Sam Altman & the Battle for OpenAI | If You Come At the King… | 2

0:11It's just after 11.30 a.m. on November 17, 2023 in Redmond, Washington. A young woman strides quickly through the halls of Microsoft headquarters. Her heart is racing and her palms are sweaty. Chief Technology Officer Kevin Scott asked her to get CEO Satya Nadella out of his meeting immediately. There's an emergency. Her fellow Microsoft employees watch as she practically trots through the office. She knows they must see the worry on her face. She reaches the door to a conference room where she can hear Nadella talking through the closed door. The woman takes a deep breath and opens the door. Nadella abruptly stops talking, and everyone around the conference table turns to stare at the young woman.

0:56Her mouth goes dry. Nadella looks at her, confused. We're in the middle of a meeting. The woman crosses to him and whispers in his ear. Kevin asked me to come get you right away. OpenAI is firing Sam Altman. Nadella's face morphs from confused to shocked. He's quiet for a moment. Microsoft is OpenAI's biggest investor, and Nadella has worked closely with Altman for four years. He likes and respects him, and from his perspective, everything has been going well at OpenAI. Nadella is blindsided by the news. He stands up. Excuse me. Nadella follows the young woman through the halls back to his office.

1:42Kevin said you need to call Mira Marati right away. That's who called him. Marati is OpenAI's chief technology officer. Nadella enters his office and goes straight to the phone. Marati picks up after the second ring. Mira, it's Satya. What's going on? The board called and told me they're firing Sam today at noon. They've asked me to serve as interim CEO. At noon? That's in less than half an hour. We've pledged$13 billion to OpenAI. We're in the process of integrating chat GPT throughout our products. They didn't think they should discuss this with us first? I don't know. I told you as soon as I heard.

2:22I'm not blaming you, but I don't understand. What did the board say when they called you? Tell me exactly. Jess said something about how he hadn't been consistently candid with them. What does that mean? They wouldn't say anything else. I'll call you as soon as I know more. Okay. Okay. Thanks, Mira. Nadella hangs up the phone and immediately calls Kevin Scott. Kevin, I just talked to Mira. What the hell? I know. It's crazy. We need to get a meeting with our whole leadership team and come up with a strategy to respond ASAP. Nadella hangs up the phone, his mind racing. He doesn't know why the board did what they did.

3:03But he's not going to let anything jeopardize the billions of dollars and thousands of hours Microsoft's poured into open AI.

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4:33Make sure to listen to Business Wars on the Wondery app or wherever you get your podcasts.

4:41From Wondery, I'm David Brown, and this is Business Wars.

5:08On our last episode, OpenAI leapt over tech powerhouses like Google and Meta to become the industry leader in AI. And their partner, Microsoft, which invested$13 billion into OpenAI, began integrating ChatGPT into its products. But internally, a deep fissure was forming between OpenAI CEO Sam Altman and board member and chief scientist Ilya Sutskova. Over the course of 2023, Sutskova became convinced that Altman had betrayed OpenAI's founding mandate to develop artificial intelligence that was beneficial to humanity. And that meant Altman had failed as CEO. On November 17th, the OpenAI board fired Altman with no warning.

5:58Altman was stunned for a few minutes. Then he resolved to fight back. This is Episode 2, If You Come at the King.

6:17It's just after noon on November 17th, 2023, at Microsoft headquarters in Redmond, Washington, minutes after Altman's firing. Satya Nadella is on a video meeting with Kevin Scott, as well as several of Microsoft's top-ranking executives. Nadella doesn't waste any time getting started. Thank you all for making this meeting on such short notice. One executive, who has shaggy hair and is sporting a red Patagonia vest, leans toward his camera. What the hell was the board thinking? And their statement, Sam hasn't been consistently candid with the board? What does that mean? I don't know. I've spoken with Mira Murati, the new acting CEO, and she didn't know anything.

