MONDAY SPECIAL: Sam Altman, OpenAI's real governance, and the cheapest acquisition of a 90bn company by Microsoft

Live from your Tech Bro Ghosts of Christmas Past, Present, and Future, it’s yet another Manic Monday edition of Business Pants. Joined by Analyst-Hole Matt Moscardi! In today’s Protected CEO Class called November 20, 2023: The Sam Altman Show, featuring Satya Nadella!

Our show today is being sponsored by Free Float Analytics, the only ESG data platform to measure real board influence

DAMION1

It’s a shortened tasting menu. But there is definitely a progression of acrid techbrow flavors: Before we get to our main story, here is the headline that truly dope-slapped me this morning:

1. Bill Ackman is defending Elon Musk amid the X owner's antisemitism controversy

1. Hedge fund manager Bill Ackman voiced his support for fellow billionaire Elon Musk on Saturday as the X owner faces backlash for retweeting an antisemitic remark.

2. Ackman, who's waged a personal campaign on social media against people he perceives as antisemites, wrote on X that Musk "is not an antisemite."

1. "It is remarkable how quickly the world stands ready to attack Musk for his shoot from the hip commentary," Ackman wrote. He then praised the Tesla and SpaceX CEO. "Musk is not perfect, but the world is a vastly better place because of him," Ackman added.

3. And in case you forgot the context: this was after Musk labeled the idea of Jewish people pushing “hatred toward whites” as “the actual truth.”

4. In his defense of Musk, Ackman reposted a video from conservative political pundit Ben Shapiro, who said Musk was unjustly being labeled as "some sort of crypto-Nazi."

1. The hedge fund manager has also blasted diversity, equity, and inclusion programs at Harvard University, his alma mater, accusing them of failing to represent Asians, Jewish people, and conservative students.

2. Notably, Shapiro also condemned DEI programs in his video. "Nobody hates the DEI more than I do. There are certain Jewish groups that are liberal in orientation who support that sort of stuff," Shapiro said.

5. Musk is also claiming Elon Musk says many big advertisers are the 'greatest oppressors' of free speech after several pull ads from X in antisemitism controversy

1. IBM, Apple, Lionsgate, Disney, Paramount Cmcast

2. Meanwhile, and here’s the uncomfortable bridge: Elon Musk says the risk of advanced AI is so high that the public needs to know why OpenAI fired Sam Altman

1. OpenAI was founded in December 2015 by Ilya Sutskever, Greg Brockman, Trevor Blackwell, Vicki Cheung, Andrej Karpathy, Durk Kingma, Jessica Livingston, John Schulman, Pamela Vagata, and Wojciech Zaremba, with Sam Altman and Elon Musk serving as the initial board members.

2. “OpenAI was created as an open source (which is why I named it “Open” AI), non-profit company to serve as a counterweight to Google, but now it has become a closed source, maximum-profit company effectively controlled by Microsoft. Not what I intended at all.”

3. OpenAI's cofounder Ilya Sutskever — who played a role in Altman's dismissal — for example, has preferred to tread more carefully given AI's potential to harm society.

1. The New York Times reported that Sutskever created a "Super Alignment" team within the company before Altman's ouster to ensure that future versions of GPT-4, the technology behind ChatGPT, wouldn't be harmful to humanity.

3. The timeline:

1. Friday

1. OpenAI board fires CEO, co-founder Sam Altman and President Greg Brockman quits after being removed from the board. Company names Mira Murati as interim CEO

2. Saturday

1. Altman's firing was over a "breakdown in communication between Sam and the board," and not "malfeasance", COO Brad Lightcap says in an internal memo

2. Early investor Khosla Ventures says it wants Altman back at OpenAI, "but will back him in whatever he does next"

3. Some employees contemplated quitting if Altman was not restored as CEO by the end of the weekend, while others expressed support for joining his new venture, people familiar with the matter said

3. Sunday

1. Altman discusses a possible return to the company, considers launching new AI startup, source tells Reuters

4. Monday

1. Microsoft CEO Satya Nadella says the Windows maker has hired Altman, Brockman and their colleagues to lead a new advanced AI research team

