OpenAI management shakeup raises concerns about future of AI

Sam Altman, CEO of OpenAI, attends the Asia-Pacific Economic Cooperation (APEC) CEO Summit in San Francisco, California, United States, November 16, 2023.

Carlos Barría | Reuters

Much of Silicon Valley has pinned its hopes and fortunes in recent years on the type of generative artificial intelligence technologies that OpenAI helped popularize.

Many industry experts view ChatGPT’s debut late last year as an iPhone-like moment, paving the way for a potential shift in how people interact with computers via written prompts capable of producing creative, seemingly human text.

As Apple If the late Steve Jobs was the company’s esteemed figurehead, articulating the appeal of the iPhone and personal computers to the masses, OpenAI also had its own charismatic leader in Sam Altman.

With Altman out of his CEO role – at least for now – following his sudden firing on Friday, comparisons to Apple are flowing freely. Jobs was fired as CEO of Apple in 1985, a decision that is part of Silicon Valley lore, since it was after his return in 1997 that Apple found the path that ultimately made it the America’s most valuable company.

Altman, who previously led startup accelerator Y Combinator, has spent the last year hobnobbing with world leaders and making routine appearances at tech events, turning the 38-year-old executive into an industry celebrity , in the mold of Jobs, Meta CEO Mark Zuckerberg, Amazon founder Jeff Bezos and You’re here CEO Elon Musk.

Alongside Altman, the OpenAI board of directors removed Greg Brockman from his role as chairman. Later Friday, Brockman announced he was leaving the company.

“What happened today at OpenAI is a board coup we haven’t seen since 1985, when Apple’s board ousted Steve Jobs,” said Friday night Ron Conway, long-time startup investor, in an job. “It’s shocking; it’s irresponsible; and it doesn’t sit well with Sam & Greg or all of OpenAI’s builders.”

Efforts are already underway by OpenAI investors to scoop up Altman, according to people familiar with the matter. Microsoft, Tiger Global, Sequoia Capital and Thrive Capital are among the major OpenAI backers trying to reinstate Altman, said the people, who asked not to be named because the discussions are confidential. The Verge reported Saturday that Altman was “ambivalent” about the possibility of returning.

Airbnb CEO Brian Chesky referred to Altman in an job as “one of the best founders of his generation” who “has made an immense contribution to our industry.”

Silicon Valley reacts to OpenAI

Matt Schlicht, CEO of startup Octane AI, told CNBC that Altman and Brockman, who was previously Stripe’s chief technology officer, “made technology available that we never dreamed of” and called it of “the most exciting and exciting”. powerful development of our life.

Octane is one of several new startups using so-called large language models that OpenAI bundles into its GPT family of software tools. Schlicht said that so far, technology “has allowed us to integrate human intelligence into our code, and through that, we’ve helped entrepreneurs generate over half a billion in revenue.”

“I have known Sam and Greg for over a decade, they are incredible and inspiring leaders,” Schlicht said. “After learning of their untimely departure, I was immediately filled with sadness. Innovation in the world had suddenly stopped.”

Ryan Jannsen, CEO of Zenlytic, shares Schlicht’s sentiment.

“The AI ​​community is in shock,” Jannsen said, adding that technologists are confused about the circumstances surrounding Altman’s firing and what it means for OpenAI going forward.

“Sam and OpenAI were the catalyst that showed the world what AI technology is capable of,” Jannsen said. “Much of the enthusiasm and activity in the field of AI today is directly due to their pioneering work.”

Whether Altman returns or not, the turmoil at OpenAI could give competitors an advantage in what has quickly become a highly competitive market for advanced LLMs. From heavily funded startups like Anthropic and Cohere to cloud computing giants Google And Amazoncompanies will likely be “looking for the best alternative” given the perceived instability at OpenAI, said industry analyst Patrick Moorhead.

“It’s not the only game in town,” Moorhead said.

Josh Wolfe, a partner at venture capital firm Lux Capital, said OpenAI is taking a huge reputational hit at a time when companies are deciding which models they will use as building blocks.

“There was a perception of regular, predictable, reliable, reliable progress, engagement and communication with industry,” Wolfe said. “The capricious nature of this decision demonstrates complete unpredictability, which is terrible for companies considering working with or trusting OpenAI.”

The unusual structure of OpenAI

Much of the challenge in understanding OpenAI lies in its unusual business structure. The OpenAI Board of Directors oversees the nonprofit organization, of which the corporate entity is a part, and “acts as the overall governing body for all OpenAI activities,” according to the blog post announcing the Altman’s ouster.

The post states that a “deliberative review process conducted by the Board of Directors” concluded that Altman “has not been consistently candid in his communications with the Board of Directors, which has hindered his ability to exercise their responsibilities.

CEO firings of high-profile Silicon Valley startups usually involve wrongdoing, rather than simple philosophical differences over the direction the company is taking.

Several investors told CNBC that OpenAI’s hybrid model presented a red flag early on, in part because incentives can too easily be misaligned. Now, they say, the company risks a serious brain drain if top talent chooses to follow Altman to his next project or an industry competitor.

Altman, meanwhile, has the advantage of having made such a name for himself that he would have no problem raising money for a new project from investors who view him as the next big thing in tech.

“Sam Altman is a hero of mine,” former Google CEO and investor Eric Schmidt said in an X post. job. “He built a company from nothing to $90 billion and changed our collective world forever. I can’t wait to see what he does next. I and billions of people will benefit from his future work – It’s going to be just amazing.”

Former Google CEO Eric Schmidt arrives for the inaugural AI Insight Forum at the Russell Building on Capitol Hill, Wednesday, September 13, 2023.

Tom Williams | Cq-roll Call, Inc. | Getty Images

Airbnb’s Chesky wrote that he spoke with Altman and Brockman and that they had his “full support.”

“I am saddened by what happened,” Chesky wrote. “They and the rest of the OpenAI team deserve better. He added in a separate post that Altman is “one of the best founders of his generation.”

As for Microsoft, whose CEO Satya Nadella was reportedly blindsided by the shakeup, several venture capitalists were surprised that the company could be so clueless about what was going on given the billions they have invested in the company.

“I imagine Microsoft might ask for a board seat the next time it decides to invest $15 billion in a startup,” said Zachary Lipton, professor of machine learning and operations research at the Carnegie Mellon University.

Industry analyst Moorhead said Microsoft could “figure out how to buy this company and how to put Sam in charge.”

“That’s the first piece, it’s about potentially finding ways to remove the current board, reinstall a new board, and then bring back Sam and company – making sure that the group stays together,” Moorhead said.

Regardless of the current chaos, Carnegie Mellon’s Lipton said he expects investors to remain bullish on AI.

“This story contains elements of corporate and ideological discord, but not even a shadow of diminished promise,” Lipton said.

— CNBC’s Lora Kolodny contributed to this report

WATCH: OpenAI says Sam Altman left as CEO because “the board no longer has confidence.”

OpenAI says Sam Altman steps down as CEO after board loses confidence


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