OpenAI Shake-Ups—What Happens Next?

All the Buzz Around OpenAI

By Professor Nelson Phillips

The tech world is abuzz with news and gossip about OpenAI.

On one hand, the exit of top executives continues with the departure of chief technology officer Mira Murati. This follows the high-profile departures of several of the most senior executives, including all the founders except for CEO Sam Altman. 

Is this a case of rats fleeing a sinking ship (or at least a badly managed one) or is this a normal phase in an entrepreneurial firm that has outgrown the team that founded it? 

Many of the departures are at least partially a result of discomfort about the speed at which OpenAI is moving in developing more and more powerful generative AI systems without, some would argue, sufficient safety measures and guardrails in place. But at least some of the departures are also to start new companies and join competitors. So, could it also be a sign that an ecosystem has developed where more and more opportunities exist for people with deep knowledge of the sector and experience with the product?

But the buzz is not just about the top management team. In other news, the company recently raised $6.6 billion to fund ongoing operations and announced that the firm is being restructured to remove most of the company from the oversight of the nonprofit board. Following the restructuring, the firm is expected to be worth more than $150 billion, and Sam Altman has reportedly asked for 7% of the new for-profit entity. If granted, that would give him about $10 billion in stock. But questions are being asked. Is moving to a fully for-profit model the logical next step in the development of the company, or is it a threat to humanity as it removes the not-for-profit board whose role was to make sure rapid development didn’t outpace safety? Does this move free up the company to compete in a highly competitive environment or create impossible-to-resist incentives to take ever-increasing risks given the potential profits to be made?

Understanding how technology ventures scale is at the core of technology management, and we know quite a bit about how this happens and the sorts of challenges and opportunities that come along with rapid growth. But ChatGPT has been adopted at a faster rate than any technology in history, and the underlying technology has associated risks that are only dimly understood. As a result, OpenAI is scaling incredibly fast, and the business and ethical challenges Sam Altman and his team face are both familiar and new. Watching what happens next will be fascinating, and there is much to learn. I just hope he and his team are as good at managing the risks of the technology that they are developing as they are at building the value of their firm!