA and the video. stuff and whatever you want to call that, you know, her like demonstration from OpenAI. Like

it demos very well. It sounds like the kind of promise of AI of creating something that approximates human intelligence. Right. You can fill in the gaps. Yeah, it just like it feels like the future. I'm not at all saying that it is, but like in terms of like other technological trends that we've seen in the last decade or so, like this one comes closer to science fiction than anything I've seen. I'm not saying it is, but like it looks like it on paper. And so it's a lot easier, I think, to get caught up in the hype than you may have been in like, I don't know, Uber for X or like instant delivery or something.

Another podcast from some SNL late-night comedy guy, not quite. Unhumor me with Robert Smygel and friends. Me and hilarious guests from Jim Gaffigan to Bob Odenkirk to David Letterman, help make you funnier. This week, my guest, SNL's Mikey Day and headwriter, Streeter Seidel, Help an a cappella band with their between songs banter. There's that worst singer in the group. The worst?

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Do you have a name suggestion? We're open. Since you guys are middle aged. One erection. Listen to human. Remember me with Robert Smygel and Friends on the IHeart Radio app, Apple Podcasts, or wherever you get your podcast. Huber me. I need some jokes to make me seem funny.

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Let us show you at iHeartadvertising.com. That's iHeartadvertising.com. There are times when the mind becomes a difficult place to live. This is David Eagleman with the Inner Cosmos podcast, and for Mental Health Awareness Month, we're dedicating a series to understanding the mind when it struggles. I'm joined by doctors, researchers, and those with lived experience. We'll talk with singer-songwriter Jewel about anxiety.

I started living in my car, and then my car got stolen. I was shoplifting. I was having panic attacks. I was agoraphobic. And making it through hardship. To be present is a learned skill, and it's hard to be present. We'll talk with John Nelson about clinical depression and the brain implant that saved his life. What I learned is that,

procedure made me happy because I'm disease-free. And we'll talk with leading experts like Judd Brewer about anxiety and John Hirschfield about obsessive-compulsive disorder and the science of how the brain can change. This is a month of deeply personal and honest conversations about what happens when the brain goes off course and what we can do about it. Listen to Inner Cosmos on the IHeart Radio app, Apple Podcasts, or wherever you get your podcasts. The Wall Street Journal also reports that OpenAI has established, and I quote,

a strengthened conflicts policy and a new independent audit committee that reviews potential conflicts, which the journal also notes as yet to disclose any details about what those policies might be. It's also important to remember that when Sam Altman returned to OpenAI, he appointed a new board of directors made up of this Avengers of Capitalism, I've called them before. People like Fiji Seymus, CEO of Instacart, which is a company that Sam Altman invest, invested in to a board that also already included Adam D'Angelo of Quora, which is another company that Sam Altman invested in. Oh, oh, sorry, sorry. I forgot there's one other guy that Sam Alman added back to the board when he became CEO. He's a guy you might know. He's called Sam Altman.

It's so good watching all this happen. It's so fun. It's so great watching all of this naked, self-dealing corrupt nonsense happen and everyone's just like this guy is the future. Sam Ortonman's the man. And I think the frustrating part of watching the Sam Altman's story unfold is that at no point anybody appears to interrogated who this person was and whether they might be fit to task. There are credible allegations of abuse from his sister, Annie Aortman. There are real things happening here, business things, social things, horrible things and no one's goddamn doing anything. And maybe that's it. Maybe Orkman's skill isn't so much creating things or any real legacy.

But it's just a result of the momentum one gets when you've made enough money for people and enough money yourself that people no longer bother to check and would rather just find convenient platitudes and stories about the clever things you've said rather than think about it for too long because maybe the truth's just a little disgusting. And the problem with someone like Sam Altman is that they'll eventually get to the point where they can do real damage. I don't know, like today, like becoming the figurehead for the entirety of Silicon Valley, and the entire artificial intelligence boom, and the CEO of its largest player.

Altman is a marketer, at best, kind of a management consultant, but let's be honest, history shows he doesn't really manage anything. Now, I think he's the Michael Jordan of bullshit, the Michael Jordan of empty promises, except he's never had a situation before where these promises were actually connected to something he was responsible for. And what's scary is, like I said, this guy is the CEO of OpenAI. And he has made all of these promises for everyone in artificial intelligence, even those not making generative AI. So everyone is putting the expectations of Sam Altman, who is building,

by which I mean having other people build a technology that doesn't do the things he's promising, on the entirety of the AI industry, so that the people buying AI who don't really know what they're talking about go and use Generative AI, and then they say, wait, this doesn't do the thing? Do you not see the problem here? Do you not see that Sam Altman is leading tech to ruin? He's promising these things that Generative AI cannot do. He is making these statements that are boosting stocks, that are, honest to God, impressive here, tricking Fortune 100 CEOs into investing money

in tech that will not do what it says. And when the ruination begins, it's going to be terrible for the valley. Funding will be even harder to get. And in the next episode, I'm going to explore Sam a little more. And I'm going to really look at what happens to an industry when they so doggedly follow and support and appreciate, such an obvious false profit.

Thank you for listening to Better Offline. The editor and composer of the Better Offline theme song is Matt Rosowski. You can check out more of his music and audio projects at Mattisowski.com. M-A-T-T-O-S-O-S-K-I.com. You can email me at E-Z at Better Offline.com or visit Better Offline.com to find more podcast links and, of course, my newsletter. I also really recommend you go to chat. Where's your ed dot at to visit the Discord

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not quite. Unhumor me with Robert Smigel and friends. Me and hilarious guests from Bob Odenkirk to David Letterman help make you funnier. This week, my guest, SNL's Mikey Day and headwriter Streeter Seidel help an a cappella band with their between songs banter. Where does your group perform?

We do some retirement homes. Those people are starving for banter. Listen to humor me with Robert Smigel and friends on the I-Heart Radio app, Apple Podcasts, or wherever you get your podcasts. The story I told myself can then shape my behavior and that can lead me to sabotage the possibility of connection. This Mental Health Awareness Month,

Tune into the podcast deeply well with Debbie Brown if you've been searching for a soft place to land while doing the work to become whole. This podcast is for you to hear more. Listen to deeply well with Debbie Brown from the Black Effect Podcast Network on the Iheart radio app, Apple Podcasts, or wherever you get your podcast.

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