Altman beats OpenAI board and returns as CEO after stormy exit
OpenAI fires Sam Altman and Microsoft hires him -- except Microsoft didn't hire anyone and Altman is now back as OpenAI CEO. Here's what's happened so far, just try to keep up.
ChatGPT
So AI really is threatening people's jobs. Sam Altman is the co-founder of OpenAI, which created ChatGPT, but over the course of a weekend, he was fired as CEO of his own company and ended up leading "a new advanced AI research team" at Microsoft instead.
Sort of. For a while.
It was a shock firing, with some OpenAI investors including Microsoft told of it only one minute before it was announced. Other investors heard the news first on social media.
Since then, there has been a storm of conflicting news about Altman's exit. For instance, it's been reported that one day after the OpenAI board fired Altman, it reconvened to discuss hiring him back.
Yet a memo from the OpenAI board seen by the New York Times on November 19, 2023, seems to refute that.
"The board firmly stands by its decision as the only path to advance and defend the mission of OpenAI," said the memo, signed by all four of the directors on the board. "Put simply, Sam's behavior and lack of transparency in his interactions with the board undermined the board's ability to effectively supervise the company in the manner it was mandated to do."
"We apologize for the abruptness of the process that we felt was required by the situation," said the board. "Even understanding the questions it has raised, we continue to believe our actions were necessary."
There has been no further information about the reasons for firing Altman, or for why it was seemingly done so abruptly. Whatever the full reasons are, they were not enough to prevent OpenAI's president Greg Brockman, quitting the firm in support of Altman.
The reasons were also not enough to prevent board member Ilya Sutskever from publicly tweeting his regret at the firing.
I deeply regret my participation in the board's actions. I never intended to harm OpenAI. I love everything we've built together and I will do everything I can to reunite the company.
-- Ilya Sutskever (@ilyasut)
After being fired, Altman reportedly worked to regain his job by leading investors to pressure the board. Those investors included venture capitalists, OpenAI employees, and also Microsoft, which represented itself and smaller investors.
At the same time, OpenAI appointed Mira Murati as an interim CEO, saying "We have the utmost confidence in her ability to lead OpenAI during this transition period." Murati reportedly also worked to get both Altman and Brockman back into the company, but her tenure as interim CEO was over in practically hours.
Instead, OpenAI announced on November 20, 2023, that Emmett Shear, former CEO of Twitch, would take over. In a tweet of over 500 words, Shear announced that his first actions would include an inquiry into the firing.
"Before I took the job, I checked on the reasoning behind the change," tweeted Shear. "The board did not remove Sam over any specific disagreement on safety, their reasoning was completely different from that."
"I'm not crazy enough to take this job without board support for commercializing our awesome models," he continued.
Either while Altman was trying to get back his role as CEO of OpenAI, or possibly after learning it wouldn't happen, he reportedly began pitching to investors about creating a new firm.
Enter Microsoft
Those efforts presumably ceased, however, when Altman and Brockman were hired by Microsoft.
It's another messy part of the story, though, as Microsoft already owns 49% of OpenAI. Both sides, Microsoft and OpenAI, have now been careful to express that their relationship will continue.
"Our partnership with Microsoft remains strong," tweeted Shear, "and my priority in the coming weeks will be to make sure we continue to serve all our customers well."
"We remain committed to our partnership with OpenAI and have confidence in our product roadmap, our ability to continue to innovate with everything we announced at Microsoft Ignite," tweeted Microsoft CEO Satya Nadella, "and in continuing to support our customers and partners."
However, in the same tweet, Nadella added: "And we're extremely excited to share the news that Sam Altman and Greg Brockman, together with colleagues, will be joining Microsoft to lead a new advanced AI research team."
"We look forward to moving quickly to provide them with the resources needed for their success," he continued.
For his part, Altman just tweeted three words: "the mission continues."
The new AI research team that Altman is to lead will reportedly be run as an independent, autonomous group within Microsoft. That means it won't be dissimilar to how OpenAI has worked with the company, except that it will be under a new contract that will mean Microsoft has full control.
It if were solely Altman and Brockman who had joined Microsoft's new AI group, it might not make a great deal of difference to OpenAI's work. After all, OpenAI reportedly has around 700 employees.
Exit OpenAI
However, Nadella's announcement tweet referred to welcoming the two men "together with colleagues." Plus since the announcement that OpenAI had fired Altman, the New York Times says that some employees were threatening to quit OpenAI.
At the time, they were reportedly threatening to leave OpenAI in order to join Altman's proposed new venture. But now, while that venture won't be happening, Kara Swisher reports that 505 of OpenAI's employees are threatening to resign if the board does not reinstate Altman and Brockman, and also stand down.
Breaking: 505 of 700 employees @OpenAI tell the board to resign. pic.twitter.com/M4D0RX3Q7a
-- Kara Swisher (@karaswisher)
"We, the undersigned, may choose to resign from OpenAl and join the newly announced Microsoft subsidiary run by Sam Altman and Greg Brockman," says the letter. "Microsoft has assured us that there are positions for all OpenAl employees at this new subsidiary should we choose to join."
