Sacking Sam Altman: Uncovering the Secret Behind OpenAI’s Move

In contrast to Google, Facebook, and other tech giants, the creators of ChatGPT established it as a nonprofit organization rather than a business, aiming to ensure its independence from commercial influences.

But the arrangement became complicated.

Although OpenAI later transitioned to a for-profit model, its controlling shareholder remains the non-profit OpenAI Inc. and its board of directors. That unique structure allowed four OpenAI board members — the company’s chief scientist, two outside tech entrepreneurs and an academic — to oust CEO Sam Altman on Friday.

The sudden departure of one of the world’s most sought-after artificial intelligence experts led to an employee revolt that has put the entire organization’s future at risk and highlighted the unusual arrangement that separates OpenAI from other tech companies.

It is very rare for large technology companies to have this kind of structure.

Facebook’s parent company, Meta, like Google and others, is set up in essentially the opposite way—by giving founders ultimate control over the company and the board with special voting shares that are not available to the masses. The idea comes from Berkshire Hathaway, which was founded with two classes of shares so that the company and its executives would not be owned by investors seeking short-term profits.

OpenAI’s mission is to safely build artificial intelligence that is “generally smarter than humans.” Discussions have revolved around this goal and whether it conflicts with the company’s growing commercial success.

“It was revealed from this government structure that they were just thinking idealistically: well, we are aligned and we all want the same thing. And that’s not going to be a problem because we’re going to stay in line,” said Sarah Kreps, director of Cornell University’s Tech Policy Institute.

As artificial intelligence technology picked up steam last year due to new investment, “I think that’s where these issues erupted.”

The board has declined to give specific reasons for firing Altman, who was quickly hired on Monday by Microsoft Corp., which invested in OpenAI. Microsoft also hired OpenAI executive Greg Brockman, who resigned in protest after Altman’s departure, along with at least three others.

In addition, Microsoft has extended job offers to all 770 OpenAI employees. If enough employees accept Microsoft’s offer or join competitors who are now openly recruiting them, OpenAI could disappear without a workforce. Much of its existing technology remains with Microsoft, which has exclusive rights to use it.

When OpenAI announced that Altman had been fired, it released a vague statement saying that he “was not consistently honest in his communications” with the board, which had lost confidence in his ability to lead the company.

The statement did not provide details or examples of Altman’s alleged lack of integrity. The company said his behavior hindered the board’s ability to fulfill its responsibilities.

Kreps said the board, which “seems to be about a safer, more cautious approach” to artificial intelligence, did itself a disservice by firing Altman. It alienated most of the company’s workforce and operated like “there is no company”. remains to implement a philosophy that promotes safety.”

After a dramatic weekend in which one interim CEO was replaced by another interim CEO, OpenAI board member Ilya Sutskever, who was a key driving force, expressed regret for his part in the ouster.

“I never intended to harm OpenAI. I love everything we’ve built together and will do everything I can to bring the company together,” he wrote Monday on X, formerly known as Twitter.

Until Friday, OpenAI had six board members. Now the board includes Sutskever, founder and chief scientist of OpenAI; Adam D’Angelo, CEO of the question and answer website Quora; tech entrepreneur Tasha McCauley; and Helen Toner of the Georgetown Center for Security and Emerging Technology.

Even earlier this year, the board had more members.

Resigning from the board were LinkedIn founder and investor Reid Hoffman, who founded another AI company last year; former Republican U.S. Rep. Will Hurd of Texas, who was briefly a 2024 presidential candidate; Neuralink Director Shivon Zilis; and Brockman, who left after Altman was fired.

When OpenAI was founded, its original board chairs were Altman and Tesla CEO Elon Musk.

The board might not have diffused tensions between its nonprofit structure and the company’s for-profit arm if not for a pivotal conflict in 2018 involving Altman and Musk.

Musk abruptly resigned from OpenAI, apparently due to a potential conflict of interest between the fledgling startup and Tesla, the electric car maker responsible for a personal fortune now worth more than $240 billion.

Earlier this year, Musk tweeted his concerns that Microsoft was misleading OpenAI in its pursuit of ever-greater profits. Musk recently launched his own AI startup, xAI, to compete with the likes of OpenAI, Microsoft, and Google.

OpenAI’s board members have not responded to requests for comment. Of the remaining four, one of the best-known members is D’Angelo, an early Facebook employee who founded Quora in 2009 and remains its CEO.

D’Angelo first joined OpenAI’s board in 2018, tweeting at the time: “I still believe that work for general AI (in terms of security) is both important and underappreciated, and I’m happy to be a part of it.”

He has publicly waded into the possibility of AI surpassing humans as recently as Nov. 6, when he questioned the conclusions of a Google research paper that showed evidence that current AI systems cannot generalize beyond their training data. This suggests that their abilities are more limited than some scientists thought.

D’Angelo posted a few months earlier that general artificial intelligence “is probably going to be the most important event in the history of the world, and it’s going to happen in our lifetime.”