By Seth Fiegerman
OpenAI stunned employees, investors and much of Silicon Valley on Friday by ousting Chief Executive Officer Sam Altman, who more than any other figure had emerged as the face of artificial intelligence following the viral success of his company’s chatbot, ChatGPT. Almost instantly, the world’s best-known AI startup, which has been in talks to sell employee shares to investors at an $86 billion valuation, was thrown into disarray. Several people, including OpenAI President Greg Brockman, have resigned, the board is facing investor pressure to reinstate Altman and there’s a possibility the board itself resigns in the coming days.
Here’s the latest:
Altman clashed with board on safety, ambitions
OpenAI’s decision to fire Altman followed wide-ranging disagreements between the chief executive and his board, according to a person familiar with the matter. The debates included differences of opinion on AI safety, the speed of development of the technology and the commercialization of the company, the person said. Altman’s ambitions may have also played a role. Altman has been looking to raise tens of billions of dollars from Middle Eastern sovereign wealth funds to create an AI chip startup, according to a person with knowledge of the investment proposal. Altman was also courting SoftBank Group Corp. chairman Masayoshi Son for a multibillion-dollar investment in a new company to make AI-oriented hardware in partnership with former Apple designer Jony Ive. The board may have been put off by Altman raising funds off of OpenAI’s name and these new companies not sharing the same governance model as OpenAI, the person said.
OpenAI’s chief scientist appealed to board
Ilya Sutskever, an OpenAI co-founder and the company’s chief scientist, told Altman he was out and is thought to be at the center of the board’s clash with him. A month ago, Sutskever’s responsibilities at the company were reduced, reflecting friction between him and Altman and Brockman. Sutskever later appealed to the board, winning over some members, including Helen Toner, the director of strategy at Georgetown’s Center for Security and Emerging Technology.
Altman blindsided in a Google Meet chat
Altman was blindsided by the move. In a joint statement posted on X, formerly known as Twitter, Brockman and Altman said Sutskever texted the chief executive on Thursday night asking to chat at noon the following day. “Sam joined a Google Meet and the whole board, except Greg, was there,” the post said. “Ilya told Sam he was being fired and that the news was going out very soon.” Shortly after, Brockman was told he was being removed from his position as chairman of the board but would hold on to his role as president.
Microsoft caught off guard, CEO supporting Altman
Despite being OpenAI’s biggest backer by far, Microsoft Corp. had only a few minutes advanced notice about Altman’s firing, said a person familiar with the matter. Microsoft CEO Satya Nadella was blindsided by the board’s decision, according to people familiar with the situation, and has been in touch with Altman and pledged to support him in whatever steps he takes next. The tech giant bet billions on OpenAI and used its partnership with the startup to add AI features to many of its best-known software products and seemingly leap ahead of rivals like Alphabet Inc.’s Google in the artificial intelligence arms race. In a public statement, Nadella tried to ease any concerns Altman’s departure could hurt his company’s long-term AI plans. “We have a long-term agreement with OpenAI with full access to everything we need to deliver on our innovation agenda and an exciting product roadmap; and remain committed to our partnership,” he wrote in a blog post.
Share sale up in the air
Just weeks ago, OpenAI employees were on the cusp of being able to sell their shares at a staggering $86 billion valuation. But in the hours following Altman’s departure, hundreds of millions of dollars of trading in closely held OpenAI shares on the secondary market have been thrown into limbo, according to people familiar with the matter. Some transactions are on hold and some have been cancelled outright, the people said. Thrive, which was expected to lead a tender offer for employee shares, has not yet wired the money and has made it clear to the OpenAI board that Altman’s departure will affect the decision.
Board under pressure to reinstate Altman
OpenAI investors are now pressing the company’s board to reverse the decision to fire Altman, according to people with knowledge of the matter. Altman is open to returning to the company, one of the people said. In one scenario under consideration, members of the current OpenAI board would step down. If Altman doesn’t return, more employees may jump ship — possibly joining him in whatever project he launches next and further jeopardizing OpenAI’s position as the leader in the AI market. In their joint post on Friday, Brockman and Altman said: “Greater things coming soon.”
