Latest / In the Loop AI / Did Sam Altman Steal this $6.5 Billion Dollar Idea?

Transcript

Did Sam Altman Steal this $6.5 Billion Dollar Idea? · In the Loop AI

• Speaker0: [0:03] So just under a month ago we recorded what was probably my favorite episode we ever did ever which was this invention and the announcement of the ai software stack finally meeting hardware and we'd get our first ai hardware device and it was designed by sam altman and johnny ive who is this amazing brilliant designer he built the ipods the iphones all the design work for apple this was a six and a half billion dollar acquisition so it was a massive bet on replacing Speaker0: [0:27] what some believe could be replacing the iPhone through this AI first device. And they had this whole big reveal and they released this beautiful video of basically them just kind of gassing each other up and saying, hey, you're great. No, you're great. Speaker1: [0:39] Glazing each other. And you're better. Speaker0: [0:40] And yes. And it was this really beautiful thing where it's like, okay, we're actually going to try to build this new type of hardware for the 21st century, thinking about it AI first with the best designer we could possibly get our hands on. This was huge. We were super excited. It had a ton of views. People really loved the episode. And then I woke up a few days ago and the website was gone and it was completely nuked. Every trace of this announcement was gone, completely disappeared. The website was taken down. The YouTube video that announced it was taken down. And I was just sitting there like, what is happening to my baby? I was so excited for this. Why? What is happening? And David, I think you probably have the answer and you could probably deliver Speaker0: [1:17] this most eloquently of what went wrong in the six and a half billion dollar deal. Speaker1: [1:22] I think everyone was hoping for absolute disaster because what came next was a lawsuit coming from a company very similarly named to their new startup, IO. So IO is going to be the company that develops the AI hardware. And the company that is suing OpenAI for patent infringement, I believe, is also IO spelled I-Y-O. I-Y-O. I-Y-O, yeah, yeah. Like one letter off and they are suing OpenAI and Johnny Ive for trying to bury their startup, bury their startup. And so this came right after all the marketing material that you just talked about, Josh, went out on the Internet. As soon as that went out there, this startup was like, yo, they're stealing our stuff. Let's sue them. Here's the founder, Jason Rugalo, who did a TED Talk about his piece of hardware. There are earbuds, big earbuds with chips in them that do like auto visual compute that also allows an AI agent to also talk to you. He tweeted out, we're not going to let Sam and Johnny steal our name. Now, this was not what I thought was happening here. I thought we were getting a early release preview of what the hardware is, the very special piece of hardware. I thought we were going to get the secret sauce. Speaker0: [2:43] I wish. Speaker1: [2:43] Turns out it's just the name. They're just lost to them over the name. I'm so disappointed. I wanted more. I wanted more drama. Speaker0: [2:54] Also, their name is not even as cool. Like, I-Y-O, I-Y-O, it's just not, I don't know, it's not interesting. Speaker0: [3:01] There's a lot more lore, though. There is more backstory to this. We have the files up here. Speaker1: [3:05] Right? Here is a tweet that I think rocketed around the world. Google X spins out I-Y-O, which makes smart earbuds from 2018, alleges Sam Altman and OpenAI heard their pitch, passed, got Johnny Ive to try and copy it, and then bought his company for $6.5 billion, copying it I-O. And so there's this big lawsuit filed by IYO towards OpenAI, which is why all this stuff had to come down. What would you say is like the big takeaway or the big reveal or the thing that listeners should know about this lawsuit? Speaker2: [3:37] I think it's knowing that it's not going to be a pair of new headphones with AI in them, David. How does that make you feel? What was that? Was that a groan? Speaker1: [3:48] Yeah, I was hoping for the earbuds. I want the fancy device. So in the episode that we did, it was a debate between are there going to be AirPods with cameras and chips in them? Or is it going to be this like puck thing that sits on your desk? And I consider the puck thing that sits on your desk to be the more lame version of what could be. And so when I listened to the TED talk from this guy that is now suing OpenAI, he had these AirPods that had like big disks on them. And so they had a lot of space, but of course, because you need a computer chip in them to run the AI model. Speaker0: [4:23] But I was like, yes, AI in my ears at all times. Speaker1: [4:26] Hyper-respondent, you can put a camera in there so it knows what's up. And I was hoping for the bigger version of what's going on. Turns out we're getting the smaller version. Speaker2: [4:33] No, I want the smaller version. I want the subtle thing that is, okay, number one, maybe this is me being selfish. I want a new device, something that I've known. I want to see the iPhone get, or the cell phone get recreated into whatever it's going to be, right? Number two, I think this device needs to be discreet. I'm kind of, and this might be revealing my boomer tendencies, but I absolutely hate how like most of the Gen Z people have conversations with AirPods in their ears. I think it's like, like, come on, like guys, like can you even hear what I'm Speaker2: [5:06] saying? And I think the same thing is going to happen. And AI is very personal. So like, I