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What happened? 

On Friday 17 November 2023, the CEO of OpenAI was abruptly fired by the board of directors, citing that he wasn’t “consistently candid” in his communications.  

They further stated, “The board no longer has confidence in his ability to continue leading OpenAI.” 

The firing led to co-founder Greg Brockman’s resignation, as well as three senior researchers. It also led to more than 90% of employees at the firm threatening to leave and head to Microsoft if Mr Altman wasn’t re-instated. The signatories included many senior executives, including the chief scientist, Ilya Sutskever, who reportedly pushed the effort to replace Altman, as well as CTO Mira Murati, whom the board had originally announced as interim CEO.  

Sam Altman was re-instated as the CEO just a few days after his firing. His reinstatement comes with proposed changes about appointing a new board of directors.   

OpenAI: A quick glance 

What? An “AI research and deployment company.” 

Industry: AI industry 

Founded: 2015 

Founders: Sam Altman, Greg Brockman 

Current CEO: Sam Altman 

Number of Employees: 770 

Most popular source of revenue: ChatGPT 

More on the story 

What happened after Sam Altman was fired? Thanks to the success of chatbot, ChatGPT, Sam Altman is widely seen as the leading figure and spokesperson within the AI industry, the tech community was shocked. The next day, major investors, including Microsoft, put pressure on the board to reconsider their decision. Negotiations began for Altman’s potential return.  

On Sunday, OpenAI announced that Emmett Shear (former Twitch CEO) as the new interim CEO. Soon after, Shear reportedly told the board that he will step down if they did not provide a clear explanation and evidence as to why Altman was ousted. By Monday, reports emerged that Satya Nadella, the current CEO of Microsoft, was personally involved in the negotiations to bring Altman back. An agreement was finalised, which not only reinstated Altman as CEO, but led to the formation of new board members, some of which include: Quora CEO, Adam D’Angelo, former Salesforce co-CEO, Bret Taylor and Larry Summers, the former US Treasury Secretary. 

Also: 

• Microsoft had reportedly hired Altman to lead a new AI effort and offered jobs for all staff who wanted to resign from OpenAI if he were not put back into his CEO position. 

• People within the tech community took to social media to voice their shock and concern. Eric Schmidt, the former CEO of Google stated Altman had, “changed our collective world forever.” 

Why was Microsoft such a big player in re-instating Sam Altman back as CEO? If the CEO of Microsoft did partake in the negotiations, then I will not be surprised. Microsoft is OpenAI’s biggest investor, injecting $10 billion into the company earlier this year. The funding will in part, help OpenAI researchers to continue to study, re-jig, improve and develop ChatGPT and other AI related projects. The funding could also help OpenAI to become even bigger and further ahead in the AI race. 

The big question: Why was Sam Altman fired? There has been an array of speculation as to why. Disclaimer: OpenAI have not officially stated the exact reason for firing him, so take what you read online and what I say with a pinch of salt. However, some suggestions have been put forward below. 

1. Differing ideological beliefs.  

OpenAI began in 2015 as a non-profit company by Sam Altman and Elon Musk. According to US Chamber, a nonprofit organisation is, “one that qualified for tax-exempt status by the IRA because its mission and purpose are to further a social cause and provide a public benefit.” Examples of this include universities, foundations and national charities. Non-profits only distribute profit to furthering the advancement of the business or organisation. In OpenAI’s case, their mission is clear: “to ensure that artificial generative intelligence benefits all of humanity.” 

Musk left the company in 2018 due to a conflict of interest. In 2019 OpenAI shifted to a capped-profit company. According to UpStock, it is a company that, “places a limit on returns from investments beyond a certain limit.” There is one reason this was done-to attract capital AI research and development. 

Ilya Sutskever and other board members were concerned about the company’s shift towards a more for-profit approach under Altman. On the one hand, you had some who argue that AI needs to accelerate as fast it can because it will bring a lot of benefits to humanity. On the other hand, you have those who argue we should slow down on AI developments because the technology can pose a real-life threat to humanity and that it can surpass human intelligence which can be used for bad. You can probably guess which side Altman drifted to.  

2. There have reportedly been developments in Artificial Generative Intelligence (AGI)… 

Taken directly from OpenAI’s website, AGI are, “AI systems that are generally smarter than humans.” It is reported that some AI researchers at the firm had made a groundbreaking development in their project known as Q* (pronounced Q-star). The machine had reportedly been able to successfully crack simple maths equations, something that they normally find difficult to do. AI machines are generally able to do well on more complex equations, but being able to crack the simple ones was enough to cause excitement – and concern. It led to the OpenAI researchers sending a letter to the board about their recent developments. I will also add, that as it stands, there currently is not a lot of information about the project.  

3. There are reports that he wanted to start a new AI venture. 

There were reports that Altman had been telling investors he intended to launch a new AI venture with co-founder and president Brockman. He had apparently been in communication with semiconductor executives, including chip designer Arm about early efforts to design new chips that would leader to lower costs for large language model companies (such as OpenAI). He has also reportedly reached out to several sovereign wealth funds in the Middle East, and pitched to SoftBank, a multi-billion-dollar fund. 

He also dabbled in several side quests, including founding World coin, an iris biometric cryptocurrency project aiming to become the, “world’s largest digital identity and financial network.  

Effective Altruism 

Effective Altruism (EA) is a philosophical, practical and research-led global community focused on doing the most good we can for other, effectively. Taken from this blog, the aim is to, “identify the world’s most pressing problems and the best solutions to them.” It was founded in 2011 by Toby Ord and William MacAskill who were Philosophers at the University of Oxford. One of EA’s philosophies, ‘earning to give’, promotes the idea of making a lot of money and giving it away to a charity or for a positive greater cause. 

