How OpenAI created the perfect conditions for chaos


The photograph was obtained from Getty Images

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OpenAI - Figure 1
Photo BBC News

There are numerous inquiries regarding the termination of Sam Altman.

Why is it possible for only four board members to take action in dismissing the chief executive of the company? What is the reason behind some board members having inadequate experience at that level? Moreover, why doesn't Microsoft, despite being the largest investor in OpenAI, have a board position?

To comprehend the responses to those inquiries, you need to delve into the one-of-a-kind organization framework - which traces back to the year 2015.

At the inception of OpenAI, it was unwaveringly focused on being a non-profit organization. Their official statement left no room for doubt: "We strive to create worth for all, not just shareholders."

The objective was "to promote the development of digital intelligence in a manner that could benefit the entire human race, without any limitations caused by the necessity of generating profit".

Some people believed that creating artificial general intelligence (AGI), which refers to AI that can do anything a human can, could be done on a tight budget.

During 2015, OpenAI declared that supporters had made a financial commitment of $1 billion (£799 million) to the scheme; yet, it is likely that only a very small proportion of this money will be used in the coming years.

In 2019, it became apparent that the previous notion was overly simplistic. Its grand aspirations required significant quantities of cloud computing resources, which would necessitate a significant capital commitment.

However, due to their inherent nature, non-profit organizations face difficulties in raising funds that are easily generated by for-profit companies. As a result, a bizarre combination was created in the year 2019.

This is where stuff begins to get intricate.

The non-profit organization OpenAI has established a commercial division. This allows investors to make a financial contribution and expect gains that are limited to 100 times their initial investment.

The business-oriented and philanthropic divisions intend to collaborate, but there would be a power differential.

In order to ensure that the profit-making branch stayed true to OpenAI's core principles, it was decided that the non-profit board would oversee the entirety of the organization.

What does that signify? Essentially, the company can aim towards their objective of assisting mankind while simultaneously drawing in significant financial resources. It's like having the best of both worlds.

OpenAI states that they prioritize their mission and principles over making a profit, as they are a non-profit organization.

The layout was peculiar, yet effective. It generated a considerable amount of money.

Microsoft has invested billions into the company, which is a significant amount. It is typical for a backer of this size to request a board seat and be granted one.

However, the arrangement of OpenAI had become quite different from what is customary. The board of the non-profit organization was not obligated to allow major funders to influence the company's management since their decision-making was based on their goals rather than financial gain.

In the upcoming years, several high-ranking members of the board resigned, frequently attributing their departure to contrasting interests. Currently, the board is composed of only six individuals, which is atypical for a reportedly $80 billion-valued enterprise as of last week.

This comprised of three top OpenAI executives: Greg Brockman (chairman & president), Ilya Sutskever (chief scientist), and Sam Altman (chief executive), along with individuals who are not officially part of the OpenAI organization namely Adam D'Angelo, Tasha McCauley, and Helen Toner.

The board of the non-profit organization seemed to be made up of individuals who lacked experience as board members. It had the typical appearance of a non-profit board.

Marissa Mayer, the ex-CEO of Yahoo, shared on platform X that commonly, corporations as big and important as OpenAI have 8-15 directors in their boards. These people are often independent and possess greater expertise in managing boards than OpenAI's current lineup.

When a majority decides on something, that indicates that only four individuals have the power to make major changes at OpenAI, such as removing its CEO. This became a reality on Friday when Sam Altman was terminated, and Greg Brockman resigned.

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