"We will take this step imminently," it continues, "unless all current board members resign, and the board appoints two new lead independent directors, such as Bret Taylor and Will Hurd, and reinstates Sam Altman and Greg Brockman."
Swisher's tweet with the text of the letter to the board shows only the first 12 of the 505 signatories. However, significantly, Ilya Sutskever is in that first 12 -- and the so very briefly interim CEO Mira Murati is first.
The board does of course have the option to stand down, but it's now surely unlikely that Altman and Brockman will return.
Consequently, whatever the impetus for firing Altman was, the result is that the single best-known AI firm is in danger of imploding. And that Microsoft, rather than just being an investor in OpenAI, has created itself a rival to that firm.
Not so fast
So Microsoft may have even just effectively taken over the future of OpenAI, Sam Altman is back in regular employment -- except it isn't over yet.
A day after the deal was seemingly done with Microsoft, it is now seemingly not done at all. For according to The Verge, Altman is still trying to regain his CEO role at OpenAI -- and he has a chance.
Citing unnamed but reportedly multiple sources, the publication says that Microsoft's announcement was a "holding pattern." They say that Microsoft CEO Satya Nadella made the move in order to end a crisis before the stock market reopened on Monday.
Key to Altman's possible return to OpenAI is the regret tweet posted by Ilya Sutskever, who had been one of the board members who led the move to oust the firm's CEO. With Sutskever now backing Altman, it would only take two more board members to change their mind for Altman to be reinstated.
"Surprises are bad"
Nadella has been doing damage control for Microsoft, by discussing the situation on news outlets including CNBC. Or perhaps it's better to say he has been trying damage control, because his interviews all ultimately say that it's up to Altman and OpenAI whether Microsoft employs any of this team.
"I'm committed to OpenAI and Sam..."
Microsoft CEO @SatyaNadella talks everything AI with @JonFortt: pic.twitter.com/a7M3yAs96x-- CNBC's Fast Money (@CNBCFastMoney)
Asked about Microsoft hiring of OpenAI staff, as those staff claimed to have been promised, Nadella said "that is for the OpenAI board and management and employees to choose."
He wouldn't be drawn further, choosing instead to say that Microsoft "chose to explicitly partner with OpenAI... obviously that depends on the people at OpenAI staying there or coming to Microsoft, so I'm open to both options."
One thing Nadella was clear about is that Microsoft is not hapy with what's been happening.
"[It's] clear something has to change around the governance," he said. "We will have a good dialogue with their board on that, and walk through that as that evolves."
He made the same point on Bloomberg TV, saying that "surprises are bad" and that he will "definitely want some governance changes."
"This idea that changes happen without being in the loop is not good," he said.
For his part, Altman has followed his "the mission continues" tweet with a possibly equally vague one about teamwork -- wherever that team may be.
we have more unity and commitment and focus than ever before.
we are all going to work together some way or other, and i'm so excited.
one team, one mission.-- Sam Altman (@sama)
Subsiding storms, probably
As of November 22, 2023, the peculiar saga is possibly over as Sam Altman has been reinstated as OpenAI CEO. Greg Brockman has also been reinstated, and there is now what is being called "a new initial board."
We have reached an agreement in principle for Sam Altman to return to OpenAI as CEO with a new initial board of Bret Taylor (Chair), Larry Summers, and Adam D'Angelo.
We are collaborating to figure out the details. Thank you so much for your patience through this.— OpenAI (@OpenAI)
Altman's return means that OpenAI's Emmett Shear was CEO for only a few more hours than Mira Murati. She has responded to the news of Altman's return solely with a retweet of the announcement, and a heart emoji.
Sheer on the other hand, has changed his Twitter/X bio to read "interim ex-CEO of OpenAI." He's also said "I am deeply pleased by this result, after ~72 very intense hours of work."
"Coming into OpenAI, I wasn't sure what the right path would be," he continued. "This was the pathway that maximized safety alongside doing right by all stakeholders involved. I'm glad to have been a part of the solution."
Microsoft's position
Just as at every step of this strange journey, everyone involved is continuing to stress that the relationship between OpenAI and Microsoft is as strong as it ever was.
i love openai, and everything i've done over the past few days has been in service of keeping this team and its mission together. when i decided to join msft on sun evening, it was clear that was the best path for me and the team. with the new board and w satya's support, i'm
— Sam Altman (@sama)
For his part, Microsoft CEO Satya Nadella said -- also on Twitter/X -- that "[we] are encouraged by the changes to the OpenAI board."
"We believe this is a first essential step on a path to more stable, well-informed, and effective governance," continued Nadella. "Sam, Greg, and I have talked and agreed they have a key role to play along with the OAI leadership team in ensuring OAI continues to thrive and build on its mission."
"We look forward to building on our strong partnership," he tweeted, "and delivering the value of this next generation of AI to our customers and partners."
