OpenAI Leadership Crisis: Sam Altman Firing and Reinstatement

OpenAI Leadership Crisis: Sam Altman Firing and Reinstatement

What went down inside OpenAI beginning on 17 November 2023 was nothing short of a real-world corporate and political drama that can rival even the twist-ridden plots of Game of Thrones and Succession. There was even a point in which the situation resembled some bits from The Office as observers shared comical takes to describe the entire saga. And it all started when the board of directors of the hybrid non-profit-but-for-profit organization at the forefront of the artificial intelligence revolution decided to fire Sam Altman as its chief executive.

Details Surrounding the Firing of Sam Altman as OpenAI Chief Executive: Revelation of Leadership Issues and Governance Problems

Removal of Sam Altman as Chief Executive and Greg Brockman as Board Chair

The tech world woke up on the morning of 17 November 2023 to the news that the OpenAI board fired Sam Altman during an unscheduled Google Meet video conference. The board was composed of five directors. These included OpenAI president Greg Brockman who also served as the board chairperson and OpenAI chief scientist Ilya Sutskever, Helen Toner who is the director of strategy and foundational research grants for the Center for Security and Emerging Technology at Georgetown University, Tasha McCauley who works as senior management scientist at the Rand Corporation, and Quora chief executive Adam D’Angelo.

It is important to note that Altman founded the AI research organization together with Brockman and Sutskever and other high-profile tech personalities and investors such as Elon Musk. He served as its chief executive beginning in 2014 and was successful in transforming it into one of the most important technology companies in the world with a USD 80 billion valuation. His leadership saw the development and deployment of several large language models which include the GPT-3 and the multimodal GPT-4. These transformer models power some of its popular generative artificial intelligence applications such as DALL-E and ChatGPT.

Nevertheless, as regards the reasons why he was removed from his post, the board released an official statement explaining that the former chief executive was not “consistently candid in his communications” and that the decision-makers made the announcement final and immediate after a deliberative review process. Brockman was also removed as the chairperson of the board and he later stepped down as OpenAI president. The board named chief technology officer Mira Murati as the new interim chief executive of OpenAI. These all transpired on the same day that Altman was fired. The organization entered into an unprecedented leadership crisis.

The removal of Altman as OpenAI chief executive did not sit well with several employees and even outside observers. Brockman and other notable employees rallied behind his back. Observers noted that the decision to oust the chief executive might stem from the nonprofit and for-profit divide inside the organization. Altman embraced an effective accelerationism approach to development while some board directors were alleged to adhere to an effective altruism approach. Others have noted that the departure of previous board directors such as Reid Hoffman and Shivon Zilis allowed the remaining ones to remove Altman from his post.

Reinstatement Efforts From Investors and Employees and Response From Microsoft

OpenAI is leading the charge toward the ongoing artificial intelligence revolution. It is one of the most important and influential companies in the world because of its contributions to advancing the field of artificial intelligence and demonstrating its practical applications. Hence, because of its status, investors grew concerned following the removal of Altman and consideration of the apparent abrupt decision of the board. Tiger Global Management and Sequoia Capital attempted to reinstate the hammered former chief executive. Several OpenAI employees launched a coordinated public demonstration of support through the X social media platform.

Microsoft entered the picture. The stock price of the company took a dive following the announcement that Altman was removed as OpenAI chief executive. This was reasonable. It has a stake in the organization worth USD 10 billion and its recent products such as Bing Chat and Microsoft Copilot are based on the artificial intelligence models of OpenAI. The company issued a statement that its partnership with the organization remains enforced and that its recent product launch and entire product roadmap are unaffected. This was a simple move to appease the investors and the public but the problem is bigger than its short-term stock performance.

Satya Nadella, the chief executive of Microsoft, did not take the matter sitting down. He urged the board to bring back Altman and Brockman. The OpenAI board welcomed the discussion. The directors agreed in principle to resign while also discussing the reinstatement of Altman. This was on 18 November 2023. Several investors prepared a list of possible new board directors. A deadline was set but the board missed it. Nadella took a more active role as a mediator. Altman and Brockman appeared at the San Francisco headquarters of OpenAI on 19 November 2023 to negotiate with the board of directors. Microsoft also attempted to gain a board seat.

It was also revealed that OpenAI chief technology officer and interim chief executive Mira Murati was planning to use her new position to bring back Altman and Greg to the fold. People were optimistic. However, in a sudden pivot, the board of directors named former Twitch chief executive Emmet Shear as the new OpenAI chief executive. The negotiation had tanked at this point. Nadella made a last-ditch effort to calm the tense situation and protect the interest of its investors. It announced on 20 November 2023 that it would hire Altman as the chief executive of a new Microsoft division focusing on AI research along with his entire team.

