Nov 18, 2023 - Technology

What to know about OpenAI after CEO Sam Altman's bombshell firing

Microsoft CEO Satya Nadella (R) speaks as then-OpenAI CEO Sam Altman (L) looks on during the OpenAI DevDay event on November 06, 2023 in San Francisco, California. Photo: Justin Sullivan/Getty Images

The dramatic double founder exit this week at OpenAI has captivated Silicon Valley, posing potentially steep consequences for the entire tech industry.

The big picture: The OpenAI board's unusual structure led to the shocking ejection of its founding CEO, whose tenure highlighted philosophical divisions over the perils and promise of rapidly advancing generative AI.

  • Sam Altman's firing Friday stunned seemingly everyone from the company's employees and executive team to its most vital investor Microsoft. The company's president Greg Brockman hours later stepped down, after being removed as board chairman.
  • Chief technology officer Mira Murati was named interim CEO while the company conducts a formal search.

The intrigue: In another plot twist, Altman was reportedly in discussions to return to the company, pet The Verge and The Wall Street Journal.

Who started OpenAI, and what does it do?

OpenAI was founded roughly eight years ago as a not-for-profit organization "to ensure that artificial general intelligence benefits all of humanity."

  • Its initial founders included Altman — known as a well-connected entrepreneur who bankrolled hot startups via accelerator Y Combinator.
  • Others included: Brockman, former OpenAI president and former CTO of Stripe; LinkedIn co-founder Reid Hoffman; Y Combinator founding partner Jessica Livingston; ex-PayPal CEO and Republican donor Peter Thiel; Tesla and SpaceX founder Elon Musk; and Ilya Sutskever, a deep learning advocate.
  • Musk, who now owns X, notably was seen as an Altman ally in OpenAI's earliest days. Since leaving the firm, he's doubled down on his criticism of AI's rapid advancement, though it's never been entirely clear if he's motivated by morals or business. (Musk launched an AI startup this year and released a new chatbot earlier this month.)

The firm evolved beyond its initial research organization to become more focused on product, particularly under Altman.

  • But the AI field changed soon after with the emergence of text and image models trained on vast hoards of data. As this promising development path began to pay off with concrete results, the research also became increasingly expensive.

In 2019 Altman became CEO of OpenAI and architected a restructuring that in a sense, allowed for his own downfall.

Who was on the board of OpenAI?

The board as of Friday had contained six members, including Altman and Brockman. The remaining members included:

  • Ilya Sutskever, also OpenAI chief scientist
  • Adam D'Angelo, CEO of search query site Quora
  • Tasha McCauley, a technology entrepreneur and an adjunct RAND Corporation scientist
  • Helen Toner, an academic and director at Georgetown University's Center for Security and Emerging Technology

Between the lines: The board's members appeared to have split, with Altman and Brockman on one side and Sutskever, on the other, per Bloomberg. The root of the divisions stemmed from disagreements over Altman's work to speedily popularize and commercialize generative AI.

Of note: The board has undergone significant changes in membership this year.

  • Hoffman, who is also on Microsoft's board, notably stepped down from the board in March, citing intent to invest in companies that could use OpenAI's software. Hoffman also co-founded his own AI company (Inflection AI) in 2022.
  • Former Rep. Will Hurd (R-Texas) stepped away from the board to run for president.

How is OpenAI structured?

Under an unusual corporate governance structure, the nonprofit created a for-profit subsidiary that could take huge investments from companies like Microsoft to fund the development of what would become GPT-3, GPT-4 and ChatGPT.

  • The New York Times reports: "But it retained the nonprofit's mission and it gave the nonprofit's board the power to govern the activities of the capped-profit entity, including firing the chief executive."

The company established a broad alliance with Microsoft, which invested heavily in the company and provided cloud computing resources that enabled OpenAI to develop the GPT series of large language models.

Our thought bubble, from Axios' Dan Primack: The highly unusual and unique structure is not a typical playbook, but helped cover the massive computing costs of running ChatGPT.

Who is Sam Altman?

Altman grew up in a St. Louis suburb and attended Stanford University, where he conducted research on AI. He ultimately dropped out and co-founded his first company, Loopt, a now-defunct location-sharing service.

  • His rise came in the mid-2010's when he was tapped to run Y Combinator, which invested in companies from Stripe to Airbnb.

One for the road: Ever goal-oriented in the tech-founder mold, Altman challenges himself with 100-mile bike rides and "an array of work targets," The New Yorker reported in 2016.

  • Per The Wall Street Journal, he told his grandmother, who died last year, during one of their final visits that he had not been to a grocery store in as many as five years.

Why was he fired?

The full story behind Altman's firing was not clear as of Saturday evening. But the root of the conflict appears to lie in disagreements over Altman's work to speedily popularize and commercialize generative AI.

  • OpenAI's explanation for Altman's firing charged that he was "not consistently candid" with the board.
  • Per an internal memo obtained by Axios, he was not fired for "malfeasance" but rather a "breakdown in communications" with the board.

How much of OpenAI does Sam Altman own?

He doesn't own direct shares in the company, he has said.

  • The WSJ reported that he opted against financial stake in the company, "citing his concern regarding the use of profit as an incentive in AI development."
  • He's also advocated for government regulation around AI. During an appearance before Congress in May, he repeatedly said he'd welcome legislation in the space.

How much of OpenAI does Microsoft own/ invest in?

Microsoft has a sizable minority stake in OpenAI and is its single largest investor. Its $10 billion injection into the company has been called "unprecedented" by Pitchbook.

  • Microsoft's announcement earlier this year of its expanding investment came months after OpenAI rolled out ChatGPT for public use — providing vital funding for the scaling and improvement of the product.

Axios' Dan Primack and Scott Rosenberg contributed to this story.

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