For the past four years, Sam Altman has been the very visible chief executive officer of OpenAI. Due to the explosion of ChatGPT this year, he has -- by extension -- become the very visible face of the generative AI movement.
On Friday, the tech world was rocked by the news that Altman had been walked to the door by OpenAI's board of directors. The reason given was, "He was not consistently candid in his communications with the board."
This morning, the plot coagulates even more. According to a report by Wired, "Nearly 500 employees of OpenAl have signed a letter saying they may quit and join Sam Altman at Microsoft unless the startup's board resigns and reappoints the ousted CEO."
This is wild stuff. But what does it mean for the future of ChatGPT and generative AI?
Let me be clear: Most of what follows is pure speculation. I am not privy to any additional facts. First, let's review what we know:
ChatGPT requires tremendous resources to run.
Microsoft has invested billions of dollars in OpenAI.
Microsoft has baked OpenAI technology into many of its products.
ChatGPT is insanely popular.
OK, let's start with some speculation: OpenAI has to have a bonkers burn rate. There is just no way it is profitable at this point. Therefore, it has to rely on money from investors, of which Microsoft is the 800-pound gorilla.
Nobody has a clear view of what Altman did to antagonize his board of directors. For now, I am going to theorize that his offenses were of a business and not personal behavior nature. That's my read based on the tone of the board's announcement.
Microsoft clearly does not find fault with Sam Altman. If it did, it would not have publicly announced a marquee role for him within days of his firing at OpenAI.
Based on the report that the employees of OpenAI signed a letter demanding Altman's return, it is fairly clear that Altman has the loyalty of his team -- and OpenAI's board does not.
Given all of that, I see three possible paths forward.
1. OpenAI tries to continue business as usual
Over the weekend, the company moved former chief technology officer Mira Murati into an interim CEO slot. Since then, former Twitch CEO Emmett Shear has apparently been brought in as CEO, at least according to his Twitter/X feed.
But what happens if the bulk of the company's development team defects to Microsoft? What will Microsoft do? Will Microsoft continue to bake in ChatGPT or will this cause a complete loss of faith in OpenAI? Will OpenAI even be able to operate its current infrastructure in what is clearly going to be a diminished capacity?
In my outsider's opinion, this is the nightmare scenario. This is the "OpenAI is going to try to make it work but it will never be the same" scenario. This opens the door to a wide range of competitors, including Microsoft, and completely crashes the incredible momentum that OpenAI has had for the past few years.
This scenario would confirm the OpenAI board's actions to be an unforced error, a self-inflicted wound that could prove fatal.
2. Microsoft builds a ChatGPT competitor
This scenario has Microsoft embarking upon a Manhattan Project-scale effort to build a full-on ChatGPT competitor at warp speed. Keep in mind that Bing Chat, or Copilot, is essentially a reskinning of the core ChatGPT technology using the ChatGPT API. My guess is that Microsoft has already been working on some research in this area; by bringing in Altman and possibly more of his team, this work accelerates tremendously.
There are clearly issues with intellectual property and trade secrets, including what Altman and Brockman can and cannot bring from their former employer and give to Microsoft.
I don't see this scenario as being particularly effective given how much effort Microsoft has made in embedding existing OpenAI technology in its newest offerings. There is no doubt that Microsoft could build such a competitor, but it does not seem to be the best use of its time and resources when compared to Scenario 3.
3. Microsoft acquires OpenAI
Microsoft acquires what's left of OpenAI and kicks OpenAI's current board of directors to the curb. Much of OpenAI's current technology runs on Azure already, so this might make a lot of sense from an infrastructure point of view.
It also makes a lot of sense from a leadership point of view, given that Microsoft now has OpenAI's spiritual and, possibly soon, technical leadership. Plus, if OpenAI employees were already planning to defect, it makes a lot of sense for Microsoft to simply fold OpenAI into the company's gigantic portfolio.
I think this may be the only practical way forward for OpenAI to survive. If OpenAI were to lose the bulk of its innovation team, it would be a shell operating on existing technology in a market that's running at warp speed. Competitors would rapidly outpace it.
But if it were brought into Microsoft, then it can keep moving at pace, under the guidance of leadership it is already comfortable with, and continue executing on plans it already has.
Given how much Microsoft has already poured into OpenAI, this might not be as big a buyout as would be required from any other potential purchaser.
David's final thoughts
All of this assumes that OpenAI's board of directors made a huge mistake and that Altman is not fundamentally culpable of some serious wrongdoing.
Beyond that, Microsoft's approach to innovation will be considerably different from the culture of innovation that Altman built up inside of OpenAI. It's not clear how much Microsoft's involvement will put friction on the gears of that innovation engine.