ChatGPT chaos takes another turn as ousted CEO returns

OpenAI will bring back Sam Altman and overhaul its board to bring on new directors, a stunning reversal in a drama that’s transfixed Silicon Valley and the global AI industry.

Altman is returning as chief executive officer and the initial board will be led by Bret Taylor, a former co-CEO of Salesforce and director at Twitter before it was acquired by Elon Musk. Other directors include Larry Summers, the US Treasury Secretary under President Bill Clinton, and existing member Adam D’Angelo, the co-founder and CEO of Quora. OpenAI is now working “to figure out the details,” the company said in a post on X, formerly Twitter.

The reworked board may not be final: its main priority is to nominate and select up to nine new directors, according to a person with direct knowledge of the deliberations. Board composition proved to be a major sticking point throughout negotiations, and parties are still determining which members — beside D’Angelo, who has been appointed — will stay on the new OpenAI board.

AI poster child Sam Altman’s sudden fall from grace had shocked the technology industry.Credit: AP

Altman agreed not to be on the board initially in order to get the deal done, said this person, who asked not to be identified disclosing details of private negotiations. It’s likely that Altman will join the board eventually.

OpenAI’s biggest backer, Microsoft, will likely have representation on the new board, certainly as a board observer and possibly with one or more board seats, the person said.

Altman’s return caps a roller-coaster few days that threw the world’s best-known AI start-up into chaos. The two new board members hold appeal for Wall Street investors and the Silicon Valley crowd. Summers, a Harvard academic and regular Bloomberg TV contributor, sits on the board of several start-ups, including Jack Dorsey’s Block. Taylor is a director at Shopify and helped steer the sale of Twitter to Musk last year, acting as a calming force during turbulent times.

Former US treasury Secretary Larry Summers is joining the OpenAI board.Credit: Bloomberg

OpenAI reached an agreement to reinstate its co-founder after four days of high-stakes negotiations, and after nearly all of its employees threatened to quit if Altman were not reinstated after his surprise ouster. His reinstatement triggered swift congratulations on X from key players in the saga including former president Greg Brockman — who said he too is returning to the company — and Chief Technology Officer Mira Murati.

Altman, who was fired by OpenAI’s board on Friday following disagreements over how fast to develop and monetise AI, had been in negotiations with the company to return. Those talks reached an impasse on Sunday in part over pressure from Altman and others for existing board members to resign, according to people familiar with the matter.

Instead, the board named a new leader — former Twitch CEO Emmett Shear — and Microsoft chief Satya Nadella said he would hire Altman to head up a new in-house AI research team.

Within hours, most of OpenAI’s 770 employees signed a letter to the board saying they might quit and join Microsoft unless all board directors resigned and Altman was reinstated. Among the many who signed the letter was Murati, who had been named interim CEO on Friday, and Ilya Sutskever, an OpenAI co-founder and board member who had previously disagreed with Altman over the company’s direction.

The quick reversal could appease investors and reduce the threat of employees fleeing. But it also raises questions about the path ahead for the ChatGPT maker and other AI start-ups, which have tried to balance developing artificial intelligence responsibly alongside the need to raise vast amounts of capital from investors to support the expensive computing infrastructure required to build these tools.

Founded in 2015, OpenAI was initially established as a nonprofit aimed at advancing AI in a way that would benefit humanity and not be dictated by financial gain. The group later reorganised itself as a capped for-profit entity, raising billions from Microsoft and other investors — with Altman being instrumental to those deals — but it continued to be overseen by a non-profit board. That tension exploded into full view in recent days.

The start-up’s investors were blindsided by Altman’s removal. Microsoft, which backed the start-up with a more than $10 billion stake, had only a few minutes’ advance notice about Altman’s firing. The software giant began working with investors including Thrive Capital and Tiger Global Management to bring him back, according to people familiar with the matter who asked to remain anonymous discussing private information. When that effort failed, Microsoft agreed to hire Altman and others from OpenAI.

More than any other figure, Altman, 38, emerged as the face of a new era of artificial intelligence technology, thanks to the viral success of ChatGPT. Altman was at the center of the industry’s efforts this year to work with regulators and he met regularly with world leaders, including US President Joe Biden and UK Prime Minister Rishi Sunak. On Thursday, he appeared on a panel at the Asia-Pacific Economic Cooperation conference, attended by other executives and world leaders, to discuss the future of AI and its risks.

Behind the scenes, however, Altman clashed with members of his board, especially Sutskever, over how quickly to develop generative AI, how to commercialise products and the steps needed to lessen their potential harms to the public, people with knowledge of the matter have said. OpenAI’s other board members at the time included D’Angelo; Tasha McCauley, CEO of GeoSim Systems; and Helen Toner, director of strategy and foundational research grants at Georgetown’s Center for Security and Emerging Technology.

Alongside rifts over strategy, board members also contended with Altman’s entrepreneurial ambitions. He has been looking to raise tens of billions of dollars from Middle Eastern sovereign wealth funds to create an AI chip start-up to compete with processors made by Nvidia, according to a person with knowledge of the investment proposal.

Altman was courting SoftBank Group chairman Masayoshi Son for a multibillion-dollar investment in a new business to make AI-oriented hardware in partnership with former Apple designer Jony Ive.

Altman’s side ventures added complexity to an already strained relationship with the board.

In a statement Friday, OpenAI said Altman’s departure came after an internal review by the board found the chief executive “was not consistently candid in his communications with the board, hindering its ability to exercise its responsibilities.” As a result, it said, “the board no longer has confidence in his ability to continue leading OpenAI.”

The boardroom drama had echoes of other coups in Silicon Valley history. Apple co-founder Steve Jobs was fired as CEO in 1985 only to return more than a decade later. Twitter co-founder Dorsey was pushed out in 2008 and came back as CEO seven years later.

--With assistance from Dina Bass, Ashlee Vance, Ed Ludlow and Anne VanderMey.

Bloomberg L.P.