Most people would say there are few moments in tech that seem to capture everyone’s attention. But first with the week of SVB’s failure, and now with OpenAI’s ouster of Sam Altman, it feels like its happening more and more. For the sake of our collective heart health, lets hope the rate doesn’t increase any more than it has.
Other instances that could be included on the list could be Travis Kalanick’s ouster, the blow up of WeWork, [insert crazy crypto blow up] in 2022, and the failure of Theranos. Across most of these gripping moments of collective shock there is one common thing often at the center of it all: board dynamics.
For those of you living under a rock (or who have a healthy relationship with social media and lack a dopamine addiction), the OpenAI situation turned up a number of additional details. Previously, Sam Altman had been asked to leave Y Combinator due to conflicts of interest. Meanwhile, before the ouster at OpenAI, “several staff researchers sent the board of directors a letter warning of a powerful AI discovery that they said could threaten humanity.”
The board’s actions can certainly feel ridiculous. People pointed to Sam’s ouster as the most significant destruction of value since the firing of Steve Jobs. And there are a fair number of criticisms of how this situation was handled. But the unavoidable reality is that it seems that OpenAI’s board did what it was constructed to do.
Picture this. A non-profit established a board to ensure AI safety in creating “public goods that help society navigate the path to AGI.” Meanwhile, Sam Altman has grander ambitions pushing more and more ambitiously into projects including a chip factory in the UAE and an AI hardware project with Jony Ive. Add on top of that the reported letter “warning of a powerful AI discovery” that could “threaten humanity.”
Some have focused less on the foolish outcome the board drove, and instead criticized the board for failing to communicate to the public the logic behind their actions. Eric Newcomer explained it this way:
“OpenAI’s board is not meant to be a normal board. This is a nonprofit board meant to keep OpenAI aligned with a mission in the public interest. It makes sense that this board would operate differently than a traditional toady board on a for-profit company.”
Earlier this week, even after Satya Nadella had announced that Sam Altman and Greg Brockman would be joining Microsoft to “lead a new advanced AI research team,” the efforts to bring about Sam’s return continued. On Tuesday, Sam was back, now with a new board consisting of the likes of Bret Taylor, Larry Summers, and Adam D’Angelo. This new interim board will have the focus of expanding the OpenAI board to up to nine people, effectively resetting the governance of OpenAI.
Agree or disagree with the mandate of OpenAI’s board, the reality is that when push came to shove, people with vested interest in the company realized it wasn’t what they wanted at all. So they pushed to replace it.
In some instances, like removing Travis Kalanick, the company’s board did exactly what it was supposed to do, whether you agree or not. In the cases of WeWork’s failed IPO, the fraud of Theranos or FTX, or SVB’s irresponsible risk management, those represented a failure of board governance.
In the face of a macroeconomic correction and the raging progress of AI, cracks are starting to show. Going forward, every company is going to come under scrutiny for how they’ve structured their board. What are the core drivers of an organization, and how are their boards reflecting that? Historically, companies have prioritized a board that will put up as little resistance as possible. Going forward, that isn’t likely to cut it.
