How the ‘king of the cannibals’ Sam Altman took over Silicon Valley

Several weeks before he was ousted as CEO of OpenAI, Sam Altman called up his longtime mentor, billionaire Peter Thiel, to talk about how to overcome one of the biggest challenges for his company. To meet soaring demand for ChatGPT’s ever-expanding capabilities and make the huge profits Altman envisioned, OpenAI needed massive computer firepower.

Altman confided to Thiel that he was looking to create a chips company, a massively expensive undertaking due to the cost of manufacturing. To raise the capital, he would travel to the Middle East including Abu Dhabi and Saudi Arabia and possibly tap his powerful Silicon Valley network, including Thiel’s Founders Fund and Vinod Khosla – both backers of OpenAI.

Sam Altman was ousted as the CEO of OpenAI, but returned after groundswell of support for his restoration.Credit: Eamon Gallagher

Altman had spent much of 2023 wooing US Congress and the tech media, seeking to show how careful his company was being about protecting against the risks of AI. He’d told them about how he held almost no stock in OpenAI, how he wanted to make the process of regulating AI more democratic, and how his company’s unique structure secured AI systems in the hands of non-profit directors. But now, here he was chatting up investors in the Middle East with ties to authoritarian regimes, spinning up a deal with the same boundary-pushing ambition that Altman had perfected in a career brimming with contradictions.

From his teens into his 30s, Altman, the college dropout, dealmaking prodigy and investing wiz behind ChatGPT, has seemed to leap from one success to another. He won the attention and dollars of Silicon Valley’s elites, who were impressed by the ambitious and savvy Stanford sophomore’s likely ascent to greater things. He rose to the top of the valley’s most influential incubator of start-ups at age 26. Industry stars such as Thiel, Khosla and Paul Graham saw in Altman a magnetic figure who could expand the tech sector’s approach across the world.

His ouster from the AI start-up, the groundswell of support for his restoration, and his quick return to his perch as CEO lifted him to a new level of fame, cementing his place in the small canon of the tech world’s household names.

“We believe Sam is the best leader for OpenAI,” said OpenAI spokeswoman Hannah Wong. “The strong support from his team underscores that he is an effective CEO who is open to different points of view, willing to tackle complex challenges, and who demonstrates care for his team.” Through a spokesperson, Altman declined to be interviewed.

Venture capitalist Vinod Khosla has been one of Open AI’s main backers.Credit: Bloomberg

Yet Altman’s tumble last month over his leadership of OpenAI, coming on the heels of the global surge of fear and excitement over the powers and pitfalls of the company’s ChatGPT chatbot, did not come out of nowhere. Altman’s critics have long harboured questions about his management style and motives.

OpenAI’s board was briefed on Altman’s efforts to raise funds for a chips venture in the Middle East, according to four people familiar with the fundraising drive. It was unrelated to the decision to fire Altman, two of the people said. Still, it was hard to figure out “what angle he’s working in a given situation”, one of the people said.

In a Silicon Valley milieu in which shooting star companies often give birth to cults of personality around firms’ founders, Altman has stood out. An investor with a dizzying array of interests, Altman might lack the singular focus of a Steve Jobs – or the sophisticated technical skills to create the products he sells – but according to fans and rivals, he has had since an early age an uncanny entrepreneurial energy and a force of will that inspires others to do their creative best.

This article is based on more than two dozen interviews with current and former colleagues, competitors, friends of Altman and others in the industry, many of whom spoke on the condition of anonymity to discuss sensitive personal relationships or business dealings conducted in confidence.

To some, Altman could be awkward and even antisocial. Even when he throws a party, “he retreats into his room pretty quickly. He has a timer or social clock where he needs to stop socialising”, said investor Lachy Groom, a close friend. “He’s not a schmoozer.”

Another close friend, investor Keith Rabois, recalled how when he first met Altman, he spent their first hangout glued to two different phones.

Yet last spring, at a closed dinner with about 60 members of US Congress, Altman alternately wowed the politicians with talk about the potential of AI, captivating them with a demonstration of how quickly ChatGPT could spin up a floor speech, and implored them to impose guardrails on the technology he himself had unleashed. AI, Altman revealed, was a supremely useful tool, not a creepy creature of science fiction.

Altman was, the members of Congress later said, unflappable, confident, comforting.

“I’ve never met anyone as smart as Sam,” said Senator Kyrsten Sinema, who spent extensive time with Altman last year. “He’s an introvert and shy and humble, and all of those are things that are not normal for people on the hill. But he’s very good at forming relationships with people on the hill and he can help folks in government understand AI.”

