Some key point about OpenAI
OpenAI is a startup that was founded in 2015 with the participation of several technology leaders including Elon Musk, Sam Altman, LinkedIn co-founder Reid Hoffman, and Peter Thiel. The non-profit organization was established to promote the use of artificial intelligence in serving humanity.
After Elon Musk left the organization, OpenAI fell into difficulty because the cost of operating the company was greater than initially estimated. At that time, the Google Brain Machine pushed the artificial intelligence race into a new arena, where AI continuously improved. This means large artificial intelligence models cost more money to process huge blocks of data.
OpenAI decided on March 11, 2019, to fundraise to pursue its ambitious goals. In less than six months, Microsoft successfully invested in OpenAI, signing an exclusive computing partnership in July 2019. As part of the deal, Microsoft has committed to investing up to $1 billion in the AI research firm. The primary focus of the partnership is to enhance Azure's large-scale AI systems capabilities. OpenAI intends to utilize this partnership to expand the field of AI and create artificial general intelligence (AGI). Both parties will benefit from this collaboration, as the advancements made to Microsoft Azure will help developers build the next generation of AI applications.
In November 2022, OpenAI launched ChatGPT and quickly caused a stir thanks to its ability to answer questions in natural language in most areas. Microsoft's billions from three years ago became a topic of interest in the venture capital world.
According to Forbes magazine, by January 2023, OpenAI had successfully raised an additional 10 billion USD in capital from Microsoft. In exchange, Microsoft acquired a 49% stake in OpenAI, with a valuation of up to 29 billion USD. As part of the agreement, Microsoft will receive 75% of OpenAI's profits until they recover their entire investment capital. Other investors will hold 49% of the shares, while OpenAI will retain the remaining 2% of the shares.
The incident involving Sam Altman's termination
On the evening of November 16, former Chairman of OpenAI's Board of Directors, Greg Brockman, revealed that CEO Sam Altman received a message from Ilya Sutskever, the company's chief scientist and co-founder, requesting his attendance at a meeting the following day. During this meeting, Altman was informed that he would be fired, and Brockman was removed from the board.
CNN reported that Altman's dismissal was largely due to a disagreement between himself and the other board members at OpenAI. Altman was keen on promoting stronger AI development, to commercialize products. In contrast, the remaining board members preferred a more cautious approach. Specifically, OpenAI is assessed to have the same level of potential risk as nuclear weapons and will likely deprive people of many job opportunities in the future, so Altman's decision to commercialize OpenAI raises concerns. a concern for OpenAI's Board of Directors - who are focused on safety. However, there is still no specific evidence to prove that risk.
According to Virtus, OpenAI's Sam Altman's influence is as great as Apple's Steve Jobs because both are passionate founders and have high influence on the company, so the case of Sam Altman being fired is significant. can greatly affect OpenAI physically and mentally. In addition to having just raised $10 billion from Microsoft - an important partner in OpenAI's development direction, Microsoft's shares dropped 2% right when the news that Sam Altman was fired was released to the market.
But was Sam Altman's firing really due to a conflict with the board of directors? Why was Sam Altman suddenly fired and even board members like Greg Brockman were also fired or why was Microsoft not informed of this incident in advance? What is hidden behind these appearances? Let's analyze in more detail with Virtus below.
Let's have a quick look at OpenAI:
+ First is about the quick CEO change: After Sam Altman left, OpenAI immediately brought Ms. Mira Murati - former CTO - Open AI's technology director, to the position of interim CEO and said that she had enough. qualifications and experience to lead OpenAI, but 1-2 days later, Emmer Shear announced on Twitter that Mira Murati would be replaced as CEO.
+ Next is the Contradiction in the words of the OpenAI Board of Directors: According to the New York Times, Open AI's board of directors judges "Sam's behavior and lack of transparency in his interactions to undermine the board's ability to effectively oversee the company in the manner it is authorized to do" but in its official announcement OpenAI said Altman "was not consistent and forthright in his communication with the board."
+ Finally, the letter from the staff and leadership team sent to OpenAI's Board of Directors and which contains more than 700 signatures confirming that more than 700 employees at OpenAi want to quit and go to Microsoft to join Sam Altman.
Secondly, Microsoft invested 1 billion USD in OpenAI in 2019. It is unclear how much of the 10 billion USD OpenAI has reportedly received from Microsoft since January 2023 has been disbursed. When Sam Altman and Greg Brockman left OpenAI, Microsoft quickly offered Altman a CEO position. Over 700 OpenAI employees expressed their desire to leave and join Altman at Microsoft. Experts believe that this move will strengthen Microsoft's competitiveness in the field of AI, particularly against Google. Microsoft's shares rose 2% to a record high after these events, equivalent to more than 40 billion USD
But the special thing here is the fact that Microsoft only spent $1 billion on OpenAI but brought in a team of more than 700 employees including Sam Altman and Greg Brock - the people who understand OpenAI best and define it. OpenAI's current price is at 30 billion USD, Microsoft only lost 1 billion USD to profit about 30 billion USD.
But reading this, perhaps everyone will think that Microsoft had a lucrative deal, but just one day after Sam Altman accepted Microsoft's offer, OpenAI realized the company's great loss and immediately proposed. asked Sam Altman to return as CEO. And it didn't take too much time to think and after only 4 days of being "ousted", Sam Altman returned to become CEO of OpenAI with OpenAI's change to a new board of directors and approval from the CEO. of Microsoft – Satya Nadella. At the same time, OpenAI's core engineers intend to quit their jobs to join Sam Altman, whose salaries are around 250,000 USD, the highest being 450,000 USD, but are now asking for compensation up to 800,000 USD. There will also be a change in the board of directors when Sam Altman returns.
So looking back, OpenAI's decision caused the company a lot of losses, but is correcting their mistakes by rehiring old employees the right way to do it? Does the decision to fire and rehire Sam Altman ensure that conflicts with the board will not happen again in the future? Meanwhile, Microsoft - benefited the most from this incident when the company's value increased to more than 40 billion USD thanks to rising stock prices and is anchored at a historic peak. So is all of this influenced by Microsoft because Microsoft is clearly the biggest beneficiary?
The above is a subjective opinion from Virtus Prosperity, so if readers have other opinions or contributions, please let Virtus know!
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