The AI Daily Brief: Artificial Intelligence News and Analysis - What REALLY Happened at OpenAI?

Episode Date: November 18, 2023

Backstabbing. Ambition. Betrayal. After Sam Altman was fired and Greg Brockman quit, NLW digs in to what we've learned so far.  ABOUT THE AI BREAKDOWN The AI Breakdown helps you understand the most important news and discussions in AI.  Subscribe to The AI Breakdown newsletter: https://theaibreakdown.beehiiv.com/subscribe Subscribe to The AI Breakdown on YouTube: https://www.youtube.com/@TheAIBreakdown Join the community: bit.ly/aibreakdown Learn more: http://breakdown.network/

Today on the AI breakdown, the latest updates from the firing of Sam Altman and the quitting of Greg Brockman, was this betrayal, ambition, backstabbing what really happened at OpenAI? The AI breakdown is a daily podcast and video about the most important news and discussions in AI. Go to Breakdown.net network for more information about our YouTube channel, our Discord, and our newsletter. Was it a palace coup? Was it the Red Wedding? Whatever the case, it was one of the most value-destructive days. in Silicon Valley history. Here's what we actually know so far about the firing of Sam Altman from OpenAI. Hello, friends. Welcome back to the AI breakdown. For this video, I once again am going

straight. I'm not going to be doing a lot of editing or any editing, frankly, so I might bobble some words. You're just going to have to deal with it. I apologize. Secondly, I'm not going to go too deep onto the setup to the story. I've released another video as well as another podcast about what happened yesterday. TLDR is that Sam Altman, around 3.30, was announced as fired from OpenAI, which sent an absolute shockwave through the entire Silicon Valley, the entire AI world, the entire business world. Microsoft had about $48 billion worth of market cap peeled off in trading at the very end of the day as investors reacted to the news. And everyone was left wondering what the heck went on. The video that I did before was largely about speculation around what was going. And the TLDR on what we've learned since that. video was published is that this feels very much like a coup in some ways, like a disagreement in the direction of the company and one faction winning out and leveraging their better board numbers to remove the main drivers of the company. So we are going to pick it up from where we left off last night. We had just gotten a statement from Sam Altman, which was very convivial, let's say, and

saying that he enjoyed his time in Open AI and blah, blah, blah, blah, blah, blah. Whereas just after that was published, Greg Brockman, the other person who had been pulled from the board of the company, he had been removed from his position as chairman of the board, but had been said that he was, the announcement said that he was staying with OpenAI and that he would be reporting to the new CEO, Miramiradi, who was previously the CTO. Greg didn't exactly agree with that assessment. He said, after learning today's news, this is the message I sent to the Open AI team. Hi, everyone. I'm super proud of what we've all built together since starting in my apartment, years ago, by the way, makes it clear where this thing started. We've been through tough and

great times together accomplishing so much despite all the reasons it should have been impossible. But based on today's news, I quit. Genuinely wishing you nothing but the best, I continue to believe in the mission of creating safe AGI that benefits all of humanity. So very quickly, statement one was Greg Brockman making it clear that he was not accepting this sort of decision and that he was going to be leaving. And so again, we were all left wondering what was actually happening, what was going on. The journalists in Silicon Valley started to step in, most notably the information, which has been obviously at the very center of AI coverage and Kara Swisher, who is probably the best known single journalist covering the tech beat. And she basically started to say that it appeared to her from her sources that there had been not some crazy major incident between Sam and the board or some massive breach of trust, but just a fairly fundamental disagreement about the direction of the company.

and that Ilya Sutskayva was the centerpiece of this, one of the other early members of the company, who Elon Musk actually said that his friendship with Larry from Google ended over recruiting him away from Google. And that appeared to be confirmed later on from reporting from the information which actually got Ilya to speak. Referring to the coup allegation, Ilya said, you can call it this way, and I can understand why you chose this word, but I disagree with this. This was the board doing its duty to the mission of the nonprofit, which is to make sure that OpenAI builds AGI that benefits all of humanity. When Ilya was asked whether these backroom removals are a good way to govern the most important company in the world, he answered, Fair, I agree that there is not an ideal

element to it 100%. So that's what we got. Now, Kara continued her coverage and writes, more on OpenAI. Several sources told me the board told Sam Altman 30 minutes in advance, Greg Brockman five minutes in advance about the move. Brockman is chair of the board, so not sure how that worked. Microsoft was also told just before. and employees not told in advance.

