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0:13

the creators of artificial intelligence

0:15

be companies or charities? From

0:18

American Public Media, this is Marketplace

0:20

Tech. I'm Stephanie Hughes. It's

0:31

Friday, the last Friday in April, and

0:33

it's time for Marketplace TechBytes Week

0:35

in Review. This week, we'll

0:37

talk about how the FTC is suing

0:40

Uber over its subscription service, plus

0:42

how the VC world is navigating the

0:44

uncertainty created by the trade war. But

0:47

first, a nonprofit pivot is

0:49

facing some challenges. OpenAI,

0:51

the maker of ChatGPT, was

0:53

founded about a decade ago as

0:55

a nonprofit research lab. It's

0:58

now looking to restructure as a

1:00

for -profit, specifically a public benefit corporation.

1:03

But that transformation is facing resistance.

1:06

About 10 former open AI employees,

1:08

along with several Nobel laureates and other

1:10

experts, have written an open

1:12

letter asking regulators in California and Delaware

1:14

to block the change. They

1:17

argue that nonprofit control is crucial

1:19

to open AI's mission, which is to,

1:21

quote, ensure that artificial

1:23

general intelligence benefits all of

1:25

humanity. Julia Burke Solomon, managing partner

1:27

at Collab Capital, spoke with me about

1:29

how unusual it is to see this

1:31

kind of conversion. We don't see

1:33

very often a public conversation

1:35

about whether or not a company

1:37

should be a non -profit or

1:39

a for -profit. And definitely we

1:42

don't see so often letters

1:44

being written to attorney generals to

1:46

try to block a transfer

1:48

in terms of the structure of

1:50

a company. I think this

1:52

is so important because these folks

1:54

who previously worked at OpenAI,

1:56

they're raising really valid concerns around

1:58

why OpenAI should remain a nonprofit

2:01

and all of those concerns

2:03

around what could happen if it

2:05

is successful in moving over

2:07

to a for -profit and the

2:09

risks. that might occur as a

2:11

result. Yeah, I want to

2:14

ask, you know, so OpenAI told the Associated

2:16

Press that any changes to its existing

2:18

structure would be in service of the broader

2:20

public benefit. You know, what

2:22

happens to an organization at its

2:24

core when it becomes a for -profit

2:26

company? How does that shift who it's

2:28

accountable to? Yeah, it means

2:30

it's accountable to the investors

2:32

and the folks who are putting

2:34

money in. And we've even

2:36

seen that at Open AI's last

2:38

fundraise, there were some requirements

2:40

around them being successful in transferring

2:42

over to a for -profit. In

2:44

fact, they are not going

2:46

to be able to get all

2:48

of the money that they

2:50

are anticipating in that race. I

2:52

think it's $40 billion altogether. They

2:55

won't be able to get $20 billion

2:57

of that if they're not successful in

2:59

the pivot to a for -profit. Just

3:01

$20 billion. Yeah, just 20 billion, which,

3:04

you know, they need because they're burning

3:06

so much money every every month. And

3:08

so you understand that when a company

3:10

raises capital, and this is the business

3:12

that I'm in when the company raises

3:14

capital, they are accountable to the

3:16

investors. And the investors have requirements

3:18

in terms of what they have to

3:21

do to get returns back to

3:23

their investors. So it really presents a

3:25

whole new set of requirements for

3:27

the company. And it's going to create

3:29

tension in terms of them being

3:31

able to fulfill their original mission in

3:33

the way that they set out

3:36

to do it originally. Yeah.

