ChatGPT maker OpenAI is in a state of turmoil following the abrupt ousting of its former CEO Sam Altman. Will OpenAI survive?
A brief look through the regular carousel of board changes at FTSE 100 companies shows you that no CEO is irreplaceable. But it is hard to think of an exec who has been quite so unceremoniously dismissed as Altman, who until last week was a rising star at the helm of the world’s best-known AI firm.
And it is harder still to think of a corporate dismissal that has so strongly united staff in opposition to it. If internal reports are to be believed, more than 95% of OpenAI’s 770 staff have signed a letter calling on the board that sacked Altman to resign.
To make matters worse, Microsoft, who committed $10 billion in funding to OpenAI, has decided to hire Altman to its own internal research unit, with the firm’s chief information officer, Kevin Scott seeking to lure disgruntled staff at OpenAI to the unit with the promise of matched compensation.
With no board, no money, and no staff, there will be no OpenAI
And to rub salt in the wound, OpenAI itself was in the course of more fundraising in a deal that would have valued it at $86 billion. That funding, and the jaw-dropping valuation, now look to be in doubt.
All of the above is a veritable recipe for disaster. With no board, no money, and no staff, there will be no OpenAI. But can this perilous but plausible scenario be avoided?
There are some reasons for thinking it will be.
First, while Microsoft is ostensibly trying to tempt staff to quit OpenAI, it is unlikely plotting to destroy the company it spent $10 billion on. OpenAI remains its best ticket to gaining a foothold in the still-nascent artificial intelligence market.
Second, there are continued signs that a coming-together at OpenAI may yet be in reach. Bloomberg reports that senior staff are now in ‘intense discussions’ to unify the company, according to a memo by Vice President of Global Affairs, Anna Makanju, and their remains external momentum to bring Altman back into the fold.
Finally, OpenAI’s flagship product, ChatGPT, remains an incredibly valuable product. It was the first online tool to reach 100 million sign-ups and it is still miles more popular than Google’s chatbot rival Bard and Elon Musk’s Grok, with over 1 billion monthly site visits.
But however some resolution might be found to salvage OpenAI, it is going to look very different at the end of it. The firm is either going to end up with a new permanent CEO, or board, or both – and Microsoft is going to want a seat or two this time round. Its governance rules and frameworks will require a massive overhaul to prevent a calamity such as this recurring. And its peculiar corporate structure – part non-profit, part for-profit – could well end up being altered after revealing signs of weakness.
And with its reputation severely damaged, OpenAI could well end up losing its crown as the world’s top AI business, opening up the AI race to rivals like Google – and all the global hype around ChatGPT could start to fizzle out.