Only Musk’s contribution counted
“Vazan is a financial economist with decades of professional and academic experience, having managed his own successful venture capital firm that has provided seed-level funding to technology startups,” Musk’s filing said.
OpenAI reported how Musk connected with Wazzan, who testified that he had never been employed by any of Musk’s companies before. Instead, three months before presenting his opinion, Vazan said Musk’s legal team had reached out to his consulting firm, BRG, and the call was forwarded to him.
Wazen’s job was to figure out how much Musk should be owed after investing $38 million in OpenAI — about 60 percent of its initial funding. Musk also made non-monetary contributions, which Wagen had to weigh, such as “recruiting key employees, initiating business contacts, teaching his co-founders everything he could about running a successful startup, and lending his reputation and authority to the venture,” Musk’s filing said.
The “fact pattern” was “quite unique,” Wazan testified, while acknowledging that his calculations were not something you would find “in a textbook.”
Additionally, Wazzan had to take into account Microsoft’s alleged ill-gotten gains, reducing how much of Microsoft’s profits went back into funding the nonprofit. Microsoft alleged that Wazzan miscalculated that “some portion of Microsoft’s stake in the OpenAI for-profit entity should be returned to the OpenAI nonprofit entity” and arbitrarily decided that that portion should be “equal to” the nonprofit stake in the for-profit entity. Microsoft alleged that with this strange math, Wezan doubled the value of the nonprofit and inflated Musk’s loss estimate.
“Vazen does not provide any rationale—contractual, governance, economic or otherwise—for reallocating any portion of Microsoft’s negotiated interest to the nonprofit,” OpenAI and Microsoft’s filing said.
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