3:38

I mean, if OpenAI doesn't

3:40

make this turn and doesn't realize

3:42

all of that funding, maybe doesn't

3:44

realize future funding, what could

3:46

that mean for the work that it's doing? Well,

3:49

maybe it means that the

3:51

work slows down a bit. I

3:53

think that some of the

3:55

issues or concerns raised is that

3:57

this move to a for -profit

4:00

for open AI really just

4:02

accelerates this AI arms race. It

4:04

continues to push forward

4:07

in a probably even faster

4:09

fashion, artificial general

4:11

intelligence, which is really seeing

4:13

that the AI is

4:15

as good or maybe even

4:17

better at many tasks

4:20

than humans. With

4:22

them, if they don't successfully

4:24

move over to a for

4:26

-profit, I would imagine that

4:28

things slow down just a bit, which

4:30

I don't think would be a

4:32

problem for anyone. I think everyone probably

4:34

would be okay. A

4:37

majority of everyday people would be

4:39

okay with things slowing down just a

4:41

bit on this AI race. There

4:43

a lot of companies that are doing

4:45

big, scary, important work. Why do you think

4:47

that what OpenAI is doing in particular

4:50

is creating such a stir? Well,

4:52

I think they have been

4:54

at the cutting edge for

4:56

a long time. And

4:58

really, from a

5:00

technology standpoint, because

5:02

they kind of had an early

5:04

start, have made some

5:06

significant headway. And Sam

5:09

Altman said recently that he believes

5:11

that AGI will be here

5:13

in this administration. So within the

5:15

next three to four years, which

5:17

is a sooner estimate than I

5:19

think we've heard before. So

5:21

I think that open

5:24

AI has a significant lead.

5:26

on this AI race. And

5:29

it's going to be really important

5:31

to make sure that they're doing

5:33

things in a way that fulfills

5:35

that original mission for AI to

5:37

be of service to all humanity

5:39

and not just the folks who

5:41

are invested in those few people.

5:44

So I think it's just really important

5:46

and everyone's watching to make sure

5:48

that this works out in a way

5:50

that will be beneficial to everyone

5:52

and not just the investors. We'll

5:55

be right back. There

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marketplace tech. That's oracle.com slash marketplace

7:01

tech. You're listening

7:03

to Marketplace Tech. I'm Stephanie Hughes.

7:06

We're back with Jewel Burke Solomon,

7:08

managing partner at Collab Capital. So

7:10

let's move to our next story.

7:12

The FTC is suing Uber for allegedly

7:15

deceiving customers. So the Federal Trade

7:17

Commission filed a lawsuit this week against

7:19

the rideshare company Uber. It's over

7:21

its Uber 1 subscription service, which provides

7:23

discounts on some food delivery and

7:25

rides. The FTC is alleging

7:27

that many consumers were enrolled without their

7:29

consent. It also says that Uber overpromised on

7:31

the savings that customers could realize and

7:34

also that it's hard to cancel a subscription.

7:36

In a statement to Marketplace, Uber denied

7:38

all the accusations and said sign -up and

7:40

cancellation processes are quote, clear, simple, and

7:43

follow the letter in spirit of the

7:45

law. So, Joel, what does

7:47

this case tell you about the direction

7:49

we could see from this FTC under the

7:51

Trump administration? Yeah, I

7:53

think this case is actually a

7:55

little surprising because it follows some

7:57

of what we were already seeing

7:59

from the FTC prior to the

8:01

Trump administration regarding the

8:03

FDC really wanting to make sure

8:06

that subscriptions are easy for people

8:08

to cancel and that they really

8:10

get clear understanding about how they

8:12

got into those subscriptions in the

8:14

first place and that they're signing

8:16

up knowingly. And so I

8:19

think it's a little bit. probably for Uber

8:21

and some of the other tech companies,

8:23

it's surprising that the FTC is still coming

8:25

down on them about these types of

8:27

subscriptions and how people get into them and

8:29

get out of them. For me,

8:31

reading this story, I was a little surprised to see it. Yeah.

8:34

And as you say, so under

8:36

the Biden administration, the FTC brought a

8:38

lawsuit against Amazon over its prime

8:40

subscription service. Why do you think we're

8:42

seeing regulators take action around this

8:45

issue in particular? Well,

8:47

I think that It's an

8:49

issue that affects everyone, and it

8:51

comes down to everyone's pocket. And in

8:53

this case in particular, I

8:55

was like, let me see if

8:57

I am subscribed to this Uber one. And

8:59

it turns out that I was, and I

9:01

didn't even realize it. And I tested it

9:04

to see how many clicks is it going

9:06

to take me to cancel this membership. And

9:08

it does take quite a few clicks to

9:10

get out of it. How many clicks? five

9:13

or six clicks from me saying that I

9:15

wanted to cancel and they're trying, you know, they

9:17

want to make sure you sure you want

9:19

to cancel. Can you pause it for one to

9:21

two months? So they ask you three or

9:24

four different questions before you can actually get to

9:26

cancel. And that could be difficult,

9:28

particularly for people who maybe aren't tech

9:30

savvy, the techs, the way

9:32

that they do the buttons. it

9:34

actually emphasizes the button that tells

9:36

you to stay in the subscription.

9:38

So there's all these little things

9:40

that they do to keep people

9:42

into these subscriptions. And I think

9:44

the FTC probably realizes that. There

9:46

are so many people who are

9:49

signing up for things, not really

9:51

understanding what they're signing up for.

