Silicon Valley Boardroom Coup Leads to Ouster of an AI Champion

Altman sparred with board members, particularly Ilya Sutskever, an OpenAI co-founder and the company’s top scientist, over the pace of developing generative AI, strategies for commercializing products, and measures to mitigate their potential risks to the public, as stated by a source with direct knowledge of the situation, who requested anonymity when discussing private information.

The OpenAI board, based in San Francisco, stunned the AI community by announcing Altman’s termination, citing a loss of confidence in his leadership and lack of transparency in his communications with the board. Shortly afterwards, Greg Brockman, a fellow OpenAI co-founder who chaired the board, also declared his departure from the company. In a post on X, formerly Twitter, Brockman stated, “Based on today’s news, I resign.”

The AI community has long debated the expeditious development of tools capable of swiftly generating a wide array of images, software code, and blocks of text with minimal prompts. While some have raised concerns that unregulated advancement of the technology poses risks to users, others argue that a slowdown would be irresponsible and could jeopardize people’s well-being, such as by delaying the discovery of AI-assisted remedies for the ill. These disputes have haunted OpenAI since its inception and were among the reasons why Elon Musk severed ties with the company in 2018. They also explain the departure of a group of employees in 2020 who then formed the competing entity, Anthropic.

Simultaneous with Altman’s exit, OpenAI’s board announced the appointment of Mira Murati, an Albanian-born Dartmouth-educated engineer who played a key role in developing some of the company’s well-known products as its interim CEO.

In addition to strategic disagreements, board members have also raised objections to Altman’s entrepreneurial pursuits. Altman sought to raise substantial funds from Middle Eastern sovereign wealth funds to establish a venture focusing on AI chips to rival those produced by Nvidia Corp. He was also in discussions with SoftBank Group Corp. chairman Masayoshi Son for a multibillion-dollar investment in a new company aimed at producing AI-centric hardware in collaboration with former Apple designer Jony Ive.

Sutskever and his allies on the OpenAI board were apprehensive about Altman’s efforts to solicit funds using OpenAI’s reputation, and harbored concerns that these new ventures might not adhere to the same governance model as OpenAI, the source revealed.

Unanticipated

The repercussions of these actions reverberated throughout OpenAI and the broader tech community. “Sam and I are shocked and saddened by what the board did today,” Brockman wrote on X, formerly Twitter. “We too are still trying to figure out exactly what happened.”

Brockman disclosed that the board conveyed the news to Altman via a Google Meet, where Sutskever informed him of his termination and the imminent public announcement. The move caught most individuals associated with the company off-guard, including Altman, who swiftly had his access to email and company devices revoked.

Executives at Microsoft Corp., the largest investor in OpenAI, were also caught unawares. Microsoft CEO Satya Nadella was “taken aback” by the news and was incensed, according to a source familiar with his reaction.

Sutskever’s apprehensions have been mounting in recent months. In July, he formed a new team at the company dedicated to exerting control over “super intelligent” future AI systems. Before joining OpenAI, the Israeli-Canadian computer scientist worked at Google Brain and held a research role at Stanford University.

Sutskever subsequently faced a reduction in his responsibilities at the company a month ago, indicating tensions between him, Altman, and Brockman. He later appealed to the board, winning over certain members, including Helen Toner, the director of strategy at Georgetown’s Center for Security and Emerging Technology.

Altman’s dismissal also created shockwaves among prominent investors and startup communities across Silicon Valley, casting the most promising industry in a state of uncertainty.

The ousting of company founders is part of the recurring lore in Silicon Valley. Steve Jobs was ousted from Apple in 1985, and Twitter dismissed its co-founder Jack Dorsey in 2008. Both leaders famously returned to their companies years later. However, Altman’s departure could have a broader impact on the industry he represented.

The tech sphere’s immediate response ranged from astonishment and dejection to unbridled speculation. Industry group discussions were ablaze, and investors and tech luminaries exchanged conjectures on social media regarding the reasons behind the board’s decision to remove its renowned CEO. With little information from the company, prediction market platform Manifold Markets commenced taking bets on the cause.

As of late morning on Friday, Altman had been sending regular emails to employees in his capacity as CEO. He was also present at multiple events on Thursday, representing OpenAI at the Asia-Pacific Economic Cooperation summit in San Francisco and attending an evening affair related to the Burning Man festival, where he addressed the future of AI art.

Earlier this month, the company held its inaugural developer conference, known as DevDay, fueling excitement about its products. “I think the developer community really loves to follow audacious visionaries and DevDay happened, I was there, and the excitement was just off the charts,” said Matt Schlicht, CEO of Octane AI. “And that was like a week ago.”

OpenAI commenced as a non-profit in 2015, but its business model has transformed over time. The company soared to prominence last year following the public debut of its chatbot ChatGPT, which captivated users with its creative, eloquent prose, and prompted individuals, organizations, and businesses to reimagine their work. Earlier this year, the company was in discussions to issue existing employee shares at a valuation of $86 billion, propelling it into the ranks of the world’s most valuable startups.

Altman also wielded significant influence in the tech realm, supporting and engaging in a range of startups. He was also a prominent advocate for AI, and his departure may undermine broader confidence in the technology. However, as with prior scandals, some anticipate that the industry will absorb the news without significant impact.

“I don’t think it will shake anyone’s confidence in tech,” said Cory Klippsten, CEO of Swan, a bitcoin financial services firm. “I think it’ll make people take a really close look at what are the biases and rules or protocols that exist in the structure of OpenAI.”

While taken aback and disheartened, Altman appeared optimistic late Friday evening, according to a source close to him. In another post on X, Altman said, “I love you all.” He added, “Today was a weird experience in many ways. But one unexpected one is that it has been sorta like reading your own eulogy while you’re still alive. The outpouring of love is awesome.”

According to one individual, Altman is likely to launch another company and collaborate with former OpenAI employees. Following Altman’s termination, there has been a wave of departures, with more expected in the days to come, the source mentioned.

In a separate post, Altman hinted at sharing more information about the company in the future: “If I start going off, the OpenAI board should go after me for the full value of my shares.” Altman famously claimed to have zero equity in the startup.

–With assistance from Emily Chang, Rachel Metz, Priya Anand, Jackie Davalos, Sarah McBride, and Ellen Huet.

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