2. OpenAI appoints former Twitch boss Emmett Shear as interim CEO

3. OpenAi employees revolt

MATT1

A governancegasm at the maw of the OpenAIpocolypse - I’m calling this the greatest “we’re negotiating with a non profit board, this is easy money” undervalued acquisition of ALL TIME.  Satya was playing that hologram game in star wars while everyone else is playing spin the hoop in the 14th century.  He effectively bought a non-profit that wasn’t for sale but valued at 90bn for a 10bn investment that got them 49% “ownership” and access to all the IP PLUS the ENTIRE TEAM that built the thing as new employees in a walled garden of governance free ecstasy given their oversight is Satya himself and Reid Hoffman… 

The announcement:

• “Mr. Altman’s departure follows a deliberative review process by the board, which concluded that he was not consistently candid in his communications with the board, hindering its ability to exercise its responsibilities. The board no longer has confidence in his ability to continue leading OpenAI.”

• In a statement, the board of directors said: “OpenAI was deliberately structured to advance our mission: to ensure that artificial general intelligence benefits all humanity. The board remains fully committed to serving this mission.”...

The speculation:

• Altman was back at headquarters to negotiate his return within 36 hours

The latest:

• Board stays firm

• Altman has been hired by Microsoft, along with Brockman

• “Mr. Sutskever, in particular, was worried that Mr. Altman was too focused on building OpenAI’s business while not paying enough attention to the dangers of A.I.”

• No filing for MSFT yet regarding material events - is hiring the CEO of the world’s most famous AI company not material?

• Confounding elements - MSFT owns 49% of OpenAI and raided their employees?

• Looks like this was MSFT’s way of buying ALL of OpenAI and getting out from under the “non profit” board - they have access to all the technology, now one of “their employees” can rebuild everything inside MSFT and they won’t have to purchase OpenAI

• Cost significantly below market value this way - hire a dozen employees, pay Altman a LOT, plunked 10bn into OpenAI but “acquisition cost” of a 90bn company is… 10bn plus some bagels in the break room?

• Board replaces their 36 hour interim CEO Mira Murati with Emmett Shear, former CEO of Twitch and Justin.tv

Board:

chief scientist and cofounder  Ilya Sutskever

Adam D’Angelo, CEO and founder of Quora, ex CTO of Facebook, age 39

• Founded Quora in 2009 at age 25 - that was AFTER being CTO of Facebook

• Quora big funding from Benchmark Capital, who backed eBay, Twitter, Uber etc

• Also Tiger Global, SBF funder

• Co-built the music player with Zuck before Facebook

• Went to Phillips Exeter for HS, CIT for college

• On OpenAI board since 2018

• Read: D’Angelo is the Tech Bro

Helen Toner, academic studying safety in emerging technologies, age 30

• Bachelor’s in 2014

• Director of Strategy and Foundational Research Grants for the Georgetown Center for Security and Emerging Technology, who is funded by… 

• CSET is supported by grants from Open Philanthropy, the William and Flora Hewlett Foundation, the NobleReach Foundation, the Musk Foundation, the Patrick J. McGovern Foundation and the Public Interest Technology University Network.

• Hewlett grandkids are big tech

• NobleReach is funded by the CIA through In-Q-Tel

• Musk!

• Old tech bro 

• University network

• Used to a research analyst at Open Philanthropy, funded by Dustin Moskovitz, and supporter of CSET

• Open Philanthropy was created as a partnership between Good Ventures and GiveWell… where she also worked

• Read: Toner is Big NGO

Tasha McCauley, founder of Geosim Systems, wife of Joseph Gordon Levitt

• Dad is Chair of the Board, Tasha not founder - Chris Wiesinger was founder and CEO, now a “strategic advisor” - glass cliff private CEO?

• Dad’s top interest on LinkedIn: Reid Hoffman

Replacement CEO:

Mira Murati, at OpenAI since 2018

• Intern, Goldman Sachs, one year at Zodiac Aerospace

• 3 years at… Tesla!  Designing the Model X!

• Left to join Leap Motion, Andreessen and Founders Fund backed company

• Replaced, and then tweets:

Replacement replacement CEO

Emmett Shear, former CEO Twitch and Justin.tv

• Replacement theory - Shear was chosen by the VCs, not the board

• Backed by Thrive at Twitch (backer of OpenAI)

• Put the probability of doom cause by AI between “2 and 50” percent

Other:

Pre-market MSFT up 1.5% on news

November 7, Sam Altman quoted in Arjuna’s PX14A6G in support of their MSFT shareholder proposal looking for MSFT to report on risks associated with mis- and disinformation generated and disseminated via MSFT’s generative AI