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@_tra99y

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Muskonomy

@muskonomy

18 days ago

JUST IN: Dr. C. Paul Wazzan's testimony on Day 14 of Musk v. OpenAI trial cut short after jury returned unanimous verdict against Musk less than an hour in Dr. C. Paul Wazzan, a financial economist with a PhD in finance from UCLA and an undergraduate degree in economics from Berkeley, took the stand at approximately 9:25 AM PT on Day 14 of the Musk v. Altman trial. Wazzan was hired by Musk's legal team to quantify the damages Musk should receive if Judge Yvonne Gonzalez Rogers found OpenAI, Sam Altman and Greg Brockman liable. PRE-TESTIMONY DISPUTE Before Wazzan took the stand, OpenAI's defense team moved to limit his testimony, arguing that during his October 2025 deposition Wazzan had testified repeatedly that he was focused on the nonprofit's wrongful gains only, but his trial testimony was about to pivot to also cover for-profit wrongful gains. Musk's legal team argued the model in Wazzan's report applied equally to both, that the for-profit and nonprofit gains were "two sides of the same coin", and that the nonprofit had derived wrongful gains because its equity stake in the for-profit had increased in value. Judge Gonzalez Rogers took the issue under submission and let the testimony proceed. JUDGE'S IMMEDIATE SKEPTICISM Within minutes of Wazzan beginning, Judge Gonzalez Rogers began questioning him directly from the bench. She told him his analysis appeared to be devoid of any connection to the underlying facts of the case and that he had made no distinctions between the conduct of individual defendants. Wazzan acknowledged he had been instructed to assume liability and to treat all defendants as equally wrongful. He confirmed he did not perform any individual analysis of Altman's or Brockman's conduct. The judge summarized his approach for the record: that Wazzan was effectively saying all defendants were "bad guys" without distinguishing among them. THE THREE STEP METHODOLOGY Wazzan walked the court through his three-step framework: Step 1: Value the OpenAI for-profit entity. Wazzan put the figure at $500 billion as of October 2025, based on the public benefit corporation conversion agreement between Microsoft and OpenAI. He noted that since October 2025 a new funding round had set the value at $840 to $850 billion, with an IPO expected to push it higher. Step 2: Determine the nonprofit's share of the for-profit. Wazzan estimated 26.2% to 29.2% based on the publicly disclosed post-recapitalization cap table. Step 3: Determine Musk's share of that nonprofit value. Wazzan estimated 50% to 75%, citing both monetary and nonmonetary contributions. The bottom line: Musk's share of OpenAI's $500 billion value would be roughly $79 billion to $134 billion in ill-gotten profits. THE MONEY: $38 MILLION IN, $79 TO $134 BILLION OUT Wazzan put Musk's initial contributions at around $38 million. Drawing on OpenAI's IRS Form 990 filings, he testified that Musk had contributed 60% of OpenAI's charitable funding in its first two years (2016 and 2017) and just under 30% across the entire history of the charity. Wazzan said the 60% figure was more relevant because the early money was more valuable than the later money. He explained with a fire-building analogy: the first person to strike the match has created the fire, even if others later add the logs that turn it into a bonfire. JUDGE'S PUSHBACK ON CHARITY VS STARTUP Judge Gonzalez Rogers pressed Wazzan on a deeper question: how he could leap from Musk's contributions to a charity to claiming a share of a for-profit entity's value. The judge noted Wazzan seemed to assume that contributions to a charity should be treated like contributions to a startup. The judge also referenced Dr. Ilya Sutskever's prior trial testimony that OpenAI's technology in 2015 had been "the size of an ant", but Wazzan said this did not affect his analysis. WAZZAN'S OWN INVESTMENT TRACK RECORD On cross-examination, Wazzan acknowledged that his own seed-stage investment firm, Wasson and Company Investment LLC, had made only seven investments. Four were successful (CogNet acquired by Intel, G-Plus acquired by SST, Mankind went public, Nomadix acquired) and three failed, including Gene Fluidix, which he said was approaching the end of its run. Wazzan estimated that Silicon Valley startup failure rates run around 80%. He admitted he had not analyzed Musk's full venture investment history. NONMONETARY CONTRIBUTIONS Wazzan testified that Musk's nonmonetary contributions included leadership, know-how, reputation and the ability to call in favors from other industrialists. He described Musk's reputation in 2015 when OpenAI was founded as "sky high", noting that Tesla and SpaceX were both already successful and that Musk was already the richest man in the world. Wazzan pointed to two emails from January 2018 already in evidence: - Sutskever to Musk at SpaceX: a note describing Musk as the most overwhelmingly competent person in the world helping OpenAI. - Brockman to Musk: "In every meeting with you, I continue to learn, grow." Wazzan said Musk was instrumental in recruiting key OpenAI scientists, including Sutskever and Durk Kingma. When pressed that Sutskever had testified differently under oath about Musk's recruiting role, Wazzan said the recruiting impact on his model was small. THE 2017 PRO FORMA CAP TABLE Wazzan also relied on a 2017 pro forma cap table that contemplated converting OpenAI to a for-profit. That document gave Musk a 52.4% equity stake, with $10 million each for Altman and Brockman and $12 million for Sutskever. Judge Gonzalez Rogers clarified for the record that Sutskever and Brockman proposed these terms, that there was an agreement in principle between them on the equity split, but that Altman never agreed in principle and the deal eventually collapsed when Sutskever and Brockman walked back their position on control rights. Wazzan said his opinion would not change even if there had been no agreement, because the document still showed what the parties were thinking at the time. TESTIMONY CUT SHORT At 10:23 AM PT, less than an hour into Wazzan's testimony, Judge Gonzalez Rogers interrupted the proceedings. The court clerk had handed her a folder. The jury, which had been deliberating since 8:30 AM, had reached a unanimous verdict on liability. Wazzan was told to stand down. His testimony was never resumed. Within minutes, the jury would deliver a verdict that ended the case.