[liamcardenas]

I am a fan of Open AI, but is this not an admission that they raised more capital than they know how to deploy on research?

Similarly, Peter Thiel once made a case that if Google ever paid a dividend it would be an admission that they are no longer a technology company and are instead a bet again innovation in search. [0]

[0] https://youtu.be/2Q26XIKtwXQ

[danielrhodes]

No. OpenAI would not invest their operating capital in startups - that would be legally and fiscally irresponsible. Instead, a separate entity is created to manage the fund and OpenAI controls that entity. That fund then raises money from LPs specifically for investments. I would imagine some of the profits/carry will then flow back into the parent. What this ends up being though is mostly a branding exercise to boost OpenAI's developer ecosystem, with some upside for the company itself if they are able to fund some successful startups.

[ma2rten]

Keep in mind that the former president of YCombinator is the CEO of OpenAI. That might help explain a move like this. Also recently a lot of people left Open AI at the same time. There was some speculation that they are going to start a new startup. Maybe this is a way for OpenAI to be able to invest in them.

[cjsplat]

Or the OpenAI venture fund is an acknowledgement that success requires an ecosystem that extends beyond their front door. Funding startups is a great way to signal that OpenAI thinks their stuff is so compelling that it will lead to startup-worthy ROI. It is also a way to get a track on potential acquisitions.

The alternative is a pure NIH strategy, or build something and hope for partners, both of which are flawed.

And regarding the Thiel snippet, dividends are isomorphic to stock buybacks, which Google has been doing for a while. They seem to still be a tech company, at least as far as my Ex-Googler eyes can judge.

[texasbigdata]

Didn't apple do exactly this with maybe sequoia around it's iTunes store to encourage innovation?

Also, dividends generally can't be stopped. The expectation is that you continue and eventually increase them. Share buy backs aren't.

[ericjang]

I would take a more charitable view on their move here.

AGI research is risky from a R&D standpoint (for obvious reasons), and also tricky from a business strategy and product development standpoint. There isn't a mature business playbook of how to monetize this technology, and although they probably have some ideas, their GPT-3 API pilots have suggested that outside entrepreneurs and programmers can come up with a larger search space of potential use cases then OpenAI can come up with themselves (in the same way that AWS users create more diverse products than Amazon can envision).

It's not an admission that they can't deploy capital - it's that they see an untapped resource of creativity that they can cheaply profit from, rather than building things in-house. The would rather grow the whole pie than try to grow their own slice. It's in a similar vein to how Taiwan Semiconductor lets other companies build on top of their platform and foster trust by never competing with them. In turn, they get to partner with more companies.

If they had pivoted entirely to a 100% investment firm, I would agree with you. But it looks to me from this announcement that they have built some fundamental technology and would like others to figure out the best way to monetize it, and they want to focus on new fundamental technology. An investment fund will align incentives with entrepreneurs building on top of GPT-3.

[rorykoehler]

Then why can't we get access to their API?

[plaidfuji]

Given the format of the application and the sectors they’re targeting for investment (companies that would benefit from applied AI, not other pure AI plays), this reads to me more like “there need to be more customers and demonstrated use cases for the tools we built, and fast” ... “and they should also be built on Azure infra”

[Eridrus]

I think its an admission that the near term benefits are from applications of existing tech, not AGI, and they have hired for folks who want to do research, not people who want to do the grueling work of making a startup.

This is fine though if OpenAI actually has an edge. I don't think they have a meaningful tech edge, you can see folks like GPT-Neo fully reimplement the ideas in papers. I also think they see this since they're looking to make a small amount of investments, and the big benefits of things like the GPT-3 API are for low experience/funding projects.

But maybe they have an edge in evaluating AI startups, and an edge in advising them beyond the typical VC. And if they do have a good repeatable edge there, this actually seems like a pretty interesting way to fund a research lab.

[mr_luc]

I don't think it has to be - I think they're thinking about how to turn that research into money in a healthy way, so as to keep doing relevant work in a super capital-intensive area and maintain their ability to exert some control over how AI is used, and they quite rightly assume that they can't both do the research and invent all of the killer apps at the same time.

It's interesting if you compare it to Bell or Xerox, right? The research lab's hackers helping make funding decisions about startups that use their secret sauce might seem funny historically, though maybe it would have been more effective.

(In practice, though, as HN is well aware, OpenAI isn't just some research lab; serial entrepreneurs who are connected with the most successful incubator ever, etc).

[ma2rten]

Similarly, Peter Thiel once made a case that if Google ever paid a dividend it would be an admission that they are no longer a technology company and are instead a bet again innovation in search.

That seems silly to me. Google is not paying dividends right now, but they are doing stock buybacks which is basically the same. However, Google also has 100k+ employees there are only so many people who can work on innovation in search at the same time.

[nl]

From the introduction: "The fund is managed by OpenAI, with investment from Microsoft and other OpenAI partners."

It's a separate fund.

> Peter Thiel once made a case that if Google ever paid a dividend it would be an admission that they are no longer a technology company

Well.. duh? They might be a tech company and pay dividends, but they aren't a growth company when that happens. This is sharemarkets 101.

[liamcardenas]

Good point. I suppose it depends on how much of the capital in the fund is committed from their reserves, if any.

[infocollector]

To make things lucrative, one thing that could be done is to remove the condition that OpenAI APIs must be used. But - the people who are going to pitch to OpenAI also are opening themselves up for competition. Another option would be to spin out an OpenAI Venture firm without strings attached?

[soheil]

> Similarly, Peter Thiel once made a case that if Google ever paid a dividend it would be an admission that they are no longer a technology company and are instead a bet again innovation in search. [0]

Does that mean it makes this a bet against innovation in AI?

[liamcardenas]

That was not what I meant to imply.

He is saying that Google not investing their capital reserves in R&D implies that they have run out of good research ideas.

If you haven’t watched the clip I recommend it.

[soheil]

I had watched it. I'm just trying to understand what parallels you were trying to make to the Open AI story by quoting Thiel. I think he was saying Google should be broken up because as you say they have run out of good ideas and are just using their capital to keep new competition in search at bay. So by quoting Thiel wouldn't you be implying if Open AI has also run out of good ideas then they're also trying to keep competition in AI at bay?

[spoonjim]

A company that never issues dividends (or equivalents) has a net present value of 0.

[jdsully]

That completely ignores acquisition as an exit strategy (it even works for public companies).

[ForHackernews]

What about share buybacks?

[spoonjim]

Share buybacks are dividend equivalents.

[sharemywin]

seems like the big pile of money they sit on is proof of that.