The $500B Phone Call
One of the more interesting aspects, certainly from a tech-perspective, of the early days of the new Trump administration was how the day after the inauguration, Sam Altman was standing at a White House podium unveiling "a $500B massive new AI initiative". After all, Altman was persona non grata in the eyes of Elon Musk, the new Best-Friend-in-Chief. I think many presumed this tension/relationship is why Altman wasn't up on the dais at the inauguration alongside his tech peers, despite donating the same $1M as they all did. And, of course, Musk was now suing OpenAI, the company which he had previously co-founded with Altman. And yet here was Altman standing with the President to announce OpenAI's biggest initiative yet – arguably the most important, at least politically, for all of AI yet – on day one of the new Trump regime. Um, what?
This is palace intrigue in every meaning of the idiom! And now Cecilia Kang and Cade Metz (with additional reporting from Teddy Schleifer) have been able to glean details about how it all went down for The New York Times:
But days earlier, before flying into Washington, Mr. Altman was on the phone with Mr. Trump, preparing an announcement that would outflank Mr. Musk and put Mr. Altman’s company at the center of the new administration’s agenda for artificial intelligence.
On the 25-minute call, Mr. Altman appealed to Mr. Trump’s love of a big story and of a big deal. Mr. Altman told the president-elect that the tech industry would achieve artificial general intelligence — the hypothetical moment when technology matches human intelligence — during the Trump administration, according to three people familiar with the call. And to get there before competitors from China, OpenAI, Oracle and SoftBank had completed a $100 billion deal to build data centers across the country.
Yes, Altman clearly knew the assignment – including allowing for Trump to take credit for a deal that was mostly in the works well before his time in office (sound familiar?). But again, how was this call even happening in the shadow of Musk? More on that in a minute, first, it seems like a lot of legwork went into the lead-up to it (and the eventual 'Stargate Project' announcement):
In early June, two OpenAI executives met with Mr. Trump in a hotel room in Las Vegas, according to two people familiar with the meeting. Mr. Altman was slated to attend the meeting, too, but bowed out after testing positive for Covid.
The meeting was arranged by Mr. Burgum. He had a yearslong relationship with OpenAI’s president, Greg Brockman, who was born in Thompson, N.D. Some OpenAI staffers call them the two most important tech people the state has ever produced.
"Mr. Burgum" is Doug Burgum, who was then the governor of North Dakota but also at the time someone who Trump was bringing in close – including as a potential Vice Presidential candidate. Remember that name.
During the meeting in Las Vegas, Mr. Brockman and OpenAI’s chief operating officer, Brad Lightcap, showed Mr. Trump the company’s A.I. video generator, Sora, which had not yet been released to the public, the two people said. With the technology, anyone can generate videos — like a herd of woolly mammoths trotting through a snowy meadow — simply by typing a sentence into a box on a computer screen.
To build this kind of technology, they explained, companies like OpenAI needed massive computer data centers backed by enormous amounts of electrical power. They focused on language around construction and infrastructure, appealing to Mr. Trump’s real estate background, and said that these giant facilities would be essential as the United States raced with China to lead the development of A.I.
As he accepted the Republican nomination the following month, Mr. Trump trumpeted the importance of electrical power in the world of A.I. “A.I. needs tremendous — literally, twice the electricity that’s available now in our country, can you imagine?” he said.
Again, they knew the assignment. Even without Altman in the room.
Back to Burgum, beyond the Brockman relationship, the man who would soon become US Secretary of the Interior also had an existing relationship with Altman (as noted earlier in the piece). And actually, while not explicitly mentioned here, but widely known, Burgum was once an SVP at Microsoft (after selling his software company, Great Plains Software, to his old Stanford Business School classmate and friend Steve Ballmer, in 2001). This matters because while there, Burgum became a mentor to a certain, young up-and-coming, long-time Microsoftie... Satya Nadella.
But as Mr. Altman and other OpenAI executives worked to strengthen political connections, they were struggling to secure the $100 billion they needed for Stargate.
Mr. Altman’s greatest challenge has been the company’s dependence on investors. OpenAI raised over $13 billion from the Microsoft in return for an exclusive deal to purchase its computing power from the tech giant. But OpenAI wanted even more computing power.
In late 2023, as Mr. Altman was negotiating with Microsoft’s chief executive, Satya Nadella, to build $100 billion in new data center infrastructure — a project that was already called “Stargate” — the OpenAI board of directors unexpectedly fired him. He was reinstated five days later, but Mr. Nadella was spooked and decided not to put in the money for Stargate. Mr. Altman needed another way to build Stargate, according to two people familiar with the Microsoft negotiations.
