Zhi Dongxi reported on August 13th that after a gap of 4 months, Grok 2 is finally about to arrive!

Yesterday, Musk announced on social platform X that the beta version of Grok 2 is about to be released, accompanied by a picture of the Grok robot wearing a big gold chain and smoking a cigar, which looks very cool.

This is one of the strong competitors of ChatGPT. Grok is a chatbot developed by Musk's large model start-up xAI, which was first launched in November last year. In April this year, xAI launched the multimodal large model Grok-1.5V, officially joining the arms race of cutting-edge multimodal large models. This time, Grok 2 will return with voice capabilities and launch an attack on GPT-4o.

Grok is coming in a fierce manner, but at the same time, Musk's "preference" for xAI has also caused dissatisfaction among investors. At least three Tesla shareholders have filed lawsuits, claiming that the transfer of resources to xAI has harmed their interests.

Public information shows that xAI has hired at least 11 Tesla employees, including six from the autonomous driving team. Musk also used Tesla's GPUs and a large amount of visual data for xAI's model training. All signs indicate that Musk is tilting the focus of resources in his "business empire" towards xAI.

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xAI was established in July last year and in May this year, it raised a huge amount of financing of 6 billion US dollars (about 43.5 billion yuan), and its valuation directly broke through 24 billion US dollars, becoming the second highest valued AI start-up after OpenAI.

I. Talent, chips, and funds, Musk transfers resources to xAIElon Musk owns a vast "business empire." In addition to xAI, he has several companies under his name, including the electric car company Tesla, space transportation startup SpaceX, brain-computer interface startup Neuralink, and social media platform X. Various signs indicate that he has "grand" plans for xAI and is transferring resources from each company to xAI.

Last month, in an interview with Canadian psychologist Jordan Peterson, Musk said, "xAI is a relatively new company, so compared to companies that have been around for 5, 10, or 20 years, we have a lot of catching up to do."

So far, xAI has hired at least 11 Tesla employees, six of whom are from the autonomous driving team. This team mainly researches AI-driven autonomous driving technology, which Musk once called crucial for Tesla's future.

Regarding the movement of talent, he said that hiring xAI employees from his other companies is a way to "prevent valuable engineers from flowing to competitors."

Musk also reassigned GPUs reserved for Tesla to xAI and X. His explanation for this was, "Tesla has nowhere to use Nvidia's chips; they will just pile up in the warehouse."

The vast amount of visual data collected by Tesla can be used as a resource to train xAI models. In last month's earnings call, Musk said, "Tesla has learned a lot from xAI. This helps to advance full self-driving and helps to build a new Tesla data center."

xAI has also rented GPUs from X and has access to X's real-time data. According to foreign media reports citing informed sources, X has contributed $250 million worth of computing power to xAI, whose chatbot Grok is only provided through a subscription on X. At the same time, the task of xAI engineers is to fix X's problems and use xAI's models to improve X's functions.

In March of this year, one of xAI's chief engineers, Igor Babuschkin, said that integrating Grok into X is "a good choice."When securing investment, Musk also leveraged xAI's connections with other companies. Some xAI investors revealed that they were informed that xAI could use data from Musk's other businesses to train its large language models, and these connections were part of the factors that attracted them to invest.

Previously, Musk had been questioned by investors for his management style of the company. However, due to the optimistic performance of Tesla and SpaceX, some investors who support xAI said that they hope to benefit from SpaceX and other companies themselves, or the "next SpaceX company" by funding Musk's latest project.

Musk is also promoting potential cooperation between his different companies. In July, he posted a poll on X, asking users whether Tesla should invest $5 billion in xAI, and said this was just "to test the waters, as any such move would require approval from the board of directors and shareholders."

After 67.9% of X users voted in favor of this move, Musk said, "It seems the public is in favor, and I will discuss it with the Tesla board."

Secondly, being sued by multiple shareholders, asset transfer is not a "first offense."

Tesla and xAI each have different AI "ambitions," which puts the two companies in an awkward position when competing for resources. In addition to selling electric vehicles, Tesla is also developing fully autonomous driving software and humanoid robots.

