On Friday, the most visible face of AI tech—OpenAI founder and CEO Sam Altman—was sacked without notice or explanation. Now, the same board is scrambling to get him back—and many of its members may be fired instead. This is a very Valley story about the tension between ideals and profit.
Remind me about Open AI—these are the ChatGPT folks?
Yup—and the most successful AI company—or maybe non-profit?—out there.
About OpenAI: it is one of the leading AI research labs in the world—and a darling of Silicon Valley investors. It was founded by Elon Musk and legendary investor and current CEO Sam Altman. The company has a high-minded mission:
Its goal is to be the first to create AGI—a machine with the learning and reasoning powers of a human mind. The purpose is not world domination; rather, the lab wants to ensure that the technology is developed safely and its benefits distributed evenly to the world.
FYI: OpenAI’s charter—“a document so sacred that employees pay is tied to how well they adhere to it”—declares that its “primary fiduciary duty is to humanity.” And that’s why it was founded as a non-profit.
But, but, but: In March 2019, OpenAI created a "capped-profit" company called OpenAI LP—which allows investors to “earn up to 100 times their investment but no more than that.” The rest of the revenue would go to its nonprofit arm. The move recognised the fact that OpenAI needed to raise billions of dollars to fund the training of its AI models—which is difficult to do as a non-profit.
About the board: Altman set up an odd structure connecting the two entities—where the commercial entity was still governed by a nonprofit parent—and its board. Its members were not investors—which would be typical in any company:
The nearly $30 billion for-profit arm is 49%-owned by Microsoft and includes a bevy of top venture capitalists as backers, who were promised a share of OpenAI’s profits. But none ultimately had any control over running the company.
Instead, OpenAI is governed by a nonprofit board. Only a minority of its members were allowed to have a financial stake in the company at any given time, according to the company’s bylaws. Altman himself had no equity in the company, further diminishing his influence with the board.
About Altman: With the rollout of the wildly successful AI chatbot—ChatGPT—Altman’s reputation has become far more greater than just a big tech CEO:
Altman has long been viewed as a Silicon Valley wunderkind. In the tradition of other tech founders before him… The launch of ChatGPT elevated his profile significantly – he has been called the father of ChatGPT and the “Oppenheimer of our age”. Earlier this year he travelled on a 22-country tour in which he met with world leaders, including Rishi Sunak, Emmanuel Macron and Narendra Modi, among others.
Ok, and he was fired by this board?
Yes—without any warning to him or the investors.
The ouster: On Friday, the board issued a statement declaring that Altman has been kicked out for “being not consistently candid in his communications”—which was cryptic, to say the least. It also said the board “no longer has confidence in his ability to lead” and said new leadership is “necessary” as the company moves forward. A new CEO was also announced: OpenAI’s CTO Mira Murati. The board also stripped its own chairman—Greg Brockman—of his title.
Point to note: Altman was notified of the meeting the night before—and then fired without a heads up. Microsoft, Thrive Capital and other investors got zero warning, as well. The non-profit board was able to do this without notice or consent precisely because the key investors were not members.
The weirdly calm fallout: Altman sent out a cheery tweet—that sounded like a speech at his non-existent farewell party:
…i loved my time at openai. it was transformative for me personally, and hopefully the world a little bit. most of all i loved working with such talented people. will have more to say about what’s next later.
His successor Mira Murati RT-ed that tweet with heart emojis. And Microsoft—OpenAI’s biggest investor—didn’t throw any tantrums about being kept in the dark either, saying: “We have a long-term agreement with OpenAI ... Together, we will continue to deliver the meaningful benefits of this technology to the world.”
U-turn ahoy! Within hours of this tamasha, there were news reports of the board trying to woo Altman back. The reason: Altman’s exit triggered a potentially crippling exodus:
Hours after he was axed, Greg Brockman, OpenAI’s president and former board chairman, resigned, and the two have been talking to friends and investors about starting another company. A string of senior researchers also resigned on Friday, and people close to OpenAI say more departures are in the works.
