Moneycontrol Pro Panorama: Takeaways from the OpenAI saga

As companies grow and succeed, the game is all about control and return on capital invested

Dear Reader,

In less than a week, the catastrophic ouster of OpenAI co-founder and CEO Sam Altman has been reversed. The ambassador of Artificial Intelligence (AI) is back at the helm, triumphant with his ideologies intact that clashed with those of the Board, leading to his unceremonious sacking.

What are the lessons learnt from this dramatic saga?

Clearly, Altman is invincible. Back in power, the once-wounded Altman might wield more power and face less resistance to his ideas. Media reports suggest that Altman was clear that his reinstatement would need a change of the board that was responsible for his ouster. Furthermore, he would be viewed as the visionary for not just the company, but the direction of AI as a platform.

A key takeaway is that successful startup enterprises are increasingly being viewed as those with innovative and disruptive ideas. As ideas become successful, investors and financiers sniff an opportunity and make a beeline to pour capital in the hope of raking in out-sized returns. Therefore, investors would do anything to safeguard their interests.

In this context, Microsoft, the $2.8 trillion tech giant and largest investor in OpenAI (subsidiary), has billions of dollars at stake in the company. OpenAI that stormed the world of technology along with co-founder Altman is a rising star, potentially worth billions (one estimate puts it above $80 billion). No wonder then that “with the AI start-up’s future in peril, venture capitalists mounted an extraordinary campaign to reinstate the charismatic CEO”, says this FT column, How Silicon Valley reunited Sam Altman and OpenAI.

Another learning is board members of corporations however large, cannot take founders, investors and executives for granted. MC Pro’s Panorama earlier this week that threw light on Altman’s ouster drew attention to the out-sized influence promoters have over organisations they start.  Company boards, howsoever experienced, cannot enforce dramatic changes. Read this interesting piece in Start-up Street, that draws attention to a phenomenon of entrepreneurs turning celebs!

Indeed, Altman’s fan following cannot be disputed. On news of his ouster, more than two-thirds of the company’s 770-strong workforce, it is reported, put their names on a letter calling on the board to resign and reinstate Altman. “By Tuesday evening, all but 20 people on OpenAI’s payroll had signed,” said the FT article.

Another takeaway is that as companies grow and succeed, the game is all about control and return on capital invested. Dissent between founders, investors and board members of a company, on issues related to pace of growth, diversification and governance are not uncommon. There are many such instances one can recall, including the ouster of Steve Jobs from Apple Inc and his return that later took the company to glorious heights. “As startups grow and their value rises, founders part company, boards exercise their power and individuals become bigger than the institution,” states Sundeep Khanna in this article. Commercialising AI is the final goal of all stakeholders at OpenAI.

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