The saga was far from over. The actual situation inside OpenAI reached a critical point. More employees surfaced to announce their full support to Altman and Brockman. Even Ilya Sutskever came forward to express his deep regret for his participation in the board decision that led to the firing of Altman. He explained that it was never his intention to harm OpenAI and he is willing to do whatever it takes to reunite the company. More than 700 employees signed a petition urging the board of directors to resign and threatened that they would follow Altman to Microsoft. Take note that Nadella assured that he is willing to take in all OpenAI employees.

Reactions From the Technology and Corporate World and Relevant Aftermath

Numerous theories have emerged to make sense of what had happened and understand the reason behind the decision to fire Sam Altman as OpenAI chief executive. Several reports claimed that Altman had approached Middle East investors to raise funds for a startup fabless semiconductor company that would rival Nvidia and other AI hardware suppliers. Some have assumed that OpenAI might have achieved artificial general intelligence and Altman failed to disclose this to the board. Malicious accusations from Annie Altman resurfaced in which she claimed that she suffered sexual, physical, emotional, verbal, and financial abuse from his brother.

The aforementioned assumptions were cleared out. The board reiterated on several occasions that the decision to remove Altman did not stem from safety concerns, behavioral issues, or financial woes. The exact reason remains vague. Several high-profile executives voiced their concern over the actions of the OpenAI board. Marissa Mayer, former president and chief executive of Yahoo! and current executive officer of Sunshine highlighted structural flaws and subsequent inherent governance problems in OpenAI while also underscoring the fact that only four independent directors have been governing one of the most important companies in the world.

Microsoft was also catapulted to the spotlight. The decision to hire Altman as chief executive of a new division was welcomed with awe and amusement. One of the largest companies in the world has essentially acquired OpenAI without spending a dime on acquisition minus regulatory oversight while also adding more than USD 100 billion in its market capitalization. Some have noted that Nadella demonstrated one of the best corporate saves in history and named him one of the best non-founder chief executives of all time. Even SpaceX and Tesla head honcho Elon Musk expressed his admiration over the last-minute and game-changing decision of Nadella.

Several personalities also gave their fair share of opinions and insights. Wired editor-at-large Steven Levy noted that the removal of Altman as OpenAI chief executive was reminiscent of the time when the Apple board kicked out Steve Jobs in 1985. Former Google chief executive Eric Schmidt expressed that he considered Altman his hero due to his efforts in changing the world through artificial intelligence. The new OpenAI interim chief executive Emmet Shear echoed the sentiments of most observers. He said that the removal of Altman was mishandled and promised that he would launch an investigation to uncover what transpired and what went wrong.

Return of Sam Altman as Chief Executive of OpenAI and Revamp on the Board

Most people thought that Altman and his team would begin working with Microsoft as soon as possible. This would be a welcome development for one of the largest tech companies in the world. Having the OpenAI team leading its own AI division would equip it with capabilities that would enable it to develop an AI strategy similar to its contemporaries such as Google. Another group of observers had a different opinion. An internal division tasked to build and deploy AI systems and models would expose the company to culpability. Its partnership with OpenAI has shielded it from possible liabilities that might arise from flawed systems and models.

Nadella also appeared before the media and made additional statements following its supposed game-changing announcement. He reiterated that he was still clueless about the exact reason behind the firing of Altman. He also mentioned that Microsoft would be open to taking in all OpenAI employees who would follow the embattled former chief executive. It is interesting to note that his statements also made it clear that the terms surrounding the announced hiring of Altman and Brockman were not finalized because the two were still weighing their options and devising the most beneficial course of action. The fate of the two remained unknown.

The OpenAI directors were not out of the woods. Talks about possible lawsuits from investors and relevant stakeholders surfaced. OpenAI employees also restated their support for Altman. Furthermore, at the same time, numerous circulations from the same employees were sent out to the media and the public that urged the remaining directors to provide a clear rationale behind their rash decision. OpenAI interim chief executive Shear also pressured the board and threatened that he would resign if the directors failed to pinpoint and substantiate with evidence the allegations thrown toward Altman that led to their decision to remove him from his post.

Several documents that allegedly came from the board circulated the internet. One document tried to expound the earlier stated rationale centers on the failure of Altman to maintain adequate communication channels. These include his demand for researchers to delay reporting progress, incongruent promises to research projects for compute quotas that resulted in internal distrust and infighting, and the discrete and routine exploitation of non-profit resources to advance personal interest. Greg Brockman and OpenAI chief operations officer Brad Lightcap were also implicated in the same document for their alleged negligence of responsibilities.

The fact still remains that the remaining board directors failed to provide a clear reason that can be substantiated with evidence. However, in what appeared to be the final turn in the twist-ridden OpenAI leadership crisis sage, Altman and Brockman resumed renegotiation with the board of directors on 21 November 2023. Shear participated as a mediator. The entire discussion culminated with an announcement that Altman was reinstated as OpenAI chief executive and a new board was formed that includes Salesforce chief executive Bret Taylor as the board chair and former U.S. Secretary of Treasury Larry Summers as an independent director.