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Removal of Sam Altman from OpenAI

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Altman, pictured in 2019

On November 17, 2023, OpenAI's board of directors removed co-founder and chief executive Sam Altman with a statement that it had no confidence in Altman's leadership.

Approximately 107 hours later, after an intense pressure campaign from investors and a threatened mass resignation of OpenAI’s employees, OpenAI announced that it had reached an agreement in principle to have Altman return as CEO with a reconstituted board of the non-profit entity which oversees the for-profit company.[1] Altman’s announced return was the third change of CEO announcement within a chaotic 4.5 day period.[1]

Background[edit]

OpenAI[edit]

OpenAI was founded in December 2015 as a non-profit entity whose mission was to do artificial intelligence research for the betterment of humanity.[2] Among its founders were Elon Musk, Sam Altman, Greg Brockman, and computer scientist Ilya Sutskever.

In 2019, after separating from Musk and facing pressure to raise money needed for costly computing power, OpenAI formed a for-profit division that took investment from Microsoft in the form of a billion dollars in cash and computer credits.[3] The for-profit entity reported to the board of the original non-profit entity.[3]

In November 2022, the for-profit division of the organization released the chatbot ChatGPT,[4] which became the fastest growing consumer product in the history of the world, contributing to a resurgence in generative artificial intelligence interest.[5] By October 2023, the company was reported to be raising money at a valuation greater than US$80 billion[6] and was set to bring in US$1 billion in annual revenue.[7]

At the time of the firing of the Altman, the board of directors of the controlling non-profit was composed of Brockman, who served as chairman; Altman; Sutskever; Adam D'Angelo, chief executive of Quora; entrepreneur Tasha McCauley, and Helen Toner, strategy director for the Center for Security and Emerging Technology.[8]

OpenAI is uniquely[9] structured, an intentional decision to avoid investor control.[10] A board of directors controls the non-profit OpenAI, Inc. The non-profit owns and controls a for-profit company itself controlling a capped-profit company, OpenAI Global, LLC and a holding company owned by employees and other investors. The holding company is the majority owner of OpenAI Global, LLC.; Microsoft owns a minority stake in the capped-profit company.[11] OpenAI's bylaws, enacted in January 2016, allow a majority of its board of directors to remove any director without prior warning or a formal meeting with written consent.[3]

Sam Altman[edit]

Sam Altman is a co-founder of OpenAI and its former chief executive; Altman took over the company following co-chair Elon Musk's resignation in 2018. Under Altman, OpenAI has shifted to becoming a for-profit entity.[2] Altman is credited with convincing Microsoft chief executive Satya Nadella with investing US$10 billion in cash and computing credits into OpenAI and leading several tender offer transactions that tripled the company's valuation.[12] Altman testified before the United States Congress speaking critically of artificial intelligence[13] and appeared at the 2023 AI Safety Summit.[14]

In the days leading up to his removal, Altman made several public appearances, announcing the GPT-4 Turbo platform at OpenAI's DevDay conference, attending APEC United States 2023,[4] and speaking at an event related to Burning Man.[15]

Events leading up to the removal[edit]

The resignation of LinkedIn co-founder Reid Hoffman, venture capitalist Shivon Zilis, and former Republican representative Will Hurd from the board allowed the remaining members to remove Altman.[3] According to Kara Swisher and The Wall Street Journal,[16] Sutskever was instrumental in Altman's removal.[17] Disagreements over the safety of artificial intelligence divided employees prior to Altman's removal.[18] The release of ChatGPT created divisions with OpenAI as a for-profit company without considerations for the safety of artificial intelligence and a non-profit cautious of artificial intelligence's capabilities; in a staff email sent in 2019 and obtained by The Atlantic, Altman referred to these divisions as "tribes".[19]

Prior to his removal, Altman was seeking billions from Middle Eastern sovereign wealth funds to develop an artificial intelligence chip to compete with Nvidia and courted SoftBank chairman Masayoshi Son to develop artificial intelligence hardware with former Apple designer Jony Ive. Sutskever and his allies opposed these efforts, viewing them as using the OpenAI name. Altman reduced Sutskever's role in October 2023, furthering divisions; Sutskever successfully appealed to several members of the board.[20] Swisher and The Verge reporter Alex Heath stated that opposition to Altman's profit-driven strategy culminated in the DevDay conference[21] in which Altman announced custom ChatGPT instances.[22] According to Axios, the removal was driven by growing discontent and distrust with Altman.[23]

Removal[edit]

Sam Altman via Twitter
@sama

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.

