The OpenAI drama

I have two half-written blog posts at the moment but having witnessed the OpenAI drama unfold over the last five days, albeit from a distance, those two can wait a little longer. Never in an organization’s history, has there been so much going on in less than a week. The last time a fired CEO created such ruckus was when Apple fired Steve Jobs back in 1985 but even Jobs wasn’t offered his old job back in less than 48 hours. I am willing to bet that someone in Hollywood has already bought the movie rights to this but I also have a feeling that the story isn’t over yet. AI has and continues to make the headlines for more reasons that one.

If you have been living under a rock, here’s a quick timeline overview of everything that’s happened so far. The downside of writing a post on what’s unraveling at OpenAI is that from the time of me writing to when I hit publish, something would have changed. However, the markets are closed for Thanksgiving and Sam Altman is back as CEO so I’m hoping that he won’t be kicked out again; at least not before next week rolls in.  

Nov. 17	OpenAI board fires CEO, co-founder Sam Altman and President Greg Brockman quits after being removed from the board. Company names Mira Murati as interim CEO. No clear reason is stated and speculation begins. Maybe it was because OpenAI was founded as a non-profit and Altman was unclear about a few things? But more shockingly, Microsoft & Satya Nadella find out almost at the same time as the general public.
Nov. 18	Altman’s firing was over a “breakdown in communication between Sam and the board,” and not “malfeasance”, COO Brad Lightcap says in an internal memo. Meanwhile, Twitter goes insane having learnt that Altman and Greg got fired via Google Meet instead of Microsoft Teams.
Nov. 18	Early investor Khosla Ventures says it wants Altman back at OpenAI, “but will back him in whatever he does next”.
Nov. 18	Some employees contemplate quitting if Altman was not restored as CEO by the end of the weekend, while others expressed support for joining his new venture. Every Bay Area company now wants to hire the most eligible AI cool kids.
Nov. 19	OpenAI scrambles to bring Altman back after he considers launching new AI startup and investors line up to give Altman their money to fund his new startup. Altman says – maybe he’ll return. ONLY if they fire the entire board and form a new one!
Nov. 20	Microsoft CEO Satya Nadella says the Windows maker has hired Altman, Brockman and their colleagues to lead a new advanced AI research team.
Nov. 20	OpenAI appoints former Twitch boss Emmett Shear as interim CEO. Shear pledges probe into Altman’s exit. OpenAI board approaches rival Anthropic’s CEO on merger, for taking top job. It begins to look like profit motives may trump responsible AI.
Nov. 20	Nearly all (97% of 770) OpenAI staff threaten to quit via an open letter and join Altman at Microsoft if board doesn’t resign. Microsoft opens its door to all OpenAI employees, so does Salesforce and so do all other San Francisco based companies.
Nov. 20	Some investors in OpenAI explore legal recourse against the company’s board.
Nov. 21	OpenAI said Altman will return as CEO with a new initial board of Bret Taylor, Larry Summers, and Adam D’Angelo. Brockman will also be returning to the startup.

There is so much to learn from everything that’s happened over the last five days but let’s focus on our four key takeaways:

• Take the benefit; not the responsibility

For the longest time, I thought that having a majority stake in a company was a sure shot way of having a seat at the boardroom. I guess not. Satya Nadella was probably one of the first people to find out about the firing AFTER the firing. Would things have changed if MSFT has a seat at the table? Well, guess what! The new board does not have anyone from MSFT either. Microsoft had the chance to hire the AI wonder kid and his entire team but then they would be held directly responsible for all AI decisions. As an investor, they reap all the benefits without taking any of the responsibilities. Who wouldn’t want that? AI is a space that is fraught with controversy and caution. Given the government interest and the risks associated, Sam Altman’s return to AI allows Microsoft to reap all the benefits without being pulled to court to answer moral or ethical questions that may arise of OpenAI’s activities.

• People work for the person; not the company

Do you know what happens when the best boss walks out? His crew walks out with him. We’ve seen happen this time and again. It is the danger that comes with kickass managers. Guess what – the employees at OpenAI – they worked for Sam Altman and not OpenAI. He went to Microsoft and all employees threatened to follow. Organizations may believe that employees work for the organization but when a good leader leaves, if they can, the team will follow. It helps not to be arrogant but realistic. Sometimes, people are not as dispensable as we’d like to believe.

• The Board is still answerable

The CEO is answerable to the board but who is the board answerable to? Turns out if you fire a CEO when he is at his peak, you are answerable to not just investors but to a whole lot of people. Even if investors were aligned with the board’s decision; Altman and the 667 of 770 employees could bring down OpenAI’s 90-billion-dollar valuation to zero. I know of no other instance where the CEO has had the entire board fired and replaced in less than five days. Now we know.

• & lastly, open letters are still cool!

The last time I heard of a bunch of upset employees writing an open letter is when Apple employees wrote to Tim Cook expressing their anger at being asked to return to the office. Looks like even though that open letter did not work, they are still the best way to express dissatisfaction with organizational decisions. I am all for it! Employees have a say and they can say it openly. And if 97% of the employees are signing an open letter, something somewhere has gone terribly wrong.

There you go. Those are my top four takeaways but I can guarantee that there are at least four others I haven’t thought of. What did you learn from this season’s OpenAI drama? Also, anyone else feels like November is OpenAI month? OpenAI was all we talked about in Nov 2022 and they’re making airwaves this Nov too. I can’t wait for the Nov 2024 to see what they come up with. Until then, let’s hope they stay calm.