What's left unsaid
It's not known yet how Altman regained his position as OpenAI CEO. It may be that he persuaded two more members of the board to back him, or it could be related to the board standing down in favor of a new interim one that was more willing to support Altman.
Nor is it known what ex-CEO Emmett Sheer's role in the company will be, if he has one. Equally, it's not known whether the previous ex-CEO Mira Murati will simply return to her old role.
What has become clear is that there either has or will be a significant change to how OpenAI's board is run. Microsoft appears to have achieved its goal of better governance of the board.
And of course it's still not known why the old board fired Altman. There have been rumors that the board wanted to be cautious and take its time developing AI tools, where Altman was racing to make products with people such as ex-Apple designer Jony Ive.
For now, the change in governance and the change in the board suggest that Altman will be able to press ahead the way he wants. And that Microsoft will have more say in how OpenAI does that.
Updated: 21 November 2023, at 08:50, with Altman's continued attempts to regain his role at OpenAI.
Updated: 22 November 2023 at 05:30 with Altman returning to OpenAI
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Comments
Apparently what Mr Altman was telling the board left a few things out, not a surprise considering what has been reported about his personality.
LOL hehe, and then $$$$$$
Certainly not Altman's. He had a large equity stake in the company. It was his baby.
Certainly not the board of directors. They represent the shareholders.
Certainly not Microsoft. They have 49% ownership. Destroying OpenAI would mean flushing most of their investment stake down the toilet. (That's what Elon Musk is singlehandedly in the process of doing with X/Twitter.)
My hunch (unsubstantiated) is that the BOD identified irregularities that pointed to fraudulent behavior by Altman, akin to Elizabeth Holmes (Theranos) and Sam Bankman-Fried (FTX). Liars don't commit just one lie. Lying permeates almost everything they do. Not just their business dealings, also their personal lives.
If the boards of Theranos and FTX had identified such issues early enough with Holmes and SBF, those companies might still exist today.
We won't learn what it is but some general information will probably come to light someday. Not today, not tomorrow, but the reasons won't stay hidden forever.
Remember that this is a privately held company that lost -$540 million on revenues of $28 million in 2022.
Silicon Valley is pretty small. My guess is that the biggest and best connected venture capitalists and IP law firms already have an idea of what went wrong.
The shareholders can revolt and elect a new BOD but Microsoft has 49% control. My guess is that some minority shareholder, probably some bigshot VC got suspicious from Altman's behavior, started poking around and found something rotten.
The people who would benefit from an OpenAI collapse are the competitors, companies like Alphabet, Meta, maybe Amazon, IBM, a bunch of startups, etc. Maybe a disgruntled former OpenAI employee, a jilted lover (we saw SBF's former girlfriend testify against him). But not someone with a sizable equity stake in OpenAI.
Silicon Valley has plenty of hubris and guys like Altman have an excess of it. Executives like Holmes and SBF have made people see red flags when people talk it up without showing real results (that is, profitability). My guess is that this will eventually end up with legal action against Altman and possibly other senior execs. The CFO would come under heavy scrutiny, there's always a money trail behind any sort of corporate shenanigans.
"Fake it until you make it" is not a real business strategy in the real world. That might be fine in a movie but it doesn't work in high tech especially when you're playing with someone else's money. The numbers eventually don't add up.
This is going to get more interesting.
Brockman (Chairman & President), Sutskever (Chief Scientist), Altman (CEO) plus three outside directors: Adam D'Angelo, Tasha McCauley, Helen Toner per the OpenAI website.
Microsoft is a Fortune 10 company and a component of the S&P 500, Nasdaq Composite and NASDAQ-100 indexes. As such I assume all six directors have some position in MSFT either directly or indirectly.
Most Americans with any sort of investments (retirement plans, pension funds, etc.) have a MSFT position in the same way they probably have AAPL, GOOG, META, and AMZN positions.
No one here knows if any of the six had sizable investments in MSFT prior to this brouhaha; those can be buried in a revocable living trust. None of the three outside directors appear to be Microsoft employees.
coming months and years.
Who is the more foolish? The fool or the fool who follows him?
Remember that OpenAI is a startup. Microsoft is One Big Company with lots of big boy politics, shareholders (as a public company), etc. The people who followed Altman to Microsoft have given up a lot of freedom plus (presumably) the chance of a big payout. And working for a big Fortune 10 company is far more restrictive than working for an agile startup.
I've worked both types and they are polar opposites in terms of mentality.
My guess is that many who fled to Microsoft will leave their new employer in less than six months.
But it is almost a given that there will some sort of legal action against Altman. Remember that Altman was forced out by the very board he sat on. There is something very, Very, VERY fishy going on that almost all who followed Altman to Microsoft probably don't have a clue what it is.
Microsoft will milk this team for its work but will call all the shots and take all of the credit. The 100+ who followed Altman are just pulling oars in the galley.
But for sure the BOD had some sort of very strong reasoning in canning an executive director and the company CEO. They aren't playing musical chairs. Someone wasn't being sufficiently truthful.