No Priors Ep. 42 | With Sarah Guo and Elad Gil

(music plays) Hi, No Priors listeners. Time for a host-only episode. This week, Elad and I are gonna talk about what's going on at OpenAI, of course, video, Q*, uh, what might be next in research, and some predictions. Okay, Elad. We have to start with the saga from this past week. What is your take on the outcome and the second-order effects?

From a second-order effect perspective, um, this seems like overall positive news for everybody involved, so... It looks like on the OpenAI side, they're back to being in a really positive, stable situation. I think they still have, like, the leading model in GPT-4. Um, they've reworked the board, which seems like a positive thing, so, you know, imagine if this had happened two years from now or three years from now, et cetera. So it, it seems like it would net increase the stability of the company and governance and a few things like that, or the nonprofit and the company and governance. So as an external viewer, it seemed like a, uh, painful thing to go through. But the flip side of it is, it seems like they're moving forward and moving ahead in a positive way. Um, and then in parallel, I think it may have ramifications to other areas, um, that we can talk about if useful, but, like, what are the second-order aspects of this? But it'd be great to hear what you think.

Yeah, I think the first, uh, obvious lesson is that governance matters, right? And this isn't an area where I think most companies are that experimental, but I think a lot of entrepreneurs are likely to think twice about placing their destiny in the hands of groups with explicitly mixed incentives now. I'd say generally, nonprofit governance is... Not every organization, but as a class, known to be kind of abysmal, right? Because performance is hard to measure objectively, and so it often ends up more about politics and specific relationships and status gains than outcomes. The clarity around how much, you know, any board matters was kind of a, a wake-up call for people. The second lesson that a lot of people will take away, or I think should, from this whole saga is that money matters, right? The factors of production are labor and capital, and compute is the AI-specific form of capital. Microsoft holds the compute here, and that clearly mattered. This is amazingly well-managed, uh, and supported by Satya and Kevin. And then the class of, like, really special labor here, the team rebelled, and the board obviously underestimated the level of support that Sam and Greg had from them. And then, then I think one thing that is often unsaid, because it's a little bit less idealistic, is that a lot of OpenAI people were very upset this last week about not just the destruction of the mission, which I think was absolutely, like, genuine, but also destruction of the value they'd built and been promised a piece of with the $86 billion, uh, tender offer. It's just a reminder that labor and capital are, like, leverage. They're stakeholders, and there's no, there's no free lunch or control without skin in the game, and I, I think there, um, likely shouldn't be from the view of many of the people involved in this.