feel like if you have like some earbuds with a camera in it, it's probably not going to function as well. My guess from this, and actually from the lawsuit, if you look into it, Sam explicitly states that it is not going to be headphones, but it's likely going to be something that kind of like sits in your pocket or sits on your desk, has some kind of like fisheye lens. So it sees everything you see, hears everything you do and kind of like subtly, I don't know, influence or connect to your cell phone or your OpenAI chat app. I'm pumped about this. Speaker1: [5:40] It's a camera and a microphone with Bluetooth. Speaker2: [5:42] Yeah. Yeah. Well, I mean, if you want to put it like that, but it's how it connects with everything else right uh josh i see you grinning dude well that was Speaker0: [5:49] My favorite part of this whole thing is like the now i get to walk around and say i told you so you can't make a hundred million airpods that have cameras because the battery technology isn't there the chips aren't there and if you look at this device it's this huge clunky ugly thing that we later found out doesn't even really work that well and the only way you can make a hundred million of these things is to have it simple is to have it near your kind of desk and they actually referred to the exact things that we said where it will be thin enough to slip slip into your pocket and it'll also be serving as a desk ornament and yeah so david's pulling up the video here i'll show where it's basically this giant like circular orb in your ear so one. Speaker1: [6:26] Inch circle that goes in your ears that looks like a hearing aid as far as putting a computer around your head somewhere it's not bad and this was a year ago and so i'm hoping with like open ai and johnny i've applied some work to it. They make it a little bit more sexy. Speaker2: [6:42] This would have been a Google Glass fail. Speaker0: [6:44] No way. It's like there are some things that like, sure, I would love to design and create, but the technology just does not exist to do that yet. And you can't force something that's not ready. And that very much feels like what this was. And I was looking at examples and demos, and it reminds me very much of the other companies that have tried this with Humane and Rabi. And we had the Humane pin and had this crazy cool tech where it could project lasers onto your hand. And that's how you interface with it. Again, the technology just isn't there. It was clunky. It did not function well. You could see it in the pictures here. It looks awesome. It projects on your hand and it has like this cool laser thing and you could interface with it through finger gestures, but the tech isn't there. And the same thing with the Rabi, which was this AI alternative device that just kind of sits on your desk, it's in your pocket. The tech just wasn't good enough and it wasn't designed very well. And I think that was, that's what we're seeing here again. And the sad thing is this guy got very upset about it and he made this big deal and is suing OpenAI. And now there's this whole giant drama unfolding for, I mean, Speaker0: [7:42] what seems like no real good reason. This guy just didn't have a good product. He got upset about it. Johnny Ivan OpenAI had heard about the product, but they just weren't interested and were building their own thing. And I mean, IO is a more elegant name anyway than IYO. So I'm team Johnny. Speaker1: [7:58] So when this tweet goes out, it's got 8,500 likes. It's got 16 and a half million views. When the tweet goes out and there's a lawsuit about the acquisition and the naming of I.O., people, including me, are thinking like, oh, they ripped off some startup's entire project, entire product. And so, like, the fact that this has gone so viral and it's just the name, not that they are going after I.Y.O.'s product, there feels like a disconnect there. It's like it's such a big deal. But then when you look at it, it's like, yeah, this one startup got upset about like they're stealing the name. Why did this get to be such a big deal? Why is it so big? Speaker0: [8:41] This is like the increasing derangement syndromes around popular people. Like we see this with Elon a lot. You see this with Trump a lot. You see this with Sam Altman. Now, it is very easy to get a ton of clicks from creating these hyperbolic headlines that aren't actually super true. And Sam did a good job of addressing this, I think, yesterday where he posted the actual emails, right? of the emails of the actual interactions between them. So I would just encourage everyone, when drama like this pops up, please just go to the source. Find the closest source to truth as you can instead of reading the headlines because generally the actual truths are far different. Speaker1: [9:14] But these emails were super revealing. What was Jason Grugelow accusing OpenAI of? Speaker0: [9:18] Anything more than the name or is it just the name? Just the name. Speaker2: [9:22] Branding. Speaker1: [9:23] Okay. And so why did Sam Altman had to, what did he have to address? What did he have to post? Speaker2: [9:28] Well, he had to address the fact that people thought he was stealing the device. And he was just like, not only is the legal case against them absolutely mute, but he exposed the founder for basically trying to get or force Sam Altman to acquire him in the first place. Speaker1: [9:45] And Sam, respectfully- That's why. Speaker2: [9:47] That's what it is. Speaker1: [9:48] It's not the name. It's this guy who's trying to get acquired and he got butt hurt that Sam Allman bought Johnny Ives' company for $6.5 billion and not his company. Speaker0: [9:58] That's what's going on. And he only wanted $200 million. So come on. Speaker1: [10:02] That would have been a deal. Would have been a deal. Wait, why didn't they acquire this company though? Speaker0: [10:06] Okay, so actually I would love for you to click in the emails and we could walk through them because these are super fascinating. One of them, so this was the initial outreach. So first he reached out to Sam and he was like, hey, I'm working on this cool thing. It's called IO. He wants to pitch Sam on investing $10 million to invest in his company. And Sam actually got back to him and he said, thanks, but I'm working on something competitive. So we'll respectfully pass. And then he said, rut row, want to work together. I don't want to go up against you, man. And he just kind of describes the company. And he's like, he's very submissive at this point where he's like, man, you guys are so cool. Like, but we have a really world-class team and i have a ted talk and my instagram clip went viral and we should work together and then sam replied he's like let me chat with johnny ive he's the one driving this so then we have a follow-up email here where it's like hey he got sick the founder got sick and sam forwarded it to one of the team members and they basically revealed that. Speaker0: [11:00] Through this email he says how embarrassing peters fail and tanks fail and there were two times in which they made a demo to the open ai team and the features that they were pitching them actually just didn't even work so through this email we learned that not only was the product like kind of ugly i mean subjectively but kind of ugly it also just didn't function so during that demo there was two embarrassing fails the thing just didn't work and sam or peter again who runs i think plink product at open ai she's like hey thanks for stopping by thanks for leaving the headphones hope you're feeling better and we'll figure out next steps and it was just kind of like throughout this whole email exchange you're kind of seeing a kind of submissive founder who really looks up to Sam Altman, who really just wants to get acquired and work together with him. And the reality is, is that they just don't have a good product. And I think from that perspective, it makes a lot of sense why Sam just kind of said like, hey, I don't think this is going to work out. They offered to see the IP. The OpenAI team turned that down because they said it wasn't going to be a match. And I think that's mostly the story. It's like, hey, this one founder just like kind of had a crappy product. Speaker0: [11:58] He pitched it to the OpenAI team and it just didn't go well. And they just so happened to be working on a company that was named... Similarly. Speaker1: [12:05] So in the YouTube video, the TED talk in question, which was a great, great TED talk, he gives a demo of his product and it is seamless. It is great. And you know, it's a TED talk, so he knows it's coming. He knows how he knows what to do. And so you could totally imagine that there was some like back end magic going on, but for all intents and purposes, like you walk away from this TED talk about this, you know, chip in your AirPods that could talk to you in real time and it's an AI and they can assist you and all that kind of stuff. And then he also does some like audio geometry stuff as well. And so it's like, you know, it's a TED talk, so it's pretty impressive. If you go to the lawsuit, the lawsuit has screenshots of images of saying that OpenAI went so far as requesting like blueprints and design schematics of their device. And so there was definitely the implication that OpenAI went after IYO's IP and then just went and got Johnny Ive to build it. That was the charge at the end of the day, or what the branding of the charge was. And then I guess if you go into the lawsuit, it's just the name. Speaker2: [13:13] I guess we won't know until OpenAI comes up with the device, right? Yeah. That'll be the true tell, which hopefully by that time, this case will be absolutely close. I don't know. This all just seems like a massive nothing burger. It sounds like the founder, Rugalo, was just salty that he had been rejected. He saw the headline a month ago. Speaker1: [13:33] It's not a good look. Speaker2: [13:34] He thought that could have been me. And now OpenAI is coming to kill me. What I find particularly hilarious is that they made zero effort to iterate on the name. They literally called it IO or the company called it IO and didn't try to delineate anyway from like that company itself. I don't know if that's like a major coincidence, but my guess is it isn't. And it was a personal hit against them, but hilarious nonetheless. Speaker0: [14:02] I'm going to go for coincidence. I feel like IO is very, it was very Johnny coded. It's kind of like Love From in the same cadence where I'm not sure it was intentional. And I think I'd love to get the timelines because I'd love to know when IO was conceived versus when this other company was conceived doing the earbuds. And I don't want to discount the IO company, the IYO company, because like this is a very respectable guy was spun out from Google X and Google X for people who don't know is kind of like their moonshot division. So google has a lot of money that they put towards just building moonshot ideas and they kind of find interesting people to work on them and this is one of those that got spun out from the product like that program it's a really cool form factor this is the ideal form factor i'd love to see like i'd love just airpods on steroids that do really cool stuff it's just i think the reality of it is just not