6:59I also called board member Adam D 'Angelo and asked if Sam had done anything nefarious. He insists no. Okay, so then why? Kevin Scott runs his hand over his thin beard. The purpose of this meeting is to figure out how we respond. Our stock is dropping. We need to do something. Nadella nods emphatically. Thank you, Kevin. I could see the company split between people loyal to Sam or to the board. The shaggy-haired executive sighs. We're just about to start releasing our office software with Copilot. We can't have OpenAI go kaput now. No, we can't. But I think we have some options. I think plan A is we support Mira in the short term, and we give the board time to explain the decision to fire Sam.

7:45Then, depending on what we learn, we throw our full weight behind Mira and we try to convince the board to reinstate Sam. Do you really think the board is going to explain this? It seems like they made a rash and, frankly, stupid decision. That brings me to plan B. We have a lot of leverage. We've pledged them a lot of money, but we haven't actually given them that much of it yet. We could use that to pressure the board into putting Sam back in charge. I think option B is it. We need a new board if we want to get back to normal. Other executives nod in agreement. Kevin Scott leans forward. I think there's also an option C.

8:23We hire Sam. I'm sure a bunch of OpenAI's researchers would follow him. And then we can rebuild OpenAI from inside Microsoft. We would own all the tech they develop instead of licensing it like we do now. Executives around the screen nod and murmur. This makes sense, too. All eyes look toward Nadella's square on the screen. Nadella thinks for a moment. Okay, let's start with Plan A. We give the board a chance to tell us if there was a good reason for the firing. But if our instincts are right, and this decision is as reckless as it seems, We move to plan B, and we get Sam back at OpenAI with a new board.

9:05If we fail at that, we move to plan C. He comes here. Make sense to everyone? All the executives nod in agreement. Great. Then let's keep digging and find out what on earth is going on over there. All right, thank you. Thanks a lot. We'll talk to you soon. Bye. Despite the initial shock, Nadella feels good about the three strategies he and his executives have come up with. And the more he thinks about it, the more comfortable he feels. The way he sees it, with this kind of leverage over open AI, there are no bad options for Microsoft. But while Nadella is coming to terms with what's occurred, Sam Altman is still reeling.

9:57It's early afternoon on November 17th, 2023 in Las Vegas, Nevada. Sam Altman sits in a chair in his hotel suite, staring off into space. Even though he's talked to his friend and OpenAI co-founder Greg Brockman about starting a new company, it still doesn't feel real. He just can't believe that he's not CEO of OpenAI anymore. Altman's phone buzzes on the desk. He glances at the caller ID. It's Brian Chesky, CEO of Airbnb and Altman's longtime friend. Altman picks up the phone. Hey Brian, I take it you heard? Yeah man, I think everyone's heard. It's crazy. I just wanted to reach out and see how I can help.

10:44Thanks, I appreciate that. It'd be great just to talk. Hey let me ask you something. Do you know why the board did this? No, I was totally blindsided. You can tell me and it'll stay between us. Is there anything concrete behind their action? I mean, anything that could get out and damage your reputation? I don't think so. I mean, the board and I have had our disagreements, but I thought it was just a normal and healthy debate between a board and a... If the firing's baseless, then you should fight back. At least try to get your job back. Altman is convinced. He hangs up with Chesky and books a flight back home to San Francisco.

11:24He needs to start marshalling his allies and putting together his battle plan. But while Altman readies his next move, Ilya Sutskover and the Borg deal with a fallout of their actions within the company itself.

11:45It's a little after 2 p.m. on November 17th in San Francisco, California. Ilya Sutskover walks into a conference room in OpenAI's headquarters, only hours after Altman's firing. Mira Murati is right behind him, along with a gaggle of top executives, who glare at Sutskover. Sutskover and Marati just finished a disastrous all-hands meeting for the entire OpenAI staff. Employee after employee asked what Altman had done. Sutskover stuck to the company line, that Altman had not been consistently candid with the board. But that hadn't satisfied the employees. And now, senior executives have asked Sutskover to speak to them privately in this conference room.