November 17, 2023[24]

On November 17, 2023, at approximately noon pacific time,[25] OpenAI's board of directors ousted Altman effective immediately following a "deliberative review process", replacing him with chief technology officer Mira Murati. In a blog post, the board said it had concluded that that Altman was not "consistently candid in his communications".[26] Simultaneously, the board announced that board chair, Brockman, would be removed from his board position, but remain president of the company reporting to the new CEO.

Altman was informed of his removal five to ten minutes before it occurred[27] on a Google Meet[28] with the board while watching the Las Vegas Grand Prix.[29] Shortly thereafter,[30] OpenAI board chairman and president Brockman was invited to a Google Meet to inform him of Altman's removal, and his own removal from the board.[25] The board publicly announced Altman's removal thirty minutes later in a blog post and a post on X, with only short advance notice to major investor Microsoft. The news quickly ricocheted around the world.[31]

Hours after Altman's removal, Brockman resigned from the company entirely,[32] joined by director of research Jakub Pachocki and researchers Aleksander Madry and Szymon Sidor.[33]

The reasons behind the removal were a mystery, though quickly attributed to a disagreement between Altman and members of the board on how quickly OpenAI should be commercializing its AI products without proper safeguards in place. According an internal memo sent by OpenAI’s chief strategy officer, Jason Kwon, discussions with the board revealed Altman’s removal was not due to "malfeasance."[34]

During an all-hands meeting with the staff the day of the removal, Sutskever defended the ouster and denied accusations of a hostile takeover.[9] An OpenAI representative requested former board member Will Hurd's presence.[35]

Reinstatement efforts[edit]

Within hours of the announcement, major investors in OpenAI began campaigns to reinstate Altman.

Microsoft and Thrive Capital were seeking for Altman to return, according to Bloomberg News.[36] Tiger Global Management and Sequoia Capital joined, according to The Information;[37]

Within a day, OpenAI's board of directors began negotiations to reinstate Altman, though he had demands about governance. The board agreed in principle to resign and to allow Altman to return, but missed the deadline.[38] According to The Verge, Altman was ambivalent about returning and would seek significant changes to the company,[39] including replacing the board.[40]

A list of possible new directors had been prepared by investors in the event that the board stepped down, including former Salesforce executive Bret Taylor.[36] According to chief strategy officer Jason Kwon, OpenAI was optimistic it could return Altman, Brockman, and other employees.[41]

On November 19, Altman and Brockman appeared at OpenAI's headquarters to negotiate, mediated by Microsoft CEO Satya Nadella. According to Bloomberg News, Murati, Kwon, and chief operating officer Brad Lightcap were pushing for a new board of directors; it was required that the board absolve Altman of wrongdoing in order for Altman to be reinstated.

Taylor was expected be a member of the new board[42] and Microsoft had also attempted to gain a seat.[43] The Wall Street Journal reported that Airbnb chief executive Brian Chesky and businesswoman Laurene Powell Jobs were also considered.[44] Murati had intended to rehire Altman and Brockman, discussing the move with Adam D'Angelo.[45] The Verge reported that Altman intended to return to OpenAI with support from Sutskever.[46]

In an unexpected move on Sunday night, some 60 hours after the initial removal, the board chose to name former Twitch chief executive Emmett Shear—who has ties to effective altruist movement[47]—as OpenAI's chief executive[48] instead of reinstating Altman.[44] Former GitHub chief executive Nat Friedman and Scale AI chief executive Alex Wang reportedly rejected offers from the board for the position.[49] Anthropic chief executive Dario Amodei[50], who had originally worked at OpenAI before splitting off, refused to negotiate a deal that could have led to a merge of the two companies.[51]

In response, Microsoft announced that Altman would be joining Microsoft to run a new artificial intelligence research team, that[52] joined by Brockman, Pachocki, Sidor, and Madry.[53]

Shear said the Altman’s removal was not due to disagreements about the safety,[54] and he would not have accepted the position without the board's support for commercialization.[55] As part of his 30-day plan, he stated his intentions to begin an investigation into the reasons behind Altman's removal.[56]

Dozens of employees announced their resignations in response to Shear's accession.[57] The next day, a letter signed by 745[58] of OpenAI's 770 employees threatened mass resignations if the board did not resign.

