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In today’s newsletter: 

• How Satya Nadella outsmarted the OpenAI board
• Zomato leads ESOP cost-cutting race
• Byju's' broken promises continue

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Microsoft, it seems, has managed to have the cake and eat it too!

Microsoft CEO Satya Nadella is considered a legend for his execution prowess, and today, we witnessed why.

In a surprising turn of events, Nadella hired ousted OpenAI CEO Sam Altman to lead an advanced AI research team at the software giant. Also joining the company is OpenAI co-founder Greg Brockman, along with a slew of executives and researchers who are resigning from OpenAI.

• This move follows unsuccessful negotiations with the OpenAI board regarding the potential reinstatement of Altman to the helm. His abrupt removal sent shockwaves across the tech industry

Microsoft, the largest shareholder in OpenAI, was taken by surprise with this news, and Nadella was reportedly furious about Altman's firing.

Nadella's decision to hire away key OpenAI personnel is being seen as a business triumph. He transformed a challenging situation into a significant advantage for Microsoft just before the US stock market opened on Monday, thereby escaping a potential blood bath. 

"We’ve learned a lot over the years about how to give founders and innovators space to build independent identities and cultures within Microsoft, including GitHub, Mojang Studios, and LinkedIn, and I’m looking forward to having you do the same," Nadella said while welcoming Altman.

Microsoft also remains committed to its partnership with OpenAI, he said.

Also Read: Microsoft ends weekend of OpenAI drama with coup of its own

OpenAI's four-person board, led by co-founder and chief scientist Ilya Sutskever, had agreed to negotiate Altman's reinstatement at the company over the weekend. However, they subsequently declined to resign, a condition for Altman's return. 

Instead, the board appointed former Twitch CEO Emmett Shear as the new OpenAI CEO.

"I took this job because I believe that OpenAI is one of the most important companies currently in existence. When the board shared the situation and asked me to take the role, I did not make the decision lightly. Ultimately I felt that I had a duty to help if I could," Shear said on X.

Shear has set a three-point plan for the next 30 days:

• Hire an independent investigator to dig into the entire process leading up to this point and generate a full report

• Speak to employees, partners, investors, and customers, take notes, and share the key takeaways

• Reform the management and leadership team in light of recent departures into an effective force to drive results for customers

Also read: Who is Emmett Shear, the new interim CEO of OpenAI

In the aftermath of this development, several OpenAI employees, including CTO Mira Murati (who was named interim CEO) and COO Brad Lightcap, expressed support for Altman with posts on social media that read, "OpenAI is nothing without its people."

• This could be indicative of a broader discontent within the AI research lab, hinting at a possible mass exodus.

Dig deeper

P.S. As Elon Musk quipped, OpenAI co-founders Sam Altman and Greg Brockman will now have to use Microsoft Teams (Ouch!). Scroll down for a humorous perspective on the tumultuous weekend.

Zomato was the first Indian unicorn to go public, and since then, several others have followed suit over the last couple of years. 

• Now, the company is once again leading the way, this time by reducing employee stock option (ESOP) expenses

As new-age companies strive for profitability amidst a challenging market for tech stocks, Zomato has slashed its ESOP costs by 44% to Rs 156 crore in the first half of FY24. 

• Policybazaar followed suit, reducing its ESOP expenses by 41% to Rs 202 crore. 

• Nykaa and Delhivery also implemented cost-cutting measures, lowering their ESOP costs by 17% each 

Paytm stands as an exception to this trend, with its ESOP costs rising by 4% to Rs 761 crore during the period.

We previously reported that ESOPs granted to Zomato co-founder and CEO Deepinder Goyal had cost the company a staggering Rs 143 crore in the second half of FY23.

Venture capital backers of such new-age companies say that these kinds of ESOP grants to founders are necessary to maintain their interest in running the ship. 

• This is because their shareholdings are diluted to a large extent due to successive rounds of fundraises

Find out more

Former Byju's employees, eagerly awaiting their settlements, experienced a similar sense of disappointment this weekend as millions of Indian cricket fans.

• Despite months of anticipation, the employees were once again met with broken promises

Edtech firm Byju's, grappling with financial woes, has yet again delayed the full and final settlements of laid-off employees.

Of the 48 former Byju's employees we spoke with, 40 confirmed that the company has not yet fulfilled its commitment to disburse their full and final settlements

• At least 10 employees, who are still awaiting their dues, were laid off between June and July

The layoffs happened in multiple phases as Byju's struggled with a liquidity crisis amidst pending lender repayments and a delayed fundraise. 

• Byju's had previously postponed the payment date from September to November 17

Additionally, many of these employees have been unable to secure new employment following their termination due to the difficult job market.

Go deeper

• Artificial general intelligence is one of the most disputed concepts in tech. Researchers at Google DeepMind want to fix that.

• India’s IT ministry is set to meet social media platforms, including Meta and Google, in the next few days, and 'brainstorm' on how to mitigate the persistent issue of AI-generated deepfakes on such platforms.

• Meta has split up its Responsible AI team as the social networking giant directs more of its resources into its generative AI work.

Here's a meme that captures the mood of one of the wildest weeks in tech we have seen in a long time. 

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