The latest chaos at OpenAI began when the company’s board of directors fired CEO Sam Altman. The board stated that Altman was not consistently candid with them, but did not provide any specific details about the allegations.
Altman’s dismissal led to a wave of resignations from OpenAI employees, including president and chairman Greg Brockman. Three senior researchers also resigned in protest.
In the wake of Altman’s departure, Microsoft, a major investor in OpenAI, announced that it would be hiring Altman and some of his former OpenAI colleagues to work on a new AI division. This move further angered OpenAI employees, who felt that Microsoft was poaching their talent.
Nearly 500 OpenAI employees have signed a petition calling for the board of directors to resign. The petition states that the board has “lost the trust of the company’s employees" and that the company is now “in a state of crisis."
The real crisis in artificial intelligence company
The board of the company behind ChatGPT on Friday fired OpenAI CEO Sam Altman – to many, the human face of generative AI – sending shock waves across the tech industry.
“Altman’s departure follows a deliberative review process by the board, which concluded that he was not consistently candid in his communications with the board, hindering its ability to exercise its responsibilities," OpenAI said in the blog without elaborating.
Greg Brockman, OpenAI president and co-founder, who stepped down from the board as chairman as part of the management shuffle, quit the company, he announced on platform X late on Friday. “Based on today’s news, i quit," he wrote.
The departures blindsided many employees who discovered the abrupt management change from an internal message and the company’s public facing blog.
Reportedly, Brockman said it came as a surprise to Altman and him as well, who learned the board’s decision within minutes of the announcement.
“We too are still trying to figure out exactly what happened," he posted on X, formerly Twitter, adding, “We will be fine. Greater things coming soon."
The now four-person board consists of three independent directors holding no equity in OpenAI and its Chief Scientist Ilya Sutskever.
Backed by billions of dollars from Microsoft, which does not have a board seat in the non-profit governing the startup, OpenAI kicked off the generative AI craze last November by releasing ChatGPT. The chatbot became one of the world’s fastest-growing software applications.
Trained on reams of data, generative AI can create human-like content, helping users spin up term papers, complete science homework and even write entire novels. After ChatGPT’s launch, regulators scrambled to catch up: the European Union revised its AI Act and the U.S. kicked off AI regulation efforts.
Altman, who ran Y Combinator, is a serial entrepreneur and investor. He was the face of OpenAI and the wildly popular generative AI technology as he toured the world this year.
Altman posted on X shortly after OpenAI published its blog: “i loved my time at openai. it was transformative for me personally, and hopefully the world a little bit. most of all i loved working with such talented people. will have more to say about what’s next later."
Murati, who has worked for Tesla, joined OpenAI in 2018 and later became chief technology officer. She oversaw product launches including that of ChatGPT.
At an emergency all-hands meeting on Friday afternoon after the announcement, Murati sought to calm employees and said OpenAI’s partnership with Microsoft is stable and its backer’s executives, including CEO Satya Nadella, continue to express confidence in the startup, a person familiar with the matter told Reuters.
In a statement published on Microsoft’s website, Nadella said: “We have a long-term agreement with OpenAI… Together, we will continue to deliver the meaningful benefits of this technology to the world."
Earthquake
The shakeup is not the first at OpenAI, launched in 2015. Tesla CEO Elon Musk once was its co-chair, and in 2020 other executives departed, going on to found competitor Anthropic, which has claimed it has a greater focus on AI safety.
Well wishers and critics piled onto digital forums as news of the latest shuffle spread.
On X, former Google CEO Eric Schmidt called Altman “a hero of mine," adding, “He built a company from nothing to $90 Billion in value, and changed our collective world forever. I can’t wait to see what he does next. I, and billions of people, will benefit from his future work- it’s going to be simply incredible."
“This is a shocker and Altman was a key ingredient in the recipe for success of OpenAI," said Daniel Ives, an analyst at Wedbush Securities. “That said, we believe Microsoft and Nadella will exert more control at OpenAI going forward with Altman gone."