12:30An executive points his finger at Sutskover accusingly. This is a coup! No, this was the board making sure that OpenAI fulfills its mission to be beneficial to humanity. I understand not sharing with the entire staff, but we're your leadership team. We need to know what's going on. Another executive nods. The U.S. Attorney's Office in Manhattan called me right before that all-hands meeting. They want to know what exactly was meant by lack of candor. They think he did something criminal. A young executive chimes in. I already heard from one customer. They want to know if OpenAI is stable or if they could lose access to chat GPT overnight.

13:09You know Anthropic and Google are going to try to poach our clients. Satskavar holds up his hands. He didn't do anything criminal and OpenAI is stable. We don't need Sam to be stable or successful. Tell the customers they have nothing to worry about. The young executive scoffs. I think it's going to take more than just vague reassurances. We need to give people answers. And if you can't provide them, then you need to set up a video call with the rest of the board so they can. Yeah, that's right. Fine, fine. You want to talk to the rest of the board, we can do that. Soon, the members of the board are on a video call at a large screen at the front of the room.

13:51What exactly did Sam do? The executives clamor for more information, talking over one another. Finally, board member Adam D 'Angelo cuts through the noise. Look, I know you're upset and you're confused, but there wasn't one incident. It was just a lot of things, and we were doing our duty. OpenAI's chief strategist Jason Kwan steps forward. This could kill the company, and it can't be your duty to let this company die. Board member Helen Toner shrugs. Well, the destruction of the company could be consistent with the board's duty. There's stunned silence. After a moment, D 'Angelo speaks up. We should talk to counsel before we say any more.

14:40Back in Redmond, Washington, Satya Nadella is tired of waiting for Ilya Sutskiver to come clean. He's ready to move on to plan B. It's time to get Altman back in and this board out. And with Microsoft behind him, Altman now has the ammo he needs to fight back with everything he's got.

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17:20It's the morning of Saturday, November 18th in San Francisco, California. Sam Altman scurries from his kitchen to the front door of his house. Through the front windows, he catches sight of Alcatraz out in the bay. He flew back to San Francisco late the night before and got straight to work, barely sleeping. Key supporters are arriving at his house this morning to help him with his campaign to get reinstated as CEO. Altman opens the front door. Mira Murati, OpenAI's interim CEO, is standing on his stoop. Altman grins. Altman and Murati have had their differences. At one point, Murati even wrote him a memo criticizing his managerial style.

18:02She complained that he could be manipulative of other executives. But her past critiques make it all the more powerful that she's here, fighting by his side. Mira, welcome to the war room. Come on in. We'll get you set up. Altman leads Mirati into the living room, where about a half a dozen people are spread out, laptops open. Many of them are OpenAI employees, including co-founder Greg Brockman. Altman claps his hands together to get everyone's attention. Everyone, could we all gather in the living room for a second? About six others take seats in the living room. First of all, I want to thank you again for being here on a Saturday.

18:44It means a lot. I just want to make sure we're all on the same page. Our overall strategy is to make it clear to the board that the current situation is untenable and that OpenAI will fail if they don't reinstate me as CEO. Thank you. Thank you. I think this is within reach. I received a call from two board members this morning. They asked if I would help stabilize the company. Altman smirks. So we just need them to see there's only one way to stabilize OpenAI. I come back, and they go. I talked to Satya, and Microsoft is willing to threaten to withhold some of the cloud computing credits they've pledged to OpenAI.

19:25And we all know that without Microsoft's computing power, OpenAI will grind to a halt. We need to coordinate with other investors to threaten to sue to add additional pressure. In the corner, Brockman grins. We're also using the fact that some key executives, including yours truly, have quit to prove our point. Altman nods. Greg put his money where his mouth is and resigned last night. And Jakob Pachocki also resigned. For anyone who doesn't know, Jakob was the lead researcher on GPT-4. So that's a big blow to the company. One of Altman's allies raises her hand. I think we should be using social media.

20:05I know X doesn't have the reach it once did, but it can still be a powerful tool. That's a good idea. We can reach out to employees and encourage them to post in support of you. Great. I think we have our attack plan. Everyone, work your contacts. And again, thank you so much for being here and having my back. Altman's war room gets to work. And while Altman and his team prepare their offense, the OpenAI board meets to discuss their options.