practical at this time so it was like a very admirable attempt it's very important design to try at least to prove that it's not possible and like okay good like good for you you tried the thing it's it like didn't work that well it's not working that well sorry but the professionals are going to take this now the guy who's designed all this amazing stuff is going to take it from here so. Speaker2: [15:08] I just looked it up and i yo so the uh the rugelow company came first founded in 2021 yeah so now we have to see when johnny ives came up with his company's name io and whether that was soon after they had these meetings with Rugalo. Speaker0: [15:28] Well, why would you name your company IYO to start? I feel like IYO is the better one. Speaker1: [15:33] We're running out of names these days. Speaker0: [15:35] I guess so, man. Speaker1: [15:36] Yeah, yeah. Well, my big takeaway is, like, Sam Altman just has a really big target on his back. Topenei has a really big target on his back. And I think people can, like, get a rabble out of people. I think this Jason Rugalo character is truly going for the money. He's going for the money. Like, you didn't acquire me, therefore I'm going to sue you. Maybe, I don't know, like, if his startup is not doing great or what, or what the strategy is with that. I don't know if he comes out looking better than he went in with this but i guess it also comes out of the lawsuit but overall like sam altman's got like 99 problems man like coming from left and right Speaker0: [16:14] Yeah and this is just one of them and it seems like at the end of the day this this only became a big deal because there was a lawsuit and they they were forced to take things down if they didn't actually have to take it down it just would have been another day in paradise they would have been sued by someone else Speaker0: [16:29] who they're competing with and that would have been the end of that well. Speaker2: [16:32] Actually speaking of target it on his back. There's one story that's been following Sam for a while now, actually since the company was founded. So for those of you who don't know, OpenAI was called OpenAI because the original mission and still technically the founding mission of the company was to create AI that was in alignment with humans. So as a specific part of that, OpenAI was structured as a non-profit. So it would never let profit basically get in the way of designing this amazing AI model that's going to benefit the entirety of humanity. Now, at some point along that line, Sam disagreed with this notion and decided to kind of evolve OpenAI into a kind of for-profit company. But he's been taking it through stages. It's what's called, it's what has caused a bit of a ruckus amongst other AI CEOs like Elon Musk, who was originally part of OpenAI and broke away. This week, this website popped up and was delivered that went viral on X called the OpenAI Files, which is basically a deep dive revealing that SAM or OpenAI itself is restructuring very much into a for-profit. And if we just scroll down here, there's actually a really neat diagram that summarizes everything that's going on here, David. So the takeaway here is OpenAI is moving into a public benefit corporation. Speaker2: [17:55] And the major benefits from the public benefit corporation is listed here, which is it is a for-profit company without a fiduciary duty to humanity, without limits on investor returns, and without granting the nonprofit rights to control AGI technology. So it's basically reverting everything that its original structure stood for. Now, this isn't new news, but it really sets in notion what OpenAI is gunning for, which is it is the leading AI model provider. I'm curious whether you guys disagree with that at all. And it has the lead right now. And to your point, David, it has the biggest target on its back. Speaker0: [18:32] In my opinion, this is a natural way for things to go. Speaker2: [18:36] I don't think this is anything surprising entirely. I kind of expected Sam to take this in a for-profit direction. Heck, every other single AI bottle producer is a for-profit anyway. But I think people are a little bit salty that their original founding mission Speaker2: [18:50] was to align AI. So I just think this is business tactics at play. And this is just another hit piece. But I don't know. What's your take? Speaker1: [18:56] I think this this topic is going to be endlessly talked about until the end of OpenAI. Like this is just right. Whether this was intentional, as in like Sam Altman thought that maybe, you know, kind of like how not to invoke a nefarious character, but like Sam Begman Freed was all about altruism and he leveraged that as a brand to help promote FTX. And so like you can carry that forward into OpenAI and be like, yeah, Sam Altman, we're going to make AI, the profits of AI go back to humanity. We're going to do universal basic income and we're going to be super mission driven. And I don't know what he was like defending against. I don't know what the strategy was with that. I don't think anyone truly knows. Or maybe alternatively, as was actually what that was supposed to be. It was just we're going to do this as a nonprofit. And then he realized that there was going to be this AI space race and you need to be for profit in order to be competitive at all. That's another, it's like one of those two things. Maybe the truth is somewhere in the middle. I don't really know. But I think people are going to like to be debating about like what was the original intent and strategy of the nonprofit inception of OpenAI? And also was that in any violation of anything? Like did, was