The Inside Story of Sam Altman’s Firing–and Rehiring–at OpenAI

[00:00:00] Hey TNB listeners, before we get started, a heads up. We're going to be asking you a question at the top of each show for the next few weeks. Our goal here at Tech News Briefing is to keep you updated with the latest headlines and trends on all things tech. Now we want to know more about you, what you like about the show, and what more you'd like to be hearing from us. Our question today is, how important are the latest tech headlines to you?

[00:00:24] If you're listening on Spotify, look for our poll under the episode description, or you can send us an email to tnb at wsj.com. Now on to the show. Welcome to Tech News Briefing. It's Monday, April 7th. I'm Victoria Craig for The Wall Street Journal. Tariff fears that have ripped through global markets are punishing one of the world's biggest investors in artificial intelligence.

[00:00:51] We'll examine the implications that could have for the future of AI funding. Then, the inside scoop behind OpenAI co-founder Sam Altman's tumultuous relationship with the company's board that led to his very brief ouster. First, investors aren't so sure about SoftBank's all-in approach to artificial intelligence.

[00:01:18] Shares of the Tokyo-based tech conglomerate have shed about 20% of their value in the last roughly two weeks. First, there were doubts over a $30 billion commitment to OpenAI. Then, the Trump administration announced a sweeping package of global tariffs that has rocked confidence in the AI supply chain. WSJ finance reporter Elliot Brown explains the impact all of that is having on SoftBank.

[00:01:43] Elliot, there are real worries now about these U.S. tariffs if they do stick, that that could be a real blow to SoftBank. Basically, SoftBank's, they like to think of themselves as a Berkshire Hathaway of tech. So, they just own a lot of stakes in other companies. And essentially, what's happening is their biggest holding is this chip design company called Arm. And Arm's shares have really been hammered in the past few weeks. And so, then that makes life a little more difficult for SoftBank because then they're worth less. It's hard for them to borrow.

[00:02:13] So, that pushes SoftBank's share price down too. So, they have been going all in. They've committed $30 billion to OpenAI, which is by far the largest investment ever in a startup. And then, they've also announced this, depending how you count, $100 billion or $500 billion plan for data centers, essentially, with OpenAI. That sort of still needs a fair amount of funding.

[00:02:37] With this OpenAI investment and the tens of billions of dollars that SoftBank has committed to it, when that deal was announced, there were already worries about how that could affect the business, whether it was a good investment altogether. But now, with semiconductor supply chains under pressure because of these tariffs, is this investment commitment from SoftBank to OpenAI becoming more difficult? How does SoftBank look at that now? It's making it harder for them.

[00:03:04] SoftBank is led by this maverick investor, Masayoshi Son, who just absolutely loves taking enormous risks. And he loves betting the farm on things. And he is really doing that with AI. It was a lot easier to do that a month and a half ago. I mean, they do have a lot of, like, a lot of cash. But they're going to really have to use some large chunk of that for this. And they're going to be more strained. And if they're really going to fulfill all their commitments, they're going to have to sell other assets, have to borrow more.

[00:03:33] So it makes things more perilous for them. And you can see that in just, like, the credit rating agencies. So there were two ratings agencies in the past week that came out and sort of, in various ways, warned that this is going to hurt their financial position. And what does it mean more broadly for the AI industry? If SoftBank is really the one sort of gung-ho about investing in all of these companies that many people see as maybe more risky investments,

[00:03:59] what does it mean for the future of the AI industry under threat from tariffs and now the biggest investor if they become more cautious? Well, the good news for AI is that it's in the middle of, despite this, this just extraordinary frenzy. And so there's just hundreds of billions of dollars that have pledged to go to build out data centers. So I can't fathom that, you know, if everyone keeps up with at least some of their commitments, we're going to be short of money going into AI.

[00:04:26] But it at least is not the sort of all systems go rocket ship emoji vibe that we were looking at a month ago, two months ago. That was WSJ finance reporter Elliot Brown. Coming up, how the CEO of the hottest tech company was unseated and resurrected. The inside story on that one after the break.

[00:04:57] Sam Altman's very brief firing as CEO of OpenAI rocked the tech world in the fall of 2023. Since then, the only thing we've really known about the reason for it was that the board alleged he had not been, quote, consistently candid. In a new book to be published next month, WSJ's Keech Hagee reveals the drama behind Altman's shocking departure and reentry into the company he co-founded. So Keech, reading through your piece, this excerpt of your book that we published in the journal,

[00:05:27] this concept of effective altruism through the lens of protecting humanity from any potential harm from AI is really a through line in the story. Can you just walk us through, for people who aren't familiar with Sam Altman, what this concept is and his approach to it? So effective altruism is basically like a kind of a cousin of utilitarianism that emerged in the early 2010s that basically tried to decide how best to help people using data.

