In the latest Forbes and Bloomberg Billionaires rankings, Sam Altman, the CEO and co-founder of OpenAI, has amassed a personal fortune exceeding $2 billion. This marks Altman’s debut into the billionaire club, solely through his investment ventures, unrelated to his affiliation with OpenAI. Altman emerges as one of Silicon Valley's most successful investors.
I. The Oppenheimer of Our Age
Undoubtedly, Altman has been one of the most prominent figures in the U.S. tech industry over the past two years. With the release of ChatGPT in late 2022, OpenAI leaped ahead of tech giants like Google, pioneering the era of generative AI. Subsequent products like GPT-4 and Sora continue to maintain strong competitiveness, firmly establishing OpenAI at the forefront of the AI revolution.
Altman has even been likened to "the Oppenheimer of Our Age" by The New Yorker. This comparison isn't far-fetched, as both figures, despite not being technical experts themselves, excel as project managers with exceptional leadership skills. They led teams of top scientists and technologists, propelling humanity into the era of atomic energy and generative AI ahead of formidable competitors like Germany and Google.
In mid-February this year, alongside the release of the text-generating video tool Sora, OpenAI also concluded a tender offer allowing employees to sell existing shares to venture capital firms led by Thrive Capital. This transaction wasn't aimed at financing the company but rather offered core executives and employees the opportunity to cash out, ensuring financial freedom and serving as a vital retention tool for the popular startup.
This deal pushed OpenAI's overall valuation to $80 billion, more than doubling from the beginning of last year's $30 billion. According to CB Insights, a market research firm specializing in venture capital and startups, OpenAI has become one of the world's most valuable startups, trailing only behind ByteDance and SpaceX.
In reality, this transaction was supposed to be completed in November last year but was postponed due to conflicts between Altman and the board. With Altman back in the CEO position, investors have once again placed their trust in this AI giant. Clearly, with the formal launch of Sora, OpenAI's valuation is set to soar even higher.
However, despite being the CEO and co-founder of OpenAI, Altman himself doesn't benefit directly from the company's soaring valuation. He doesn't hold any stake in OpenAI, and the increased valuation primarily benefits high-ranking executives and core technical talent, yielding no direct personal wealth for Altman.
II. No Ownership in OpenAI
Why doesn't Sam Altman, as the co-founder and CEO of OpenAI, own any stake in the company?
This traces back to the founding and transformation of OpenAI. In December 2015, Altman, along with Musk and former Google ML expert Ilya Sutskever, co-founded the nonprofit AI research organization OpenAI, aiming to advance AI technology research and collaboration, establish industry safety and ethical standards, and promote the beneficial use of AI for humanity. At that time, Altman was also the president of the renowned Silicon Valley incubator Y Combinator, serving as co-chairman of OpenAI alongside Musk.
Initially, OpenAI's research funding came entirely from generous donations from numerous billionaires and tech giants. Musk announced plans to donate $1 billion in installments in the future, and Nvidia donated the first supercomputer, DGX-1. However, Musk donated less than $45 million before the fallout, while other donors contributed a total of $90 million.
Thanks to donations from tech super billionaires like Musk, OpenAI was able to recruit AI research talent at Silicon Valley's average salary standards. However, compared to industry giants like Google and Facebook, OpenAI's salary standards still lagged behind, and most of the initial talents joined with the altruistic aim of benefiting humanity. As OpenAI progressed in developing products, the issue of insufficient funds gradually surfaced.
AI research is a costly endeavor, and the nonprofit nature of the organization posed a fundamental limitation on OpenAI's ability to raise funds, hindering its efforts to attract top talent and increase research investment. In 2017, OpenAI spent $7.9 million on cloud computing, while DeepMind, under Google, spent $442 million in the same year. This vast financial gap made it challenging for OpenAI to compete with industry giants like Google and Facebook.
Divergence arose between Musk and Altman regarding the direction of OpenAI's development. In early 2018, Musk proposed to personally take over the operation and development of OpenAI, but faced strong opposition from the board. Being extremely confident and proud, Musk subsequently completely withdrew from OpenAI, citing conflicts of interest, and terminated his donations. Altman gradually phased out of his work at Y Combinator and shifted his focus entirely to managing OpenAI. In 2018, Altman's position changed from co-chairman of OpenAI to president. In March 2019, OpenAI officially transitioned from a non-profit entity to a "limited-profit" organization known as Open LP, initiating acceptance of strategic and venture capital investments. The former non-profit entity, Open Inc, continued to exist as the parent company of Open LP. To prevent economic interests from influencing its original research mission, the board members of OpenAI's non-profit parent company were prohibited from holding any shares in its subsidiaries, including Ultraman himself.
