Tech Brew Ride Home - Mon. 11/20 – Where We Are With The Sam Altman Drama

Episode Date: November 20, 2023

There’s really only one story today, the whole, Sam Altman got fired by OpenAI’s board but then they tried to get him back, but then Microsoft hired him, and now OpenAI employees are threatening to quit en masse, story. But also, the CEO of Cruise has stepped down. And Linda Yaccarino’s friends are suggesting she should step down as CEO of X. Sponsors: DraftKings code Techmeme DrinkTrade.com/ride Links: Inside the Chaos at OpenAI (The Atlantic) Cruise co-founder and CEO Kyle Vogt resigns (TechCrunch) GM boss Mary Barra’s high-tech bet unraveling after Kyle Vogt departs as CEO of embattled Cruise robotaxi unit (Fortune) Yaccarino On Hot Seat As Ad Execs Urge Twitter CEO To Resign (Forbes) Learn more about your ad choices. Visit megaphone.fm/adchoices

On April 4th, 2023, around 2 in the morning, a man was found stabbed multiple times on a sidewalk in downtown San Francisco. Hey, who did this to you? What happened next turned the story into a political firestorm. Reports have identified the victim as Bob Lee, the founder of Cash App. From Bloomberg Podcasts, this is Foundering, the Killing of Bob Lee, beginning April 16. Welcome to the TechMeme ride home for Monday, November 20th, 20th, 203. I'm Brian McCullough today. There's really only one story. The whole Sam Altman got fired by OpenAI's board, but then they tried to get him back, but then Microsoft hired him, and now OpenAI employees are threatening to quit on mass story. But also, the CEO of Cruz has stepped down, and Linda Yaccarino's friends are suggesting she should step down as CEO of X. Here's what you miss today in the world of tech. All right, let's do this. I know you all have been waiting with baited breath. So here is the whole Sam Altman saga as of the time of this recording. Late Friday afternoon last week, word came down that Sam Altman had been fired by Open AIs

board of directors because a review by the board found he wasn't, quote, consistently candid in his communications with the board, and quote, obviously, a Friday news dump firing the very prominent head of the biggest startup in all the land is mega news. Lots of you were tweeting at me for an emergency podcast episode. about this, but I'm glad we didn't try for one. Because what does that quote sound like to you? It sounded like initially the board had uncovered Sam doing something bad, either in a business sense or a personal sense, and it would have to be pretty bad for something like this to happen so suddenly, right? Word was that Microsoft only learned of the firing one minute before it was

announced. It's a good thing that we waited because over the ensuing hours, instead of it being some new scandal, it became clear that this was something of a boardroom coup. Remember that OpenAI has that weird structure wherein there is a for-profit entity that is merely a subsidiary of a nonprofit entity with a Board of Directors whose mission is to bring about benign and useful artificial general intelligence. We spoke a little bit about this board on a recent episode and hinted that they could shut down, that they had the power to shut down OpenAI's for-profit operations if they felt AGI had been achieved. That same board we mentioned seems to be some of the same folks responsible for this firing, especially OpenAI's chief scientist, Ilya Suscever, who seems to have been the driving force behind this move. This became clear mere hours after the initial news when OpenAI president and co-founder Greg Brockman resigned in solidarity with Altman. In fact, all this led to a slew of resignations.

It rapidly became clear that a ton of employees ranging from management to research scientists were ready to follow Altman out the door. And almost immediately, word came out that Altman was already talking to investors about starting a new company. OpenAI's board said that it, quote, stands by its decision as the only path to advance and defend the mission of Open AI and criticize, quote, Sam's behavior and lack of transparency, end quote. But then word came down that the board, perhaps with Microsoft's assistance, was begging Altman to return to OpenAI, which, you know, I can't imagine what they could possibly have promised him to entice him to come back. And indeed, late last night, the information was reporting that Altman was not coming back as