Around the world, Altman’s manner seemed to assure everyone from national leaders to a 15-year-old high school student in Toronto who had been diagnosed with cancer and asked Altman for help with his research in 2021. “It’s very scary when a new, ambitious tech company comes out and says: ‘We’re going to build God, and we’re going make sure that it benefits all of humanity’,” said Arnav Shah, who become pen-pals with the mogul. “But I’m 100 per cent certain that if anyone is going to build this thing ... it should be him. I literally cannot think of someone that I would trust more that has more pure intentions.”

Altman’s uncanny sense of the next big thing has led him to back hundreds of start-ups including a new utopian city, longevity and nuclear fusion ventures and Vita Brevis, a San Francisco speakeasy focused on art. He meshed with a brand of Silicon Valley investor who some see as proto-philosopher-kings, influential figures expected to have a take on the economy, world politics and the shape of the future. Altman is given to grand statements about politics (“Democracy only works in a growing economy”) and even considered a run for California governor after Donald Trump was elected president.

Altman has courted these comparisons. “You also want to be an exponential curve yourself – you should aim for your life to follow an ever-increasing up-and-to-the-right trajectory,” he wrote in a blog post titled “How to Be Successful” in 2019.

But in recent weeks, following the internal drama at OpenAI, friends say Altman’s unusual ability to tolerate extraordinary doses of stress seemed to waver.

Altman has presented himself as an avatar of altruism, but his AI venture has run into crosscurrents of concern about the technology’s potential impact on the world’s economy and human lives.

The larger-than-life characters who become celebrity CEOs in Silicon Valley are sometimes tech wizards and sometimes hard-driving business builders, but always the focus of intense debates about their goals, motives and methods.

In Altman’s case, his employees, competitors, admirers and critics argue over his sometimes-cavalier attitude toward others (he says he’s not interested in “most people”) and his contradictory positions on AI (he warned against the technology’s role in fuelling disinformation and erasing jobs, then pushed out ChatGPT knowing it was not protected against errors and offensive statements).

“Sam is the only person I’ve ever known who, where there’s a 1 per cent chance of a trillion-dollar outcome, that’s something to be leaned into,” said a person who worked closely with Altman.

“The entire venture industry would run to the hills if you told them you should invest in this thing that is going to cost a ton of money and only has a 1 per cent chance of succeeding. But Sam would be like: ‘Interesting – how big can it be?’”

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King of the cannibals

For almost a decade, Altman, 38, has been one of the tech world’s foremost fireballs of investment energy. He won devotion – and dollars – from prominent investors, including his key early mentors, Thiel and Paul Graham, a founder of Y-Combinator, the tech start-up incubator that Altman would come to run.

“You could parachute him into an island full of cannibals and come back in five years and he’d be the king,” Graham wrote in 2008. “Honestly, Sam is, along with Steve Jobs, the founder I refer to most when I’m advising start-ups. On questions of design, I ask ‘What would Steve do?’ but on questions of strategy or ambition I ask, ‘What would Sam do?’” He referred to Altman by his nickname, which is also his handle on Twitter and the tech forum Hacker News.

The co-founder of PayPal and Palantir, Peter Thiel, was an early mentor for Altman.Credit: AP

When Altman was in college, Graham said, within three minutes of meeting him, “I remember thinking, ah, so this is what Bill Gates must have been like when he was 19.” What Graham saw was not a deep knowledge of technology but rather “toughness, adaptability, determination”.

“Those are the qualities you need to win.”

Altman first came to the attention of the valley’s most prominent investors when his start-up, Loopt, won support from Y-Combinator. Loopt, which he developed with his boyfriend, Nick Sivo, at Stanford, let smartphone users find and meet nearby people and preceded a booming market for using phones’ location data.

Getting funded by Y-Combinator – in a first batch of investments that included the social media giant Reddit – ended up being more important than Loopt’s own future. The company was never particularly successful, though Rabois noted that Altman successfully brokered deals for Loopt with all the major telecom companies – an early sign of his knack for selling ideas to powerful people.

At 19, Altman “seemed like he had a 40-year-old inside him”, wrote Graham, a founder of the incubator. “There are other 19-year-olds who are 12 inside.” Altman would never resort to an “I’m just a kid” defence when challenged by his elders, Graham said; rather, his response to “that’s a stupid idea” was “simply to look the other person in the eye and say ‘Really? Why do you think so?’”

His most vital supporter was Thiel, the most high-profile gay man in Silicon Valley and Altman’s adviser and friend at least since he sold Loopt to the prepaid card company Green Dot for $US43 million in 2012.

