Execs Jump Ship as OpenAI Goes For-Profit & The $100K NIL Controversy

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0:29Good Morning Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, how messy has college football become? A quarterback abruptly left his 3-0 team because they weren't paying him enough. Then OpenAI said, you know what? Let's make some cash and is changing from a non-profit to a for-profit. It's Friday, September 27th. Let's ride.

0:54We are, of course, following Helene, which made landfall in Florida last night as a category for Hurricane, the strongest to ever hit the state's big bend region. This was a massive storm with a wind field that stretched the equivalent distance between Washington, D.C. and Indianapolis, and it's already caused unprecedented flooding and record storm surges of up to 10 feet in some of Florida's coastal communities. As of 6 a.m. this morning, more than 2 million customers were without power across Florida, Georgia, and the Carolinas. Helene has now entered Georgia, And while it's weakened to a tropical storm, meteorologists say it's still extremely dangerous.

1:32This is how you know this storm is and was bad. Waffle House closed all of its locations in Tallahassee. Remember, if Waffle Houses are operating or not, has actually been used by FEMA as an indicator of a storm's severity. So to see them all shut down says a lot. Not only shut down, too, I've been seeing pictures of them boarded up as well. And that is not a site that you come across very often. It does look like Helene has reduced in intensity. It is a tropical storm now, but we definitely hope that everyone in the region is staying safe. Now let's take a moment to hear about our sponsor, Wise Business.

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3:26Murati was probably the second biggest name still left at the company as the technical lead behind OpenAI's suite of chatbots. But she joined Chief Research Officer Bob McGrew and Vice President of Research Barrett Zoff on their way out the door with Murati citing no real reason for leaving other than the moment felt right. One thing that may have made the moment right is that OpenAI is ditching its more altruistic roots. According to reports, the company, which was founded as a nonprofit with a mission to build artificial general intelligence for all, is transforming into a for-profit enterprise that could be valued at$150 billion.

4:04Altman is also reportedly in line to receive 7 % equity, which would make for a nice$10 billion boost to his net worth. So, Neil, the string of exits, the shedding of the nonprofit label, what is going on at OpenAI? I mean, this was soap opera coming into this week, and then all of a sudden things got even more dramatic. I mean, Sam Altman himself said leadership changes are a natural part of companies, but I obviously won't pretend it's natural for this one to be so abrupt. We are not a normal company, and that is absolutely true. I mean, 11 people founded OpenAI. Right now, there are just two left, including Sam Altman.

4:45He has tightened his control over this company as it's moved from a nonprofit when it was founded in 2015 towards the future, where it's basically just looking like any other Silicon Valley giant. And with this$150 billion valuation, it's going to be one of the biggest tech companies in the entire world. Right. Altman is trying to paint this picture that all the decisions to leave were separate. They just so happen to coincide at the same time. But Mirati is a big name, though. Remember, last November when that coup happened that ousted Sam Altman, Mirati was installed as the company's CEO briefly.

5:17She eventually actually pushed back and said she joined 500 other OpenAI employees and said, we're going to leave the company if you don't bring Sam Altman back. But there has been this growing rift at OpenAI. You have the people who are still on board with that original mission, that original nonprofit vision for the company. And then those who want to more aggressively commercialize the product, get the product into more people's hands. And it has led to repeated clashes, if you believe, reports from reporters who cover the company in between these two groups. And so I think that even though Sam Allman is trying to say, no, everything's fine.

5:52Like, it's just a very high-stress work environment. It is natural for executives to leave. There could be more to the story here. Yeah. So why would OpenAI want to become a for-profit company? And the big reason why, for me, seems to be this big fundraise that they're trying to close. They're trying to raise$6.5 billion, which would be the biggest VC investment in history. $6.5 billion is absolutely insane. And the problem is, under this previous nonprofit structure, you had to cap profits for investors. So if I'm trying to court the top VCs in Silicon Valley and I'm saying, hey, invest in our company, but actually you can only make 10 percent on your return.

6:36You can only make 20 percent on your return. That is not a very enticing pitch because this is a lot of money they're forking over. Moving to a for profit structure could allow these VCs to make a lot more money on their investment. And when you're trying to raise$6.5 billion, you need to set that you need to up the ceiling a little bit. And that is seems to be like the main impetus here for moving to the new structure, which hasn't really been announced publicly by OpenAI. It's just been reports and anything would take years down the road to happen. But it does seem like they've been on that path for the past year or two.

7:09And it seems like they're going to get there in the future. Also, OpenAI needs the money here because remember the information released this big report a few months ago saying that they have spent approximately$7 billion on training its various models and$1.5 billion on staffing alone. It is really expensive to have the best minds in AI work at your company. And then remember the early report too was ChatGBT, which is literally the first model they ever released. At one point it was costing OpenAI around$700 ,000 a day to run. So we know that this is a historically capital-intensive business. It burns through a lot of cash to kind of tune these models in the way that they want them to.

