Sam Altman’s Ousting Wreaks Havoc in Silicon Valley
November 21, 2023
Sam Altman was fired by the board of OpenAI last weekend, creating chaos in the rapidly growing tech and AI development industry. The board announced their decision in a blog post on Friday, stating their conclusion that, “he was not consistently candid in his communications with the board, hindering its ability to exercise its responsibilities. The board no longer has confidence in his ability to continue leading OpenAI.” This came as a shock to the employees of OpenAI, and to its investors, who were not consulted about the decision and found out about it via social media. On Sunday, Microsoft hired Altman, but after days of negotiation, he is back at OpenAI.
Throughout the chaotic weekend, many theories about Altman’s firing have surfaced. The most common speculation is that the decision has to do with two of the four board members, Tasha McCauley and Helen Toner, and their ties to the Effective Altruism movement. Effective Altruism is a philosophy that promotes using logic and reason to help people as much as possible, and within the AI research field, has become a movement that seeks to slow down AI development in the hopes of avoiding global catastrophe at the hands of dangerously intelligent AI technology. Sam Altman is not an advocate of this ideology, and is known as an “accelerationist”, or someone who believes that AI technology development should be pursued at all costs. According to Peter Coy of The New York Times, “the apparent disagreement between Altman and the OpenAI board [was] about how to steer artificial intelligence research so A.I. doesn’t destroy the human race.” It’s easy to see why this would cause a rift between Altman and the board, especially as Altman pursued AI development more and more aggressively.
Another theory indicates Altman’s entrepreneurial pursuits. While Sam Altman is primarily known for founding OpenAI, he is also involved in several other projects and investments and owns twelve other startups. From the board’s perspective, this is a risky situation. One misstep by Altman and the company could be caught up in his messy financial entanglements.
On Sunday, just hours after the board announced OpenAI’s interim CEO, Microsoft hired Sam Altman and Greg Brockman, a cofounder of OpenAI who resigned in solidarity with Altman. Microsoft and OpenAI have a long-standing partnership, thanks to Microsoft’s investments in OpenAI of over 13 billion dollars. Brockman and Altman were hired to lead an advanced AI research lab at Microsoft, a decision that makes a lot of sense for the two, who would likely have access to unlimited funds and equipment; access that they would not have if they decided to restart OpenAI on their own. This would have been the plan, if OpenAI had not rehired Altman on Tuesday, a decision that was reached after several changes to the board. Helen Toner, who wrote a research paper criticizing OpenAI’s lack of safety in its development, has been removed, as well as Tasha McCauley and Ilya Sutskever. Adam D’Angelo, the founder of Quora, is the only member of the original board who remains.
Amidst the chaos, many are left wondering, how did it get to this point? How is it that a CEO can be fired from his own company? The answer lies in OpenAI’s unusual corporate governance structure. The company, OpenAI Global LLC, is owned by a non-profit, known as OpenAI Inc. This allowed the board to fire Altman, who has no equity or shares in the company. Some have accused the board of staging a coup to slow down the development of AI in accordance with Effective Altruistic ideology. This seems fine because it means the board was keeping the safety of humanity at the forefront of the company, instead of prioritizing the commercialization of AI, right? Perhaps, but for the company itself, this method of development is not a sustainable business model.
OpenAI is arguably the most successful AI startup in the industry and a global leader in AI development. Without Sam Altman to steer the company in a commercial direction, it would most likely have fallen apart, a key factor in the letter signed by 700 of 770 OpenAI employees on Monday, where they declared that if Altman is not promptly reinstated, they would all leave the company and join Microsoft’s subsidiary. After Altman’s ouster, the employees of OpenAI faced an uncertain future and knew they would be better off working for a huge corporation than for a company with a strange, non-profit corporate structure. Now that Altman has been reinstated, OpenAI employees are celebrating the company’s new leadership and their return to normalcy after almost a week of chaos.
Photo credit: OpenAI