OpenAI's nonprofit kill switch fired Sam Altman, then collapsed in 72 hours under employee and investor pressure.
The kill switch existed but could not be usedA nonprofit board of volunteers with the legal power to fire the CEO was defeated in 72 hours by market pressures, employee revolt, and one very powerful man's network.
Employee equity was in the balanceOpenAI was days from closing a tender offer letting employees sell shares at an $86 billion valuation, worth millions to many of them, and some had already put down deposits on houses.
The guardrails are now largely goneAfter the failed December 2024 restructure, the nonprofit is on top in name and owns about a quarter of the equity, but the investor profit caps are gone and the board's authority is massively weakene
Executive SummaryAI
On Friday, November 17th, 2023, OpenAI's board fired CEO Sam Altman by video call while he was in a Las Vegas hotel room, four days before he was reinstated.
Ilya Sutskever read a prepared statement saying the board had lost confidence in Sam's ability to lead; the public statement said he was "not consistently candid in his communications with the board", and CTO Meera Muradi was named interim CEO.
The board's power came from the 2019 structure Altman himself designed: a nonprofit board owning a for-profit subsidiary, with investor profits capped at 100x and the nonprofit board able to fire the for-profit's CEO.
The reason for the firing was a 70-page, two-part memo Sutskever sent three fellow directors, opening "Sam exhibits a consistent pattern of lying, undermining his execs, and pitting his execs against one another", and citing unapproved GPT-4 safety changes, the $175 million OpenAI startup fund Altman personally owned, and his attempt to remove Helen Toner.
By Tuesday morning more than 700 of OpenAI's 770 employees had signed a letter demanding Altman's return; Sutskever, Toner and McCauley left the board, Brett Taylor and Larry Summers joined, and at 10pm Pacific the announcement went out that Sam Altman would return as CEO.
Key Quote
“AI will probably, like most likely sort of lead to the end of the world.”
— Sam Altman
Key Quote
“that could in fact be consistent with the mission.”