A spate of high-level researchers resigned, some of OpenAI’s corporate customers are looking for alternatives, and a high-stakes financing with venture capitalists is now in jeopardy, people familiar with the matter said.
And why did any of this happen?
The core of this battle is a more serious issue of AI safety. As we explained in this Big Story, there are serious concerns about machine intelligence taking over the world. The meteoric success of ChatGPT—and Altman’s desire to move forward at dizzying speeds—heightened these worries among board members.
Whither AI safety? Altman has also been increasingly at odds with chief scientist Ilya Sutskever over guardrails for ChatGPT tech:
As he saw the power of GPT-4, Mr. Sutskever helped create a new Super Alignment team inside the company that would explore ways of ensuring that future versions of the technology would not do harm. Mr. Altman was open to those concerns, but he also wanted OpenAI to stay ahead of its much larger competitors.
Or as tech journalist Kara Swisher describes it:
Sources tell me that the profit direction of the company under Altman and the speed of development, which could be seen as too risky, and the nonprofit side dedicated to more safety and caution were at odds.
But what tipped the board over the edge: Altman went and did an end run around those concerns.
Altman’s empire-building spree: In recent months, Altman was feverishly leveraging OpenAI’s name to spin off a number of new ventures. He was fundraising tens of billions of dollars for a project to develop semiconductors—which are needed to power AI models. And he was also hustling to fund an unnamed AI hardware device.
Altman was recently in the Middle East talking to a number of big hitters—including SoftBank Group Corp., Saudi Arabia’s Public Investment Fund, Mubadala Investment Company and others, as he sought tens of billions of dollars for these new companies. None of which went down well with the board.
Why any of this matters: The battle within OpenAI reflects a broader divide within Silicon Valley over AI tech—between ‘doomers’ and ‘accelerationists’:
On one side, there are so-called accelerationists, who see the productivity gains from this near-magical tech breakthrough as the next leap forward for capitalism. Top tech analyst Dan Ives from Wedbush Securities dubbed it “the fourth industrial revolution”... The venture capital community in Silicon Valley has enthusiastically backed this argument, with SoftBank’s Masayoshi Son moved to tears as he described AI giving birth to a “superhuman.”
Where the money men tend to be accelerationists—scientists, activists and even tech titans like Elon Musk are more alarmist:
For the doomers, all the rosy predictions of AI utopia are inextricable from the reverse: that AI has the Terminator-like potential to rebel against its maker and poses an existential risk to humanity. (There is also the semi-doomer complaint that the tech will displace millions of workers from their jobs and fuel even greater disinformation and media disintegration.)
For now, the money men seem to have won the day.
Fire the board? The latest reports suggest that Altman will demand the heads of those mean board members as a condition of his return: “Altman is thinking about returning but has told investors that if he does return, he wants a new board and governance structure, people familiar with the matter said.” For all its public posturing, Microsoft is firmly in his corner: “CEO Satya Nadella… has been in touch with Altman and pledged to support him in whatever steps he takes next.”
It is crystal-clear Altman is calling all the shots—and holds OpenAi’s future in his hands:
OpenAI investors are now pressing the company’s board to reverse the decision to fire Altman, according to people with knowledge of the matter. Altman is open to returning to the company, one of the people said. In one scenario under consideration, members of the current OpenAI board would step down. If Altman doesn’t return, more employees may jump ship — possibly joining him in whatever project he launches next and further jeopardising OpenAI’s position as the leader in the AI market.
The bottomline: For all the talk about ethics or safety, technological development is driven entirely by the needs of investors and the market. This is how we ended up in the toxic hellscape that is social media. Making the same mistakes with AI is hardly going to improve matters. Will we ever learn to slow down and not break things?
Reading list
New York Times (splainer gift link) and Wall Street Journal (splainer gift link) have the latest reporting on the Altman saga. Bloomberg News has the best summary of the issues involved—and a report on Altman’s fundraising spree. Fortune offers an interesting look at the parallels drawn between Altman and Steve Jobs—who was famously fired from Apple. This Big Story looked at the fears about AI—and why predictions of technological doom are often inaccurate.
