Well folks,
There is really only one story in tech today so here it is. My take.
What Happened with OpenAI This Weekend
It was a wild weekend for OpenAI.
Shortly after the close of the stock market, and after the recording of DTNS, OpenAI's board announced that it had fired CEO Sam Altman over not being "consistently candid in his communications." A source told the Wall Street Journal that no single incident led to the dismissal, "but rather a mounting loss of trust over communications with Altman." The statement said co-founder Greg Brockman would step down as chairman of the board but stay on at the company in his role as president.
Microsoft had been told shortly before the announcement and was taken by surprise and reportedly upset. OpenAI CTO Mira Murati had been told the night before and was named as interim CEO.
Brockman immediately quit and the reports began coming out that he would join Altman in a new startup.
Altman is well known for having multiple projects underway at once. WorldCoin is a a prominent example. That's his company to create a validated identity by requiring an iris scan in order to open an account. He is also rumored to have been exploring starting a chip company as well. It's not the only one, so coming up with a project you could argue had conflict of interest wouldn't have been hard.
Reports began to come out the board member and co-founder Ilya Sutskever and board member and Quora CEO Adam D'angelo were the driving forces behind Altman's ouster. It was suspected it might have been over disagreements regarding safety and profit, though that was later disputed. OpenAI is a nonprofit organization but it owns capped profit OpenAI Global LLC which Altman was CEO of. Capped profit means investors, like Microsoft can get a return on investment but only up to a maximum amount. I covered this in my episode of Know A Little more about OpenAI. Whcih obviously needs an update now but the history is still valid.
Sunday, Sam Altman posted on X a picture of him with an OpenAI guest badge with the text "first and last time i ever wear one of these." Reports spilled out the rest of the afternoon over negotiations to bring Altman back as CEO. Altman reportedly pressed for a new board to be named, which the existing board would not agree to.
So instead, Open AI named former Twitch CEO Emmett Shear as its new CEO. Shear left his CEO position at Twitch in March. Shear said he would hire an independent investigator to look into the firing of Altman. He also said "the board did *not* remove Sam over any specific disagreement on safety."
Then Microsoft's Satya Nadella posted again stating the company's commitment to OpenAI, how he was looking forward to working with Shear AND that Microsoft had hired Altman and Brockman to lead a new advanced AI research team. Altman responded to that post with "The mission continues." Keep in mind that Microsoft holds a license to all OpenAI IP. It also is the single largest investor in OpenAI Global LLC.
Monday morning employees of OpenAI began posting "OpenAI is nothing without its people."
Ilya Sutskever posted “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.”
Altman replied to the post with three heart emojis
Monday D'angelo announced that Quora's AI effort Poe is launching user-created bots, supporting Claude and ChatGPT as a base. Interesting timing.
Then the Wall Street Journal reported that more than 500 of OpenAI's 770 or so employees said they would leave the company to work at the new Microsoft division unless Altman was brought back. They said Microsoft had assured them all they would get positions.
The employees signed a joint letter that read “Your actions have made it obvious that you are incapable of overseeing OpenAI. We are unable to work for or with people that lack competence, judgement and care for our mission and employees.” And Ilya Sutskever signed it.
Then Brockman posted that OpenAI employees including Jakub Pachocki, and Szymon Sidor, and Aleksander Madry, will join the leadership at Microsoft.
NOTES
- Other OpenAI board members: Tasha McCauley, an adjunct senior management scientist at Rand, and Helen Toner, a director at a Washington nonprofit.
- OpenAI's board is shielded from investors who unlike many boards, don't get voting rights over board members.
MY TAKE
Here are the possible scenarios of what actually happened behind the scenes.
- The one pushed most over the weekends that there were two tribes. Altman led the more optimistic one pushing for faster development. Sutskever pushed the more conservative go slow movement. Since OpenAI is owned by a non-profit and bound to create value for humanity, not shareholders, Sutskever's camp got the upper hand and pushed out Altman who was veering into pursuing profit over ideals. Except Sutskever seems to have recanted this.
- Another scenario might be that there was a personality conflict with one or more of the other board members who used the above scenario to manipulate Sutskever into joining a coup to get Altman out of the way.
- The wilder idea is that Altman and Microsoft cooked this up as a way to get a profit-making company together outside of OpenAI. This would hinge on the fact that Microsoft's investment in OpenAI is made up in large part by Azure credits which have yet to be paid giving Microsoft leverage.
That's the speculation. Here's the reality.
Microsoft is coming out of this with a solid license to OpenAI IP, most of its top talent and all the cash and infrastructure needed to drive forward development. Look for Microsoft to possibly take increasing bites of OpenAI in the future (if there's anything left) and OpenAI to possibly sell its for-profit company to Microsoft and become a non-profit IP management entity.
Google will have an even harder time competing here but will continue to compete. And Anthropic will now need a strong partner, the most likely of which is Amazon. So I won't be shocked if Amazon buys Anthropic and merges it into AWS.
In the end I believe the high level cause of this was the odd "profit-capped" company. A non-profit can successfully own a for profit company. Look at Mozilla. But when you limit people's ability to benefit from their work they will go to great lengths to get around that limit.
LINKS
"OpenAI announces leadership transition"
"Sam Altman ousted as OpenAI’s CEO | TechCrunch"
"(2) Adam D'Angelo on X: "We are launching a new feature on Poe today: user-created bots. This initially allows anyone to create a new bot based on a short text prompt and an existing bot used as a base. We currently support Claude instant and ChatGPT as base bots.
"(2) Sam Altman on X: "first and last time i ever wear one of these
"(2) Ilya Sutskever on X: "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." / X"
https://twitter.com/ilyasut/status/1726590052392956028?s=20
"(2) Sam Altman on X: "❤️❤️❤️" / X"
https://twitter.com/sama/status/1726594398098780570
"(2) Satya Nadella on X: "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, and in continuing to support our customers and partners. We look forward to getting to know Emmett…" / X"
https://twitter.com/satyanadella/status/1726509045803336122
"(2) Greg Brockman on X: "We are going to build something new & it will be incredible. Initial leadership (more soon): @merettm @sidorszymon @aleks_madry @sama @gdb The mission continues." / X"
https://twitter.com/gdb/status/1726530200484372688
"OpenAI Employees Threaten to Quit Unless Board Resigns - WSJ"
"Sam Altman to Join Microsoft Following OpenAI Ouster - WSJ"
"OpenAI’s leadership moves to Microsoft, propelling its stock up | TechCrunch"
"OpenAI appoints new boss as Sam Altman joins Microsoft in Silicon Valley twist"
"Who is OpenAI interim CEO Emmett Shear? By Reuters"
"Microsoft and OpenAI Forge Awkward Partnership as Tech’s New Power Couple - WSJ"
"OpenAI’s Misalignment and Microsoft’s Gain – Stratechery by Ben Thompson"
"Sam Altman: What on earth is happening at OpenAI? - BBC News"
Great one page summary of all the wild events of this weekend. The speculation Microsoft and Altman cooked this up is not lost upon me but that's too risky of a move publicity wise and not of too much benefit to Microsoft; they already controlled the IP. The board just messed up and this is the result of the fallout. Actions have consequences.