Transition from YC Alumnus to CEO
The question arises: since Ultraman doesn't hold any shares in OpenAI, where did his billion-dollar fortune come from? Almost entirely from venture capital. Forbes Magazine, after scrutinizing numerous regulatory filings and interviewing industry insiders, confirmed that Ultraman's investment assets surpassed $2 billion.
Apart from being an outstanding entrepreneur, Ultraman is also a highly successful investor. As early as 2015, Forbes recognized him in its "30 Under 30" list of venture capitalists. After all, as the CEO of Y Combinator, Silicon Valley's most renowned startup incubator, Ultraman had extensive exposure to numerous startup companies.
He himself underwent the transition from entrepreneur to investor at YC. In 2005, at just 20 years old, Ultraman, then a sophomore studying computer science at Stanford University, co-founded the location-sharing service Loopt with a classmate, dropping out of college to serve as CEO. That same year, Loopt became one of the inaugural members of Y Combinator's startup boot camp in Cambridge, Massachusetts, and received over $30 million in total investments from Xfund and Sequoia Capital.
Due to slow user growth, Ultraman decided to sell Loopt for $43.4 million in 2012. While his first venture didn't succeed, at least it exited smoothly. The month after selling the company, Ultraman and his brother founded a venture capital firm, Hydrazing Capital, raising $20 million for investing in startups.
Despite the challenges faced by Loopt, Ultraman developed a strong connection with YC. During his time at YC's startup accelerator, he made many entrepreneurial friends, laying the groundwork for his future investments, including Reddit co-founder Alexis Ohanian. By the age of 25, Ultraman had already invested in four YC startups. Three-quarters of Hydrazing Capital's subsequent investments were also directed towards YC startups.
Furthermore, Ultraman's vitality, foresight, and courage left a profound impression on YC's founders and renowned investor Paul Graham, who even likened Ultraman to a young Steve Jobs. In the later stages of Loopt's startup journey, with years of entrepreneurial experience under his belt, Ultraman was invited by Graham to become a partner at YC.
The Most Connected Investor in Silicon Valley
After selling Loopt in 2012, Ultraman had more time to engage in YC's management affairs. Less than two years later, in February 2014, Graham appointed the then-under-29 Ultraman as the president of YC, entrusting Silicon Valley's most influential startup incubator to the young man he valued most.
Ultraman not only managed YC but also made investments himself. From 2014 to 2019, Ultraman served as YC's president for nearly five years, coming into contact with countless entrepreneurial projects and making investments in some of them. Reddit, Airbnb, and Stripe were among the YC projects he invested in.
Ultraman himself experienced the hardships of entrepreneurship firsthand, so he deeply understands the needs and feelings of entrepreneurs. Last year, when Silicon Valley Bank went bankrupt, many startups faced a sudden shortfall in funding. Just when many entrepreneurs were feeling anxious, Ultraman provided them with hundreds of thousands to millions of dollars in emergency funding, even without formal loan contracts. This act of timely assistance deeply moved many entrepreneurs.
Rad AI CEO Doktor Gurson said that when he was in a tight spot, he emailed Ultraman for help. In less than two hours, Ultraman wired him hundreds of thousands of dollars in cash, enough to cover his immediate needs, without even specifying a repayment date, simply saying, "send me back whatever you can whenever you can."
Following the exposure of this incident, Ultraman told the media, "I remember the help investors gave me when I was struggling with funding during my own entrepreneurial journey, so I have been striving to continue offering that kind of help."
Moreover, despite his young age, Ultraman is one of the most well-connected investors in Silicon Valley. He knows almost all the influential figures in the American tech industry. These connections are a significant reason why entrepreneurs are willing to accept Ultraman's investments. A single phone call or email from him could potentially bring substantial funding and facilitate business partnerships for startup companies.