Soon after the sale, which Altman has described as disappointing (his take was $US5 million). He raised $US21 million – mostly from Thiel – to start his own venture capital fund, called Hydrazine Capital, with his brother Jack.

He became a part-time partner at Y-Combinator and then, in 2014, its president, shocking some of his peers.

Altman’s bond with Thiel blossomed: he helped Thiel’s venture firm, Founder’s Fund, get access to hot start-ups, and the men sometimes travelled together to speak at events.

OpenAI’s Sam Altman at an event in early December.Credit: Bloomberg

“It’s not just a friendship, like going around playing golf,” said a person familiar with the relationship. “It’s something much deeper than that. Sam has to be one of the two or three people closest to Peter.” The person said the Thiel-Altman tie had only one parallel: Thiel’s close bond with another young man whose star quickly ascended in Silicon Valley: Meta CEO Mark Zuckerberg. Thiel declined to comment.

People who know the men say Thiel’s style and approach to business appears to have shaped Altman. For example, Altman has been criticised for running OpenAI like a monopoly, undermining open-source technology and pushing smaller companies to launch products through its platform – a strategy Thiel outlined in his book, Zero to One.

Thiel has long seeded up-and-coming mentees with capital and access to his powerful network. Altman has adopted the same tactic: he’d connect people for future jobs and deals with one-line emails that say simply, “Meet”, according to another person who has worked with him.

Both men are private but consummate networkers, known for opening their many homes and throwing parties. Thiel’s holiday parties in Los Angeles and Miami are top-shelf events for Silicon Valley’s elite. Guests who have attended gatherings at Altman’s San Francisco house – he also owns homes in Hawaii and Napa Valley – described it as warm, with candles and friends offering blankets to curl up in, a welcome contrast with Altman’s sometimes awkward manner.

People who know Altman from his Y-Combinator days say that while some start-ups felt ignored by him, the young investor paid attention to the people and companies who mattered most. “His greatest gift was making the two most important people in his life happy: Paul Graham and Peter Thiel,” said one of the people.

“I’ve had this conversation about what makes Sama special a hundred times,” said a venture-backed start-up founder who travels in similar circles. “He’s really good at the whole mafia thing. It’s almost like a secret society. ”

The close friend agreed that Altman’s ability to convene useful people is key to his success. “He’s just cultivated such good, candid relationships that he can use them to make magic,” they said. “People have been real advocates for him when he was unproven, and to some degree he is paying that forward.”

Altman is renowned for his loyalty to those he cares about. A cleaner from his time at Loopt still works for Altman. Altman does not have regularly scheduled meetings, but responds to messages instantly, according to his personal coach, Matt Mochary. “People inside the company get unblocked instantly and people outside the company feel totally loved,” Mochary said on a podcast. “He does this to people who are in his circle of ‘I want you to feel loved’.”

‘Think bigger’

At Y-Combinator, Altman went virtually overnight from a well-connected wunderkind to one of the best-known figures in Silicon Valley. As he transformed the incubator from scrappy start-up bootcamp into an investment powerhouse with tentacles in distant places and fields, it in turn made him a star.

“Once he took over YC,” a colleague said. “He felt like he could get a meeting with anyone.”

Altman started putting his own spin on things immediately. Less than a month after Graham named him successor, Altman put out the call for wildly ambitious founders building start-ups around breakthrough technologies, invoking Elon Musk’s SpaceX and Tesla as examples. He listed areas like energy, AI, transportation and housing, internet infrastructure and education as of interest. “Now small start-ups can do what used to take the resources of nations,” Altman enthused on his personal blog.

“There was a profound change in the companies YC admitted after Sam became leader,” one of the people who worked with Altman said. “He used Y-Combinator as a platform to do other things, and the seeds of his demise were also there.”

Multiple people described Altman as a hands-off manager who picked potential winners and gave those people great autonomy so he could move on to his other interests. Even at OpenAI, Altman “sees himself more like an investor than a typical CEO”, said another close friend.

This style led Altman being asked to leave his role at Y-Combinator, according to four people familiar with Altman’s work there. Some perceived him as aloof and absent. He told people what they wanted to hear, said three of the people. Other leaders resented Altman “hogging credit” for building successful start-ups, the colleagues said.

Colleagues came to see Altman as off doing his own thing at OpenAI and investing in Y-Combinator companies with his own personal fund, Hydrazine. Grumbling emerged that he was reaping enormous personal profits without building and advising those companies.

