- On Friday, OpenAI’s board shockingly fired Sam Altman, the man behind ChatGPT.
- Management has given little notice to its shareholders or even large investors like Microsoft.
- Yahoo’s CEO said OpenAI’s “crazy management model” was responsible for Altman’s sudden ouster from the company.
OpenAI’s board dismissed its influential CEO and the man behind superstar chatbot ChatGPT, Sam Altman, on Friday, shocking investors and the entire tech industry.
OpenAI board announced on Friday that Altman was leaving, stating that he “no longer has confidence in his ability to continue to lead OpenAI.”
The management board did not previously notify its investors, including Microsoft, of this decision invested over 10 billion dollars in an artificial intelligence company and according to it holds as much as 49% of its shares some reports.
The board consisted of six people, including OpenAI CEO and co-founder Greg Brockman, OpenAI Chief Scientist Ilya Sutskever, Adam D’Angelo, Tasha McCauley, Helen Toner, and Sam Altman himself.
Altman and Brockman were not previously privy to the decision, raising concerns about why and how a leading tech industry figure was forced out of the company he so effortlessly founded.
John Bates, a British tech entrepreneur and former University of Cambridge fellow, told Business Insider that CEOs often “work at the behest of the board of directors.”
“The hiring and firing of CEOs, whether public, private or otherwise, is the responsibility of the board of directors.”
He emphasized that even CEOs are “at-will employees” in American companies, but OpenAI’s board “behaved like a bunch of kids” and in this case “erratically.”
“I don’t think there’s actually anything wrong with boards firing CEOs,” he said. “It’s a good and necessary thing. We have to have this because we don’t want dictators who can’t be removed if they behave badly. “The system simply failed in this case because the board didn’t communicate what they did, they didn’t think about the shareholders, they didn’t think about the staff.”
Microsoft CEO Satya Nadella said Monday on Kara Swisher’s podcast that the tech giant should have been “consulted” before Altman was ousted over his investment in the company. It was “the least” they could do, he said.
“They have the right to do that, but the board has behaved very strangely because the first thing you need to do is socialize with shareholders,” Bates told BI.
“You have a responsibility. They may not feel the need to do so, but it may just be immature management.”
He added: “This is one of the most important companies in the world. He does amazing things. It has a $13 billion investment from Microsoft and such naive behavior in front of the world, in my opinion, really hurts the credibility of this company. “
Former Yahoo CEO Marissa Mayer agrees with this view and announces on X – formerly on Twitter – that OpenAI’s “crazy management model” allowed Altman to be forced out. Mayer added that board members were “broken and uninformed.”
This is partly due to OpenAI’s unusual structure
OpenAI was founded as a not-for-profit company in 2015 to build artificial intelligence in a responsible way that benefits society. Then he created limited profit company OpenAI LP in 2019 to increase investments while limiting profits. It received huge Microsoft’s $1 billion investment then.
Most members of the OpenAI management board do not hold shares in the company, including: Sam Altman himself who chose to have no involvement, which ultimately limited his power and influence. To get rid of him, a simple majority of the votes of the management board members was enough.
This is a huge contrast to companies like Google and Meta. For example, Mark Zuckerberg is virtually impossible to fire because The meta has a two-class structure. This means that the company has two classes of shares that provide shareholders with different voting rights.
Zuckerberg owns shares that give him more voting rights and decision-making power in the company than any other shareholder, making him almost untouchable, BI previously reported.
Bates said Altman’s decision to give up equity was “odd” but he may have been “inspired by his goal to change the world.”
“It is increasingly important for young people to solve the problem of climate change, to help the world, to help people, all this is more important than money.”