Two heavyweight investors, PayPal co-founder Peter Thiel and YC founder Graham, have played mentorship roles to Ultraman throughout his career. Microsoft CEO Nadella and Apple CEO Cook also hold him in high regard. Microsoft's willingness to invest over $10 billion in OpenAI largely stems from Nadella's trust in Ultraman himself.
After being ousted from the OpenAI board last year, Ultraman dramatically returned to the company in just four days, thanks to Nadella's behind-the-scenes push. When OpenAI employees threatened to resign en masse, Nadella provided Ultraman with the best pressure tactic: announcing the recruitment of Ultraman to lead Microsoft's AI department.
Ultraman obviously wouldn't actually join Microsoft, but if he did, OpenAI employees would collectively resign, turning OpenAI into a shell company. It was only after Microsoft recruited Ultraman that the OpenAI board finally changed its stance and welcomed Ultraman back. Microsoft also gained an observer seat on the OpenAI board, at least having insight into major matters.
Fifth, the most adventurous investor
Ultraman's most valuable investment projects include Reddit and payment solution company Stripe, short-term rental company Airbnb, supersonic aircraft company Hermeus, and cryptocurrency company Worldcoin, among others.
Airbnb's IPO made Ultraman a billionaire. His luxurious homes in Hawaii and California, worth $70 million, came from cashing out his shares in Airbnb. Stripe is currently not listed, but its valuation exceeded $65 billion earlier this year, making it one of the most valuable startups. Worldcoin's token value surged 337% over the past year, bringing Ultraman considerable returns.
Reddit just went public last month. Ultraman has invested in this social media company multiple times over the past decade, even serving as interim CEO in 2014. He currently holds 8.7% of Reddit's shares, second only to Tencent, the second-largest shareholder with 11% ownership. With Reddit's current market value of $7.4 billion, Ultraman's stake is worth $650 million. Of course, this investment also has another important significance: Reddit's user-generated content is also OpenAI's most valuable large-scale training asset.
Although Ultraman indulges in many luxuries, such as his lavish properties in Hawaii and California and expensive personal collections like airplane engines, it hasn't affected his substantial investments. Whenever he finds a project that interests him, Ultraman invests without hesitation.
Renowned investor and LinkedIn co-founder Reid Hoffman describes Ultraman as a rare investor who isn't afraid to make big bets. Many investors fear failure and only invest in projects they believe will make money, avoiding the risk of potential failure. However, Ultraman courageously takes on these risks.
In 2021 alone, Ultraman invested $375 million in nuclear energy company Helion Energy, becoming its chairman, and invested $180 million in biopharmaceutical company Retro Biosciences. According to him, this was all the liquid capital he had at the time.
During his time at YC, Ultraman was very interested in biopharmaceutical projects and even specifically requested the YC investment department to find related projects. Although he later joined OpenAI, Ultraman still maintains a strong interest in investing. After Retro Biosciences caught his attention in 2020 with its blood exchange technology potentially delaying human aging, Ultraman wasted no time investing almost all of his available funds.
The AI arms race is bound to consume huge amounts of electricity, and Ultraman believes that nuclear fusion will be an important technological solution. Last summer, Helion Energy reached a cooperation agreement with Microsoft, planning to generate electricity through nuclear fusion by 2028 to power Microsoft's data centers. This was Helion's first commercial contract. As an investor and chairman, Ultraman played a crucial role in bringing Helion and Microsoft together. In fact, Ultraman often invests alongside his mentor, Teal, in many investment projects. Besides Helion Energy, in 2022, he and Teal also invested together in the supersonic aircraft company Hermeus. Founded in 2018, this company aims to create a hypersonic aircraft that travels five times the speed of sound. While it may sound incredibly ambitious, Ultraman greatly admires such audacity.
Being a fan of aircraft engines himself, Ultraman has purchased and collected some aircraft engines. After investing in Hermeus, he remarked, "Hermeus is pursuing a wildly ambitious dream that initially seems impossible, but they are gradually turning it into reality through engineering culture and a technical roadmap. My heart beats for supersonic aircraft."
Although the majority of Ultraman's $2 billion fortune consists of paper investment assets, which may fluctuate dramatically in value with the condition of investment projects, he seems unconcerned about risk and does not hedge his assets. Ultraman has described his investment philosophy as follows: as long as one investment succeeds spectacularly, it can outweigh the losses from other projects.