[00:05:56] And it started out trying to solve global poverty and in recent years has become increasingly interested in trying to prevent runaway AI from murdering humanity, what they tend to call existential risk. So this is not all effective altruism, but it's become an increasingly dominant strain in it. And in many ways, OpenAI, the company that Sam Altman co-founded and is CEO of, was founded a little bit out of these worries and ideas.

[00:06:20] They were not effective altruists themselves, but the whole point of OpenAI was to make sure that when AI was developed, it would be safe and have these checks and balances to make sure that it didn't get out of control. The sort of fascinating thing is as OpenAI became more successful and released ChatGPT, there were people inside the organization, especially those that were focused on AI safety, that were really worried they might be going too fast.

[00:06:45] And Sam got these warnings from friends like Peter Thiel right before he was fired that these types of voices were threatening to destroy the company. And it's that issue of safety that brings us to Sam Altman's ouster at OpenAI briefly. Walk us through what led to the board's distrust. I know there are many prongs of this, but what led to their distrust in this co-founder of this company?

[00:07:09] So the way to think about it is there are long-term reasons and short-term reasons for the board's decision to fire Sam Altman. The long-term reasons were a little bit about just basic power struggles at the board. Who was going to be on the board? Who's not going to be on the board? And even though Sam didn't have equity, he had just a lot of de facto power. So there was a little bit of tussling there. And then there had been a number of safety breaches or moments when the board felt that they were not alerted about problems in the safety procedure.

[00:07:39] And they didn't feel like Sam was telling them all the information, especially when it came to safety, which was extremely concerning to them as the technology that OpenAI was putting out was getting better and better. Especially GPT-4, which was starting to look to people increasingly close to this idea of AGI, artificial general intelligence, that the company was set up to create. The board felt that some of Sam's actions were deliberately deceptive.

[00:08:04] For example, he set up a startup fund himself personally that he owned, and the board didn't realize that he personally owned it. And it took them many months once they got a hint that this was going on to figure that out. And the whole thing was kind of a mess and led to some loss of trust. So those are the longer-term reasons. And the shorter-term reasons are that two people came forward to the board. One was the chief scientist and co-founder, Ilya Setskaver, who's on the board as well.

[00:08:29] And Mira Marati, the CTO, to speak about what they saw as Sam's sort of failures as a manager and some toxic behavior in their view. And this is really the first time that any of us are really getting an inside look at what happened in those days before and the immediate aftermath. It seems like, from your reporting, that the board really miscalculated the reaction both inside and outside to Sam's ouster. There were a number of miscalculations.

[00:08:56] One was just a basic communication issue, that they were not able to communicate the reasons why, beyond saying that Sam had not been consistently candid with the board, which was basically saying that he had lied to the board. They couldn't say about what. And that was sort of a messaging problem that ended up just being untenable. And another miscalculation was that they believed that Mira Marati would stand up and calm the company,

[00:09:21] get it through a six-month period while they look for a new CEO, because she had stepped into the interim CEO role. And they were absolutely shocked when, within hours of them firing Sam, Mira Marati was leading an executive committee mutiny against the board, asking why was Sam fired. And they felt like they couldn't tell the room, well, you know, we've been talking about this and secret calls for weeks now. So they just did not expect that at all.

[00:09:46] And some of those safety concerns, does it seem like those things will be resolved with the new company structure or with Sam now returning to the helm? So in the months afterwards, the company did set up new sort of safety procedures quite publicly and made a big show of, look, we care about safety. We're putting these things in place. They did lose a lot of people in the months afterwards who were really concerned about safety. And a lot of these folks are sort of whistleblowers that came forward and said,

[00:10:15] OpenAI is moving too fast. They are kind of going off the rails on safety. So you've seen less of this drip, drip, drip of leaks that had happened in the months after the blip. And what you're mostly seeing from the company now is just product releases and the virality of their new image generator. Your book, The Optimist, Sam Altman, OpenAI and the Race to Invent the Future is out in May. What else can readers expect to learn about this man who looms so large over the AI industry?

[00:10:43] The portrait of Sam that emerges in the book is really of a master fundraiser. That is his superpower. That's what he's been able to do from his first startup, which he founded in college. He got funded by Sequoia Capital when he was a sophomore in college, which is like the preeminent venture capital firm in Silicon Valley. So what he's able to do is raise these enormous sums of money. OpenAI just did the largest venture capital fundraise ever.

[00:11:09] And I think we're going to continue to see that because he's still a very young man and he has a long way to go. That was WSJ reporter Kei Chaggy. And that's it for Tech News Briefing. Today's show was produced by Jess Jupiter with supervising producer Emily Martosi. I'm Victoria Craig for The Wall Street Journal. We'll be back this afternoon with TNB Tech Minute. Thanks for listening.