OpenAI CEO after talks had broken down. OpenAI named Twitch co-founder Emmett Shear as an interim CEO. And then this morning, and by this morning, I mean like three, A.m. when he actually tweeted this, Sacha Nadella himself said Sam Altman, Greg Brockman, and other OpenAI staff would be joining Microsoft's new, quote, advanced AI research team, but that Microsoft remained committed to OpenAI. You know, it's been a busy weekend when the CEO of Microsoft is tweeting at 3 a.m. his time. Now, if you think this is the end of the story, you'd be wrong because Ilya Suskever began tweeting that he deeply regrets his, quote, participation in the board's actions and never intended to harm OpenAI. And then as I was writing this very segment this morning,

OpenAI staff released an open letter, signed by Ilya Suscever, among others, and more than 500 others, saying that they may quit OpenAI and join Sam Altman wherever he goes next, unless the board resigns and reappoints Altman as CEO. OpenAI only has about 770 workers, so who knows what will have transpired by the time you read these words, like OpenAI might not be a going concern by then if everybody quits. I don't think that we're going to know what really happened here for quite a while, but based on everything I've been reading and hearing over the weekend, this piece from the Atlantic sounds closest to what might actually be true. This might all have begun almost a year ago right now,

though it was likely that it was that recent demo day that was the match that started the explosion. Again, quoting the Atlantic. A year ago right now, in 2022, rumors began to spread with an open AI that its competitors at Anthropic were developing a chatbot of their own. The rivalry was personal. Anthropic had formed after a faction of employees left OpenAI in 2020, reportedly because of concerns over how fast the company was releasing its products. In November, OpenAI leadership told employees that they would need to launch a chat bot in a matter of weeks. According to three people who were at the company, to accomplish this task, they instructed employees to publish an existing model, GPT3.5, with a chat-based interface. Leadership was careful to frame the effort, not as a product launch, but as a, quote, low-key research preview. By putting GPT 3.5 into people's hands, Altman and other executives said OpenAI could gather more data on how people would use and interact with AI, which would help the company inform GPT4's development. The approach also aligned with the company's broader deployment strategy to gradually release technology into the world for people to get used to them. Some executives, including Altman, started to pair at the same line. OpenAI needed to get the data flywheel going. The company pressed forward and launched ChatGPT on November 30th, 2022.

It was such a low-key event that many employees who weren't directly involved, including those in safety functions, didn't even realize it had happened. Some of those who were aware, according to one employee, had started a betting pool, wagering how many people might use the tool during its first week. The highest guess was 100,000 users. OpenAI's president tweeted that the tool hit 1 million within the first five days. The phrase low-key research preview became an instant meme within OpenAI. Employees turned it into laptop stickers. Chat GPT's runaway success placed extraordinary strain on the company. The slew of new products made things worse, according to three people who were at the company at the time.

The release of GPT4 also frustrated the alignment team, which was focused on further upstream AI safety challenges, such as developing various techniques to get the model to follow user instructions and prevent it from spewing toxic speech or hallucinating, confidently presenting misinformation as fact. Many members of the team, including a growing contingent fearful of the existential risk of more advanced. advanced AI models felt uncomfortable with how quickly GPT4 had been launched and integrated widely into other products. They believe that the AI safety work they had done was insufficient. The tensions boiled over at the top. As Altman and OpenAI President Greg Brockman encouraged more commercialization, the company's chief scientist, Ilya Saskerv, grew more

concerned about whether OpenAI was upholding the governing non-profits' mission to create beneficial AGI. Over the past few years, the rapid progress of Open AIs large language models had made Suskever more confident that AGI would arrive soon and thus more focused on preventing its possible dangers, according to Jeffrey Hinton, an AI pioneer, who served as Susgever's doctoral advisor at the University of Toronto and has remained close with him over the years. Anticipating the arrival of this all-powerful technology, Susgever began to behave like a spiritual leader, three employees who worked with him, told us. His constant, enthusiastic refrain was feel the AGI, a reference to the idea that the company was on the

