Industry Reels From Sam Altman Firing; OpenAI Return Rumored

Tech Investors, Execs Stunned By Altman's OpenAI Exodus, Which May Be Short-Lived
Industry Reels From Sam Altman Firing; OpenAI Return Rumored
Sam Altman, co-founder and ex-CEO, OpenAI

Technology investors and executives are reeling from OpenAI's shocking firing of co-founder and CEO Sam Altman, though there's a chance the separation may be short-lived.

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"Whatever offense Altman committed, it would have to be tremendous for the board to make this move, especially for a CEO who has consistently delivered products that led the industry," Rain Capital founder and General Partner Chenxi Wang told Information Security Media Group.

OpenAI axed Altman on Friday for being "not consistently candid in his communications with the board," leading to the board losing confidence in his ability to continue leading the nonprofit behind ChatGPT. The CEO change blindsided employees of the AI juggernaut as well as top investor Microsoft and led to co-founder and President Greg Brockman - an Altman ally - quitting after being deposed as board chair (see: OpenAI Fires CEO Sam Altman for Lying to Board of Directors).

"Whenever you have a mass exodus of leadership, it does not portend good things," AllegisCyber Capital founder and Managing Director Bob Ackerman told ISMG. "This becomes a giant distraction internally. It creates a discontinuity, and that discontinuity is to the advantage of their competitors because the internal team will take their eye off the ball while they're waiting for what's next."

A Potential Change of Heart at OpenAI?

But one of the most stunning firings in tech history might not actually stick. The Verge reported late Saturday that OpenAI's board is in discussions with Altman to return as CEO, while Forbes said venture capital investors have discussed working with Microsoft and senior employees to bring back Altman. The Verge said Altman is "ambivalent" about coming back and would want significant governance changes.

"This becomes a giant distraction internally."
– Bob Ackerman, managing director, AllegisCyber Capital

Altman is considering returning but told investors that he wants a new board, The Wall Street Journal reported, saying Microsoft and Thrive Capital are orchestrating the efforts to reinstate Altman. Altman might decide that competing against OpenAI is more palatable than coming back, and The Information reported that Altman is talking to investors about a new AI venture he plans to launch with Brockman.

"What they were able to achieve with ChatGPT has burnished their reputations, and that plays into the hype in the space," Ackerman said. "Whatever they decide to do next, I'm sure it will be AI-focused, and I'm sure there'll be a lot of capital coming at it … I'm sure it will gather a tremendous amount of attention and probably put the board of OpenAI under further scrutiny."

Neither OpenAI, Microsoft nor Thrive Capital responded to ISMG requests for comment. Microsoft's stock is down $6.48 - or 1.8% - to $366.42 per share since OpenAI announced Altman's departure just before 3:30 p.m. ET Friday. OpenAI board member and Chief Scientist Ilya Sutskever told Altman about his firing at 3:00 p.m. ET Friday and told Boardman about being axed from the board minutes before the announcement.

Were Concerns Over Security Testing Behind Altman's Firing?

Wang said discussions she's heard over the past day indicate Altman overruled concerns at OpenAI over security or privacy testing in favor of prioritizing go-to-market initiatives. Internal friction elevated concerns to the board. OpenAI has tried to assuage those fears, and account managers have told clients, "This change in leadership was not related to our business, security or privacy practices."

"Clearly, they heard the rumor and are seeking to dispel it," Wang said.

Three OpenAI leaders quit following Altman and Brockman's departures and several more are expected to exit in the coming days, with many potentially joining OpenAI's co-founders at a new venture, The Information reported Saturday. The mass exodus at OpenAI indicates a broad divide between the company's senior leadership and its board, which Ackerman said will benefit OpenAI's competitors.

"It's not good news for OpenAI," Ackerman said. "Without their senior leadership team in place, it can only slow things down."

Ardent Privacy founder and CEO Sameer Ahirrao said Altman's firing will serve as an important lesson for other tech CEOs to take responsible and ethical AI seriously. This effort needs to go beyond words and include company resources and investments as well as government regulation, he said. But ultimately, Altman's firing shouldn't derail all the progress generative AI has made in recent years, Ahirrao said.

"Earlier, many founding team members left OpenAI, so I don't think it will stop AI development negatively," Ahirrao told ISMG. "In fact, I think it will create more competition and opportunities for other players to excel, both open-source and startups. The AI train has left the station."

About the Author

Michael Novinson

Michael Novinson

Managing Editor, Business, ISMG

Novinson is responsible for covering the vendor and technology landscape. Prior to joining ISMG, he spent four and a half years covering all the major cybersecurity vendors at CRN, with a focus on their programs and offerings for IT service providers. He was recognized for his breaking news coverage of the August 2019 coordinated ransomware attack against local governments in Texas as well as for his continued reporting around the SolarWinds hack in late 2020 and early 2021.

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