that nefarious? Was that a good move? Was that illegal? People are just going to debate this forever Speaker0: [20:15] Yeah this feels like this is just another extension of the conversation of everything that's gone wrong about open AI and that's this like technical debt they will never be able to escape from they had the issue with all the founders when they all left and they tried to push Sam Allman out of the company so there's all this lore that keeps getting resurfaced in different form factors but I think we kind of know this this is nothing net new, this isn't anything breaking that we're not aware of so I think now I'm just kind of judging open AI I'm like just merit-based just like hey if your models are great and you are delivering like high quality software that's fine like I know all of your problems I know all the skeletons in your closet I'm aware of this this is like I know who we're dealing with just make good software now I'm not really interested in the drama anymore now you're just right there with everyone else. Speaker2: [20:58] Yeah, I think also kind of seeing it from Sam's perspective, he is facing a lot of pressure from investors, right? So he needs to raise capital to train new breakthrough models. It's a very expensive art form to get involved in. And these investors, rightly so, are saying, listen, I want more than 100x, which is crazy to someone that comes from a crypto background where that would be like the dream, but they want more than this. And it's likely that the most powerful technology that humanity has ever seen before is going to lead to way, way, way more than that, right? Especially if it's the leading model provider. The second thing that this OpenAI files revealed that I found was interesting is Sam likes to herald a lot online that he owns almost no equity in OpenAI and he's not really benefiting from it financially. But what was revealed is one of the biggest equity owners of OpenAI, according to this OpenAI Files release is Sam, but it's just through different corporations that he's set up that has bought the public, not the public stock, but the private stock. So they own equity stake in it. So he's kind of like self-funded it through the billions that he raised through either his Airbnb investments or his YC Combinator investments. And he now indirectly owns a heck of a lot of OpenAI. So it's in his financial interest actually to move this into a public benefit corporation and a full profit Speaker1: [22:19] So when sam altman has said i own no equity in open ai Speaker2: [22:23] Oh he does Speaker1: [22:24] That was a lie so he Speaker2: [22:26] Lied yeah yeah Speaker1: [22:27] He just lied through his teeth according Speaker2: [22:29] According to the open ai files Speaker1: [22:30] Yes according to the opening well it's Speaker2: [22:32] It's kind of like a white lie because he technically doesn't Speaker1: [22:35] Do it but this quote that's a lie by omission exactly if he if you if he thought in the back of his head like well i'm not going to talk about the equity that i own through these private entities, that's a lot. Because the spirit of the question is, do you have financial upside to the growth of your company? That was the spirit of the question. Speaker2: [22:53] And again, this is like claims that are made by this website and they have a bunch of sources. Speaker1: [22:57] Who made this website is an interesting question. I've been trying to find that out. The tech oversight project and the Midas project, not exactly sure what these things are. One of them is holding the hyperscalers accountable. But man, if I was Sam Altman's direct competition, I would be very interested Speaker1: [23:15] in this website getting, you know, publicized even further. Speaker0: [23:19] And that's pretty much it. So, OpenAI, getting sued by some disgruntled guy who created a pretty mid-tier product, and we're still back to business. So, do not fret. We are still building our little puck-shaped pocket thing that'll sit on your desk, go in your pocket. We're still, the mission continues. We are building the AI-first hardware device. It is still coming. $6.5 billion did not go to waste, although it did stir up quite a bit of drama. And that's where we stand today. So, I'm hopeful we kind of, part of me selfishly wants more lawsuits so we can learn more about the device as we go. So kind of forced to like push out these publications from behind the scenes. Yeah. So, I mean, to be fair, I'm not a shareholder of OpenAI. So if you want to go sue them and get more information, like we'd love to cover it. That'd be great. Please consider. But yeah, that's mostly the story. It's just there's not a whole lot of new things. It's just a continuation of the old. And a lot of people just kind of being upset with OpenAI and Sam Altman as a whole and just kind of the company navigating through that. Speaker1: [24:14] The drama between the OpenAI Labs continues to be the most Game of Thrones-y thing that I think has ever happened in my lifetime. And I look forward to covering it with you guys on future episodes of Limitless. So if you found this episode on YouTube, make sure to hit that subscribe button so you can track the drama, which that's what we do here, as well as talk to other frontier tech leaders and innovators in this space, just so we can kind of stay ahead of the curve of the very weird future that is coming our way. If you like podcasts, this is also coming in podcast form so you can subscribe on Apple, Spotify, wherever you do your podcasts. But if you're on YouTube, Speaker0: [24:48] Make sure you. Speaker1: [24:48] Hit that subscribe button. Thanks, everyone.