9:53

And then when they realize it,

9:55

having a hard time getting out of

9:57

it, and that's not good for

9:59

consumers. And so they're likely recognizing

10:02

this, probably getting a ton of complaints

10:04

and wanting to make sure that

10:06

companies are not taking advantage of consumers.

10:09

Let's get to our last story, how

10:11

the VC world is dealing with trade uncertainty.

10:13

This is going to hit close to home

10:15

for usual. The Wall Street Journal

10:17

reported this week that the Trump administration

10:19

is considering lower tariffs on Chinese imports

10:21

in an effort to de -escalate the

10:23

trade war. The public markets have

10:26

gone crazy over the last few weeks and

10:28

not in the good crazy way as a result

10:30

of the back and forth over tariffs imposed

10:32

by the Trump administration, not just on China, but

10:34

a lot of countries. Julie,

10:36

you work in the private capital

10:38

markets. How is the uncertainty around

10:40

tariffs affecting the work you do? Certainly

10:43

affecting us and I

10:45

think affecting anyone who's managing

10:47

capital. The VC

10:49

funding industry has experienced

10:52

significant drops in terms

10:54

of allocation due to

10:56

all of this uncertainty,

10:58

which means that startup companies are

11:00

likely having a much harder

11:02

time raising capital for their businesses.

11:05

And a lot of people are just

11:07

kind of going pencils down until

11:09

they understand what's happening. And

11:12

every week it seems like really

11:14

every day there's a new development

11:16

as it relates to these tariffs.

11:18

So it's difficult to know what

11:20

to do just because of all

11:22

of the uncertainty around this. Yeah.

11:24

How are you advising startups

11:27

that you're currently invested in?

11:29

Yeah, so we're asking our

11:31

companies to come up with

11:33

plan B, C, D, if

11:35

they have any goods that

11:37

they're bringing from overseas and

11:39

selling those. We're asking them

11:41

to think thoroughly about what

11:43

they can do to mitigate

11:45

any risk or any additions

11:47

to their cost model as

11:50

a result of the tariffs.

11:52

We're also reminding them to

11:54

really shore up their relationships

11:57

with their current suppliers and

11:59

customers. So spending a

12:01

lot more time

12:03

on getting their current

12:05

customers and employees and

12:07

partners, everyone in their

12:10

business being transparent about

12:12

how the tariffs

12:14

are impacting them. And

12:16

we're really reminding our portfolio

12:18

companies that next round of funding

12:20

may be more challenging than

12:22

they anticipated. So they really need

12:24

to focus on making sure

12:26

that their costs are in check

12:28

and they're expanding their runway

12:30

to the extent that they can.

12:33

Yeah, the work could be harder and the funding

12:35

could be harder. I want

12:37

to talk to other investors who

12:39

say that there can actually be

12:41

an upside for startups to public

12:43

companies struggling. It could mean that

12:45

workers who might have been happily

12:47

employed at a tech giant might be

12:49

more likely to go off and

12:51

start their own companies, which could ostensibly

12:53

lead to more innovation. I'm

12:56

wondering if that's something that you're seeing or

12:58

even just keeping an eye out for. Yeah,

13:00

for sure. We're seeing. It's kind

13:02

of incredible. founders that

13:04

maybe would not have started companies

13:06

had they not been laid off

13:08

from their cushy corporate job in

13:10

this kind of being the push

13:13

that they needed to start something

13:15

really incredible. So I think this

13:17

is actually a great time for

13:19

investors and people who angel invest

13:21

even to get involved and write

13:23

checks because there are a lot

13:25

of really talented people who are

13:27

starting companies and talented folks who

13:29

are joining early stage companies as

13:32

well who may not otherwise have

13:34

done so. That was Jewel

13:36

Burke Solomon, managing partner at

13:38

Collab Capital. You can find

13:40

the full video of this episode of

13:42

Marketplace Tech Bites, we can review on

13:44

our YouTube channel, MarketplaceAPM. And subscribe if

13:46

you haven't already to watch us every

13:48

Friday. Daniel Shin and Hazy

13:51

Salvarado producer show, Garry O 'Keefe is

13:53

our engineer, Daisy Palacios is

13:55

the senior producer, Kelly Silvera is

13:57

our executive producer. I'm Stephanie

13:59

Hughes and that's Marketplace Tech. This

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