7:48So you need that$6.5 billion. And if the way to get it is to convince these investors that, yes, we are going to become a for-profit enemy, of course Sam Altman is going to take that route. People in New York City were bumping into each other on the sidewalk, even more than typical yesterday, because everyone was staring at their phones, reading the indictment of Mayor Eric Adams, the first time a sitting mayor in the modern history of New York has been criminally charged. Prosecutors unveiled five charges of corruption against the man running the country's biggest city, accusing Adams of accepting more than$100 ,000 in bribes from foreign officials going back a decade in exchange for preferable treatment.

8:27Much of the indictment focuses around Adams's cozy relationship with Turkish businessmen and its government, specifically the country's national air carrier, Turkish Airlines. Prosecutors allege Adams was granted free or heavily discounted trips on Turkish Airlines, as well as comp stays at luxury resorts and free meals while overseas. Damian Williams, the U.S. attorney for Manhattan, said these freebies was, quote, a multi-year scheme to buy favor with a single New York politician on the rise, Eric Adams. As part of this quid pro quo, Adams allegedly pressured the New York Fire Department to permit a new Turkish consulate building in Manhattan, despite there being safety problems with the skyscraper.

9:09In a press conference following the indictment, Adams said he was innocent and said he asked New Yorkers to be patient and hear out his defense. Still, calls are growing for him to resign. Right. If you follow this indictment and you look at some of the names that Adams was connected with, it was a celebrity promoter, a university chairman, an airline manager, a luxury hotel owner, all related to the Turkish government. They provided Adams with free travel with these entertainment benefits, as well as some illegal campaign cash. If you follow the campaign donation money, it looks very bad for Adams, candidly.

9:46Adams and his staff worked to disguise this foreign money that was coming in. And then there's this program that you can, it's called the matching funds program, where you can actually get public money to match some of the private donations you received. And so Adams was essentially taking this foreign money, disguising it that it was coming from locals, and then using that to increase the amount of money coming into this campaign via this matching funds program. So that's where some of the allegations are surrounding this. if you look at the campaign money that was flowing into his kind of coffers.

10:19Right, so prosecutors are accusing him of basically bilking taxpayers out of$10 million. But really, the juiciest stuff of this is related to this foreign travel and his relationship with Turkish Airlines. In the indictment, one of the most quoted anecdotes was the fact that he traveled from New York to Paris with a stopover in Istanbul. And he texted his partner, who was wondering, Why are we stopping in Istanbul on the way from New York to Paris? It's not exactly on the way. And he allegedly texted them. You know, we always stop in Istanbul. It's always the first stop. You got to know that. And he had these stays at the St.

10:58Regis Istanbul, a boat tour to Prince's Islands in the Sea of Marmara and a Turkish bath at a seaside hotel. So for any of anyone wanting to look at free trips, luxury trips, this is where you can find it. Yeah, and then so some other notable kind of screenshots that escaped from the indictment was the airline manager was asking an aide of Adams to say, like, how much should I charge you for this flight? And they put forth the number,$50, and the aide's like, no, he's being watched right now. You have to charge more than that. So they charged them$1 ,000, but as soon as they did that, they also upgraded them to business class, which was worth like$16 ,000.

11:38So you see this extremely transparent relationship of like, we are giving you free stuff. We are giving you discounted flights in exchange for political favor. And that tit for tat really came to fruition when they wanted to get this Turkish consular building built in time for or open in time for Turkey's president to visit New York. And they pushed it through despite the fire department saying like, no, this failed the fire inspection. fire inspection. So that's where you saw like the tit for tat action happen, probably the most transparently. And it's really the denouement of what has been a roller coaster ride of administration for Adams.

12:17We've talked about on the show how he has been a big promoter of getting rats out of the city. And it came to light that the city paid McKinsey$1.6 million to design a new trash can that would be a better receptacle. So there's a lot of eyebrow raising moments. He was also a big supporter of the city's nightlife industry. He said, this is a city of nightlife. I must test the product. I have to be out. Another thing he said to Stephen Colbert, if you're going to hang out with the boys at night, you have to get up with the men in the morning. So this has been just a wild ride for New Yorkers. Now that this indictment has been unsealed, the question is what happens next to Adams?

12:57He's running the country's biggest city. The power is in Kathy Hochul, the governor's hand, to possibly force him out. She kind of punted on that yesterday, saying, I'm looking forward to hearing his defense. So New Yorkers are just left in limbo here with this indictment. And Adams maintains his innocence. But right now, it's not clear who is leading the city. Up next,$99 flights to Europe. It's a thing. Eczema isn't always obvious, but it's real. And so is the relief. From EBCLIS. After an initial dosing phase, about 4 in 10 people taking EBCLIS achieved itch relief and clear or almost clear skin at 16 weeks.

