Drama levels in Silicon Valley are through the roof as a rapid succession of firing, hiring and resigning has rocked American artificial intelligence (AI) startup OpenAI over the past few days.
OpenAI’s board booted chief executive Sam Altman on Friday, coming as a shock to the tech world.
By Monday, former Twitch boss and co-founder, Emmett Shear, was named interim chief executive of the company and Altman had a new role at Microsoft along with Greg Brockman, OpenAI co-founder who departed the company when his partner was fired.
Just a few hours later over 500 of OpenAI’s 700 plus employees have said they may follow Altman and Brockman out the door to Microsoft unless the entire board resigns “imminently”.
Most of the saga appears to be unfolding on Musk’s X platform, where there is plenty of rumination over what has happened.
One post read: “The only people left at OpenAI are decel safetyists, whom msft [Microsoft] don’t want anyways. Sam & Greg will basically get a blank check to shoot for the moon.
“Microsoft is already planning >$50B of infra spend over the next few years. Somehow, Satya managed to extract an outcome that actually leaves Microsoft in a BETTER position vs last week.”
But where does this all leave OpenAI?
OpenAI is the tech startup behind mainstream generative AI model ChatGPT and is backed by a $10bn investment from Microsoft.
In a long post on X, new OpenAI chief executive Shear explained why he chose to take the role.
He wrote: “I took this job because I believe that OpenAI is one of the most important companies currently in existence. When the board shared the situation and asked me to take the role, I did not make the decision lightly. Ultimately, I felt that I had a duty to help if I could.”
Shear has a three point plan for the next month. Firstly, he intends to hire an independent investigator to “dig into” and report on how Altman came to be fired.
Then he will speak to “as many of our employees, partners, investors, and customers as possible,” and share his findings. Lastly, he will “reform” the management team after all the departures.
But his plans may be thwarted before he even starts the job.
Analyst at PP Foresight, Paolo Pescatore told City A.M. it is too early to say what will happen to OpenAI now.
“First and foremost confidence and credibility needs to be restored to gain back trust from all key stakeholders. This will be no easy feat. For sure it is now a different company so will most likely have to start from scratch again.
“Retaining and attracting talent must be a priority otherwise any chances of a turnaround will be short lived,” he explained.
Even if Altman and Brockman were disposable in the eyes of the board, it is more than just a few disgruntled employees turning their backs on the startup.
Also, its current arrangement means the software giant has access to OpenAI’s existing intellectual property (IP), which could make it light work for a new research team at Microsoft to catch up with OpenAI. Especially, if all its former staff are there too.
Microsoft shares notched up two per cent on Monday. AJ Bell head of financial analysis, Danni Hewson, said: “What’s abundantly clear is that Microsoft’s swift moves to bring Open AI’s ousted boss into the fold has delighted investors, sending shares in the company to a record high.”
But she questioned whether OpenAI employees will follow through on threats to step away if the current board refuses to resign.
“That’s another chapter which is likely to keep us hooked on this story for at least a few more days to come,” Hewson added.
A timeline of what we know so far
On Friday the board fired Sam Altman as chief executive. Following this, OpenAI co-founder and president Greg Brockman quit.
OpenAI quickly appointed chief technology officer Mira Murati as interim boss, who then said she wanted Altman back in the company.
For a while it looked like Altman would return. According to an internal memo reported by The Information, chief strategy officer at OpenAI, Jason Kwon, said the company remained “optimistic” that it could bring back Altman and other top executives.
But then sometime on Sunday the board appointed Twitch founder Emmett Shear as the new chief executive of OpenAI. Microsoft said Altman and Brockman would lead a new AI research team.
On Monday morning Microsoft chief Satya Nadella said Microsoft is committed to its partnership with OpenAI.
In the afternoon, around 500 employees threaten to leave OpenAI and join the new research unit at Microsoft unless the whole OpenAI board resigns.
In a post on X, Brockman said the new Microsoft team led by him and Altman plan to “build something new” and “incredible.”