Navigating Board Turbulence: Lessons From OpenAI
The rollercoaster of events at OpenAI serve as a reminder of the power dynamics and challenges that even the most innovative and groundbreaking companies face.
January 08, 2024 at 09:32 AM
18 minute read
Corporate Governance
OpenAI, the high-flying developer of the groundbreaking ChatGPT AI chatbot and its associated foundational large language models, recently made headlines that set the corporate governance world abuzz. On a quiet Friday in Silicon Valley, one week before Thanksgiving 2023, and just before the one-year launch anniversary of ChatGPT, the company publicly announced the firing of Sam Altman, its prominent co-founder, CEO, and board member.
Chaos ensued after Altman's unexpected removal. Over 90% of OpenAI's employees, including Mira Murati, the first interim CEO appointed by the board of directors, openly rebelled, demanding Altman's reinstatement and the resignation of the board. They threatened to leave en masse to Microsoft, OpenAI's largest investor, to work on a competitive AI venture led by Altman and Greg Brockman, OpenAI's board chairman who had resigned in solidarity with Altman following his termination. Even Ilya Sutskever, OpenAI's esteemed chief scientist and a board member who reportedly played a role in Altman's termination, signed the employees' open letter to the board, threatening to resign.
Altman's firing also derailed a planned private tender offer, led by Josh Kushner's venture fund Thrive Capital, which would have valued OpenAI at $86 billion and provided significant liquidity for employees' otherwise untradeable private company shares. Within days, Altman was reinstated as CEO, the tender offer was back on track, and a new OpenAI board had taken the baton from those who had orchestrated Altman's removal.
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