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14:06Eye problems can occur. Tell your doctor if you have new or worsening eye problems. You should not receive a live vaccine when treated with EPCLIS. Before starting EPCLIS, tell your doctor if you have a parasitic infection. Searching for real relief? Ask your doctor about EPCLIS and visit ebclus.lily.com or call 1-800-LILY-RX or 1-800-545-5979. Tuesday on NBC, Jimmy Fallon and Bozema St. John host the highly anticipated new competition show. I hired 10 creatives from all walks of life. They will be battling it out to see who can impress the world's biggest brands. This is a huge opportunity. This is the battle for the next big idea.

14:42This is not play play. We're spending millions of dollars. I'm so excited to embark on this adventure with all of you. Make the best idea win! On brand with Jimmy Fallon. Series premiere Tuesday on NBC. When the NCAA finally allowed athletes to profit off their name, image, and likeness, many celebrated the fact that students were able to capture a share of the value they provided schools. But NIL deals quickly devolved into the Wild West with no real oversight as to how donors in schools compensate top athletes. In a recent controversy with UNLV starting quarterback Matthew Sluka has raised thorny questions about the system once again.

15:22Sluka, who has the team off to a 3-0 start, said he will no longer play for the Rebels, choosing to sit out the rest of the year instead because he never received the money he was promised for transferring there. According to Sluka, he received a verbal promise from the team's offensive coordinator that he would get paid$100 ,000 from the school's NIL collective if he committed. But he never saw the money, and because it was a verbal agreement, it makes legal action that much more difficult to pursue. Neil, another example of an NIL deal gone sideways and another example of how little oversight this new system operates under.

15:57Yeah, this is actually unprecedented. No one, we know the NIL has been a bit of a Wild West, but the fact that a quarterback for a 3-0 team after three games is saying, actually, you know, I don't feel like playing anymore. You're not paying me what we discussed under the table is absolutely insane. And followed by another UNLV player who left saying that more vaguely that expectations were not met. And this all stems from the fact that college athletics does not recognize that players are employees and won't directly compensate them. So instead of that, you have this very convoluted system where the team, the school cannot sign a contract with a player, and instead they have to outsource it to these NIL booster collectives, which have sprung up, these third parties.

16:43So now you have this web of three different entities He's trying to arrange very secretive, under-the-table deals with very little oversight, very little regulation, and there's no legal recourse to when those deals go wrong, which we've seen them go wrong. This is the first time a player is standing up and saying, you didn't agree to what you paid me. I don't care who promised it. He's saying it was the assistant coach, but the assistant coach cannot pay him. So the assistant coach was relying on these boosters to pay him. So he's saying, you know what? I think I can get paid more somewhere else, so I'm just going to sit out this season.

17:13And it's absolutely insane. Yeah, the NCAA still prohibits that pay-to-play model that you described. So you can't say that we, UNLV as a school, will pay you$100 ,000 to come play here. But you can say, I'm rewarding you$100 ,000 through our NIL collective, which is a separate entity, to compensate you for your name, image, and likeness. Again, it's a little dumb, but it's the corner that the NCAA has backed themselves into. The key issue here, too, is whether this alleged promise not in writing is enforceable. You can have a handshake. You can have the clearest of memories of it. But unless it's in writing, it becomes very difficult to enforce, especially in the state of Nevada, where oral contracts are not seen as enforceable, especially if they can't be performed in one year.

18:00So maybe that was another thing that Sluka was thinking about is that he's like, if I can confine my services to a one-year period, then I have a better chance of taking this to court under Nevada law. But again, look at how deep we're going into the legal system right now. This should not be happening if you're just going to school and playing as a top college athlete, but this is kind of the reality that college athletes find themselves in right now. The worst kept secret in the NCAA is that this has been happening for decades. These handshake deals about, yeah, I'll get you maybe your car that you want if you come play for me at Florida, Alabama, Georgia, or whatever.

18:34But now it's just out in the open. You can talk about it because NIL has been in place since 2021. The question here is whether what this quarterback did will spark other college athletes who say they've been stiffed by their teams to also come forward and say, hey, before the redshirt season, you know, before the timeline is up that I could perhaps stay another year in college and play for another team, which is four games, I'll stop playing too. So I I think people who watch college sports are wondering whether other college football players are going to look at what this quarterback did and say, you know what?

