The Whiplash of Change at OpenAI : Lessons From The Sam Altman Saga

The Whiplash of Change at OpenAI : Lessons From The Sam Altman Saga

It’s hard not to be transfixed by the boardroom drama that has surrounded OpenAI, when co-founder and CEO of OpenAI Sam Altman was mysteriously fired last week by its board of directors. 

Altman’s sacking astonished Silicon Valley and left investors and employees in a state of shock about the future of the company.

Co-founder Greg Brockman handed in his resignation shortly after he was demoted following Sam’s sacking, sending OpenAI into complete chaos and creating a media frenzy about what the possible reasons were for such an abrupt firing. 

Over a matter of days, the decision was then reversed due to a petition started by OpenAI employees saying that if Altman was not reinstated and the board sacked they would also resign from the company. Over 700 OpenAI employees signed the petition. 

It’s been a whirlwind of disruption for the tech brand that has changed within a matter of days. 

Why was Altman fired?

No-one knows the reasons for Sam Altman being fired from OpenAI in the first place. The mystery is still unsolved but of course there are plenty of speculations. 

The only public statement that was released from the board, was they accused Altman of not being “consistently candid in his communications with the board, hindering its ability to exercise its responsibilities”, and that “the board no longer has confidence in his ability to continue leading OpenAI.” 

In a twist, the interim CEO Emmett Shear reportedly told the board that he would also step down if they didn’t provide a clear explanation and evidence for why Altman was fired. 

It’s safe to say that the firing of Sam Altman blindsided everyone at OpenAI, and there are yet to be any further details released to clear up the confusion. 

There are whispers going around that there was a lack of alignment between OpenAI’s non-profit endeavours and its commercial goals, with some saying that Altman was beginning to disregard OpenAI’s original purpose in favour of profit-led products. There may be some thread of truth in this speculation as OpenAI has a very unique set-up compared to other Silicon Valley tech companies. 

The corporate governance structure at OpenAI

OpenAI has an unusual corporate governance structure. It began in 2015 as a non-profit and in 2019 established a capped-profit subsidiary – an arrangement in which investors’ returns are limited to a certain amount above their initial investment. The OpenAI Non-Profit fully controls For-Profit OpenAI. As OpenAI states, “the board is still the board of a Nonprofit, each director must perform their fiduciary duties in furtherance of its mission—safe AGI that is broadly beneficial. While the for-profit subsidiary is permitted to make and distribute profit, it is subject to this mission. The Nonprofit’s principal beneficiary is humanity, not OpenAI investors.”

This means unlike traditional boards, where their responsibility is maximising value for shareholders, OpenAI’s board is bound to the fiduciary duty to create “safe A.G.I”.  On the board were two members, Tasha McCauley and Helen Toner, both with ties to the Effective Altruism movement, a utilitarian-inspired group that has pushed for A.I safety research and raised concerns that a powerful A.I system could one day lead to human extinction. 

Under Altman’s leadership, OpenAI has taken billions of dollars in investment, including from tech giant Microsoft, as it began to develop consumer products such as the infamous ChatGPT.

It’s not too far off the mark to say that the drama around who should control OpenAI’s future, and what that future looks like could have caused a rift between Altman and board members, as rumours were rife that the company had abandoned its mission and that Altman wanted to put all of OpenAI’s resources towards the For-Profit side of the company.  This came to head at OpenAI’s DevDay where Altman announced a larger partnership with Microsoft, as well as an AI App store. Whereas on the other side of the camp lead scientist Ilya Sustker was outspoken about slowing things down and keeping the focus on AI safety. Sales vs safety seemed to be clash for leaders within OpenAI. 

Interim CEO Emmett Shear did lay this speculation to rest on X (previously Twitter), where in a post Emmett said, “The board did not remove Sam over any specific disagreement on safety, their reasoning was completely different from that.”

Another speculation about the board’s reasons for firing Altman was his mission to raise investment for the development of chips that could withstand the processing of AI technology. 

Nvidia is the global manufacturer which controls around 80% of the global AI chip market. They have the monopoly on the chip market and their powerful chips are used by Microsoft and other leading tech brands. However, Altman had desires to build chips that would rival Nvidia’s, reducing OpenAI’s costs and enabling them to create more hardware products specifically designed for AI.

