The Journal. - OpenAI’s Weekend of Absolute Chaos

Episode Date: November 20, 2023

OpenAI unexpectedly fired its CEO and co-founder Sam Altman on Friday. The move kicked off a series of twists and turns that left the company and its staff in upheaval. WSJ’s Deepa Seetharaman wades through the chaos and explains what might be next for the company. Further Listening: - A Conversation with OpenAI’s Sam Altman and Mira Murati  - The Company Behind ChatGPT  Further Reading: - OpenAI Employees Threaten to Quit Unless Board Resigns  - Sam Altman Is Out at OpenAI After Board Skirmish  Learn more about your ad choices. Visit megaphone.fm/adchoices

Our colleague Deepa Sitaraman covers OpenAI, and she didn't have the weekend she was expecting. I was going to have a really nice, relaxing Friday. I was going to pack. We were going up to see my in-laws in Washington State, and I was running out the door to go to Rite Aid to pick up a prescription. And then my dad texts me. He's like, look at the story. How crazy. Breaking news. Sam Altman is out as CEO of Open AI. The company just announced. The tech world was thrown into chaos over the weekend when the

company that gave us the groundbreaking artificial intelligence program ChatGPT up and fired its popular and well-known CEO, Sam Altman. It has been a dizzying 72 hours for Sam Altman, the ousted CEO of OpenAI. And I'm literally in the doorway of my

house, and I was like, oh my god, and I dropped everything, my coat, my purse, except for my phone. And I just ran up to my laptop and just started calling everybody I could. And it was like only hours later when I went downstairs that I realized the door to my house is like wide open. And like, I just didn't close the door. Like anyone could have just walked in and I genuinely wouldn't have known it because I was just there writing, writing, calling, calling, calling, calling, calling. A year ago, OpenAI released ChatGPT, which became one of the most viral tech products of all time. And it vaulted OpenAI to the tech big leagues.

But now the company is at war. Its employees are revolting in support of ousted CEO, Sam Altman. You didn't get the sense that this is somebody who was in trouble. Everyone seemed to just be behind Sam. And like there wasn't anything afoot, right? Right. But now we know better.

And then, you know, so there I am in my doorway. And all of a sudden I realized that probably one of the most famous CEOs in the world right now has just abruptly lost his job. And no one really understands why. Welcome to The Journal, our show about money, business, and power. I'm Kate Leinbaugh. It's Monday, November 20th. Coming up on the show, the coup, the counter-coup, and the counter-counter-coup at OpenAI. At AirMiles, we help you collect more moments.

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Collect more moments with more ways to earn. Air Mile. It was Friday afternoon ahead of Thanksgiving week when OpenAI put out a blog post. It says that Sam Altman had been fired, that the board no longer had confidence in his ability to continue as CEO of OpenAI. So it's very clear from anybody reading it, this is an ouster. Sam was fired.

This is not a mutual decision or anything like that. And that a CEO search is going to be underway. It was a huge shock because Sam Altman is a tech superstar. He's raised billions of dollars for OpenAI and had become the de facto spokesperson for artificial intelligence. And, you know, OpenAI didn't really have much cachet until suddenly ChatGPT is launched last year. And all of a sudden, Sam goes from Silicon Valley famous to being globally famous. You know, suddenly everybody wants to talk to him. He's going to the White House. He's

going around the world, talking to world leaders everywhere about artificial intelligence and its future. He just becomes this celebrity. Altman co-founded OpenAI with a handful of other people. But it wasn't like most other startups. It was set up as a non-profit research lab. The goal was to build AI transparently and safely. But it didn't stay a non-profit for long. There is a kind of slow evolution driven by SAM to make the company into a for-profit so they can start taking larger and larger sums of money. And this is really significant

because it just costs a lot of money to build these AI systems. It takes a lot of computational power. In 2019, OpenAI took a $1 billion investment from Microsoft. That funding was vital to the creation of ChatGPT, and it followed a big change in the company's structure. So they created a for-profit entity that would accept dollars from investors like Microsoft.

But that for-profit is governed by a non-profit. And the non-profit has a board of directors that make all the decisions. And the bylaws were structured in such a way that the company is beholden to this board. And this board has extraordinary power to make changes if they feel the company is not doing the right thing, or if they feel the executives are not doing the right thing. That board structure was put in place to keep the original ethos of the company, one that would push the limits of AI but do it safely. OpenAI's researchers have long been concerned about potential harms the technology could have

on society. Sam Altman spoke about these concerns to Congress in May. I think if this technology goes wrong, it can go quite wrong. And we want to be vocal about that. We want to work with the government to prevent that from happening. But we try to be very clear-eyed about what the downside case is and the work that we have to do to mitigate that. But OpenAI kept growing fast and was seeking to raise tens of billions of dollars. And then Friday came. Can you tell us what happened beat by beat on Friday? Here's what we know, and it's still pretty sketchy, but this is what Greg Brockman, the OpenAI president and co-founder, said on X the night it happened, so Friday night.

