The shock sacking of OpenAI co-founder and CEO Sam Altman is the sort of board coup that the tech world last witnessed nearly four decades ago, when the then Apple board ousted Steve Jobs.
Jobs was reinstated years later, and the rest, as they say, is history.
While there is a lot of ambiguity on the actual triggers and it is unclear what evicted co-founders Sam Altman and Greg Brockman will do next, their exit has thrown the spotlight once again on founder rights and board composition, apart from the future of AI and of the startups building on top of OpenAI.
Founder and board alignment
Harshil Mathur, founder and CEO of fintech unicorn Razorpay, said that while there is not enough information yet, the entire episode is a reminder that founders should keep their boards aligned.
Razorpay counts Y Combinator among its early investors. Altman was President of Y Combinator, before he shifted gears and focussed on OpenAI.
Edtech unicorn UpGrad’s CEO Mayank Kumar too said that the board and founders need to have more communication and transparency.
“Also, while crafting board rights, all the edge cases need to be thought through by the founder. Sometimes founders end up using the template in the SHA (shareholders’ agreement), and that may end up going against them,’’ he said.
Arvind Parthiban, founder and CEO of SaaS startup SuperOps.ai, said Altman's ouster raises many questions and concerns.
“There is a lack of clarity in the reasons for the ouster. The statement shared alludes to communication issues between the board and the CEO, and that makes me question if there is something we should all be worrying about, and what is being left unsaid,” he explained.
Former Twitter India head and cofounder of AI startup Fanory.ai, Manish Maheshwari said Altman’s firing has sparked intense debate about transparency in leadership changes. “Why was such a key figure removed with reasons like 'not consistently candid in communications’,’’ he said in a post on X.
Unacademy founder Gaurav Munjal tweeted: “We love Sam.”
BharatPe’s controversial founder Ashneer Grover, who is in a running feud with his former board and investors for over a year now, compared Altman’s plight to his, apart from other ousted founders such as WeWork’s Adam Neumann and Uber’s Travis Kalanick.
Mohan Kumar of Avataar Ventures added, "It looks like a conflict between being 'open' and beneficial to all, versus Sam's capitalist approach, trying to get regulators to govern AI."
Founders beware
Thiyagarajan Maruthavanan, CEO of Upekkha, an accelerator that mentors and trains SaaS companies, said founders will be more careful when deciding who sits on their board.
"Founders will be more careful in constructing their boards. About who they add and what experience they bring in,” he said.
The board of Open AI comprised Altman, chairman and president Greg Brockman, and chief scientist Ilya Sutskever.
It also included three non-employees: Adam D’Angelo, co-founder and CEO of Quora; Tasha McCauley, an American robotics engineer and scientist, who is also the former chief of Israeli startup GeoSim Systems; and Helen Toner, director of strategy and foundational research grants at Georgetown’s Center for Security and Emerging Technology (CSET).
“The interesting part is that unlike Uber-Travis, one can't take the lazy 'blame the VCs’ route,” quipped an Indian venture capitalist.
OpenAI started off as a non-profit organisation, but later created a hybrid "capped-profit" company, that allowed it to raise funds externally, with a promise that the original non-profit operation will still benefit. It has so far raised $10 billion from Microsoft at a valuation of almost $30 billion, as it invests in building computing capacity.
However, OpenAI is structured in such a way that the non-profit owns and controls a subsidiary that attracted Microsoft's mega funding, which is the reason the tech titan doesn't have a say in the AI unicorn's boardroom machinations. According to its charter, its principal beneficiary is “humanity”, not investors.
As it happens, Altman didn’t have any equity in OpenAI nor voting rights, which meant the board could fire him without notice.
On the other hand, Meta founder Mark Zuckerberg controls over 60 percent of the vote despite owning under 15 percent stake, due to the firm’s differential voting structure. Indian founders such as Bhavish Aggarwal of Ola took steps to strengthen their rights a few years ago, vis-a-vis their investors.
Whither, progress
Mathur further said that Altman’s exit would definitely slow down the progress of AI.
“The drive, energy, and speed at which Sam operates is infectious and impossible to replace. This is the Jobs firing of this generation,” he added.
With Sam Altman being fired from the top job at OpenAI, a lot is also at stake for many startups around the world who have been building products on top of the ChatGPT maker’s large language models.
Altman was fired from the company on November 17, after the board said it had lost confidence in his ability to lead the firm effectively. A blog on OpenAI’s website said that a review conducted found he was not consistently candid in his communications with the board. Mira Murati, the company’s chief technology officer, will serve as interim CEO.
Blindsided about what’s next
The abrupt ouster of one of the world’s most powerful tech founders has triggered concerns among founders building on top of OpenAI models.
“In times of change like this there will be a leadership vacuum. Many were building on top of or along with OpenAI. They would be having doubts about that now,” Maruthavanan added.
He believes that leaders like Satya Nadella, executive chairman and CEO of Microsoft, one of OpenAI’s biggest backers, and Murati will have to step up and allay the fears of those building on top of OpenAI models.
“Else folk may start shifting to other platforms,” Maruthavanan added.
Vishal Virani, co-founder and CEO of programming platform DhiWise, said the future of OpenAI largely depends on the strategic direction the new leadership decides to take.
“For now, it seems prudent to adopt a wait-and-watch approach, focusing on what we can control and adapt to rather than speculating about OpenAI's next moves. In essence, we find ourselves in an era of unpredictability, where adaptability and resilience are key,” added Virani.
San Francisco-based startup KissanAI, a multilingual AI chatbot for farmers, uses OpenAI for some parts of its architecture.
“We have been using Azure, so we will be fine if there’s any interruption. We are also building our own agriculture models in parallel, which is a necessity now, in case something like this happens again," said KissanAI founder Pratik Desai.
Slower tech development at OpenAI
Many believe that Altman’s exit is momentous and will impact the pace of development in AI.
"I'm not aware of what is going to change at OpenAI, but if the reason for Sam’s firing was accelerated development, and they are going to focus more on research, it is possible that things will slow down," added Desai.
“Unfortunately, from an industry perspective, it will kill the great vision and delay the progress of AGI (artificial general intelligence) by many years. The future of AGI is impacted by this decision, and it’s all about how mature the decision makers are in their vision of Open AI,” said Kava, co-founder of AI SaaS firm VideoSDK.
Abhimanyu Saxena, co-founder of the edtech Scaler, also believes this event will have quite an impact on the timeline of technology, and feels that Altman will come with some interesting developments soon.
“He knows what he is doing, and the board getting misaligned is not uncommon with such emerging technologies. I'm sure there will be interesting outcomes in the immediate future,” he said.
(With inputs from Chandra R Srikanth, Bhavya Dilipkumar, Mansi Verma, and Deepsekhar Choudhary)
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