In today's Finshots, we talk about Sam Altman's exit and the many theories surrounding his departure.

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The Story

Before we explain the many theories on why the founder of OpenAI, Sam Altman was fired a few days back, we want to give you some context. OpenAI is an artificial intelligence research laboratory responsible for building and developing advanced language models. Led by Sam Altman, they have been responsible for building products like ChatGPT — an AI assistant that can write your poems, spell check your social media posts, and explain complicated science topics in simple words. You’ve probably heard of them by now already. So we won’t bore you with needless details.

Anyway, 3 days ago, OpenAI’s board of directors (chief scientist and co-founder Ilya Sutskever, Quora CEO Adam D’Angelo, technology entrepreneur Tasha McCauley, and Helen Toner an expert in AI policy and global AI strategy research) decided to fire its founder and CEO Sam Altman in the most spectacular fashion, surprising industry observers and outsiders alike. It was a bolt out of the blue and it may have changed the AI landscape overnight. Since then there have been many theories forwarded to explain the bizarre move and we will look at some of these ideas and see if they hold any merit.

Theory: This is a coup — an attempt by the board to secure control of a trillion-dollar economic enterprise.

There’s no denying it. This was a calculated move. And the OpenAI board kept pretty much everyone in the dark until the day of the firing. Microsoft, OpenAI’s most influential shareholder and a company that has committed over $13 billion to OpenAI was not informed of the decision until just before the public announcement. Greg Brockman, the company’s co-founder and former president, who was also fired from the board, was intimated about the move just before it happened. Employees and key management personnel were made aware of the decision after the firing. So in many ways, this was orchestrated by a select few without broad consensus from key stakeholders and employees.

This has led many people to believe that this a classic coup — an attempt by the chief scientist and co-founder Ilya Sutskever to wrest control from Sam Altman. They argue that he convinced the three independent directors to get rid of Sam in a bid to become the most influential voice at OpenAI. This gives him control of what could potentially be the most important economic enterprise of the 21st century.

Finshots’ take: While it is true that the board was tight-lipped about its decision, this theory leaves out one key detail. OpenAI started off as a charity. A not-for-profit company. As it scaled, however, it transitioned to a capped-profit company. Meaning, investors and employees will only be able to participate in profits up to a defined limit. Also, the 3 independent directors at OpenAI hold no equity and it’s unclear if Ilya Sutskever holds a sizeable stake in the company. So even though it may have been a coup, it’s unlikely that this was motivated by financial gain. It could have been motivated by influence or ego, but it’s unlikely that it’s money. Here is the organizational structure of OpenAI.

Source: OpenAI’s website

In simple words, this flowchart says

> OpenAI is overseen by a Board of Directors.
> OpenAI operates as a non-profit and also has a profit-limited arm.
> Employees and other investors, through a holding company, have ownership stakes.
> Microsoft is a minority stakeholder in the profit-limited part of OpenAI.

Theory: Sam Altman was fired because of a massive privacy scare that threatened to put the whole company at risk

On November 10, 2023, a security expert discussed a serious security flaw inside OpenAI’s most popular product, ChatGPT. A few days later, Sam Altman said the company was pausing new signups for ChatGPT Plus due to overwhelming demand. And then, 3 days later he was fired rather unceremoniously by the board.

At first glance, all three events seem disparate. However, on closer examination, you begin to see a connection. A serious security exposé could put the company’s entire reputation at risk. These security flaws usually crop up when entrepreneurs throw all caution to the wind — something Sam Altman has been accused of multiple times. So perhaps pausing new signups was a tacit admission that he had gone too far with ChatGPT. Perhaps there was a massive security risk precipitating on the horizon. This could explain why the board decided to fire Sam Altman without going into the details.

Finshots’ Take: It’s unlikely there’s any merit in this allegation since an internal memo from OpenAI seems to indicate that “the board’s decision was not made in response to malfeasance or anything related” to their financial, business, safety, or security/privacy practices. The memo also reiterated the fact that Sam was fired due to a breakdown in communication between him and the board. Nothing more. Nothing less.