Among the signatories was board member Sutskever, who defected from the board and publicly apologized for his participation in the board's previous actions.[59]

On November 21, OpenAI announced it had reached an agreement in principle for Altman to be reinstated with Taylor, D'Angelo, and economist Lawrence Summers on an interim[60] board, [61] with Taylor as chair of the board.[62]

As part of the compromise deal, Altman and Brockman will not reclaim seats on the board. Altman agreed to an internal investigation into his alleged conduct.[63]

Aftermath[edit]

OpenAI[edit]

The removal reportedly left OpenAI in "chaos", according to The New York Times,[64] with the overwhelming majority of number of OpenAI employees threatening to resign if the board did not reconsider Altman's removal.[65]

According to The Information, Altman's removal and subsequent threatened mass resignation of employees risked a tender offer led by Thrive Capital valuing the company at US$86 billion.[66] [67] The Information later reported that Thrive Capital's tender offer will continue after Altman's reinstatement.[68]

Market effects[edit]

Shares in Microsoft fell nearly three percent following the announcement.[69] According to CoinDesk, the value of Worldcoin, an iris biometric cryptocurrency co-founded by Altman, decreased twelve percent.[2] After hiring Altman, Microsoft's stock price rose over two percent to an all-time high.[70]

Altman's announced removal was seen to have benefited OpenAI's competitors, such Anthropic, Quora, Hugging Face, Meta Platforms, and Google.[71]

The Economist wrote that the removal could slow down the artificial intelligence industry as a whole.[72] Google DeepMind received an increase in applicants, according to The Information; Cohere and Adept engaged in an active effort to hire OpenAI employees.[73] Several investors considered writing down their OpenAI investments to zero, impacting the company's ability to raise capital.[65] Over one hundred companies using OpenAI contacted Anthropic, according to The Information; others reached out to Google Cloud, Cohere, and Microsoft Azure.[74]

Potential venture[edit]

According to The Information, Altman was planning a new artificial intelligence venture with Brockman,[75] and OpenAI employees.[76] Sequoia Capital investor Alfred Lin and venture capitalist Vinod Khosla expressed interest in Altman's potential venture.[77][78]

Legal action[edit]

Multiple OpenAI investors considered legal action.[79]

Reactions[edit]

Sam Altman[edit]

Altman quipped that the OpenAI board of directors should sue him should he "start going off".[80] Former co-chair Elon Musk stated the board should be transparent in its removal.[81] Allies of Altman accused board members of staging a coup[9] and several OpenAI employees responded to a tweet Altman wrote with a heart emoji, intended to demonstrate employees who are prepared to leave.[82] Former Google chief executive Eric Schmidt wrote that Altman was a "hero to [him]" after his removal.[26]

Technology industry[edit]

Microsoft executives were informed of Altman's removal a minute before the announcement was made, according to Axios,[83] and investors were not given advance knowledge. Satya Nadella and chief technology officer Kevin Scott expressed confidence in OpenAI following his removal,[84] though Nadella was reportedly furious, according to Bloomberg News.[20]

Y Combinator co-founder Paul Graham referred to the board's members as "misbehaving children".[23] Third Point chief executive and Microsoft shareholder Daniel S. Loeb stated that OpenAI had "stunningly poor governance".[85] French digital transition minister Jean-Noël Barrot stated that Altman is "welcome in France".[86]

Following the employee letter, Salesforce chief executive Marc Benioff offered to employ OpenAI employees with matching salaries,[87] an offer extended by Microsoft.[88]

Media analysis[edit]

Analyst Fred Havemeyer stated that Nadella "pulled off a coup of his own" in hiring Altman.[89]

Wired editor-at-large Steven Levy compared the removal of Altman to the removal of Steve Jobs from Apple in 1985,[90] a comparison made by The New York Times.[91] Axios posed that the board could resign, returning OpenAI to Altman.[58] Writing for The New York Times, Ezra Klein noted the role of OpenAI's controlling non-profit in self-regulation.[92]

References[edit]

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93. Sam Altman Bio, Age, Height, Weight, Relationships, Biography on Wikipedia, and Family - infootch.com

Further reading[edit]

External links[edit]

  1. REDIRECT Template:OpenAI


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