What some investors are worried about is that as Musk transfers talent, hardware, and other resources to xAI, these other businesses will be affected. Although Musk has said that this sharing benefits investors in all of his companies, his approach has still triggered lawsuits from investors and has been used as an argument against Tesla's plan to pay him a salary package worth tens of billions of dollars.

At least three Tesla shareholders have filed lawsuits, claiming that the transfer of resources to xAI has harmed their interests. These cases are currently pending.The lawsuits accuse Musk of diverting resources such as talent to xAI, violating his fiduciary duties, seeking damages, and demanding that Musk transfer his xAI shares to Tesla. For example, one shareholder lawsuit targets the redistribution of GPUs between the two companies, with the complaint stating: "Musk is creating tremendous value at xAI, but at the expense of Tesla."

Musk does not own a majority stake in Tesla, which is already a publicly traded company. In contrast, his other private companies may have more room for maneuver, but he still needs to be accountable to the investors of these companies.

The likelihood of these company investors taking legal action against him is low. After all, for a private company that may only have 10 shareholders who all know each other, a phone call might be enough to resolve the issue.

According to Brian Quinn, a law professor at Boston College, Musk's various asset transfer activities are problematic: "Every time he 'plays with' the resources of these companies, he is dealing with other people's money. He cannot treat all assets as his personal assets."

Scott Cummings, a law professor at UCLA, said: "The law does not prohibit people from having fiduciary duties to multiple companies, but what the law prohibits is the act of benefiting one company at the expense of another."

In fact, it is not the first time that Musk has transferred resources between his different companies. For many years, he has been using his various companies to help each other, including the space transportation startup SpaceX, the brain-computer interface company Neuralink, the tunnel manufacturer Boring, the social platform X, the car company Tesla, and xAI.

In 2022, Musk acquired the company then known as Twitter and subsequently brought in employees from his "business empire" to help with the transition. In court testimony, Musk said that Tesla engineers were "voluntarily helping briefly after work."

III. Grok, the second-highest valuation AI startup after OpenAI, becomes a strong competitor to ChatGPT.

xAI, founded in July of last year, broke through a valuation of $24 billion in just one year, becoming the second-highest valued AI startup after OpenAI.While the founder's halo is indeed dazzling, on the other hand, the rapid development of xAI is inseparable from the product itself.

In November last year, xAI, which had been established for only four months, launched its first chatbot, Grok, whose underlying model is the self-developed Grok-1 by xAI.

It is reported that xAI first trained a prototype large model, Grok-0, with 33 billion parameters, and after two months of iteration, Grok-1 was finally born. Its benchmark scores are higher than Llama 2 70B and GPT-3.5, but there is a certain gap compared to GPT-4.

Grok's main feature is not its strong performance, but its wit and humor, and its responsiveness to requests. Unlike traditional chatbots such as ChatGPT, its style is as "rebellious" as Musk himself, and it will answer some "sharp" questions that other AIs are likely to refuse to answer, such as seriously telling you how to make cocaine and listing detailed steps.

In March of this year, after repeatedly suing OpenAI for not being "Open" enough, Musk announced that Grok-1 was open source, directly releasing the basic model weights and network architecture, and then released new versions of Grok-1.5 and multimodal large model Grok-1.5V within a month.

Compared with cutting-edge models such as GPT-4V and Claude 3, Grok-1.5V's performance is on par, slightly outperforming some benchmark tests.

In the release announcement of Grok-1.5V, xAI wrote that in the next few months, it is expected to significantly improve multimodal understanding and generation capabilities in various modalities such as images, audio, and video.At present, it seems that Grok 2 will at least be enhanced with audio capabilities. Aravind Srinivas, CEO of AI search startup Perplexity, inquired under the announcement of Grok 2 whether it would have "Feynman's voice," to which Musk responded with certainty.

Conclusion: Resource Allocation in Musk's "Business Empire"

When a person owns multiple companies, sharing resources among them is not illegal in itself, provided that each entity is fairly compensated. However, this practice is rare in large companies and is considered problematic by legal experts, as it may lead to the CEO making decisions that harm one company for the benefit of another.

In operating his "business empire," Musk almost openly favors xAI. With such resource allocation, we will have to wait and see what kind of results Grok 2 can deliver.

Source: The Wall Street Journal