In a year filled with wild tech stories – Elon Musk’s acquisition of Twitter, the collapse of cryptocurrency exchange FTX and the implosion of the Silicon Valley Bank, nothing was as captivating as the whiplash-inducing week for Sam Altman. I could not be the only one fascinated by the saga of OpenAI’s boardroom coup-turned-volte-face. What happens behind tech doors stays largely hidden. Infamous boardroom takeovers have occurred before, although never as openly or in real-time. When Steve Jobs was fired from Apple in 1985, it wasn’t until Walter Isaacson’s biography in 2011 that we got the gritty details of what truly transpired. Aaron Sorkin recreated this in 2015, using Isaacson’s recollection as the source for his script for the eponymous movie. No dramatised recount was needed for OpenAI in 2023 – it was pure corporate infotainment of the highest order.
The creator of ChatGPT had the job of safely developing smarter-than-human AI. Still, that mission looked to be in jeopardy when OpenAI’s non-profit board of directors collectively decided to oust Altman, suggesting that he had been dishonest in his communications with them. The series of events unfolded only days after OpenAI hosted its first-ever developer conference, where it laid out new and commercialised updates of its technology, including the ability to customise its ChatGPT AI Chatbot. To many, it seemed like the future of AI and humanity hung in the balance. This was unfolding in real-time on X, formerly Twitter. Altman posted a quirky image of himself holding a visitor’s pass with the caption, “first and last time I wear one of these”.
Here is the full rundown of a week so incredible that you would be forgiven for thinking it was a soap opera written by an early version of ChatGPT.
Friday, 17th November
Around 3 p.m. ET, Altman joined a Google Meet call, where the majority of OpenAI’s board was present. The session had been organised by fellow co-founder and head scientist Ilya Sutskever, during which Altman was sacked and informed that the news would be made public shortly. Within the next half hour, the board removed Greg Brockman, another co-founder and president of OpenAI, from the board. Around 3:30 p.m. ET, OpenAI publicly revealed that Altman had been sacked. Mira Murati, the company’s chief technology officer, was named interim CEO by the board.
OpenAI’s principal partners, including its largest financial supporter, Microsoft, were notified of Altman’s dismissal just minutes before the board’s statement. According to CNN contributor Kara Swisher, who spoke to people familiar with the unfolding events – a crucial element in the CEO’s departure was disagreement between Altman, who favoured developing AI more aggressively, and members of the OpenAI board, who wished to proceed more cautiously.
Saturday, 18th November
Within 24 hours after Altman’s firing, news surfaced that he and other ex-OpenAI employees were planning their startup. The board of OpenAI was also said to be having second thoughts and considering allowing the dismissed CEO to return.
Sunday, 19th November
Altman was back in OpenAI’s offices on Sunday afternoon, this time with a visitor badge, to discuss his comeback. According to reports, Microsoft CEO Satya Nadella mediated the conversation. A deadline of 5 p.m. PT has been set for the board to agree to Altman’s demands, which include adding a seat for Microsoft and reinstalling him as CEO.
However, those negotiations fell through.
As Sunday evolved into Monday, Nadella announced that Altman and Brockman would join Microsoft to lead a new AI research division. Emmett Shear, the former CEO of Amazon’s streaming business Twitch, was named interim CEO of OpenAI. Murati would resume her position as OpenAI’s chief technical officer.
Monday, 20th November
Shear, who left Twitch in March, said that the opportunity to join OpenAI was a “once-in-a-lifetime” opportunity in an early Monday post on X. He went on to say that the business will employ an independent investigator to look into what transpired leading up to Altman’s termination. However, OpenAI staff were not persuaded. Over 500 employees signed an open letter urging the company’s board of directors to resign and restore Altman and Brockman. If their demands were not granted, they threatened to follow the co-founders to Microsoft.
“We have more unity, commitment, and focus than ever before,” Altman wrote on X. We’re all going to collaborate in some form, and I’m quite thrilled about that. “One mission, one team.” But the drama was far from over. According to The Verge, Altman and Brockman might potentially return to OpenAI if the board members who sacked him resign. In an interview with CNBC, Nadella stated that he was “open to both options” when asked if Altman would join Microsoft.
“Look, that is for the OpenAI board and management and the employees to choose,” Nadella said. “We chose to explicitly partner with OpenAI, and we want to continue to do so, and obviously, that depends on the people of OpenAI staying there or coming to Microsoft.”
