Funding Also Comes to a Halt... The Chaos of OpenAI

ChatGPT Father Altman Abruptly Fired
Internal Board Division and Unique Governance Structure Cause

Sam Altman, CEO of OpenAI, who sparked a global generative artificial intelligence (AI) craze by launching ChatGPT, was abruptly fired, causing OpenAI's new fundraising efforts to come to a halt.

On the 19th (local time), major foreign media outlets reported, citing sources, that OpenAI's sale of existing shares was facing difficulties due to the departure of Altman and other key executives.

OpenAI had been pursuing new funding by selling existing shares held by current employees to external investors. The sale of existing shares is being led by Strive Capital, a New York-based U.S. venture capital firm.

Sources said, "The sale led by Strive Capital was in its final stages just before Altman's dismissal and aimed to be completed next month." They added that employees were greatly unsettled by the sudden firing of Altman and the subsequent resignations of key executives.

In addition, Altman had been meeting with major global investors to raise funds. A British foreign media outlet reported, "Just weeks before the dismissal incident, Altman was pursuing funding by meeting with major investors from the Middle East and Masayoshi Son, chairman of Japan's SoftBank," but noted, "It is unclear whether these funds were intended for OpenAI or for personal startup capital."

Sam Altman, CEO of OpenAI.
Photo by Reuters Yonhap News

The Altman dismissal incident is viewed within and outside the industry as stemming from conflicts over AI technology monetization, internal board divisions, and the inherent limitations of being a nonprofit organization. OpenAI is structured so that the nonprofit 'OpenAI Inc' controls its subsidiary 'OpenAI LLP.' The board limits OpenAI's profits according to its goal of "creating safe and beneficial artificial general intelligence (AGI) for humanity."

Microsoft (MS), the major shareholder that invested $13 billion in OpenAI, only has profit-sharing rights and is not entitled to participate in board decision-making. Axios reported, "The board members do not hold company shares, and even the major shareholder MS has no voting rights on the board, creating a unique governance structure."

Altman, known as the de facto leader of OpenAI, has played only the role of a professional manager rather than a developer. Although Altman is a board member, he does not directly own a single share of OpenAI.

According to Bloomberg News, the board members are divided into a hardline faction of two, including Altman and Greg Brockman, Chief Technology Officer (CTO), and a moderate faction of four. The moderates include OpenAI's Chief Scientist Ilya Sutskever and three outside directors: Adam D’Angelo, founder of the search site Quora; Tasha McCauley, associate professor at the private research institution RAND; and Helen Toner, director of the Security and New Technology Center at Georgetown University.

They have grown apart over the speed of monetizing generative AI technology and issues of stability, failing to reach a smooth consensus. Axios reported, "Altman showed significant differences with the board during the process of raising billions of dollars for AI language model development and systematically promoting AI popularization and commercialization."

Meanwhile, reports emerged that OpenAI executives, including Mira Murati, the interim CEO recommended by the board, and Jason Kwon, Chief Strategy Officer (CSO), are pushing for Altman's return. On the same day, IT media The Information reported, citing sources, that Altman met with company executives at OpenAI headquarters in San Francisco in the afternoon. Greg Brockman, who left the company after Altman's dismissal, was also present.

Altman posted a photo on his social media platform X (formerly Twitter) showing him wearing an external visitor badge issued to visitors inside the company, writing, "This is the first and last time I will wear this." Bloomberg sources reported that Altman set changes in governance, including the dismissal of the existing board members, as conditions for his return.

This content was produced with the assistance of AI translation services.