OpenAI's Inflection Point
Key insights of today’s newsletter:
On Friday, the board of OpenAI ousted Sam Altman as their CEO — blindsiding investors, employees and pretty much anybody else
Ilya Sutskever, chief scientist and board member, seemed to have been the key instigator and was quoted saying: “This was the board doing its duty to the mission of the nonprofit, which is to make sure that OpenAI builds AGI that benefits all of humanity”
Within 24 hours after the ousting, the board was re-engaged in talks with Altman to negotiate his return — after senior employees, investors, and Microsoft put pressure to reverse course
Much is uncertain and new details keep emerging, but what is for certain is that this moment marks an inflection point for the company
During an interview with Bloomberg, four months ago, Sam Altman was asked the following question:
“You have an incredible amount of power. Why should we trust you?”
After a moment of silence, Altman replied:
"You shouldn't. (...) No one person should be trusted here. I don't have super-voting shares, like, I don’t want them. The board can fire me, I think that's important. I think the board over time should get democratized to all of humanity.
On first glance, it seems like the board of OpenAI executed on their mission to keep their CEO accountable, a right Altman has championed (whether that was genuine on his part or not) from the start. Fate loves irony.
Pushing back veil of ignorance
For those who don’t know, OpenAI operates rather unique governance structure. You have OpenAI LP, which is is a capped for-profit entity (which Microsoft has heavily invested in). But this entity is governed by OpenAI Inc., a non-profit led by a board of directors, who kind of act like guardians, who’s sole responsibility is to ensure the company stays true to their mission of making sure AGI benefits everyone. On Friday, this board voted to fire Altman as their CEO — blindsiding investors, employees and pretty much anybody else.
The immediate question it raises is what could’ve triggered such a dramatic response? An internal memo suggests Altman’s firing was not the result of malfeasance or anything related to financial, business, safety, or security/privacy practices, but rather “a breakdown in communications”. The bigger picture that emerged was that of an internal schism.
Ilya Sutskever, chief scientist and cofounder, and one of the six members of the board, reportedly orchestrated the ouster due to growing concerns over the direction that Altman was taking the company.
Kara Swisher, a respected journalist and tech reporter, tweeted that one of her sources told her that the OpenAI's Dev Day event on November 6, with Altman aggressively pushing consumer products, was an “inflection moment of Altman pushing too far, too fast.”
And it might not have been just about Dev Day. Speaking at the APEC CEO summit in San Francisco last week, Altman seemed to suggest another breakthrough at OpenAI was imminent, declaring rather cryptically:
“Four times now in the history of OpenAI—the most recent time was just in the last couple of weeks—I’ve gotten to be in the room, when we sort of push the veil of ignorance back and push the frontier of discovery forward. Getting to do that is like the professional honor of a lifetime.”
While there’s no reason to believe OpenAI is nearing superintelligence, today’s systems and the generations to come, are perfectly capable of causing real world harm.
This, combined with the the Dev Day announcements, may have given Sutskever, who is a major proponent for AI safety, the impression that Altman was no longer the right guy for the job and felt the need to act. He made his case to the board and the rest is history.
The sword of Damocles
It turned out to be a miscalculation of epic proportions. The same day Greg Brockman resigned in solidarity with Altman, as well as at least three other senior researchers. Reports suggest more to come.
The move to let Altman go, was widely seen as irresponsible and potentially catastrophic for the company — within 24 hours, Forbes and The Verge reported that OpenAI’s interim CEO Mira Murati and the remaining board, had re-engaged in talks with Altman to negotiate his return.
The sword of Damocles hanging above their necks is a combination of massive outflow of talent, Microsoft potentially withholding cloud computing service, and an upending lawsuit from investors. In addition to that, Altman and Brockman have reportedly already been taking steps towards founding a new venture that could count on pledges from investors, should that materialize.
It’s hard to believe the board did not anticipate any of this. Either something truly egregious transpired (that we don’t know about yet) that justified such a drastic move or the board acted on a whim, risking the entire future of the company in the process. What did they think would happen?
Things will go one of two ways from here on out:
Altman returns to OpenAI, together with Brockman and the others, and the full board resigns, or;
The board doesn’t reverse course, triggering a major outflow of talent and flurry of lawsuits, and OpenAI slowly disintegrates
Much is uncertain and new details will likely emerge over the coming days, but one thing is for certain: OpenAI has reached an inflection point.
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Have a question? Shoot me an email at jurgen@cdisglobal.com
This was predictable. Why? Because (at least for now) we’re all human — and despite our best intentions, and regardless of governance model — it’s incredibly difficult for mortals to balance investor appetite for commercial innovation (greed) with community desire to carefully regulate in the name of public safety (fear).
This could be sort of like META's name change/announcement to focus on the VR space, where there's a reconsideration of valuation (first), then brutal profits demanded in the near term ("year of efficiency"). In 2 years, OpenAI could be wildly profitable, or at least not bleeding cash quite so quickly, but you're spot on Jurgen: this is an inflection point for the company.