Sam-Bankman Fried, founder of now dissolved FTX, is a part of it. At one point, FTX was valued at more than $15 billion, and he planned to give most away to charity. Dustin Moskovitz (Facebook co-founder) and Elon Musk are also a part of the community. 

Sam Altman is a part of the community too. What is interesting is that AI safety is one of EA’s most talked about projects. The former board were filled with current and former EA’s and AI safety is something that people, such as Musk, are striving for. 

What implications could the saga have?  

Some things to think about: 

• Regulation, regulation, regulation. Prior to the drama, there were many calls for some sort of regulatory body to be established. After the saga, these calls will increase. OpenAI is a big tech company and they are dominating the AI industry, an industry that will play a crucial role in shaping the future. Regulation does need to be implemented. Many countries, such as the US and UK, want to become leaders in developing such regulatory pillars. The UK has kickstarted some international dialogue with the UK AI Safety Summit that was held last month. Taken from the S&P Global Daily Update, “The real story is about the ethical governance of a technology that will have a profound impact on humans. The real story is about who decides what benefits all of humanity.”  

• Who is the winner in all the drama? At first, it seemed like Microsoft was. Even though Altman and Brockman’s hire to lead a new AI division at Microsoft fell through (it would have saved the company lots of money and time), it shows how Microsoft is willing to present themselves as the frontrunner in the AI race. Moreover, prior to the drama, Microsoft did not have a seat at the board room table. Given their $13 billion investment to date, the CEO’s personal sway in bringing Altman back and the influence they wield over other investors, the whole saga has highlighted the influence that Microsoft have. You can even say that out of all the investors in OpenAI, Microsoft has taken the biggest bite out of the OpenAI pie of influence. given Microsoft a bigger pie of influence in OpenAI world. I am sure Microsoft will end up having a seat on the board because even they were blindsided by Altman’s sudden removal, and if you are the biggest investor, you do not want this to happen. With all this being said, I think the real winner is Sam Altman himself. The fact that most of the employees at OpenAI, major investors and people within the technology world were willing to back him at whatever cost, goes to show the immense power and influence he has, not just as a person, or in the AI world, but in shaping the future as ww know it. His future at the company and in the AI race seems to look secure for now. 

• Should the world be aware? If the developments in AGI are real, then should the world know? With Team AI safety or team AI advancement? I think we need a healthy balance of both. What is clear, is that the world will become increasingly reliant on the technology. We do need some form of regulatory body. We do need ethics involved. We do need the people to be aware of the potential benefits – and concerns over this rapidly evolving technology. The growth of AI will affect us all. 

The AI industry: 

Google’s Bard. Antrophic’s Claude. Meta’s Llama 2. These are just some of the competitors to OpenAI’s ChatGPT. And this list of competitors will get longer and longer as the months go by. Why? 

• It’s a popular sector. Investors are pouring a lot of money into start-ups that are AI or cloud related. According to PitchBook, investors have poured $21.4 billion into generative AI startups this year through to September 30, 2023. The fear of missing out does not only exist in stock markets and they clearly see it as an investment that will give them a good return in the future. 

One interesting thing to note: Big tech companies, like Meta and Google were already working on their own AI departments. How did a smaller and less resourced startup manage to dominate the sector? It has left the bigger companies scrambling to catch up and overtake. Usually, it’s the other way around. With any frenzy, it eventually dies out. The AI investors will have to wait and look for the next big thing. 

Closing thoughts: 

What a story. This has been my most heavily research story to date. I had a pleasure learning more about the recent OpenAI drama, as well as the AI industry. It’s a topic we will continue to see in the headlines this year and for the years to come. As for OpenAI, they will continue to dominate (at least for the time being) because ChatGPT is still very popular. 

For the main man himself, Sam Altman will continue to build and defend his stance about the need to develop AI fast. He will continue to be seen as the main voice for the development of the AI industry too. 

For OpenAI, the stand-offs and the shakeups seem to be at an end. Out with the former board members and in with the new. With a committed and seemingly loyal  

For the AI industry, regulation will come into force. It’s not a matter of if, it’s a matter of when. And I believe that will be soon. Regulation needs to keep up with the rapid developments we’re seeing with AI. 

For everyone else, from suggesting potential research ideas for school essays, to helping out with business plans for the next unicorn, to instructing you in making a very tasty chocolate cake, what is very clear, is that we’ll continue to adopt AI into our everyday lives. AI has secured itself into our futures. 

That’s it for this week! I hope you’ve enjoyed today’s Insight. 

What are your thoughts on the story? Do you think we will find out the exact reasons as to why Sam Altman was initially fired? Will a new and better Chatbot will overtake ChatGPT in the future? Are you team AI safety, or team AI advancement? Do you think we need a healthy balance of both? 

I’d love to know your thoughts! Message me on any of my social media platforms or send me an email: hello@parahinsights.com. 

Further resources: 

‘Inside OpenAI, the Architect of ChatGPT, featuring Mira Murati’ | The Circuit with Emily Chang’ - YouTube video by Bloomberg Originals 

‘What Really Happened At OpenAI (Q* AGI Potential TERRIFIED Researchers)’ - YouTube video by Tina Huang 

'OpenAI: Inside the Battle for the Startups Soul’ - YouTube video by Bloomberg Originals 

‘Is Microsoft Really a Winner in this? OpenAI Key Player Updates’ - YouTube video by The Carly P Reilly Show 

‘What is effective altruism? Philosopher Peter Singer explains.’ - YouTube video by Big Think 

DISCLAIMER:  

This blog is for informational purposes only. Parah Insights is not associated with the news sources in this blog, and sharing does not equal endorsement. Parah Insights does not provide financial, tax, legal or accounting advice – always consult your financial and legal advisors to determine what’s right for you and your business.