Now, this is something major that we will talk about in just a minute as relates to the Microsoft dimension of this. But this is absolutely wild. And why we were speculating yesterday that it must be some insanely crazy going to break in the news otherwise kind of disaster, some massive horrifying sex scandal or some state level secret type of thing. Not a normal disagreement, right? You don't not tell the other people involved, but that's exactly what happens. So the reasoning that started to come out, and this is what Kara said in a further tweet, is, quote, the board members who voted against Altman felt he was manipulative and headstrong and

wanted to do what he wanted to do. Kara makes the very important point, that sounds like a typical SV Silicon Valley CEO to me, but this might not be a typical Silicon Valley company. They certainly have a lot of explaining to do. Kara writes, would be eager to actually hear specifics of their concerns and also evidence that they tried to inform him if they had problems. and gave him a chance to respond and change. If not, it looks cloddish.

So at that point, we got away from just rampant speculation and got another post from Greg, which clearly was the beginning of the clapback. Brockman writes, Sam and I are shocked and saddened by what the board did today. First, let us first say thank you to all the incredible people that we have worked with at OpenAI, our customers, our investors, and all of those who have been reaching out.

We too are still trying to figure out exactly what happened. Here is what we know. Last night, Sam got a text from Ilya asking to talk at noon Friday. Sam joined a Google Meet and the whole board except Greg was there. Ilya told Sam he was being fired and that the news was going out very soon. At 1219 p.m., Greg got a text from Ilya asking for a quick call. At 12.23 p.m. Ilya sent a Google meeting link. Greg was told he was being removed from the board but was vital to the company and would retain his role and that Sam had been fired. Around the same time, OpenAI, published a blog post. As far as we know, the management team was made aware of this shortly after. of the mirror who found out the night before.

The outpouring of support has been really nice. Thank you, but please don't spend any time being concerned. We will all be fine. Greater things coming soon. So there is a lot to unpack from this. And no, I don't mean the fact that this is a Microsoft Align company using Google Meet, although that has been a very popular tweet theme. What this is clearly trying to suggest is that this was an ambush.

This was a blindside. This gives the feeling of that red wedding from Game of Thrones type of thing. You're talking about the first indication that something might be wrong being on Thursday night. And it wasn't even really obvious. It was just Ilya asking for a conversation with Sam on Friday, right, at noon on Friday. Then 20 minutes later, Greg getting a link for a quick call that happened four minutes later and being told that he was removed from the board. Going back to what Kara Swisher said, this is not a situation where they had a chance to respond or hear complaints. Now, of course, to give the existing board, the remaining board, I guess you would say, the benefit of the doubt, we don't know if there had been weeks and weeks of discussions and this was the final straw.

We haven't gotten the full story on that front yet, but it is a very abrupt way to deal with this, right? So let's talk or let's start to talk about what some of the implications of this might be. And the first is that I think, let's talk about Microsoft first. Let's find a specific post to start there. Yeah. Okay. So we have reporting from the information. Open-AI interim CEO Mira Muradi told staff in a company-wide meeting that its relationship with Microsoft, its biggest outside source of capital and computing power, was stable following the sudden firing of CEO Sam Altman.

Now, Kara retweeted that and said, stable maybe, pissed definitely. And it just doesn't seem correct to me that's a reasonable interpretation of what's going on with Microsoft. My strong guess is that they are livid. And in fact, I've gone through a set of different feelings about this. At first, when it seemed to me like maybe Sam had done something really egregious, my thought about what would happen next was that Microsoft would come and swoop in and take advantage of the Discord to buy out the rest of AI or open AI to really complete this acquisition. at a discounted price tag, at least relative to the $80 to $90 billion that they were outraising at,

something like $40 to $50 billion, consolidate that power and make sure that they have strong control of the ship. I still think that's possible, but I think it's even more likely or even more possible that we get something the opposite where Microsoft actually goes totally scorched earth. Nivey, the founder of Angelist, writes, either Sam or Microsoft or both of them may sue to take over Open AI. The corporate structure is novel and therefore full of holes and the remaining board are pushovers. They will not withstand any pressure. Now, I don't know how to comment around the remaining board, but I do think that it's hard to overestimate the degree to which the set of board members, who, by the way, did not let the other investors know about this decision until it happened have absolutely destroyed value. Let's start with the $48 billion that was ripped off the Microsoft market cap by making this announcement before trading and closed for the day.

