GM Readers! ☀️

Happy Thanksgiving to our readers who celebrated it! 🦃 🖖 Welcome to the 20th issue of Evolving Internet Insights.

We have a jam packed issue today, covering all the different angles of the OpenAI shake up that played out last Friday and unwinded over the week.

Thanks for reading!

Liang 

(Writing solo this week, Dan is halfway across the world “touching grass” 🙏🕺🌐 and I’m feeling major FOMO 🥲)

🌰 In a Nutshell

• OpenAI fires Sam Altman, key personnel resign

• Sam Altman and Greg Brockman (ex-president and board member of OpenAI) join Microsoft to lead new advance AI research team

• Sam Altman and Greg Brockman return to OpenAI with a new board in place

💾 Byte-sized Stories

This week’s top stories with our insights on top.

Episode 1: OpenAI Board Fires Sam Altman, Catches Everyone Off Guard 🤯

⚡️ TL;DR: The OpenAI Board fired CEO Sam Altman in a surprise announcement last Friday (Nov 17). In a blog post, the OpenAI board stated “he [Altman] was not consistently candid in his communications with the board, hindering its ability to exercise its responsibilities.”

The key events:

• On Friday Altman was fired, and CTO Mira Murati was named Interim CEO. 

• Greg Brockman, OpenAI cofounder, president and board member (he was not involved in the decision to fire Altman) and 3 senior researchers resigned from OpenAI.

• Over the weekend, investors like Microsoft tried to work with the Board to bring Altman and Brockman back to Open AI. Investors got no advance notice of Altman’s firing.

• On Sunday, talks to bring Altman and Brockman back fell through, the Board hired Emmett Shear (Cofounder and ex-CEO of Twitch) as Interim CEO on Sunday. (3 CEOs in 3 Days) 

⚡️ So What: Many stakeholders from employees to investors to the broader public sided with Altman. Earlier this week, more than 700 employees (out of 770), including Ilya Sutskever, who many thought was at the center of the decision to fire Altman, signed a letter threatening to resign from OpenAI if the board is not replaced. This is the clearest signal that many believe OpenAI would not really work without Altman at the helm.

⚡️ Zoom Out: At the time of this writing, the OpenAI board has not clarified what exactly Altman did wrong which is leading many to question the decision in the first place. OpenAI’s COO highlighted in a memo to OpenAI staff: “we can say definitively that the board’s decision was not made in response to malfeasance or anything related to our financial, business, safety, or security/privacy practices. This was a breakdown in communication between Sam and the board.” 

Read More Here, Here, Here

Episode 2: Microsoft Hires Altman To Lead New Advanced AI Research Team

⚡️ TL;DR: In light of Altman’s firing, Microsoft hired Altman and Brockman (and other OpenAI employees who left) to start an advanced AI research team. Other key ex-OpenAI hires include:

• Jakub Pachocki, who was director of research at OpenAI

• Szymon Sidor, who was a research scientist OpenAI 

• Aleksander Madry, who was head of preparedness at OpenAI 

⚡️ So What: Hiring Altman, Brockman and key ex-OpenAI talent signals that Microsoft will do whatever it takes to allow a talented team to continue building. But Microsoft has a completely different structure which may be at odds with the entrepreneurial mindset (i.e. experiment, move fast and break things).

⚡️ Zoom Out: One of the key questions will be how Microsoft handles its relationship with OpenAI. The company has committed to investing ~$10 billion into OpenAI and reportedly owns 49% of the company. Satya Nadella, CEO of Microsoft, reiterated that in light of the events, Microsoft remains committed to its partnership with OpenAI.

 Read More Here, Here

P.S. Our next Brainfood Issue will deep dive into OpenAI’s governance structure and the role of different stakeholders.

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Episode 3: Altman Returns to OpenAI With a New Board In Place

⚡️ TL;DR: In a twist of events, Altman and Brockman return to OpenAI. A new board has been put into place, that includes:

• Larry Summers, Former US Secretary of Treasury and Former President of Harvard University

• Bret Taylor, Former Co-CEO of Salesforce

• Adam D’Angelo, CEO of Quora (and is the only person from the old board to remain)

⚡️ So What: One of the goals of the new Board is to appoint an expanded board of directors of up to 9 people. Both Microsoft and Altman have stated they want a seat on this expanded board. In light of these events, it’s clear the governance structure needs to be revisited. Unlike other startups, OpenAI has a fairly complex governance structure with multiple entities.

⚡️ Zoom Out: Throughout this saga, the old board never clearly stated why Altman was fired. At one point, interim CEO Emmet Shear threatened to resign unless the board gave him clarity on why Altman resigned. There is a broader question here on who governs the governors? 

In this saga, the employees ended playing a key role by banding together to enable Altman and Brockman’s return. After all 👇

Read More Here, Here

📊 Let’s Get Graphic

One visual we couldn’t stop thinking about.

OpenAI’s Complex Governance Structure

⚡️ Takeaway: OpenAI’s structure highlights how much power the Board of Directors have. But while the board of directors have “hard powers” in that they can push through a variety of actions like firing the CEO, other stakeholders hold a significant amount of soft power. 

For example, while Microsoft doesn’t have representation at the Board of Directors level, it’s OpenAI’s largest funder. And the employees also showed their power as well with the letter to the board where they threatened to quit if the board did not resign.

🐇 Down the Rabbit Hole

Some deeper dives to help you get smarter on emerging tech.

1. AI Companies Are Running Out of Data: Deep dive into how AI companies are running out of human created data to train their models on and the potential drawbacks of synthetic data 

2. 6 Pricing Questions: a16z guide on pricing questions every founder should asks when designing pricing schemes

3. OpenAI’s Misalignment: Deep dive essay covering OpenAI’s structure and the misalignment in the company

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