20:39It's Saturday, November 18th. Adam D 'Angelo logs onto a video call with the other three OpenAI board members. He has a thin layer of stubble and dark circles under his eyes. He can't believe that it hasn't even been 24 hours since he and the board fired Altman. He knew there would be blowback, but he's been shocked by just how chaotic the situation has become. One by one, the other board members log on. D 'Angelo notes that they all look as exhausted as he feels. D 'Angelo kicks off the meeting. So, how's everyone's weekend going? Right. The rest of the board oblige him with some small chuckles.

21:23Look, we're all tired and I think this has become a much bigger deal than anyone was expecting. I, for one, will say that I didn't expect to see press camped outside my house, but there they are. Yeah, me too. It's looking like the choice is bringing Sam back or letting open AI die. Helen Toner runs her hand through her long, dark hair. I mean, if OpenAI can't be run safely with Sam Altman, and it will fail without him, then maybe it's our duty to let it fail. We could have Altman come back, but with less power, not let him be CEO or hold a board seat. Before we let this company die, remember that we all believed in OpenAI at one point, including Ilya.

22:13Sutskver nods glumly. That meeting with the leadership yesterday was rough, but we still have power here. Altman wants back in and he wants us out. But we can refuse to do either of those things until we approve the new board members. We can find board members who have the experience and gravitas to stand up to Sam and hold him accountable. Several of the other board members nod in agreement. Toner isn't totally convinced. Fine, let's talk to Sam. Invite him to the office. Maybe we can reach an agreement that will satisfy our concerns about staying true to OpenAI's founding principles. But we should also look for a new CEO, someone we know shares our values.

22:56D 'Angelo nods. Yeah, that makes sense to me. The next day, Sam Altman arrives at OpenAI headquarters along with key members of the OpenAI executive team, who are his allies. He posts a selfie to X wearing a visitor's badge. He comments that it's the first and last time he'll wear one. D 'Angelo and Sutskova have arrived to represent the board. The negotiations stretch on all day. Altman will only return to the company if the current board is out. But the board will only agree to resign if they approve of the new board members. They insist that the new board members must be able to hold Altman accountable.

23:42But they can't agree on any names. Both sides are dug in. With word of the standoff, anxious OpenAI employees flock to the office on a Sunday. Reporters camp out in front of the building, noting deliveries of Boba Tea and McDonald's. But while they're negotiating with Altman, the board reaches out to potential permanent replacements for the CEO job. The CEO of Anthropic, who once worked for OpenAI, quickly turns it down, as do the CEOs of tech companies GitHub and Scale. Everyone waits for the combatants to leave their foxholes.

24:24It's just before 9pm on Sunday, November 19th, 2023 in San Francisco. About a dozen OpenAI employees sit in the main office area at headquarters, waiting and worrying. Finally, Sutskiver walks into the main office area. The employees sit up straight and snap their laptops shut. Over the past 36 hours, myself and the other board members have heard your outcry. However, the board stands by our decision to let Altman go. Emmett Scheer has agreed to serve as CEO. Scheer founded Twitch, the streaming video site. He has a vision that aligns with OpenAI's founding mission to build safe, responsible AI.

25:13He'll be coming by the office tonight. Everyone silently processes what Sutskiver just said. They gather up their belongings and leave the building. This is not the outcome these OpenAI employees wanted. The way they see it. There is no OpenAI without Altman. And they're not the only ones who feel this way.

25:45It's just after 9 p.m. in Redmond, Washington. Satya Nadella sits in his home office staring at his computer. He's bouncing between the social media posts of tech reporters and coverage of India's victory in the cricket World Cup finals. His phone buzzes. It's another Microsoft executive. What do you think about the Emmett Sheer News? I think it's time to officially move to Plan C. I agree. I'll call Sam and start getting into what it would take for him to restart OpenAI within Microsoft. Nadella hangs up and calls Altman. The board may think this is over, but to Nadella, that's far from the case.