In 2019, that sentiment led to Graham flying into San Francisco from Britain, where he was living in semi-retirement after having children. People at Y-Combinator hadn’t seen Graham in years. Graham convened a short meeting with company leaders. Then Altman was asked to leave the room. Graham explained that Altman would not be returning to YC as president.

Five years after Altman took over the influential incubator, Graham said he had had no idea that Altman had been spending so little time nurturing start-ups at the organisation and so much energy tending to his own projects, the people said.

Graham and his wife were “his biggest fans and his enablers,” said one of the people describing their relationship at the time. Then “they flipped”.

In an email to The Post, Graham said his wife, Jessica Livingston, a Y-Combinator founding partner, had encouraged Altman to step aside before his own visit to San Francisco, after the couple learned that he was going to be CEO of OpenAI’s new for-profit arm.

“Since he agreed immediately, it would be misleading to use the word ‘fired’ to describe this,” he wrote. Graham did not respond to follow-up questions.

A story Altman told about himself at a Y-Combinator event symbolised his bold style: trying to win a big client, Altman flew to the company’s headquarters and sat in their lobby all day until they agreed to see him, according to someone who heard Altman tell the story. After several meetings, the leaders said they wanted to visit Altman’s offices. At the time, Altman’s firm consisted of only five people, so he hired some college friends to make his business look bigger. He said the scheme worked and he got the contract.

Altman’s tactics generate plenty of debate in Silicon Valley. Friends say he seems to work without stress, ever busy, ever on the phone. Yet others point to the same personality traits and see a salesman who knew few limits.

“Ambition isn’t quite the right word to describe Sam,” said Groom, the close friend. “It’s something more like an inclination to say ‘Why not think bigger?’ AI companies might say, let’s try to raise 10 billion. Sam says, let’s do 100 billion – and there’s kind of a casualness about it. He has sort of an unbounded way of thinking.”

An outsider sensibility

Altman learned to program when he was 8. He told his brother when they played board games as children that: “I have to win and I’m in charge of everything.”

The son of a real estate developer and a dermatologist, he dropped out of college to start a business. Altman grew up in the suburbs of St Louis and inherited an outsider sensibility that Thiel attributed to his Jewish identity, describing Altman’s belief system to The New Yorker as “things can always go deeply wrong and that there’s no single place in the world where you’re deeply at home”.

He drives himself hard, accumulating roughly eight kilos of muscle mass in a single year.

“I started off my career in life as a very anxious, high-strung person,” Altman told the Art of Accomplishment podcast last year. It left him, he said, “somewhat miserable … tremendously less effective and a much worse leader”.

Then he discovered meditation – his younger sister Annie, who has since cut off contact with her family, said she told Sam and her other brothers about the practice and they teased her about it, so years later, she said she was startled to find Sam had taken it on. More recently, though, Sam said on the podcast, he has mostly stopped meditating, partly because he doesn’t want to lose his motivation to work.

He and Musk, the CEO of Tesla and owner of what used to be Twitter, created OpenAI as a non-profit with the aim of warning and protecting the world against a technology Musk believed could wipe out humanity by accident. Altman appeared to agree.

“Development of superhuman machine intelligence is probably the greatest threat to the continued existence of humanity,” he wrote on his personal blog before the company’s launch in 2015, adding that it “does not have to be the inherently evil sci-fi version to kill us all.” But the technology’s promise was too brilliant to pass up. It just needed the right regulation, and he wanted to set up a global governing board to erect boundaries for the tool’s use.

His sister Annie said around that time her brother was more fixated on human threats like famine or riots that could trigger violence. “People have small motivation to steal when they have housing and food,” she recalled telling him after he’d made a big purchase of guns and gold.

By the time the company launched, Altman’s rhetoric on AI risk seemed to become more modulated.

Altman says a universal basic income will “make real progress towards eliminating poverty”.Credit: Eamon Gallagher

Some of Altman’s other political initiatives have remained stuck at the experimental stage. Sometimes described as a centrist Democrat, Altman from early on took public stands against Donald Trump’s 2016 presidential bid, calling Trump “abusive, erratic, and prone to fits of rage”, as well as “unfit to be president”. But Altman also credited Trump with being “right about some big things” and rebuffed calls from some tech workers for him to spurn his friend Thiel, who had become an outspoken advocate for Trump.

Some tech workers accused Altman of trying to co-opt their political movement rather than mounting any enduring effort to push back against Trump. Early in his presidency, when Trump threatened to create a registry of Muslims in the United States, many liberal tech workers signed a “Never Again” pledge, vowing not to build such a directory. Altman responded by calling an off-the-record meeting in which employees were asked to write down ideas for “Tech Worker Values”, but the initiative faded away.

