❤️🩹 OpenAI: The Latest Entrepreneurial Drama
Let’s dive into the current soap opera ⬇️
👩💻 What is OpenAI?
Firstly, it’s important to understand that OpenAI is not a startup per se; it is a non-profit foundation established in 2015, aiming to study the development of artificial intelligence to ensure people’s safety.
All the buzz about AI we’ve seen this year stems from this paper published by Google in 2016, discussing the potential security problems that could arise with the development of this technology.
And OpenAI, with Sam Altman as CEO, took that paper and has delved into its research lines for years, training Large Language Models (LLMs) and studying their potential impact and reach in society, leading to developments like ChatGPT-3.5, ChatGPT-4, and DALL-E, its main tools today.
As these tools started gaining potential, OpenAI decided to create a for-profit subsidiary of the original foundation. In other words, they created a company that would operate with startup dynamics but would depend on the non-profit foundation. As complex and strange as it sounds.
The structure is as follows, according to their own website:
The LLC will operate as a startup, while the OpenAI Charity will continue to be a foundation but will have control over the LLC.
This startup, dependent on the OpenAI foundation, has received capital from top-tier investors like Khosla Ventures. But its main investor is Microsoft, after making a historic investment of 10 billion dollars in January 2023 (Bloomberg).
But… 🤔 doesn’t it seem odd that in the entire history of Sam Altman and OpenAI, the protagonist of Silicon Valley stories in recent years is not present?
🚀 Where is Elon Musk?
At this point, Elon Musk has many enemies. But Sam Altman is possibly one of those he hates the most.
OpenAI was founded by Elon Musk along with Sam Altman and other key players in the tech ecosystem, such as Reid Hoffman (co-founder of LinkedIn), Peter Thiel (co-founder of PayPal), and Jessica Livingston (co-founder of YCombinator).
When OpenAI was established, Elon made an initial donation of 100 million dollars to support the operation and worked alongside Sam to attract top-tier talent to the company (Wired).
In 2018, Elon left OpenAI due to “differences” with Sam. According to Wired, this was because Sam wanted to give the company a more commercial focus, while Elon wanted to prioritize safety.
In any case, Elon has often spoken about his involvement in OpenAI. He was the one who financed its startup and helped get everything rolling. He even claims that he chose the company’s name.
But today, he owns no percentage of the company, as the money he provided was a donation, not an investment. It’s understandable that he’s upset, considering OpenAI is now valued at 86 billion dollars 🤷♀️ (Reuters).
In fact, Elon announced this month that he is working on his own tool similar to ChatGPT, named Grok (Xataka).
🌪️ So, what has happened these days?
🔹 Act 1: Sam’s Sudden Dismissal
On November 17th, the Board of OpenAI decided to remove Sam Altman from the company.
As a protest, Greg Brockman (President of the Board) announces his departure from the company. Even Mira Murati, the company’s CTO until that moment, resigns from replacing Sam as CEO (which was the Board’s initial plan).
At that moment, the decision surprised everyone.
Just a week earlier, OpenAI had held its first conference, OpenAI DevDay, where Sam Altman had discussed new, particularly ambitious advancements for their main tool, ChatGPT-4 (big fan, btw 💖).
The Board had just fired the CEO of the fastest-growing startup in history, on a Friday afternoon, via a Google Meet call, without transparently disclosing the reasons for the decision beyond an opaque message about him “not being consistently honest in his communications with the Board.”
🔹 Act 2: Microsoft Questioning the Board
Microsoft was shocked, as despite having invested over 10 billion dollars in OpenAI, it seemed that no one had consulted them about this decision.
But practically, the Board didn’t need to consult anyone 🤷♀️. In OpenAI, the startup is directly dependent on the foundation, and legally, the foundation can make that decision.
As mentioned before, OpenAI was born as a non-profit foundation, and it was later when the startup was created in which Microsoft invested (the LLC), but as a subsidiary of the foundation.
The foundation wanted to research and ensure the safety of AI, and the startup wanted to exploit the technology to make it commercially scalable.
It was an organizational disaster waiting to happen, and it did now.
🔹 Act 3: It Seems Like It’s Going to Be Resolved
On Saturday, Sam posted this photo on Twitter, back at the OpenAI offices, saying it’s the first and last time he enters with a guest pass (and not as staff).
At that moment, everyone believes the Board will admit its mistake and reinstate Sam.
But that doesn’t happen. The Board decides to appoint Emmett Shear, the CEO of Twitch until March of this year, a person who has openly expressed skepticism about the rapid development of AI recently (tweet).
🔹 Act 4: Everything Becomes More Chaotic and Microsoft Tries to Take Control
Now, no one understands anything, and Twitter is ablaze with rumors about what really happened and why Sam Altman was removed so abruptly.
There are talks that OpenAI might have achieved AGI (Artificial General Intelligence, a software with human-like learning capabilities). There are even viral tweets from his supposed sister accusing him of sexual abuse.
There are thousands of speculations about what will happen with ChatGPT, as many startups today depend on OpenAI having built/strengthened their business model by integrating ChatGPT’s API.
Satya Nadella, the CEO of Microsoft, calls Sam and offers to hire him to continue developing AI models. The offer is extendable to the entire OpenAI team that wants to join him.
🔹 Act 5: The Board Regrets What They Did 48 Hours Earlier
On Monday 20th, Ilya Sutskever, who is attributed with the coup by the Board to remove Sam, retracts and regrets what happened.
In fact, Elon Musk jumps on his tweet to ask what everyone has in mind:
Ilya signs a letter along with 710 people from the OpenAI team (over 90% of the company) stating that if Sam doesn’t return, they will resign and move to Microsoft.
Given this situation, the Board has no room to maneuver:
- If Sam and the entire team leave, Microsoft would be de facto purchasing OpenAI, as they would acquire its technical team, and being their main investors, they already have access to its intellectual property.
- Moreover, this “covert purchase” of OpenAI would save them potential problems with U.S. antitrust laws, because in practice it’s not an M&A.
- And an important point 💡: in California, employees cannot be required to sign a non-compete clause. This means if an employee leaves a startup, they can found a startup with the same business model and compete without any legal consequences. This further worsens the situation for OpenAI.
🔹 Act 6: Sam Returns to OpenAI and Disbands the Board That Fired Him
Finally, on Tuesday 21st in the evening (SFO time), OpenAI announces that Sam is returning to the company, and the original Board will be replaced.
Now rumors continue about the possible reason for Sam’s abrupt dismissal.
There’s talk of a project named Q* that they are working on, which could be close to achieving AGI, and that Sam “hid” from the Board the threatening aspect it could have.
For now, there are only speculations. If you want to delve deeper into this, below are some links:
💡 To delve deeper…
- What is Q*? And when we will hear more? — OpenAI Community→ here
- Antes de despedir a Altman, OpenAI hizo un descubrimiento. Uno que plantea una “amenaza para la humanidad” — Xataka → here
- Análisis sobre la reciente saga de OpenAI (con Matias de Notco) — Beta Podcast → here
- Turmoil at OpenAI: Now that Sam Altman’s coming back, what’s next for the creators of ChatGPT? — The Verge → here
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