“I’m tired of the OpenAI drama. The only thing that is clear is they need some proper corporate governance,” said Naveen Rao, the founder of Databricks. The unfolding drama is straight out of the movies.
The still-developing story, which started over the weekend with Sam Altman getting fired from the post of the CEO of OpenAI, has a lot of lessons for other companies. The first is to be extremely careful when making decisions that could bring your company’s value from “$90 billion to a Taco Bell dollar menu overnight,” as AI advisor Vin Vashishta said.
Another biggest mistake was the company going closed doors. “The ‘open’ in OpenAI is all about open source,” said Elon Musk, highlighting that the company has become a closed source for maximum profit company, which according to him is “not good karma“.
Ironically, the board decision to oust the much-loved CEO over a video call on Google Meet, has made almost all the employees start to question the motivation behind the rushed decision. Altman was followed by few other employees who were ready to quit, including Greg Brockman, the president of the company, making us question the board functioning.
According to Altman, the board members of a company should think about their companies every day. “Board members are also a good forcing function to keep the company focused on execution. In my experience, companies without any outsiders on their boards often have less discipline around operational cadence,” reads Altman’s blog from 2014.
It is clear that Altman had a hint that the board might fire him, beforehand.
Too much to lose
The most recent development in the story is that Altman is not coming back as the CEO of OpenAI. Ilya Sutskever, the chief scientist of OpenAI and the person who broke the news to Altman, has said that the latter would not return as the CEO of the company due to disagreements.
Now Emmett Shear, the co-founder of Twitch, will be the new interim CEO instead of Mira Murati.
According to internal reports, Altman had two conditions for his return to office. First is that the whole board should resign, and the second is that all team meetings should happen on Microsoft Teams, and not Google Meet from now on. If the board decided to not accept this, it would be like burning down the whole company.
Not just the employees, the investors are flabbergasted with what went down. Microsoft, the biggest investor of OpenAI, might possibly not be happy with the decision. Reportedly, Satya Nadella and the Microsoft team was informed just moments before it was announced to the public. Arguably, Microsoft’s trust in OpenAI was more about the for-profit company led by Altman, and not the AGI focus that the board aims to achieve.
Thus, less than a day later, the board gathered again and decided to speak to Altman. Vinod Khosla, one of the first investors of OpenAI, has shown solidarity with Altman, though the investors cannot bring him back, they are definitely pushing the OpenAI board to do the same. Khosla has said that he will support whatever Altman starts next.
Meanwhile, OpenAI employees were posting hearts to Altman’s post saying, “I love the openai team so much.” Clearly, everyone is pretty unhappy with the firing, and want him back.
With the leadership muddle at OpenAI, customers are losing faith in its products and services as well. A lot of companies would be reconsidering the usage of OpenAI Services as well, and it looks like Microsoft is the collateral damage in all of this so much so that the company even released a statement to stakeholders, seeking confidence in Murati role as interim-CEO, but now even she is replaced by Shear.
Interestingly, according to a lot of reports on X and LinkedIn, there was a bit of instability in the company’s API over the weekend. For example, AI Studio Lab, has posted on X saying, “We’ll be cancelling our subscription and stopping any spend on OpenAI API calls. We do not want to support self-saboteurs.”
On the other hand, companies are planning to stop integrations or switch to a different LLM provider as soon as possible, leaving OpenAI. If a majority of the company’s staff leave along with Altman, it would affect the whole ecosystem of the companies using its products. Now that Altman is not coming back as the CEO, there might be a mass exodus, leaving OpenAI in a state of chaos.
If companies are currently planning to build on OpenAI’s infrastructure, it might not be such a great idea. Since Altman was the one who steered the company towards building AI models for others, and making the company for-profit, with him gone, OpenAI might bring a lot of changes to the company’s monetisation strategy.
Since one of the reasons for Altman’s departure is the use of Google Meet instead of Microsoft Teams, there might be a fall-out between both the companies, and Microsoft might disconnect itself from OpenAI, or vice versa.
If this continues, OpenAI might go bankrupt by the end of 2024.
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