Theory: OpenAI has achieved AGI (or Artificial General Intelligence) and the board ousted Sam to protect humanity from a Terminator-like future. A future where AI-powered robots destroy the world

In a recent tech summit that brings global CEOs, entrepreneurs and other thought leaders with the most senior political leaders, from the Asia Pacific, Sam Altman spoke at length about how AI could unlock significant economic opportunity. And he said something interesting during the course of the discussion that caught the attention of several people. In this video, at about 13:26, you can hear him say “On a personal note, like four times now in the history of OpenAI, the most recent time was just in the last couple of weeks, I’ve gotten to be in the room when we pushed the veil of ignorance back”

In simple words he’s saying, we’ve had 4 massive breakthroughs at OpenAI. And the most recent one was just a couple of weeks back. So the theory goes that OpenAI is now at the cusp of achieving AGI — an AI system that is generally smarter than humans. This discovery has prompted board members to quickly reconfigure the team to steer this powerful new beast (AGI) in a direction that benefits humanity (as opposed to destroying it). And the board felt Sam Altman and his reckless pursuits could be detrimental to humans if he were driving the company at this pivotal moment. So they fired him and got someone else on board who is more measured in their approach.

This also explains why OpenAI has gone ahead and replaced Sam with a new CEO Emmett Shear — the founder and former CEO of Twitch (a live video streaming platform). While he is a technologist much like Sam, he differs in his approach towards AI as illustrated in a tweet he put out a few months back. Responding to another tweet about pausing AI research, he said “I’m in favour of a slowdown. We can’t learn how to build a safe AI without experimenting, and we can’t experiment without progress, but we probably shouldn’t be barreling ahead at max speed either.” This stands in stark contrast to Sam’s approach, who’s taken OpenAI from an obscure upstart to a household name in just a few years.

Finshots’ Take: There is likely some truth here. It’s possible that Ilya (the chief scientist and a board member who is believed to have played a key role in ousting Sam) thinks we need to build a safe AGI as opposed to simply achieving AGI. And the board’s vague statement could hint at a possible difference in vision i.e. how to take OpenAI forward. However, we don’t think OpenAI is close to achieving AGI anytime soon and the idea that they have already achieved AGI is likely baseless.

Theory: This was Microsoft’s play. They are running everything from the shadows. And this was a bid to take control of OpenAI

After Sam’s firing, Microsoft’s Satya Nadella put out a statement seemingly in support of OpenAI's decision. He said that they had a long-term partnership with OpenAI and they were committed to it fully. The next day he tweeted about the cricket World Cup, much to the dismay of everyone following this topsy-turvy saga. But then yesterday, he put out a tweet reaffirming their commitment to the new leadership team at OpenAI with one small addition— “[Also] 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. We look forward to moving quickly to provide them with the resources needed for their success.”

In other words, Microsoft will now hire Sam Altman and Greg Brockman (the two founders of OpenAI) and a good chunk of his team at OpenAI so that they can now build AI solutions with infinite resources at the company’s disposal.

This has prompted some to speculate that this was all Microsoft’s doing. That they had planned it all along.

Finshots’ take: While it is true that Sam Altman, Greg Brockman and other key figures at OpenAI may be moving to Microsoft, it is unlikely that Satya Nadella had planned all this out. As we already pointed out, they were blissfully unaware of Sam’s exit until it happened. And they were likely figuring out the best course of action to protect their $13 billion investment in OpenAI. Getting Sam onboard while also reaffirming their partnership with OpenAI achieves both objectives. They can now focus on commercializing AI with some of the best talents on the planet, while also amicably dealing with the fallout at OpenAI. It truly is a Satya Nadella masterstroke, but it’s unlikely this was preplanned.

Since then, several OpenAI employees have vowed to exit the firm and follow Sam Altman, leaving the company in tatters. But just when you thought everything was over, Ilya Sutskever tweeted this - “I deeply regret my participation in the board's actions. I never intended to harm OpenAI. I love everything we've built together and I will do everything I can to reunite the company.” In other words, he's saying, “Look, I am sorry everyone is leaving. This was a mistake on my part. Please come back.”  Ilya is the guy who is believed to have triggered all of this by the way. And that's not all. Sam Altman even quoted that tweet and replied with "❤️❤️❤️". Has he forgiven Ilya? Will he return to OpenAI and ditch the Microsoft partnership.

We don't know.

However, soon enough, Kara Swisher, an American journalist posted a letter allegedly signed by 505 of 700 OpenAI employees asking the board to resign. Here's the full letter if you want to read it. If you don't have the patience to read everything, look at the last signatory on the letter.

IT'S ILYA!!!!!!!

He is asking for his own resignation.

Bonkers!!!!

In any case, this is still a developing story. But hopefully, this summary gives you an idea of what’s happening at one of the most important companies in the world.

Also, if you have a favourite theory, don’t forget to share this story with your friends and tell them about it. Here are the links for WhatsApp, LinkedIn and X (formerly Twitter).

Until then…

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