Tuesday, 21st November
Altman was reinstated late Tuesday as OpenAI’s CEO, the company said on X.
“We have reached an agreement in principle for Sam Altman to return to OpenAI as CEO with a new initial board,” the company said, adding that Bret Taylor, a former co-CEO of Salesforce, will chair the board. Former Treasury Secretary Larry Summers will join the board alongside existing director, Quora CEO Adam D’Angelo.
Altman stated on X that he is “looking forward” to returning to OpenAI and expanding on the company’s “strong partnership” with Microsoft. It’s unclear how Altman’s return will affect Shear. Shear stated on X, “I am really happy by this achievement, after (some) 72 very intensive hours of effort… I’m delighted I could contribute to the answer.”
According to his X post, Brockman is also returning to OpenAI. Microsoft and Altman look to be the main winners from the dispute: Altman will continue to manage the company he helped build. Microsoft has gained more authority over the corporation that has invested billions in furthering its AI goals.
The Conspiracies
Whatever transpired resulted from one of the two theories: money or ethics.
On the former theory, Bloomberg’s Matt Levine put it well: “OpenAI’s board members are not venture capitalists, don’t own equity at all, are not motivated by hopes of a trillion-dollar valuation, and were, in fact, adverse to its venture capitalist investors…They took a very long and grandiose view of the importance of their product and its ability to change the world, while the employees would like to see some cash now.”
As for the second theory – ethics – when asked what would management guru Peter Drucker have to say regarding OpenAI, Richard Straub of the Global Drucker Forum noted: “Drucker would have been critical about the confusion between for-profit goals and the nonprofit mission as we see it at OpenAI,” Straub said. “Drucker wouldn’t reject the development or the use of Artificial General Intelligence (AGI)…He would support its usefulness as long as humans stay in charge.”
However, the third and most critical issue which went under the radar was board governance and leadership.
Incompetent, intemperate, callous, inflexible, corrupt, insular, and malevolent are the seven characteristics of terrible leadership described by Barbara Kellerman, a fellow at Harvard Kennedy School’s Centre for Public Leadership. “The board of OpenAI definitely fell into the categories of being incompetent, intemperate and insular: They failed completely to take into account the AI superhero status of Sam Altman or the power of their biggest client, Microsoft CEO Satya Nadella,” she said. “But above all, the drama was driven by the approximately 700 (out of 770) Open AI employees who threatened to walk unless Altman came back.”
The Aftermath
The Winners: Microsoft
No one had a bigger turnaround in this whole fiasco than Mr. Nadella.
Following Altman’s ouster on Friday, it appeared Nadella would lose one of his strongest allies. Microsoft made a $13 billion investment in OpenAI, and under Altman’s direction, the business grew to become one of Microsoft’s most important partners. Microsoft is spending a lot of money on its technology to power several artificial intelligence services, including its Copilot AI product suite, which is wagering its commercial future. Nadella would have liked to see Altman back in his position. Once it became evident that this would not happen, he took the next best action: intervening and providing positions to Altman, Brockman, and their supporters.
It was a brilliant move in terms of strategy. Microsoft will now be able to use OpenAI’s models to power its products going forward while at the same time providing the funding and processing capacity required for a new team led by Altman to develop new models that Microsoft owns in the long run. With the addition of several brilliant AI researchers from OpenAI, Microsoft now essentially controls 100% of a brand-new AI lab that would have attracted the interest of any Silicon Valley venture capitalist.
The Losers: OpenAI
OpenAI itself is the clearest loser in all of this.
The business had a celebrity boss, a well-known product in ChatGPT, and an impressive roster of AI talent that made Silicon Valley titans envious, making it the hottest name in tech before Friday. Its state-of-the-art artificial intelligence language model, GPT-4, was the finest in its class, and it was amid a tender offer that would have allowed employees to cash out their stock at an eye-watering valuation.
The company is now in chaos. Its top leaders have left, and morale has been crushed. What’s worse, the tender offer may fall through. The new chief executive has said that he wishes to slow down AI advancement. Furthermore, the business remains largely reliant on Microsoft, which possesses the massive processing capacity required by OpenAI to run its models. On Monday, Microsoft will also house a growing “mini-OpenAI” under the direction of Altman, staffed by former OpenAI workers. The board of OpenAI may be happy with the result since it made the decision, even after being offered the option to change its mind. However, it appears foolish to fail to explain Altman’s termination, and unless it provides further details, it’s easier to see the general public agreeing with it.
Author: Amar Chowdhury