That same year, Altman launched an experiment to provide a universal basic income – enough money to live on, he said – to a sample group in Oakland, California, to see if a cash giveaway might substitute for the traditional work that AI could eliminate. “As technology continues to eliminate traditional jobs and massive new wealth gets created, we’re going to see some version of this at a national scale,” Altman wrote. “So it would be good to answer some of the theoretical questions now. Do people sit around and play video games, or do they create new things? Are people happy and fulfilled?”

Altman increasingly argued that “AI could lead to resource abundance”, meaning it could eliminate massive numbers of jobs and concentrate resources in the hands of a few, said Matt Krisiloff, a friend and former colleague of Altman’s who spearheaded the universal income project and now heads a fertility start-up that Altman invested in.

“He has a belief that if one day an AI can really operate as a human – and you have factories producing robots that can do infrastructure work or farming” it will be “very important to figure out how those resources get distributed fairly for everyone to benefit”.

Altman said a guaranteed income would “make real progress towards eliminating poverty”. He proposed to give 100 families in Oakland $US1500 ($2185) a month. When the experiment began in 2020, the terms had changed: 1000 people were to get $US1000 a month, and a control group of 2000 people would get $US50 a month and the location had moved.

The experiment, which Altman started with $US10 million, is ongoing with results expected in 2024, said Elizabeth Rhodes, research director of OpenResearch, an Altman-funded operation. Altman has not given up on the idea and has agreed not to talk about it while the experiment is ongoing.

“I would bet anything he had no idea what he was getting himself into,” Rhodes said. “He was probably thinking of self-funding a smaller thing ... In Silicon Valley there are a lot of short attention spans, but he’s stayed consistent.”

A founder ‘who can bend reality’

The consistency broke, according to some friends and critics of Altman, when he released ChatGPT, triggering the kind of corporate arms race OpenAI was founded to prevent.

Still, the controversy at OpenAI that led to Altman’s firing and rehiring last month turned not so much on the existential question of how dangerous artificial intelligence will be, but on who would control the path forward for the world’s leading AI company – a battle that has caused schisms inside the start-up for years.

To some, Altman can be awkward and even antisocial.Credit: Bloomberg

Altman and Musk founded OpenAI in 2015 in part because they were worried that Google had acquired DeepMind, an AI pioneer, and seemed to be hurtling towards dominance. OpenAI recruited some of DeepMind’s talent, setting the company up as a non-profit that they said would work for humanity’s benefit rather than financial returns.

Altman eventually took control of OpenAI after a dramatic upheaval triggered by Musk. Musk, according to two people familiar with the internal discussions, was frustrated by the lack of progress and proposed to cut half of OpenAI’s staff – a move Altman rejected. Altman, by contrast, believed OpenAI desperately needed more money to amp up its computer power and compete for talent with tech giants. Altman’s solution was to transform the company into a for-profit enterprise, though it would still be governed by a non-profit board. The shift helped Altman secure a $US1 billion investment from Microsoft.

Altman played a central role in selecting board members, said a person familiar with the board’s dealings. “Either they were his friends or they were people who can never go up against Sam without being destroyed,” the person said.

The transition to a for-profit masked internal tensions. Executives complained, to one another and openly, about Altman’s management style, calling it manipulative. “He will figure out what you want to hear,” one said. “It gets rid of the problem, but turns out to not be lasting in any way.”

Seeking to ease the friction, Altman brought in his coach, Mochary, in 2018, but employees worried he was reporting private conversations back to the CEO, according to two people familiar with the environment. Similar concerns led to the board’s decision in 2023, according to three people familiar with the proceedings. The Washington Post reported that a board review of Altman’s behaviour was triggered by complaints of senior leaders alleging manipulative behaviour and retaliation.

In the end, Altman’s reputation has only been burnished by his temporary downfall.

“I don’t think he is a bully,” said Khosla, who declined to comment on the chip venture. “He just asks hard questions, and sometimes people are threatened by it.”

“He’s the kind of founder that can bend reality,” said Hemant Taneja, a friend of Altman and managing director of the venture capital firm General Catalyst, adding that Altman had invited him to invest in OpenAI but that he declined because he couldn’t understand the company’s complex structure.

“By creating the fastest and most popular consumer application of generative AI, he showed us the art of the possible … This is the first technology where every CEO of every company in every industry is now thinking about how to do AI in their business. He made that happen.”

Washington Post

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