That Nadella and Microsoft got cold feet about expanding the OpenAI investment after the Altman coup has been known for some time, though I'm not sure it was ever tied directly to the actual 'Stargate' project as it is here. And that's interesting because it allowed Altman to walk through another door that also coincidentally had just opened: Oracle's massive AI datacenter project in Abilene, Texas. Why had the door just opened on that? Because Elon Musk, fed up with how long it would take Oracle to build it out, backed out of a deal to use it for xAI, opting to build his own.
But that Oracle datacenter project was for a "mere" $10B. Altman wanted to convert it into the $100B 'Stargate' dream he had been working on with Microsoft, but the Biden administration was worried about the foreign investment that would undoubtedly be required at such a scale. So they waited. And Altman built up his relationship with Masa Son at SoftBank and MGX out of the UAE. Then came Trump. But...
As the inauguration approached, many of Mr. Altman’s A.I. rivals met with the president-elect at Mar-a-Lago in Palm Beach, Fla. This included Mr. Musk and Mr. Zuckerberg, who has been giving away Meta’s A.I. technology in an effort to devalue OpenAI’s technology.
The best Mr. Altman could do was a meeting in Palm Springs outside of Mar-a-Lago with Howard Lutnick, Mr. Trump’s nominee for commerce secretary, according to three people familiar with the meeting.
After donating $1 million to Trump’s inaugural fund, Mr. Altman was invited to the inaugural festivities. But a mutual acquaintance — it is not clear who — arranged Mr. Altman’s Friday afternoon phone call with the president-elect, according to four people familiar with the arrangements.
"It is not clear who" is such a fun way to tee up a guessing game. I'll bite. One possibility would obviously be Burgum – perhaps at the urging of Nadella to help offload the project from Microsoft's books? – but it seems like the NYT reporting would have surfaced that in this case. Another possibility could be Ellison – especially if he was still irked about Musk backing out of his data center and, as such, keen to help Altman even more here. He was, of course, on stage with Altman (and Masa Son) at the announcement... A wild card could be Peter Thiel, who of course co-founded PayPal with Musk back in the day but is also close with Altman and has long had the ear of the President. Who knows, but yes, fun that they teed up such speculation around this clearly critical call.
Did someone stab Elon Musk in the back here?
On Inauguration Day, Mr. Altman, Mr. Ellison and Mr. Son were at the Capitol Building ceremony but were largely overlooked by the public. Early the next day, they gathered in a suite of the five-star Riggs hotel in Washington to map out how they would unveil their partnership to the world, according to four people familiar with the meeting. As they nibbled on cold cuts and fruit, they tried to put the draft of a blog post on a screen hanging on the wall. At first, they couldn’t get the screen to work. Then Mr. Altman, the youngest of the three, got it working.
It is also interesting how the three key Stargate architects were there, but were indeed overlooked and seemingly overshadowed by all the other Big Tech CEOs. This seemingly helped them keep this announcement under-wraps and perhaps kept Musk's eyes in a different direction... (Also, bonus points to Altman for coming through as the IT guy fixing the old folks' tech issues.)
In the afternoon, the Stargate partners rode in a caravan to the White House and walked to the visitor’s entrance for a public event they’d agreed upon in that earlier phone call with Mr. Trump. But they were left waiting in the 10-degree chill for 10 to 20 minutes. On Mr. Trump’s second day in office, there were problems with the White House computer system. And Mr. Ellison had forgotten his driver’s license, according to three people familiar with the moment.
I mean, this is some deep, in-the-weeds reporting here. Who on Earth was this source? One of them?!
Eventually, Mr. Altman, Mr. Son, and Mr. Ellison followed Mr. Trump into the Roosevelt Room. In his opening remarks, Mr. Trump referred again to the electricity demands of data centers, which he described as “big, beautiful buildings that are going to employ a lot of people.”
He introduced Mr. Altman, who was wearing a gray suit, blue tie, and American flag pin on his lapel, as “by far the leading expert, based on everything I read.”
I'm reminded of the scene in Jerry Maguire where Frank Cushman signs with Bob Sugar because Jerry was out making the rounds with Rod Tidwell. One could almost imagine Musk yelling at Trump, "You let that snake in the door?!" But, of course, it certainly wasn't lost on Trump (or someone on his team) the power-play here with all the rising chatter than Musk was the one really in charge. Oh yeah?
It's all a big ouch for Musk. Who immediately attacked the deal as a bogus one without funding. A final deeply ironic twist.
M.G. Siegler
M.G. Siegler