NEWS: Examining attorney confronted Robert Wu about Microsoft's additional $10 Billion capital commitment with a $60 Billion target redemption (6x return).
Wu admitted the board did no quantitative or financial analysis to determine if the deal was fair to the nonprofit.
Robert Wu described the investment: "Microsoft did make an additional capital commitment of $10,000,000,000 dollars.
Again, I think similar to prior versions of this partnership, a portion of that was actual cash contributed, and a portion of that was for compute."
The examining attorney calculated: "The target redemption amount for Microsoft's $10,000,000,000 investment is $60,000,000,000. Is that a six times return on investment?"
Wu confirmed: "Correct."
The attorney then asked the critical question: "What did the OpenAI board do to determine whether that six x return was reasonable and fair to the nonprofit?"
Wu's answer was procedurally vague: "Similar to prior investments made by Microsoft and prior investments made by other investors. The board took into consideration first and foremost what was in the best interests of the nonprofit's mission. And they took into consideration the timing of the partnership with Microsoft, including commercial agreement and other things like accessibility, made the determination that a six x return."
But when pressed on specifics, Wu crumbled: "Did the board do any quantitative analysis to determine whether the six x return was appropriate?"
Wu admitted: "I don't know."
The examining attorney pressed further: "Did the board do any financial modeling to determine whether the six x return was appropriate?"
Wu again: "I don't know about specific financial modeling."
Wu later tried to recover: "Yeah. I could speak to the board having that with management and the team that was negotiating this deal with Microsoft. And they did review the terms, including all of the terms beyond just the investment as well, taking into consideration the compute that was necessary, the state of the company and the industry at that point, and made the determination that this deal was fair. Then management's recognition, I can't speak to specifics."
The attorney closed: "And you don't know whether any of that was done?"
Wu acknowledged uncertainty but held that the board considered the business state and financials.
The testimony shows a pattern. Microsoft got 6x returns ($10B → $60B target). The board claimed to act in the nonprofit's "best interest." But there's no quantitative analysis, no financial modeling, no documented reasoning for why 6x was "fair" to a nonprofit that gave away all its IP.