Greg Brockman was also chairman of the board and a staunch ally of Altman. He says that on Thursday night, Sam gets a text from Ilya Setskovor. Ilya Setskovor is OpenAI's chief scientist, a co-founder, and a board member. And he's clashed with Altman over safety. And Sam is asked to talk on Friday at noon. And Sam joins a Google Meet, and he's looking at the whole board,

except for Greg Brockman and and the board doesn't waste a ton of time Ilya just says Sam you're being fired wow and the news is going to go out really soon and then at 12 19 p.m Greg gets a text from Ilya asking for a quick call. And then a few minutes later, 12.23 p.m., Ilya sends another Google Meet link. And then Greg is told in that meeting that he'll still maintain his role at OpenAI, but just he would no longer be chairman of the board. And this is all according to Greg. What did the board say was the reason they took this move? They didn't offer very many details.

The most we have is this one sentence in the blog post that says that they made this decision after a, quote, deliberative review process, after a, quote, deliberative review process, which concluded that he, that's Altman, he was not consistently candid in his communications with the board, hindering its ability to exercise its responsibilities. Now that, like, that sparked so many questions. And there were many theories about what not consistently candid means. What have your sources told you is behind that?

I mean, immediately, every rumor was being spread about what it was. You know, everyone just assumed that somehow it was like a crime or something. Like there was just a lot of conversation, a lot of concern about what, okay, so what did Sam do? Clearly he must've done something very, very, very problematic to be ousted this quickly, this soon. I mean, that's what everyone was speculating, right? And so speculation isn't worth a ton to a journalist. It's fun, but you need to know what's actually going on. And I'll say that's something that we're still figuring out. We don't know what the precipitating events were. What we do know is that we know a couple of things. All right, let's hear it. We want to know.

We know there, and these are narratives that are coming from different camps within the open AI world. You know, I spoke to some sources who are close to the board. And the thing that we are hearing from that side is that Sam was fired because the board felt like he wasn't telling them the truth over a long period of time. That this was something that was mounting over a long period of time where they felt like they weren't getting the full story and had to double check everything that Sam was telling them. And I know what you're going to ask, what was he not consistently candid about? That's the burning question. This is why I'm still calling 50 people. And as soon as I get off the phone with you, you're going to call more people to try to figure this out because this is one of the big mysteries. But according to the people we know

that are willing to talk about the board, that's their position that the board stands by its initial rationale. So if that's the board's rationale, what do Sam's people say? Sam's people say. On Sam's side, in the Sam camp, there is this understanding that Sam was clashing a lot with Ilya Setskovor over his safety and safety initiatives regarding AI,

how to balance those issues and those concerns with the need to make money and make rapid progress. And the two of them were on opposite sides. Ilya Setskovert has grown increasingly concerned about AI and about the power of AI and the way it could affect the future. And how was it received by OpenAI employees? employees. Ilya is there. Basically, he says that it's unfortunate that this happened. And this isn't the ideal way that you'd want a change like this to happen, but that eventually the company would get, quote unquote, closer because of this experience. No one is explaining why Sam left. And that just leaves a very, very bad taste for a lot of employees. So there is a lot of discussion about quitting. Three senior researchers who are very, very,

very well respected inside the company do quit. And Greg Brockman quits. And then through the weekend, you know, some of these researchers that currently work for OpenAI are going to Sam Altman's house to talk to him to try to find ways to get him back. Like almost immediately after the coup comes the counter coup. Coming up, the counter coup. Coming up, the countercoup. With Uber Reserve, good things come to those who plan ahead. Family vacay? Reserve your ride as soon as you book your flights. To all the planners, now you can reserve your Uber ride up to 90 days in advance.

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Must be legal drinking age Please enjoy responsibly Available at the LCBO Within hours after Sam Altman was fired Friday His supporters started rallying behind him Including some of OpenAI's biggest investors Like Microsoft Sam Altman was fired Friday. His supporters started rallying behind him, including some of OpenAI's biggest investors, like Microsoft.

That night, just shortly after, suddenly they're all on the phone trying to find ways. Like, how do we get Sam back? How do we get Greg back? Like, how do we do this? We got to reverse this. This can't happen. And so you have actors like Microsoft.

They are kind of leading the charge on trying to figure out a way to undo this mess. And then by Saturday, we learn that Sam is already talking to investors about a new company that he's going to start with Greg and some of the researchers that have already left OpenAI for him. And he's weighing that. Meanwhile, a growing number of employees are threatening to quit. A lot of rivals see blood in the water. And so suddenly a lot of major customers of OpenAI are contacting other AI companies and OpenAI's competitors and vice versa, just to see what their options are in case something really big happens with OpenAI.

