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Weekend Special — Sam Altman’s triumphal return to OpenAI

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Shapshak is editor-in-chief of Stuff.co.za and executive director of Scrolla.Africa

A sudden return to the company he co-founded is the unlikely denouement to an equally surreal five days of boardroom politics.

The board of OpenAI will go down in history for all the wrong reasons.

They fired the co-founder who built the hottest new company running the hottest new technology – arguably the biggest game changer in a generation – and was on the brink of catapulting OpenAI’s valuation from $30-billion to $90-billion. 

The board of four people, who are more like ethical trustees than representatives of the investors, claimed CEO Sam Altman was “not consistently candid in his communications” with it and therefore inexplicably “hindering its ability to exercise its responsibilities”.

They called a midday video conference on Friday, 17 November where another co-founder – chief scientist Ilya Sutskever – read Altman his marching orders. The board chair, Greg Brockman, who wasn’t involved in the ousting, resigned in solidarity, as did numerous senior staff.

This precipitated arguably the fastest meltdown of a company – in Silicon Valley and beyond – which ultimately saw 743 of its 770 employees signing an open letter demanding Altman be reinstated and the board themselves resign. 

Read more in Daily Maverick: Everything You Need to Know About the Fight for the Future of OpenAI

Microsoft, which had invested $1-billion in 2018 and $10-billion last year in the start-up, was reportedly upset after being given (literally) one minute’s notice before the midday video conference firing. Its share price also took a hit.

The tech giant quickly offered Altman and Brockman a job, with CEO Satya Nadella tweeting he was “extremely excited” that they “will be joining Microsoft to lead a new advanced AI research team”.

This clearly misguided board had gifted Microsoft the hiring opportunity of a generation. Altman is the new Bill Gates, the new Steve Jobs, the new Elon Musk. By Monday, the $2.75-trillion firm’s chief technology officer, Kevin Scott, had offered all of OpenAI’s staff a job that “matches your compensation”.

If all of OpenAI’s staff left it would result in Microsoft effectively getting the whole of OpenAI’s talent without actually buying the company. Talk about an own goal

But as sudden as Altman’s firing was last Friday, so was his sudden return on Tuesday night (21 November), when it was announced he would return to his role as CEO of the hottest new tech firm in the world.

The most short-sighted board in company history has also been shown the door, although Quora CEO Adam D’Angelo retains his seat Sutskever, who reportedly led the ouster, resigned from the board but will still work at OpenAI. “I deeply regret my participation in the board’s actions,” he tweeted after signing the open letter.

Late on Tuesday night (Wednesday South African time), OpenAI announced normal logic and rationality had resumed.“We have reached an agreement in principle for Sam to return to OpenAI as CEO with a new initial board of Bret Taylor (chair), Larry Summers and Adam D’Angelo,” OpenAI tweeted. “We are collaborating to figure out the details. Thank you so much for your patience through this.”

Patience is hardly the word. Outrage, blame, recrimination, threats and compensation offers are more apt descriptions of the five-day weekend special.

The root of this still unexplained lack of being “consistently candid” – soon to become as ironically used a term as “consciously uncoupling” in general use – is the bizarre board structure that OpenAI adopted. Originally a nonprofit organisation, when Musk exited in 2018, OpenAI released how much computing power it would need for its plans and formed a for-profit subsidiary. Worried, as they should, about the conceivable dangers of AI and its vast potential, that six-person board – including Altman while Brockman was chair – was set up with the director’s fiduciary duty to “humanity, not OpenAI investors”.

That clearly didn’t work. Altman was ostensibly fired for racing ahead without proper guiderails, in its twisted logic, so it fired him. All that achieved was removing any such restrictions after a giant for-profit corporation called Microsoft snapped him up. If all of OpenAI’s staff left it would result in Microsoft effectively getting the whole of OpenAI’s talent (it already had licensed OpenAI’s tech through its 49% shareholding thanks to its investment) without actually buying the company. Talk about an own goal. Elon Musk would be proud.

What must also have been playing on the board’s mind was that it would lose all of its staff and would clearly run out of funding. Only a fraction of Microsoft’s $10-billion investment has been received, Semafor reported, meaning tranches of cash would likely stop.

Not since Steve Jobs was forced out in 1985 has the business world focused on how a self-destructive board could threaten a company’s future. It took Apple 12 years to denigrate to the point where Michael Dell famously said “shut it down and give the money back to the shareholders” in October 1997.

The year before Apple had bought Job’s new company, called NeXT, which made a UNIX-based operating system (OS) that would become Apple’s own OS. That $400-million deal in December 1996 followed  Apple’s worst financial quarter to date, which saw CEO Gil Amelio resign. Jobs returned in September 1997 as Apple’s interim CEO, which was shortened to iCEO, and the rest is history. Apple is the most valuable company in the world.

Read more in Daily Maverick: The cat’s out of the bag: Apple takes a 36% bite of Google’s revenue in search engine deal

Considering how quickly this OpenAI saga played out – which echoes the equally sudden rise of OpenAI to such global prominence in just a year since it released ChatGPT – it is perhaps the first concrete example of the impact of AI on business, albeit it the company that took it mainstream. Welcome to corporate politics – and everything – at the pace of AI. DM

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  • Mike Schroeder says:

    “Altman is the new Bill Gates, the new Steve Jobs, the new Elon Musk.”
    IMHO, the jury is still out on that … what has he done so far that equals the cited 3 (other than being fired in a similar way to Jobs)

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