by OpenAI, the AI startup known for its popular AI-powered platform, ChatGPT, made a surprising move on Friday when its board decided to remove CEO Sam Altman from his position. However, this decision has not been well-received by investors, partners, and employees, who appear to be more comfortable with the board’s power in theory rather than its actual exercise. Altman, a prominent figure in the Silicon Valley startup scene and former president of Y Combinator, has garnered a cult following within the industry, which has further exacerbated the backlash against the board’s decision.
Just over 24 hours after Altman’s removal was announced, several publications reported that the OpenAI board was considering bringing Altman back as CEO. This change in their stance can be attributed to the anger and concern expressed by investors. Satya Nadella, CEO of Microsoft, a major partner of OpenAI, was reportedly furious when he learned of Altman’s departure and has reached out to Altman to offer his support. OpenAI’s backers, including Tiger Global, Sequoia Capital, and Thrive Capital, have sought Microsoft’s assistance in pressuring the board to reverse its decision. In addition, some venture capital backers, such as Khosla Ventures and Reid Hoffman, former OpenAI board member and co-founder of LinkedIn, are rumored to be considering legal action against the board, as they were not informed in advance of Altman’s firing.
Vinod Khosla, founder of Khosla Ventures, expressed his desire for Altman to return to OpenAI and stated that the fund would support him in his future endeavors. Microsoft, in particular, holds significant leverage over OpenAI. While OpenAI has only received a fraction of Microsoft’s recent $10 billion investment, a significant portion of the funding is in the form of cloud compute purchases rather than cash. Withholding these credits and the remaining cash investment could put OpenAI in a financially vulnerable position, especially as the costs of running and training its AI systems continue to rise.
As the board deliberates its next steps, several top AI researchers and executives at OpenAI have already resigned. This includes Greg Brockman, OpenAI’s president and co-founder, who stepped down after being stripped of his position as chair by the board. Three senior researchers, including the director of research Jakub Pachocki and head of preparedness Aleksander Madry, also left following Brockman’s resignation, and more employees are expected to follow suit.
The departures can be attributed to a perceived power struggle between Altman and two board members, Quora CEO Adam D’Angelo and Sutskever, as well as concerns about Altman’s commercial ambitions conflicting with OpenAI’s mission of ensuring the beneficial use of AI. However, the tech community, including OpenAI, has shown overwhelming support for Altman.
As Altman and Brockman explore opportunities for a new venture focused on AI chips, and OpenAI’s employee stock sale faces an uncertain future, the board must now contend with the repercussions of its decision. The board members, including Tasha McCauley, a tech entrepreneur, and Helen Toner, the director of strategy at Georgetown University’s Center for Security and Emerging Technology, may have believed that removing Altman was the right move, but it appears that they did not have the ultimate authority to make such a decision.
According to reports, the board had initially agreed to resign in principle, potentially making room for a Microsoft-aligned member and allowing Altman and Brockman to return. However, Altman is reportedly unsure about returning and would require significant changes in management. Altman has also expressed his frustration that major shareholders have no say in OpenAI’s governance, according to associates cited by The Wall Street Journal.
Despite the board’s indecisiveness, with a missed deadline for employee departures, the fate of the board and the structure of OpenAI appear to be almost certain.
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1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it
