Why did OpenAI fire Sam Altman, and why did Microsoft hire him?

Healthy companies are led by competent, commercially successful, and globally beloved founders, and they generally do not tend to fire them. When Sam Altman took the stage in San Francisco on November 6, all of this defined his role at OpenAI.

In the report detailed by Donanımhaber, the co-founder and chief executive officer had sparked a global race for artificial intelligence supremacy, helped OpenAI surpass its much larger rivals, and at this point was regularly compared to Bill Gates and Steve Jobs.

Yet, just 11 days after OpenAI's developer conference, Altman would be fired from his own company.

Executives and investors loyal to Altman would quickly launch a strong initiative to bring the prominent figure back, and ultimately, the board of directors would ignore these efforts and hire former Twitch CEO Emmett Shear to replace Altman. Sam Altman, on the other hand, would take the helm of the new artificial intelligence team established by Microsoft.

ALTMAN: THE PERSON WHO MADE THE COMPANY WHAT IT IS

At the company's first developer conference on November 6, the applause for Altman seemed universal. 2 million customers, including more than 92 percent of Fortune 500 companies, were elevating OpenAI and Altman.

The biggest reason for this was Microsoft, which invested 13 billion dollars in the company and caused Altman to leave competitors like Google and Amazon behind in certain categories of cloud computing, revitalized the Bing search engine, and positioned the company as a leader in the newest software category.

At the event on November 6, Altman invited Microsoft CEO Satya Nadella to the stage and asked what he thought about the partnership. Nadella, smiling, answered this question simply: "We love you guys." Nadella had also thanked Altman for ‘building something magical’.

However, even though customers and investors were happy, there was a faction that approached Altman and the idea of a commercial artificial intelligence company with deep skepticism: Altman's own board of directors. Although the board included Altman and a close ally, OpenAI President Greg Brockman, the board was ultimately controlled by scientists and their interests, who worried that the company's expansion was getting out of control, and perhaps even dangerous.

What is certain is this; the majority of the OpenAI board of directors is deeply concerned about the risks of artificial intelligence. However, not everyone takes this scenario seriously. Other artificial intelligence leaders, including Altman, argue that such concerns can be managed and that the potential benefits of making artificial intelligence widely available outweigh the risks.

THE SKEPTICS WON

On Friday, November 17, the skeptics prevailed, and the board of directors approved the decision to suddenly dismiss one of the most famous living founders. Since the announcement of the decision, OpenAI has made almost no effort for a smooth transition. Even the decision text implied that Altman was not honest: "he was not consistently candid in his communications"

OpenAI Chief Operating Officer Brad Lightcap later said in a note sent to employees that he did not accuse Altman of malfeasance, attributing his dismissal to a "breakdown in communication" rather than a debate over safety. According to a person familiar with Nadella's thinking, the board acted without consulting Microsoft, and the hasty termination of a key business partner had "infuriated" Nadella.

Following his firing, it is known that Altman planned to found a rival company, while investors tried to bring him back to the company. So much so that OpenAI employees launched a massive campaign on Saturday to express their support for Altman. Some investors were even considering writing down the value of their holdings in OpenAI to zero. All of this was being done to push the OpenAI board of directors to resign and reverse their mistake.

A source familiar with Nadella's thinking said the Microsoft CEO advocated for Altman's potential return and would also be interested in backing Altman's new venture. The source predicted that if the board did not reconsider, a large portion of OpenAI engineers would resign in the coming days…

DID OPENAI STRAY FROM ITS GOALS?

When OpenAI was founded by a team that included Altman and Elon Musk, its primary goal, as stated in an announcement made in 2015, was "to advance digital intelligence in the way that is most likely to benefit humanity as a whole".

The organization would not pursue financial gain for its own sake, but would instead act as a check on for-profit efforts and ensure the safe distribution of artificial intelligence. Musk had provided most of the startup's initial funding and had helped recruit Ilya Sutskever as the company's chief scientist early on.

Musk's move was actually a coup. In a podcast broadcast earlier this month, Musk said he decided to fund OpenAI and personally recruited Sutskever from Google because he was concerned that Google was developing artificial intelligence without regard for safety. Sutskever is seen as a legend in his field for his research on neural networks.

Meanwhile, Musk added that hiring Sutskever ended his friendship with Google co-founder Larry Page. However, Musk himself later distanced himself from Altman, leaving OpenAI in 2018 and cutting off his funding support.

As a result, Altman needed money because venture capital firms and big tech companies were interested in backing ambitious artificial intelligence efforts. To tap into this pool of capital, he established a new subsidiary that the non-profit organization described as a "capped-profit" company. Altman had also announced that despite his position as founder and CEO, he held no equity in the company. Earlier this year, he sold 49 percent of OpenAI to Microsoft and gave Microsoft no seats on the board of directors. The ultimate power in the company lay with the board of directors consisting of Altman, Sutskever, and Brockman.

In February, Musk complained on X that OpenAI was no longer "a counterweight to Google, but had become a closed-source, maximum-profit company effectively controlled by Microsoft."

Altman was also pursuing side projects that had the potential to enrich himself and his investors, but remained outside the control of OpenAI's safety-conscious board of directors. It was stated that Altman pitched these ideas to sovereign wealth funds in the Middle East while planning to establish his own artificial intelligence chipmaker. These funds are tens of billions of dollars in size. Altman reportedly pitched custom artificial intelligence Tensor Processing Unit (TPU) chips to rival Nvidia to investors recently. The TPU project was codenamed "Tigris" and was attracting interest from a number of prominent venture firms and even Microsoft. Microsoft had recently announced its Azure Maia 100 and Cobalt 100 processors.

He also pitched a potential multi-billion dollar investment to SoftBank Group, led by Japanese billionaire and tech investor Masayoshi Son, for a company he planned to found with former Apple design guru Jony Ive to produce artificial intelligence-focused hardware.

These efforts and the growing success of the non-profit company pitted Altman against Sutskever, who began to voice safety concerns more loudly. In July, Sutskever formed a new team within the company focused on reining in future "superintelligent" artificial intelligence systems.

The tension with Altman escalated further in October when Altman moved to reduce Sutskever's role in the company, which angered Sutskever and led to friction with the company's board of directors.

NOVEMBER 6 TURNING POINT

According to sources, at the event on November 6, Altman made a series of announcements that angered Sutskever and those sympathetic to his point of view. These included customized versions of ChatGPT, which would allow anyone to build their own ChatGPT model and monetize them.

In the following days, Sutskever took his concerns to the board of directors. According to an account posted on X by Brockman, Sutskever texted Altman on the evening of November 16, inviting him to join a video call with the board the next day. Brockman was not invited. Around noon the next day, Altman joined the meeting and was told he was fired. Minutes later, the announcement was made, and chaos followed.

As a result of all this series of chaos, perhaps the only winner was Microsoft. Microsoft CEO Satya Nadella announced in a statement a few hours ago that he had hired former OpenAI CEO Sam Altman and co-founder Greg Brockman.

Nadella announced that both Sam Altman and Greg Brockman would join Microsoft's new advanced artificial intelligence research team. In a post shared on X, Nadella said, "We’re extremely excited to share the news that Sam Altman and Greg Brockman, together with colleagues, will be joining Microsoft to lead a new advanced AI research team."

However, an atmosphere of uncertainty still prevails. It seems that Sam Altman and Greg Brockman will take some employees from OpenAI with them as they move to Microsoft. It is known that Microsoft is OpenAI's main source of funding. ChatGPT and all other services run on Microsoft's servers. The process from now on will be quite interesting, but let us also mention that Nadella used the expressions, "We remain committed to our partnership with OpenAI."