That is a huge, crazy. That's 5x 4.8 times what Microsoft invested just gone in a flash from their market cap. That's one type of value destruction. The second type of value destruction, which we're going to get into more in a moment, is what this means in terms of the compromised confidence, in the company as relates to the legion of developers who are building on top of Open AIs APIs. Are those people going to stick around? I think there's a really open question. And if you are the fiduciary member of a startup, you have to really think seriously about whether

it makes sense to build in that ecosystem, given this utter chaos. So we've got the Microsoft piece on the one hand. Now, there are other reactions as well. Let's talk about Silicon Valley and specifically the EACC crowd being radicalized. Aaron Ng says the real irony is that Ilya and Co have just accelerated the formation of multiple organizations that likely don't care about safety at all. And it really does seem like the safety is a dimension of this, right? It seems so far from what we've gotten wind of that at the center of the disagreement was

around how fast Open AI was moving. and whether there had been some recent development that scared Ilya and other members of the company, but that Greg and Sam wanted to move forward with, this is the most important part of the story that we just don't have yet, that it is, that is yet to be determined. And I think that regardless of exactly what comes out with that, the way that Silicon Valley is interpreting this,

people who are in Silicon Valley is that this was an assault on techno-accelerationism and techno-optimism and just the tech-forward mindset by the forces of effective altruism and dumerism. Shriram Kishan says, Effective altruism might be the villain a lot of us here should be focused on. Now, of course, there have been lots of comparisons made to Sam Bankman-Fried, not only for his name, but also for his ties to EA. And one of the questions that I'm keeping track of or going to keep an eye out for is to what extent this was really an EA or versus an EACC battle, right? How much this was an AI safety versus accelerationist battle.

Did Ilya make some big move that he thought because of how far advanced open AI really was? Do we actually have something approaching AGI? Sam just gave comments at the APEC conference this week where he said that, a few times, four times over the course of his career, he had been a part of with OpenAI, lifting the veil on mystery and moving into the future. And the most recent one was just a couple of weeks ago. There was a lot of speculation that that means, and that was the context for all of this changing, although right now we just don't know. And like I said, that's the biggest piece of information that's not available yet. Danielle Fong captures what I felt too last night. She wrote,

low-key EACC rebellion energy tonight for real. And I said, I don't think it's that low-key anymore. Basically, you have the entire establishment of Silicon Valley raging up and ready to fight this sort of dumerism that has become a major strand of conversation in the AI space. Now, on top of that, you also have the actual sort of Silicon Valley establishment racing to the aid of these guys. And I think this is a... another dimension of what happens next if we're talking about outcomes and implications. So Brian Chesky from Airbnb writes, I've spoken to Sam and Greg, and they will have a statement coming shortly. And he literally also later went on to say that he supported them out, that

they were, you know, that the Silicon Valley was behind him. And you're certainly starting to see it from venture capitalists as well. The famed angel investor Ron Conway writes, what happened at OpenAI today is a board coup that we have not seen the likes of since 1985, when then Apple Board pushed out Steve Jobs. It is shocking. It is irresponsible. And it does not do right by Sam and Greg or all the builders in Open AI. This is a crazy moment.

And I think that the question is, of course, where things go next. Now, there are a lot of predictions on that front. Dr. Jim Fan from Invida says, The infinite energy of Sam and Greg cannot be contained. They will rebuild Rome from the ashes with an even great. sense of urgency. Open AI just created its mightiest competitor, and we are all seeing it unfold in real time. And it happened before. The Anthropic founding team, many of whom co-authored the Watershed GPT3 paper, split from OpenAI in 2021. It remains OpenAI's close number two today.