There is of course no hard evidence to determine if this too was a reason for Altman’s firing. 

OpenAI was meant to be the antithesis of Silicon Valley. It was meant to be a more transparent and democratic alternative to the big tech companies we’ve come to know. 

Now Altman is back in the seat of CEO, the company has confirmed it will be hiring an independent investigator to understand the events leading up to the firing. 

What does the petition say about Altman as a leader?

With both investors and employees signing a petition to return Altman as CEO at OpenAI it would be easy to assume that Altman is different from the usual suspects of tech leaders. 

It’s rare to hear of employees revolting against the board to bring back their leader, usually it’s the other way around. 

On Altman’s firing, hundreds of employees took to X (previously Twitter) to show their solidarity for Sam Altman. Posting – {“OpenAI is nothing without its people” }  

Employees also refused to attend an emergy all hands meeting, with some putting a “fuck you” emoji into the companies Slack channel. 

It’s clear that Altman has OpenAI’s people, but as history has proved to us (many times), is the devout following from worship or respect? According to some staff at OpenAI there is a cult-like following for Altman in the company. Are we surprised, of course not. Visionary leaders with ideas of revolution – but I think we’ve all started to become a tad wary of white male leaders professing to save the world.

One power move in Altamn’s back pocket was that he didn’t take any personal equity in OpenAI, which was claimed to keep him aligned with the company’s mission. Believing that this would convince others of his integrity. However, this may change when he is reinstated as CEO, time will tell what his demands will be. 

With so little known about his character, and even fewer people talking openly about exactly WHY they wanted Altman back as their CEO it’s difficult to determine his leadership style – but his influence is clear. 

One notable phrase that Altman has been criticised for is his phrase “median human”. Frequently in speeches Altman refers to people as “median humans” that will be replaced by AI. The very dehumanised language he uses to even refer to people is quite telling. Yet another tech leader who has no real empathy or understanding for the considerations of people living in the real world and not in a tech bubble. 

Some newspaper headlines have called Altman “The Oppenheimer of AI”, with concerns that he may not realise what he’s creating until it’s too late.

The return of Sam Altman to OpenAI

Investors and employees will be breathing a sigh of relief now that Altman is reinstated. Even brands who use OpenAI as a source were in a panic that the company was about to implode. If anyone uses AI tools or services, you’ll be well aware of the many emails that were sent to users confirming that service would not go down. 

If Altman had left, and his team with him, it would have put all the AI power into Microsoft’s hands, as Altamn not only received a job offer from Microsoft’s Satya Nadella, but Satya also said he would take on any OpenAI staff who resigned on Altamn’s behalf. 

What is for certain, after this drama, the company will go through another major restructuring, probably securing Altman’s seat more safely as CEO and not leaving it up to board members. 

How OpenAI balances their non-profit mission and their for-profit desires will also be an interesting dance to watch.

What we can learn from OpenAi

As the company who created ChatGPT, and arguably one of the most important AI firms in the world, dissecting this episode in their history provides huge lessons for what we should all be thinking about when it comes to power and control in a company. 

While the board went the wrong way about firing Altman, and we’re yet to know their reasoning; isn’t it a good thing that a board is more attached to a mission than their profits? 

It also provides us with a blinding example of how a board can be completely misaligned with the wider team. If they had created conversations around safe-guarding with other team members, or if they had a more inclusive board including employees, then surely the embarrassment of an employee mutiny would have been avoided? 

And while the jury is still out on exactly Sam Altman’s future agenda for OpenAI and his leadership style, doesn’t it go to show the power and influence one person has over a company – and how ultimately while Altman appears to be their greatest asset, he may also be their greatest risk. 

Liberty Mind
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    About The Author

    Lizzie Benton is a people and culture specialist who supports organisations in developing a unique company culture and building engaged teams. Lizzie has been recognised as a millennial changing the world of work, and has been featured in the Metro, HuffingtonPost and has spoken across the UK on employee engagement. When not consulting or running a workshop, Lizzie can be found in rural Lincolnshire enjoying afternoon tea and fresh air.