cusp of its ultimate goal. At OpenAI's 2020 holiday party held at the California Academy of Sciences, Susceiver led employees in a chant, feel the AGI, feel the AGI. The phrase itself was popular enough that Open AI employees created a special feel the AGI reaction emoji in Slack. The more confident Susquever grew about the power of Open AI's technology, the more he also allied himself with the existential risk faction within the company. For a leadership offsite this year, according to two people familiar with the event, Susceiver commissioned a wooden effigy from a local artist that was intended to represent an unaligned AI. That is one that does not meet human objectives. He set it on fire to symbolize OpenAI's commitment to its founding

principles. In July, OpenAI announced the creation of a so-called superalignment team with Susgever co-leading the research. My own note breaking in here, this is the board that we talked about what was it last week that I hadn't known existed before. Quoting again, through it all, Altman pressed onward. In the days before his firing, he was drumming up hype about OpenAIs continued advances. The company had begun work on GPT5, he told the Financial Times, before alluding days later, to something incredible in store at the APEC summit. Quote, just in the last couple of weeks, I have gotten to be in the room when we sort of push the veil of ignorance back and the frontier of discovery forward, he said. Getting to do that is a professional honor of a lifetime, end quote. According to reports, Altman was also looking to raise billions of dollars from SoftBank and Middle Eastern investors to build a chip company to compete with Nvidia and other semiconductor manufacturers, as well as lower costs for OpenAI. In a year, Altman had helped transform OpenAI from a hybrid research company into a Silicon Valley tech company in full growth mode. In this context, it is easy to understand how tensions boiled over. OpenAI's charter placed principal ahead of profit, shareholders, and any

individual. The company was founded in part by the very contingent that Susquever now represents, those fearful of AI's potential with beliefs at times seemingly rooted in the realm of science fiction, and that also makes up a portion of OpenAI's current board. But Altman II positioned OpenAI's commercial products and fundraising efforts as a means to the company's ultimate goal. He told employees that the company's models were still early enough in development that OpenAI ought to commercialize and generate enough revenue to ensure that it could spend without limits on alignment and safety concerns. Chad GPT is reportedly on pace to generate more than $1 billion a year, end quote.

Well, on a normal day, this would have led the show. Cruise co-founder and CEO Kyle Vacht has resigned a month after California's DMV suspended Cruz's permits to operate self-driving cars on public roads. If you think a Friday news dump is one thing, this would be doing a news dump on a Sunday night when everyone else is focused on a different executive shakeup. Quoting TechCrunch. Kyle Vogt, the serial entrepreneur who co-founded and led Cruz from a startup in a garage through its acquisition and ownership by General Motors, has resigned according to an email sent to employees Sunday evening that TechCrunch has viewed.

In a separate internal email, also viewed by TechCrunch, GM chair and CEO Mary Barra, announced that Mo Elshinawi, who is Executive Vice President of Engineering at Cruise, will serve as president and CTO for Cruz. Greg Glidden, a Cruz board member and GM's EVP of Legal and Policy, who was recently put in charge of as chief administrative officer at Cruise, will continue in that role. As of Sunday, no one had been named to the CEO spot. The executive shakeup comes less than a month after the California Department of Motor Vehicles suspended Cruz's permits to operate self-driving vehicles on public roads after an October 2nd incident that saw a pedestrian who had been initially hit by a human-driven car, and landed in the path of a cruise robot taxi run over and dragged 20 feet by the AV. A video, which TechCrunch viewed a day after the incident, showed the robot taxi breaking aggressively and coming to a stop over the woman.