History is destined to repeat itself. I wish Sam and Greg a great battle ahead. The ship is unstoppable no matter where they sail. Meanwhile, we've also been seeing a lot of tweets like this one from Rahul who said, stories of Greg's superhuman abilities from people who worked with him are wild. Like when GPT4 first finished training, it didn't actually work very well, and the whole team thought it's over. Scaling is dead until Greg went into a cave for weeks and somehow magically made it work. So a couple of things to watch out for as we try to understand what comes next. The first is, are there going to be any more high-profile defections? Yesterday, we did see the GPT4 lead, the head of AI Risk, and an open source baselines researcher all leave in the wake of the announcement that Sam had been fired and that Greg was stepping down and leaving the company

as well. If that becomes a flood of people, obviously it's going to have fairly big implications. Now, of course, related to that will be what Greg and Sam decide to do next. It sounds like from a Bloomberg article that just came out that part of what the frustration was is that Sam was raising money for lots of different things, not just Open AI. From Bloomberg, alongside Rifts Over Strategy, board members also contended with Altman's entrepreneurial ambitions. Altman had been looking to raise tens of billions of dollars from Middle Eastern sovereign wealth funds to create an AI chip startup to compete with processors made by NVIDIA Corp, and Altman was courting softbank group Corp Chairman Masayoshi Sun for a multi-billion dollar investment in a new company to make AI-oriented

hardware in partnership with former Apple designer Johnny Ive. I think one big question is will we see Sam and Greg pursue one of those or multiple of those or will they compete or will they instead decide to go after a direct competitor of OpenAI? Now one little cleanup note from my coverage yesterday. One of the things that started being discussed on Twitter as all of this was happening was whether Mira Muradi, the former CTO and now CEO or acting CEO of OpenAI, was actually a Dartmouth engineer. Some had tried to suggest that she wasn't, but it appears from a number of sources, including people who have DM'd me who actually took classes with her during her time in college that she actually was. So I want to make sure not to spread that sort of rumor any further.

Regardless of what you think of her role in all this, she was in fact at Dartmouth. And I think when I step away and I reflect on this, one of the big questions is how it ends up being seen and interpreted. On the one hand, right now, most people are viewing it, at least most people who are enfranchised and in the know and in the tech industry, they're seeing it as this battle or part of this battle between the EAs and the EACCs. Siki Chen summed this up really well when he wrote, so basically the move slower people ousted the move faster people who'll move fast to start a new co, all the move faster people will join to move faster, and all that will be left are the move slower people moving slow to move slower together.

Now, obviously, Siki is pointing out that the implications or the consequences of these actions may not be the overall slowdown in the industry that the people who are involved with it might have hoped, and it does feel definitionally true. But there is this other possibility that's starting to raise its head in some of the coverage as well, most particularly from this Bloomberg piece. And that's an even older story, not one necessarily about AI safety versus AI commercialization, but just about good old power. Bloomberg writes, a month ago, Ilya's responsibilities at the company were reduced,

reflecting friction between him and Altman and Brockman. Is this actually as simple as internecine warfare between people who don't even necessarily have huge disagreements about actual policies or approaches, and who just each in their own way want to be the leader, not a leader? Obviously, we don't know for sure yet. There is much more to this story that hasn't been told, and frankly, I anticipate it will come out. I don't know what their move will be, and if it will be legal as we speculated earlier in this video. But one thing that this Bloomberg piece does confirm is that Microsoft was not happy about this. Writes Bloomberg, Microsoft CEO Satya Nadella was blindsided by the news and was furious

according to someone with direct knowledge of his thinking. It is entirely possible that part of how we get the story is through some sort of as-to-be-determined legal process to come. Meanwhile, Altman is just out here trolling. Late last night, he wrote, If I start going off, the Open AI board should go after me for the full value of my shares. Of course, a joke because Sam very famously does not have shares in the company. I will keep you posted as I learn more about this. But for now, another crazy day in one of the craziest stories we've had this year. Until next time. Peace.