19:10I think I increased my market value over the past three games. Maybe I'll just stop playing, too, and find and play elsewhere. So this is an absolutely insane Wild West system that can only be resolved, experts think, by having the fact that a team can directly pay players. And that might happen actually as soon as next year because there's this antitrust case working its way through the Supreme Court House versus NCAA. They agreed to a settlement. They have to go back and work on another settlement because the judge rejected it. But if that comes to fruition, then by next year, schools will be able to play players directly.

19:46So this might be a one-season chaos thing, and it could be resolved next year. But we'll have to see how that plays out. Yeah, athlete employment. It could be coming to a school near you. Hoda Koppi can finally sleep in. The host of the Today Show for the past 17 years made the surprise announcement yesterday that she would be stepping down from the role, leaving NBC execs with a huge decision of who will replace her as the face of one of their most lucrative programs. Koppi said her decision was sparked by her recent 60th birthday when she realized she wanted to spend more time with her two children.

20:21I have a time pie in front of me, she said, and I think my kids deserve a bigger slice of that pie. Copy was working a lot. Not only did she host the flagship 7 a.m. to 9 a.m. slot of the Today Show with Savannah Guthrie, she also came back for the more lighthearted 10 a.m. hour. As one of the brightest stars for NBC, Copy's exit is one of the most significant changes to the morning TV landscape in at least a decade, according to the New York Times. And that landscape has shifted monumentally. The morning shows on broadcast networks like NBC, CBS and ABC have all shed viewership over the past several years, as more Americans have turned to cable, Twitter, email newsletters and maybe even podcasts for their morning cup of news.

21:03Still, these shows are extremely profitable for their parent companies and also serve as key promotional vehicles for other areas of their businesses. So NBC will be considering her replacement with the deliberateness of hiring a new CEO. Right. Morning News is falling in viewership, but it is still big business for the networks themselves. If you go through America's six most watched morning programs, Good Morning America, Today, CBS, Fox & Friends, Morning Joe, and New Day, they bring in over a billion dollars and millions of viewers every single year. So even though you can say that morning shows are losing maybe their cultural relevance a little bit, they are still extremely important for the bottom line of these networks.

21:43And just because they're losing their relevance doesn't mean you don't have to compete just as hard. You have to compete even harder with your other kind of competitors out there. And Good Morning America usually beats Today Show in total viewership, but Today Show wins out in the advertisers' more important demographics of that 25 to 54-year-old age group. So this is still just an extremely high-value property that you do want to nail Hoda's kind of replacement. Yeah. And it's been interesting to see viewers migrate to more of those cable channels that do morning shows, which offer maybe more partisan, hard hitting news and interviews rather than the more lighthearted Today Show or Good Morning America.

22:26So between 2014 and 2019 TV seasons, the 25 to 54 audience, that target audience, has jumped 25 percent for Fox and Friends, 28 percent for CNN's New Day and 113 percent for MSNBC's Morning Joe. And when you hear interviews with executives and anchors at all of these networks and cable channels, they say that people are more interested these days. Maybe it's a part of the Trump revolution after he became president in 2016 of more hard-hitting interviews. You know, today's show is usually ease into your day. Let's talk about some light stuff. Maybe we'll cook some things. Maybe we'll show off some products.

23:07Maybe we'll interview some celebrities. Just very nice and lighthearted. And now people want really hard-hitting news in their morning. And they want to wake up and just be rammed in the face with like, here's everything that's going wrong in the world. So it's been an interesting change in viewership behavior. One thing that does point to Morning Show still having a lot of cultural relevance, though, is that think about Apple's show, The Morning Show, which was kind of this detailed look, a dramatic look at kind of the inner workings of morning TV. and that is a very popular franchise for Apple TV.

23:42So people, and just asking around the office too, because I didn't grow up watching morning shows, but people around me did. And like you guys have extremely strong feelings about it. Like you have memories of growing up maybe with your parents watching this. It was usually passed down through generations. Now it seems like it's a little different because people are competing tooth and nail for viewers. So you clearly grew up with kind of like the morning show. It was always on in the morning. Right, right. You know, maybe put on Arthur and then you'd go back to the Today Show. But it's just as you're getting ready for school in the morning, making your breakfast or eating your breakfast, it was just always on in the background.

24:16So people develop a relationship with the people that give them the news in the morning. And, you know, we're trying to cultivate that relationship, too. But I'm just happy for her to sleep in. Oh, my God. We know how early she gets up. Yeah, we empathize with you, Hoda. A$99 flight to Europe sounds too good to be true. but as long as you aren't expecting a first-class experience or to carry a bag on board or to drink water for free, it can be a reality. The budget airline Play just announced a sub -$100 flight from the U.S.'s East Coast to Amsterdam, Berlin, Copenhagen, Dublin, Liverpool, Paris, and Reykjavik.