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OpenAI Executive Restructure Raises Concerns About Future of AI

by SuperiorInvest

Sam Altman, CEO of OpenAI, attends the Asia-Pacific Economic Cooperation (APEC) CEO Summit in San Francisco, California, USA, on November 16, 2023.

Carlos Barria | Reuters

A wide swath of Silicon Valley has tied its hopes and fortunes in recent years to the kind of generative artificial intelligence technologies that OpenAI helped popularize.

Many industry experts point to ChatGPT’s debut late last year as an iPhone-like moment, ushering in a potential shift in the way people interact with computers through written prompts that can produce creative text. , apparently human.

Such as Apple If the late Steve Jobs acted as the company’s esteemed figurehead, articulating the appeal of the iPhone and personal computers to the masses, OpenAI also had its own charismatic leader in Sam Altman.

With Altman out as CEO (at least for now) after his sudden firing on Friday, comparisons to Apple are flowing freely. Jobs was fired as CEO of Apple in 1985, a move that endures in Silicon Valley lore, as it was after his return in 1997 that Apple found the path that ultimately made it the most valuable company in the US. .

Altman, who previously ran startup accelerator Y Combinator, spent the past year networking with world leaders and making routine appearances at tech events, turning the 38-year-old executive into an industry celebrity in the mold of Jobs. Goal CEO Mark Zuckerberg Amazon founder Jeff Bezos and tesla Elon Musk, CEO.

Along with Altman, the OpenAI board of directors removed Greg Brockman from his position as president. Later Friday, Brockman said he would leave the company.

“What happened today at OpenAI is a board coup the likes of which we haven’t seen since 1985, when Apple’s then-board of directors ousted Steve Jobs,” veteran startup investor Ron Conway said Friday afternoon in an mail. “It’s shocking; it’s irresponsible; and it’s a disservice to Sam & Greg and all the developers at OpenAI.”

OpenAI investors are already making efforts to win back Altman, according to people familiar with the matter. microsoft, Tiger Global, Sequoia Capital and Thrive Capital are among several major OpenAI backers that are seeking to reinstate Altman, said the people, who asked not to be identified because the discussions are confidential. The Verge reported Saturday that Altman is “ambivalent” about returning.

Airbnb CEO Brian Chesky referred to Altman with an mail as “one of the best founders of his generation” who “has made an immense contribution to our industry.”

Silicon Valley reacts to OpenAI

Matt Schlicht, CEO of startup Octane AI, told CNBC that Altman and Brockman, who was previously Stripe’s chief technology officer, “made available a technology that we had only dreamed of” and called it “the most exciting and powerful development of our life.”

Octane is one of many startups using the so-called large language models that OpenAI includes in its GPT family of software tools. Schlicht said the technology so far “has allowed us to include human-level intelligence within our code, and through that we’ve helped entrepreneurs generate more than $500 million in revenue.”

“I have known Sam and Greg for over a decade, they are incredible and inspiring leaders,” Schlicht said. “After learning of his premature departure, I was immediately filled with sadness. Suddenly, innovation in the world stopped.”

Ryan Jannsen, CEO of Zenlytic, shared Schlicht’s sentiment.

“The AI ​​community is reeling,” Jannsen said, adding that technologists are confused about the circumstances surrounding Altman’s firing and what it means for OpenAI going forward.

“Sam and OpenAI were the catalyst that showed the world what AI technology is capable of,” Jannsen said. “Much of the current enthusiasm and activity in AI is directly due to his pioneering work.”

Whether Altman returns or not, the turmoil at OpenAI could give its rivals an advantage in what has quickly become a highly competitive market for advanced LLMs. From heavily funded startups like Anthropic and Cohere to cloud computing giants Google and AmazonCompanies will likely be “looking for the next best alternative,” given the perceived instability in OpenAI, said industry analyst Patrick Moorhead.

“They’re not the only game out there,” Moorhead said.

Josh Wolfe, a partner at venture firm Lux Capital, said OpenAI is taking a big hit to its reputation at a time when companies are deciding which models to use as building blocks.

“There was a perception of consistent, predictable, reliable and reputable progress, commitment and communication with the industry,” Wolfe said. “The surprising whimsy of the move indicates complete unpredictability, which is terrible for companies that plan to work with or rely on OpenAI.”

The unusual structure of OpenAI

A big part of the challenge in understanding OpenAI is its Unusual business structure. OpenAI’s board of directors oversees the nonprofit, of which the corporate entity is a part, and “acts as the overall governing body for all OpenAI activities,” according to the blog post announcing Altman’s ouster.

The post said that a “deliberative review process by the board” concluded that Altman “was not consistently candid in his communications with the board, which hindered his ability to exercise his responsibilities.”

CEO firings of high-profile startups in Silicon Valley typically involve wrongdoing, rather than simply philosophical differences about where the company is headed.

Several investors told CNBC that OpenAI’s hybrid model raised a red flag from the start, in part because incentives can become misaligned too easily. Now, they said, the company risks a serious brain drain if top talent chooses to follow Altman on his next project or an industry competitor.

Meanwhile, Altman has the advantage of having made such a name for himself that he would have no problem raising money for a new project from investors who see him as the next big tech luminary.

“Sam Altman is a hero to me,” former Google CEO and investor Eric Schmidt said in an X mail. “He built a company from nothing to a value of $90 billion and changed our collective world forever. I can’t wait to see what he does next. I and billions of others will benefit from his future work; It will be simply incredible.”

Former Google CEO Eric Schmidt arrives at the inaugural AI Insight Forum at the Russell Building on Capitol Hill, Wednesday, Sept. 13, 2023.

Tom Williams | Cq-roll Call, Inc. | fake images

Airbnb’s Chesky wrote that he had spoken with Altman and Brockman and that they have their “full support.”

“I am saddened by what happened,” Chesky wrote. “They and the rest of the OpenAI team deserve better.” He added in a separate post that Altman is “one of the best founders of his generation.”

As for Microsoft, whose CEO Satya Nadella was reportedly caught off guard by the restructuring, several venture capitalists were surprised that the company could be so unaware of what was brewing, given the billions they had invested. in the company.

“I imagine Microsoft might ask for a board seat the next time they decide to invest $15 billion in a startup,” said Zachary Lipton, a professor of machine learning and operations research at Carnegie Mellon University.

Industry analyst Moorhead said Microsoft could “figure out how to buy this company and how to put Sam in charge.”

“That’s the first play, is potentially finding ways to remove the current board, reinstate a new board and then bring Sam and company back in, making sure the band stays together,” Moorhead said.

Regardless of the current chaos, Carnegie Mellon’s Lipton said he expects investors to remain optimistic about AI.

“This story has elements of corporate and ideological discord, but not even a hint of diminished promise,” Lipton said.

— CNBC’s Lora Kolodny contributed to this report.

LOOK: OpenAI says Sam Altman will step down as CEO because “the board no longer has trust.”

OpenAI says Sam Altman exits as CEO after board loses trust

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