The removal of CEO Sam Altman by OpenAI, followed by the resignation of President Greg Brockman, took the tech industry by surprise, including even OpenAI’s investors and its biggest partner, Microsoft.
Multiple sources with direct knowledge of the matter told Forbes that not a single key venture capitalist was warned of this development beforehand, to the point that one such investor even said “This is insane.”
Microsoft, one of the most notable partners of OpenAI only learned about Altman’s firing and dismissal from the board one minute before the news was made public, according to a report from Axios. The software maker has invested more than $10 billion into the AI company and actively integrates its models into its own products, such as Copilot.
However, following the news of OpenAI’s interim CEO Mira Murati, Microsoft’s chairman and CEO Satya Nadella has shown support for this change on X (formerly Twitter). He expressed that Microsoft maintains a long-term agreement with OpenAI, possessing complete access to all necessary resources to fulfill Microsoft’s innovation agenda and an exciting product roadmap. He added that their commitment remains steadfast.
As you saw at Microsoft Ignite this week, we're continuing to rapidly innovate for this era of AI, with over 100 announcements across the full tech stack – from AI systems, models, and tools in Azure, to Copilot. Most importantly, we're committed to delivering all of this to our…
— Satya Nadella (@satyanadella) November 17, 2023
Meanwhile, OpenAI’s other investors including Khosla Ventures also did not know about the ouster prior to the announcement, revealed a source close to the firm’s owner Vinod Khosla. Khosla himself declined a request for comment. His company had invested in OpenAI back in 2019.
An early investor, Reid Hoffman, who even sat on the company’s board of investors in the past had the same thing to say. Hoffman also declined a request to comment.
Despite reportedly conducting a tender offer to acquire employee shares in April and engaging in discussions to acquire more at an $80 billion valuation last month, as per The Information, Thrive Capital did not provide a response to a request for comment either.
In 2015, during OpenAI’s initial launch when it operated as a nonprofit, key investors included Hoffman, Elon Musk, Peter Thiel, Amazon Web Services, and the company’s own leaders, Altman and Brockman. Presently, OpenAI has adopted a corporate structure that features a for-profit AI entity under the control of a non-profit umbrella organization.
Investors in the for-profit segment agree to a capped return on investment; for the original investors, the limit was set at 100x. Subsequent investors, as indicated by PitchBook, include Andreessen Horowitz, Bedrock Capital, Sequoia, and Tiger Global.