This is an audio transcript of the FT News Briefing podcast episode: ‘Elon Musk gatecrashes OpenAI restructuring’
Marc Filippino
Good morning from the Financial Times. Today is Wednesday, February 12th. And this is your FT News Briefing. Hong Kong’s tech stocks are soaring right now. And Elon Musk is throwing a wrench in OpenAI’s plans to restructure. Plus, Sudan’s two-year civil war has entered a new phase. I’m Marc Filippino, and here’s the news you need to start your day.
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Tech companies are having a stellar week on the Hong Kong Stock Exchange. Chinese tech stocks listed there have entered bull market territory. The index that tracks the 30 largest companies is up 27 per cent since about a month ago. Investors are excited because of a Chinese AI start-up that we’ve been talking about a lot lately — DeepSeek. Its model uses way less computing power than its US counterparts. And on top of that, the world’s largest electric vehicle battery maker, CATL, applied for a secondary listing there this week. It could be the city’s largest stock offering in years.
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Elon Musk wants to take control of the non-profit that governs OpenAI. He led a consortium of investors this week to make a nearly $100bn offer for it. That could complicate an already complicated restructuring at OpenAI. So why would Musk offer an absurd amount of money for a non-profit? Well, there’s some history there. I’m joined now by the FT’s venture capital correspondent, George Hammond. Hi, George.
George Hammond
Hey.
Marc Filippino
All right. So can you break down for us what OpenAI’s structure is? What exactly Musk in this group of investors offered?
George Hammond
So OpenAI has a really complex structure, and that’s a legacy of its foundation as a non-profit research organisation in 2015. The company then launched a capped for-profit subsidiary in 2019, so it could start taking in outside investment. So it has this slightly Frankenstein structure of a non-profit which has a controlling stake in a for-profit entity. And what OpenAI is trying to do is to streamline its structure and make itself into a more traditional for-profit structure. So Musk is offering $97.4bn with a consortium of other investors to take control of those assets held by the non-profit, which include control over the for-profit.
Marc Filippino
So do we think this bid is going anywhere, George?
George Hammond
OpenAI have made it pretty clear they’re not interested in this bid. Chief executive Sam Altman has said publicly that OpenAI is not for sale and OpenAI’s mission is not for sale. According to our sources, the board of OpenAI has not received a formal bid, and they’ve been pretty unequivocal that they would not consider selling to an external investor.
Marc Filippino
Just out of curiosity, why is Musk doing this? Why even float this kind of offer?
George Hammond
I think there’s a few ways to look at this. Musk was a co-founder of OpenAI. He left OpenAI’s board in 2018 after clashing with Altman about the direction of the company. And since then, he’s become a competitor to OpenAI. He’s launched his own AI start-up, xAI. So there is a competitive dynamic here and a business dynamic. You could also take him at his word and think that he is committed to OpenAI’s mission, and he thinks Sam Altman and Co reneging on that mission. And so he thinks he’d be a better steward of these assets than they would.
Marc Filippino
How much of a wrench could this throw into Altman’s plan to convert OpenAI to a for-profit company? I have to imagine that there would be several hurdles there.
George Hammond
So Altman is trying to do something phenomenally complicated in turning this company, which was founded as a non-profit into a form of for-profit. And as part of that restructuring, it has to put a value on the assets held by the non-profit. Internally, OpenAI is talking about a valuation of around 30bn. Musk’s bid pushes up the potential valuation of these assets to closer to 100bn, and that puts OpenAI in a position where they may have to pay more to complete this deal, which would give them less to invest in pursuing the technology. So it creates a complication for OpenAI and they think that’s one motivation for Musk’s bid.
Marc Filippino
George Hammond covers venture capital for the FT from San Francisco. Thanks, George.
George Hammond
Thanks, Marc.
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Marc Filippino
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