The DMV's order of suspension stated that Cruz withheld about seven seconds of video footage, which showed the robot taxi then attempting to pull over and subsequently dragging the woman 20 feet. Morale at Cruise has been low since the October 2nd incident, with employees pointing the finger at poor management that didn't prioritize safety at the company. Without commercial permits to operate in San Francisco and an internal decision deposit to driverless fleets in other states, the company laid off contract workers further deepening the malaise. Employee discontent was further inflamed last week when Cruz suspended its

employee share selling program for the fourth quarter. Sources who spoke to TechCrunch on the condition of anonymity said they could lose upwards of tens of thousands of dollars as a result of this decision. Over the weekend, Cruz backtracked on that move. Vok to send out an email Saturday saying that certain employees could sell a limited number of shares and a one-time opportunity. Vogue didn't provide many details, but said the company was developing a plan to conduct a new tender offer to provide restricted stock unit liquidity to mitigate potential tax implications, end quote. And then quoting Fortune. For GM CEO Mary Berra, the crisis at Cruz appears to have the makings of a disaster.

Cruz was Barras' biggest bet yet on Silicon Valley, with GM snapping up a whopping 80% of the innovative. startup. This investment offered her century-old carmaker the chance to finally be viewed as a disruptive tech company with the valuation multiples more akin to Buzzy Software Companies than those of a lowly metal bender beset by meddlesome unionized workforces. Votes Company was so important to GM's equity story that he was a constant presence in investor calls and even growth stock guru Kathy Wood bought shares in GM to gain exposure to Cruz. Berra is now faced with the conundrum about what to do about Cruz. The company's losses soared to $1.9 billion in the first nine months of 2023, well worse than the $1.36 billion in the previous years period.

The big question for investors is how long it will continue to burn cash and how much more capital GM needs to infuse it with just to keep crews afloat. The suspension of its operations already pushed out its timeline for hitting revenue targets, and GM recently opted to appoint one of its own, Greg Gilden, to act as a kind of babysitter and exercise greater oversight, end quote. Well, I guess we got to round out this day of executive turmoil in tech with this story. Sources are telling Forbes that leading ad executives have told Linda Yaccarino that she is risking her reputation and suggested she stepped down as ex-CEO to make a statement about anti-Semitism. Quote, Forbes has confirmed that Yaccarino has been contacted by a groundswell of leading advertising executives who questioned why she is risking her reputation to shield ex-owner Elon

Musk's behavior and suggested that she could make a statement about racism and anti-Semitism by stepping down. She has so far resisted their entreaties, sources said. Last week, Musk endorsed an explicitly anti-Semitic conspiracy theory, and a report from watchdog media matters found that ads from major companies, including IBM and Amazon, had been placed next to content promoting Nazis and white nationalism, prompting advertisers, including Apple, Disney, and IBM to pull ads from the platform. Even the White House has condemned Musk's anti-Semitic and racist statement in which Musk agreed with an ex-user who espoused a conspiracy theory that, quote, Jewish communities have been pushing the exact kind of dialectical hatred against whites

that they claim to want people to stop using against them, end quote. The CEO, who one source said has political aspirations, pledged to build tools to help give advertisers more control over what content their ads would appear next to. But the new measures the company implemented to shield advertisers have not worked as promised sources in positions to know, told Forbes. One, a machine learning enhanced sensitivity settings was intended as a supplement of existing controls already provided to advertisers concerned about ads appearing next to untoward content, according to this person and materials viewed by Forbes. However, it did not appear to stop ads placed by Apple, Bravo, Oracle, Exfinity, and IBM

to appear next to post, touting Hitler and the Nazi Party. Beyond the hate content itself, it was Twitter's failure to deliver again on another of its promises of protection that so infuriated the brands who pooled their ads a source-told Forbes. Musk has now said he will sue Media Matters over its report, end quote. You know, I haven't asked for this for a little bit, but today would be a really good day to tell people about this podcast. Go on social media and be like, if you want the best 10-minute summary of the whole Open AI weekend saga, the TechMeme Ride Home podcast is the best place to get it. tell your coworkers and friends to listen to today's episode.

Also, heck, for whatever reason, the reviews at the top of iTunes for this podcast are negative ones at the moment. So if you had the time to write a positive review on Apple Podcasts for this show, that would rock. Thanks in advance. Talk to you tomorrow.