Editor’s note: I wrote this only hours before Sam Altman was reinstated as CEO of OpenAI. That news was not yet public at the time of writing.
The captain of the Titanic setting sail with only 20 lifeboats, Ronald Wayne selling his 10% ownership in Apple in 1976, and the Seattle Seahawks passing the ball on 2nd & Goal at the end of Super Bowl 49.
These are all examples of decisions that made more sense than firing Sam Altman from OpenAI.
In one of the few business stories this year that I can unironically say "shocked the world," Sam Altman was fired from his post as OpenAI's CEO last Friday after the company's board of directors accused him of being "not consistently candid in his communications" with the board.
I hesitate to say anything too bombastic before the full details of what happened get revealed. But this might go down as one of the most egregious failures of corporate governance in US history.
A board of directors has three main goals. First and foremost, it needs to protect and grow the shareholder value of the company. Considering the company's valuation ballooned to as high as $90 billion under Altman's leadership, I think the shareholder value was doing just fine.
Second, in a mission-driven company like OpenAI, I think a board needs to defend that mission and ensure the company strategy aligns accordingly. Many reports have pegged this as the central tension behind Altman's firing since his newfound thirst for commercialization was reportedly interfering with the company's commitment to education and advocacy in responsible AI development. Let's not forget: OpenAI was founded as a nonprofit think tank, which by any metric is a far cry from a corporation with a $90 billion valuation. But I've worked for an extremely mission-driven company, and in my experience, nobody is more committed to that mission than the trench-level employees. They're the ones who actively chose to come and fight for that cause. The fact that 95% of OpenAI employees have signed a pledge to quit if Altman isn't reinstated as CEO makes me question whether Altman's alignment to the mission was really the issue here.
And lastly, and most importantly in this case, the board needs to support the CEO. That doesn't mean blindly defending him or her like an overly territorial parent; it means using the collective expertise and experience at that board table to help the CEO do his or her job as effectively as possible. I can absolutely believe Altman wasn't a perfect CEO because nobody is. But regardless of what he did wrong, it was overwhelmingly clear he was doing a remarkable amount of things right. And when that's the case, the board is supposed to help overcome the remaining challenges by giving the CEO guidance and guardrails, not by giving them the boot.
Once again, maybe an investigation will prove the board's punishment fit the crime, but with nothing but vague generalities and unconvincing rumors to go off for now, all signs seem to point to a corporate governance implosion.
The saddest piece of all this to me is that the OpenAI employees, who pulled off arguably the most successful consumer product launch in tech history with ChatGPT, will likely no longer get to cash-in on this rumored $80-90 billion valuation. It seems unlikely any future fundraising would value the company nearly as high with the company's leadership team and rank-and-file staff on the verge of decimation. You can have all the intellectual property and proprietary models and neural networks that you want, but if you don't have any people, you don't have a company. The decision by the board to pull this stunt in the middle of a fundraising round that was designed to let regular employees cash-in on their equity is horrible.
But let's look at something to marvel at here; in a year where we spent far too long listening to Mark Zuckerberg and Elon Musk bicker about who could kick the other's face in, it's Satya Nadella that is now sitting atop the Big Tech jiu-jitsu power rankings. Microsoft swooping in and hiring Sam Altman, Greg Brockman, and potentially hundreds of additional OpenAI employees to start a new advanced AI research team at Microsoft is an undeniably baller move. The clay is still really wet on this, but it seems like when all is said and done, Microsoft will either a) have acquired the brains behind the decade's most promising startup virtually for free or b) see a brand new (and hopefully more rational) board of directors leading their most promising investment. They can't lose.
I'm sure the OpenAI board has very legitimate concerns about the whirlwind speed of AI innovation right now, but the cat is out of the bag on AI, and as long as that's true, the absolute best thing you can be as a company is a truly ethically responsible category leader. I don't care how fast Altman was moving. The OpenAI board's decision to hit the self-destruct button and consequently abandon its category leader post is only going to harm the mission they claim to be protecting.
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