Why Was Sam Altman Fired from OpenAI, and What Happens Next?

Why Was Sam Altman Fired from OpenAI, and What Happens Next

The ChatGPT creator was unceremoniously fired from his position, what does that mean for OpenAI?

A year since the generative artificial intelligence (AI) tool ChatGPT was introduced, its parent company OpenAI is back in the headlines—but this time, it is not celebratory. On November 17, 2023, the company abruptly (and rather unceremoniously) decided to fire its founder Sam Altman, sending a note to employees on Sunday night confirming that he wouldn’t return. 

Within two days, the board of directors found an interim replacement. However, the board was probably not prepared for what lay ahead. First, OpenAI employees were not pleased with the decision, and some senior employees quit. Also, Microsoft, a massive shareholder in OpenAI, opened its doors to Altman—possibly irked with how OpenAI dealt with the whole ordeal without informing the tech giant in advance of the move. 

Typically, getting fired is worse for the employee than for the company. In this case, it might be the opposite. Here, we look at why Altman was fired and what will happen next.

Why was Sam Altman fired?

On Friday, Altman’s fate was decided on a Google Meet call, where he was told he was being fired. What’s more, Greg Brockman, the co-Founder of OpenAI, was not even invited to the call. On November 17, 2023, OpenAI published a blog post, stating, “The board no longer has confidence in his ability to continue leading OpenAI.”

That was it. The blog offered minimal concrete reasoning for the board’s loss of confidence. In a memo, the board said, “Sam’s behavior and lack of transparency in his interactions with the board undermined the board’s ability to effectively supervise the company in the manner it was mandated to do.” They were hesitant about Altman’s innovative bid, believing he would have an Oppenheimer streak and exploit the dangers of AI.

What ensued

Vague explanation, worse execution

The board’s actions have been criticized by many, more so for how they went about it. They didn’t inform any of the stakeholders or even Brockman, which makes it appear as if it were a spur-of-the-moment, targeted attack. However, if the board thought that the company would just accept its decision, it was woefully wrong. Once the news of the ousting got out, Altman loyalists—his co-founder and about 95% of OpenAI’s employees—decided to tender their resignation as well.

This was such a stressful turn of events that the board tried to get Altman back; however, that ship appears to have sailed.

Microsoft to the rescue

Even though Microsoft has a 49 percent stake in OpenAI, having invested over US$13 billion, it was informed of Altman’s ousting just a few minutes before the official announcement. Others fared worse, getting this information from the rest of the world via social media. 

With such a significant amount of stake in OpenAI, one might expect Microsoft will have some sway in the decision-making process. Well, it doesn’t, owing to OpenAI’s governance structure. As per the New York Times, OpenAI is controlled by the board of a nonprofit that decides the company’s leadership. Its investors have little to no say in such decisions.

To make up for the lack of control, Microsoft had a different plan in place. Mere days after the news came out, the CEO of Microsoft, Satya Nadella, appointed Altman as the CEO of a new research lab to speed up AI innovation. This decision stands in stark contrast to the OpenAI board’s cautious approach to developing AI technology.

Satya Nadella via X, formerly Twitter

Worryingly for OpenAI, this might signal a loss of confidence, as Microsoft might look to redirect its investments to its own venture.

Employees walk out in solidarity

While the board found Altman to be unfit, employees held a contrary view. According to them, the move “undermined our mission and company.” By Monday morning, over 550 out of 700 OpenAI employees had signed a letter stating they might leave to join Altman’s new project at Microsoft unless the startup’s board stepped down. The staff mentioned, “Microsoft has assured us that there are positions for all OpenAI employees at this new subsidiary if we decide to join.” OpenAI’s now former co-Founder Brockman has also left to join Microsoft’s AI research team.

In a mind-boggling move, OpenAI’s Chief Scientist Ilya Sutskever, who reportedly led the push to remove Altman, also tendered his resignation.

A déjà vu moment?

The Altman fiasco has reminded people of a similar ousting in 1985: Steve Jobs. Jobs was fired after a boardroom disagreement over his ability to lead Apple, a company he had founded. However, the comparison stops there. When Jobs was fired, employees didn’t walk out in solidarity, and his colleagues didn’t protest because Jobs’s leadership style, as per reports, was genuinely questionable. He made unrealistic demands of his coworkers and refused to back down. In his case, one could say that the firing was a humbling experience for Jobs. 

In the case of Altman, however, seeing the overwhelming support he received from employees and coworkers, one is forced to question OpenAI’s board.

What happens next?

Altman appears to have landed on his feet almost instantly, starting his new role as CEO of Microsoft’s advanced AI research team. For OpenAI, however, the future looks tumultuous. In a very “what goes around, comes around” fashion, the company has lost investors’ confidence since this abrupt move, with people questioning its internal functioning. Moreover, employees, too, are threatening to move on and join Altman at his new Microsoft venture.

After his ousting, Jobs said, “Getting fired from Apple was the best thing that could have ever happened to me.” Will Altman share this sentiment a few years from now? More importantly, will the OpenAI board share this sentiment when it looks back on its firing decision?

Update: Just a day after this article was posted, Altman is back at the helm as CEO of OpenAI. The company will be getting a new board. 

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Header Image by Wikimedia Commons and X

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