OpenAI's co-founder and CEO, Sam Altman, was abruptly fired by the board on Friday. This sent shockwaves through the Tech world. Insiders claim that the OpenAI investors, including major players like Microsoft and Thrive Capital, are now actively working to bring Altman back to the helm. 

The firing of Sam Altman, coupled with an attempt to demote president and co-founder Greg Brockman, has thrown the company into chaos. High-level researchers resigned in support of Altman and Brockman.  And corporate customers are reportedly exploring alternative options. 

A critical financing round with venture capitalists now hangs in the balance, adding to the uncertainty surrounding the company's future.

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Board's Decision

The board responsible for Altman's dismissal included prominent figures like Helen Toner, Tasha McCauley, Adam D'Angelo, and Ilya Sutskever. The exact reasons behind Altman's firing remain unclear, but tensions had been escalating over the rapid expansion of OpenAI's commercial offerings, perceived by some as a deviation from the company's initial charter to develop safe AI.

Sam Altman is reportedly considering a return to OpenAI but under specific conditions. He has expressed the desire for a new board and governance structure. 

Altman is also said to be exploring the possibility of starting a new company that would bring on former OpenAI employees who left in protest following his ouster.

Altman's unique governance structure for OpenAI, intentionally designed to grant the board the power to fire him, has become a focal point of the current turmoil. 

Unlike traditional tech companies, where CEOs report to a board representing investors, Altman's setup allowed for decisions to be made without input from major shareholders. This structure played a crucial role in the sudden removal of Altman, despite his financial success for the company.

OpenAI Investors

Major stakeholders, including Microsoft and Thrive Capital, are actively involved in negotiations to reinstate Altman as CEO. Microsoft invested $13 billion in OpenAI and is the primary financial backer.  Thrive Capital stands as the second-largest shareholder. Other investors are reportedly supportive of these efforts to bring back Altman.

The governance structure at OpenAI has an unconventional setup that Altman helped create. 

The nonprofit organization, founded in 2015, has a for-profit arm that operates independently and is majority-owned by Microsoft. The intricate corporate structure has led to a lack of control by major investors over the company's decisions, contributing to the board's ability to remove Altman without investor consent.

OpenAI's Unprecedented Growth

During Altman's leadership, OpenAI transformed from a small nonprofit to a multibillion-dollar company at an unprecedented pace. 

The launch of a for-profit arm facilitated significant funding from Microsoft, leading to the rapid expansion of the company's commercial offerings. However, this growth also underscored the tension between the research-focused nonprofit and the commercially successful arm, symbolized by Altman's abrupt departure.

Altman's unique governance structure for OpenAI, intentionally designed to grant the board the power to fire him, was supposed to be a precaution to ensure the safety of how artificial intelligence is developing. 

Unlike traditional tech companies, where CEOs report to a board representing investors, Altman's setup allowed for decisions to be made without input from major shareholders. This structure played a crucial role in the sudden removal of Altman, despite his financial success for the company.

Altman, reportedly enraged by the board's decision, has lamented the lack of control major shareholders have over OpenAI's governance. The swift and unexpected firing raised critical questions about the company's governance, its future trajectory, and safe AI.