Developers are outraged and feel like they haven't been communicated to. And meanwhile, you know, Sam himself is kind of out there tweeting, I love the OpenAI team so much. Yeah. And then through Saturday night, you get a lot of employees responding with a little heart emoji. Over the weekend, big names in tech were tweeting their support for Altman. And the board is kind of just outnumbered and being mocked all over Twitter, all through the Valley, as being kind of like amateurs. And so you've got this dynamic where the board is now being isolated. And so you've got this dynamic where the board is now being isolated. Under intense pressure from investors and employees, OpenAI invited Altman back on Sunday to have a discussion.

Altman's allies wanted him back as CEO. The two sides talked for hours. But the board stuck to its decision. And so Sunday night, it was pretty clear that they weren't going to allow Sam to come back as CEO, that they weren't going to resign, and that they in fact named a new CEO. And the response internally is like molten lava. It's anger. Everyone is pissed about the fact that Sam isn't going to return. And employees were already really angry, but they've, they grow even angrier. So the counter coup failed. The counter coup failed. But now you have a counter coup. A counter counter coup.

Well, the counter coup part two, which is the last twist last night. So at some point, I'm a human, so I go to sleep sometimes. And I think, but just before I went to bed, the latest twist was that Microsoft announced that they were going to hire Sam and Greg as employees to man this new advanced AI research group. Then today I wake up and more than 500 employees have signed a petition to say they will all quit. There are 770 employees at the company. So more than 500 of them have announced that they will quit unless the board reinstates

Sam and Greg. And unless the board resigns. And unless the board resigns. Ilya Sutskovor, the board member who told Altman he'd been fired on the Google meet, he also signed the letter. He tweeted this morning, quote, I deeply regret my participation in the board's actions. I never intended to harm OpenAI. Plot twist. Yeah.

He fired them and now he's full of regret. Yeah. Why? I think the best guess that anyone I've talked to had is that he underestimated the extent of the damage and how many employees would be angry and would want to walk out. And I guess wasn't prepared also for the level of pushback, not just from employees, not just from investors, but really Silicon Valley. I mean, all of Silicon Valley has gotten really invested in this and everyone is pushing to restore sam to his old role so these events that started on it's it's monday morning and the events that started on friday afternoon are still rippling closer to being resolved. Yep. I was talking to somebody before who just made it really clear. Investors aren't giving up.

Investors just aren't giving up. This afternoon, Altman tweeted that he and Microsoft CEO Satya Nadella share a top priority to, quote, ensure OpenAI continues to thrive. So thinking back on these last days, other than maybe exhausting, how would you describe them? Shocking. I mean, shocking. Like, I don't... On the shock meter.

I haven't experienced this level of shock on the shock meter yet. I think this is the craziest story I've ever covered as a business reporter. The surprise of it was really intense. Like, it's not like there was a lot of warning that something like this would happen and that the CEO of the most valuable AI startup in the world would just be ejected. It's just not that clear how this was going to shake out. And then that has major implications for the most important company in AI. I mean, actually, you can't go back to normal

after a weekend like this. Before we go, we're excited to share a trailer for a new series we have coming out in a few weeks. It's a deep dive, multi-part series about one company. That company is OpenAI. Here it is. In 2015, a young tech executive named Greg Brockman showed up to dinner at a fancy hotel in Silicon Valley. This was at the Rosewood in Palo Alto. Very nice view of, you know, kind of the rolling hills. And you can, you know, you can see the interstate in the distance.

Always love a view of an interstate. At the table were some big names. Elon Musk was there. So was the investor Sam Altman. Greg arrived late. I felt very bad because I felt like I kind of missed all the good stuff. But fortunately, the opposite was true. I think the good stuff was about to begin.

They were there to talk about starting an artificial intelligence company. And within a year, they made it a reality. They called it OpenAI. Eventually, that startup released a product you've probably heard of. Can you introduce yourself? Sure thing. I'm ChatGPT, developed by OpenAI. I'm designed to chat, answer questions, and provide... ChatGPT was a huge hit. It transformed open AI from a little-known startup into a tech powerhouse. But ChatGPT also triggered concerns about things like factuality.

What percentage was fact and what percentage was fiction? Well, 50-50. And about the kinds of data chatbots are trained on. I don't want to hear this about you're saving humanity by stealing authors' work. It's just not true. But OpenAI's biggest threat has come from within. Today, San Francisco-based OpenAI announced the firing of co-founder and CEO Sam Altman. announced the firing of co-founder and CEO Sam Altman.

Probably one of the most famous CEOs in the world right now has just abruptly lost his job, and no one really understands why. I'm Kate Leinbaugh, and we've got a new miniseries from The Journal called Artificial. It's all about OpenAI, how it built one of the most viral tech products in the world, and tore itself apart in the process. Find it in the Journal feed on Spotify

or wherever you get your podcasts, starting December 3rd. That's all for today, Monday, November 20th. The Journal is a co-production of Spotify and The Wall Street Journal. Additional reporting in this episode by Tom Doughton, Keech Hagee, and Berber Jin. Thanks for listening. See you tomorrow.