The full impact of the OpenAI surprise will unfold over time, but its fundraising prospects were an immediate concern. Altman was considered a master fundraiser who managed to negotiate billions of dollars in investment from Microsoft as well as having led the company’s tender offer transactions this year that fueled OpenAI’s valuation from $29 billion to over $80 billion.
“In the short term it will impair OpenAI’s ability to raise more capital. In the intermediate term it will be a non-issue," news agency Reuters quoted Thomas Hayes, chairman at hedge fund Great Hill Capital, as saying.
As late as Thursday evening, Altman showed no signs of concern at two public events. He joined colleagues in a panel on the sidelines of the Asia-Pacific Economic Cooperation (APEC) conference in San Francisco, describing his commitment and vision for AI.
Later he spoke at a Burning Man-related event in Oakland, California, engaging in an hour-long conversation on the topic of art and AI. Altman seemed relaxed and gave no indication anything was wrong, but left right after his talk was over at 7:30 p.m.
Is Microsoft A Clear Winner?
Microsoft emerged on Monday as the big winner of the upheaval at OpenAI, hiring ousted CEO Sam Altman and other key staff of the startup to avert a potential flight to rivals and help deepen its lead in the artificial intelligence race.
The turmoil at OpenAI raised fears about the fallout for Microsoft, which has pumped in billions of dollars and uses the pioneer’s technology for most of its AI offerings such as its Copilot AI assistant.
The move ensured “the golden child of AI" will stay with Microsoft, analysts said, as the company competes with Alphabet-owned Google to dominate the nascent industry, Reuters reported.
Reportedly, Altman will lead a new research team at the software giant. He will be joined by Greg Brockman, another OpenAI cofounder, as well as other researchers including Szymon Sidor.
About 500 employees of the startup also threatened to leave unless the board stepped down and reinstated Altman, as well as Brockman, according to a letter reviewed by Reuters.
“Your actions have made it obvious that you are incapable of overseeing OpenAI," the employees said on Monday in the letter, adding, “Microsoft has assured us there are positions for all OpenAI employees at this new subsidiary should we choose to join."
Analysts said an employee exodus was expected due to concerns over governance and the potential impact on what was expected to be a share sale at an $86 billion valuation, potentially affecting staff payouts at OpenAI.
Movements at OpenAI
OpenAI is bringing in the former head of Twitch as interim CEO.
Emmett Shear announced his new role on Monday morning in a post on X, while also acknowledging “the process and communications" around Altman’s firing were “handled very badly" and damaged trust in the company.
When it abruptly fired Altman, OpenAI said an internal review found the 38-year-old was “not consistently candid in his communications" with the company’s board of directors.
OpenAI did not provide more details, leaving industry analysts and tech watchers reading tea leaves in an effort to figure out what happened.
At OpenAI, Shear has promised to shed some light into Altman’s departure. In his X post, he pledged to hire an independent investigator to look into what led up to Altman’s ouster and write a report within 30 days.
Shear, 40, is the co-founder of the Amazon-owned streaming platform Twitch, a social media site that’s mostly known for gaming.
Shear left the company in March. He said that was due to the birth of his now 9-month-old son.
OpenAI had initially named its chief technology officer, Mira Murati, as interim CEO. But she appeared to be one of the signatories on a letter that began circulating early Monday — and signed by hundreds of other OpenAI employees — calling for the board’s resignation and Altman’s return.
However, it is not confirmed that all of the signatures were from OpenAI employees, news agency AP reported.
A spokesperson at OpenAI confirmed that the board has received the letter, which also said the board had replaced Murati, against the best interest of the company.
Investors keeping a close eye
Investors, for their part, are trying to stabilise the situation. Microsoft CEO Satya Nadella weighed in a post on X early Monday morning, saying he was “extremely excited" to bring on Altman and Brockman and looking “forward to getting to know" the new management team at OpenAI.
(With agency inputs)
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