OpenAI fired the CEO that led it to the summit of the artificial intelligence industry. What more could it have wanted?

November 21, 2023 journo

On Friday, OpenAI – the creator of ChatGPT – fired its CEO, Sam Altman.

It came as a shock to many in the industry as the company had become a key player in the artificial intelligence race, with a market valuation reaching an estimated $US90 billion ($137 billion).

The announcement left workers and investors up in arms, with both groups calling for his reinstatement.

OpenAI’s board was not forthcoming with the reasons behind the move, though the company’s unusual structure provides some clues as to why the high-flying founder may have been shown the door.

Who is Sam Altman?

Mr Altman, now 38, dropped out of Stanford at age 19 to start his first company.

He told New York Magazine that he worked so hard on it that he got scurvy – a vitamin C deficiency from failing to eat enough fruit and vegetables that once afflicted sailors on long voyages.

A man in a suit holding a laptop walks past a group of photographers outside — Sam Altman, co-founder of OpenAI, has been ousted by the board. (Reuters: Julia Nikhinson)

Following a series of successful stints in Silicon Valley, most notably as the president of startup incubator Y Combinator, Mr Altman was brought in as one of the founders of OpenAI in 2015.

By that stage, he was already a billionaire.

Why was he fired?

In a statement released on Friday, the OpenAI board said Mr Altman was “not consistently candid in his communications with the board”.

This gave little away.

However, Toby Ord, a senior research fellow at Oxford University, pointed to OpenAI’s unusual company structure as a factor.

Looking only at the corporate success of OpenAI “misunderstands the nature of the board and their legal duties”, he posted on X, formerly known as Twitter.

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Dr Ord wrote that the board has explicit differences in its mission, compared to the profit motives of the company it oversees.

“[The board] has a legal duty to ensure that AGI [artificial general intelligence] is developed safely and broadly beneficially for humanity,” he wrote.

Based on this, Dr Ord speculated that one reason for Mr Altman’s dismissal could’ve been that he’d “repeatedly withheld information that interfered with [the board’s] legal obligations to ensure safe development of AGI.”

What happened after his firing?

Usually, the removal of an executive is to either appease investors or workers.

This time they were both up in arms. Investors scrambled to have him re-appointed.

Several senior researchers at OpenAI reportedly quit in solidarity, while dozens of staff posted identical messages on X, saying: “OpenAI is nothing without its people.”

Almost all of OpenAI’s more than 700 employees threatened to quit in a letter asking for the reinstatement of Mr Altman among other demands, according to Reuters.

Soon, Mr Altman was at OpenAI’s offices negotiating a possible return.

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Chief strategy officer Jason Kwon told staff in a memo that OpenAI was “optimistic” about bringing back the fired co-founder, according to The Information.

This attempt ultimately fell through, and he ended up taking a role at Microsoft – one of OpenAI’s largest investors.

What happens now?

Mr Altman’s new role at Microsoft will be leading an advanced AI research team.

“We’re extremely excited,” Microsoft CEO Satya Nadella posted on X. “We look forward to moving quickly to provide them with the resources needed for their success.”

Despite scooping up the OpenAI co-founder, Nadella said Microsoft remains “committed to our partnership with OpenAI”.

This potentially leaves Microsoft with a new venture, headed by Mr Altman, in direct competition with OpenAI – a company the tech giant has invested $US12 billion in.

Mr Altman’s presence makes Microsoft a “destination employer” for generative AI engineers, RBC Capital Markets analyst Rishi Jaluria told Yahoo Finance.

“Microsoft will now have to decide how to split backing and resources between OpenAI and Altman’s team at Microsoft,” wrote Adam Clark, a business reporter at Barron’s.

OpenAI, meanwhile, is left with a number of holes to fill.

The company named existing CTO Mira Murati as interim CEO, before almost immediately replacing her with former Twitch CEO Emmett Shear.

“One immediate issue could be a brain drain at OpenAI with employees either seeking to follow Altman or being lured away by rivals, with the company’s share-sale plans now threatened,” Mr Clark wrote.