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What actually happened at OpenAI and the sacking of Sam Altman?

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I was going to write an in-depth analysis of what actually happened at OpenAI …

… but Bloomberg beat me to it. In their article Doomed Mission Behind Sam Altman’s Shock Ouster From OpenAI, by Max Chafkin and Rachel Metz, there is a fascinating insight into how a technology company booms and explodes and then argue and implode.

Here’s a summary of the Bloomberg article (I recommend you clickthrough and read the whole thing):

Healthy companies led by competent, commercially successful and globally beloved founders generally don’t tend to fire them. And, as Sam Altman walked on stage in San Francisco on November 6, all those things could have described his role at OpenAI.

The co-founder and chief executive officer was, by this point, regularly compared to Bill Gates and Steve Jobs. Eleven days later he would be fired — kicking off a chaotic weekend during which executives and investors loyal to Altman were agitating for his return. The board ignored them, and hired Emmett Shear, the former Twitch CEO, instead. Nearly all OpenAI employees then threatened to quit and follow Altman out of the company.

On November 6, at the company’s first developer conference … Altman invited CEO Satya Nadella onto the stage ...

... and asked him how Microsoft felt about the partnership. Nadella started to respond, and then broke into laughter, as if the answer to the question was absurdly obvious … [then] Nadella announced at midnight local time on Sunday [November 19] that Altman would lead a new in-house AI lab alongside OpenAI board member Greg Brockman, who’d also left last week. Microsoft, meanwhile, remains committed to the OpenAI partnership, he said. Shares jumped to their highest ever.

Even though OpenAI's most important shareholder is still in favour of Altman, his board of directors remained deeply sceptical. The board included Altman and Brockman, a close ally and OpenAI’s president, but was ultimately controlled by the interests of scientists who worried that the company’s expansion was out of control, maybe even dangerous.

That put the scientists at odds with Altman and Brockman, who both argued that OpenAI was growing its business out of necessity. Every time a customer asks OpenAI’s ChatGPT chatbot a question it requires huge amounts of expensive computing power — so much that the company was having trouble keeping up with the explosive demand from users. The company has been forced to place limits on the number of times users can query its most powerful AI models in a day. In fact, the situation got so dire in the days after the developer conference, Altman announced that the company was pausing sign-ups for its paid ChatGPT Plus service for an indeterminate amount of time.

From Altman’s point of view, raising more money and finding additional revenue sources were essential. But some members of the board, with ties to the AI-sceptical effective altruism movement, viewed this in tension with the risks posed by advanced AI. Many effective altruists — a pseudo-philosophical movement that seeks to donate money to head off existential risks — have imagined scenarios in which a powerful AI system could be used by a terrorist group to, say, create a bioweapon. Or in the absolute worst case scenario the AI could spontaneously turn bad, take control of weapons systems and attempt to wipe out human civilization. Not everyone takes this scenario seriously, and other AI leaders, including Altman, have argued that such concerns can be managed and that the potential benefits from making AI broadly available outweighs the risks.

In respect to Bloomberg I’ll leave this there as, to find out the whole story, you need to clickthrough. Nevertheless, their take seems to be that the AI guru Ilya Sutskever, OpenAI's Chief Scientist and Board member, fell out with Sam Altman big time, because Sam was pitching new ideas and building for-profit firms that could be worth billions. Ilya wanted to keep the company firmly focused on the science, open sourced and not-for-profit.

A clash of science versus commerce.


Further updates #1

My friend Linas on LinkedIn has written notes on the last 24 hours:

Here's what happened just in the last 24 hours:

  • Over 95% of OpenAI employees have signed the letter asking the board to resign and leave OpenAI.
  • It seems that Sam Altman & Greg Brockman's deal to join Microsoft is far from a sure thing.
  • VCs and key investors in OpenAI still don't know why Sam was fired.
  • Some investors are now mulling lawsuits against the OpenAI board.
  • OpenAI’s board of directors approached Dario Amodei, CEO of Anthropic (OpenAI's key competitor) to discuss a potential merger after firing Altman.
  • Microsoft may ask for more seats on the OpenAI board.
  • OpenAI was reportedly valued at ~$90 billion recenlty. Today, it's not clear if it's even worth 5% of that, especially after most of the key people left the startup. More importantly, it's not even clear how OpenAI plans to keep ChatGPT and the rest of its business running.

Further updates #2

Sam is back as CEO of OpenAI.

Open AI reaches deal with Sam Altman to return as chief | The Independent

And a board shake-up!

Sam Altman to return as OpenAI CEO | TechCrunch

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Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog,, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...

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