The OpenAI saga still isn't over — here's how Sam Altman could still return

Around 3:00 am ET this morning, the 48-hour OpenAI saga seemed to wrap. After his shocking firing on Friday, ousted CEO Sam Altman spent a long weekend fruitlessly negotiating with OpenAI’s four remaining board members along with Greg Brockman, the former chairman of the board, and Microsoft. A few hours before Monday’s market open, Microsoft CEO Satya Nadella put an end to the shenanigans.

He announced that he had hired Altman and Brockman to run an AI research group at Microsoft. OpenAI presented a new interim CEO, Twitch co-founder Emmett Shear.

It’s not the ending many in Silicon Valley were hoping to see. It leaves a lot of people with a lot of money on the line as big losers—which also probably means this ain’t over yet.


Even though Microsoft stock is riding near an all-time high on the coup of adding Altman, it’s not a total win for the company, which may still have to pay billions for its existing obligations to OpenAI. Microsoft is now also on the hook for building up a new AI research organization under Altman and Brockman within its ranks. Even worse, some of Microsoft’s investment in OpenAI could end up a sunk cost as Altman loyalists defect from the startup, which may be unable to fulfill its contractual obligations to Microsoft. Microsoft uses OpenAI’s models in its own business productivity software and also offers OpenAI’s models directly to its Azure cloud-computing customers.

Perhaps the biggest current losers are the venture capitalists who have poured hundreds of millions into a Sam-led OpenAI — namely Khosla Ventures, Sequoia, and Thrive Capital. While they may have been prepared to fund a new company led by Altman and Brockman, as one of the VCs, Vinod Khosla, tweeted late last night, they’re unable to do that with Altman and Brockman sitting inside Microsoft.

Without those two at the helm at OpenAI, the VCs will likely lack confidence in the remaining team—and could see their investment go to zero.

Meanwhile, a petition has been circulating within OpenAI, which I understand one of the VC firms helped draft, that has now been signed by over 500 OpenAI employees out of about 700, threatening to quit if the current four-person OpenAI board does not resign. Signatures on the petition include some of the firm’s top executives, including former interim CEO Mira Mirati and Ilya Sutskever, the cofounder and chief scientist who was one of the board members instrumental in ousting Altman in the first place. Sutskever now says he “deeply regrets” his role in Altman’s ousting and wants to see the team reunited.

OpenAI employees were in the middle of a tender offer that was set to end at the beginning of December, in which Thrive Capital and potential others had offered to purchase their shares at an $86 billion valuation. The money has not yet been wired and that deal is as good as dead without Altman back at OpenAI, meaning the employees have a lot to lose in the current Altman-to-Microsoft scenario, too.

What all these “losers” now need to hope is that the board can still be flipped. After Sutskever’s shocking about-face urging the board’s removal (including himself), the next best flipping candidate is probably Adam D’Angelo, the founder of Quora and founding CTO of Facebook, who is no doubt getting pressure from many Silicon Valley peers. The board still does not seem to have clearly stated what made them fire Altman in the first place, according to the employee petition. If the majority of the board goes back on its decision, whether that takes weeks or months, there would still be a potential path back for Altman—if he even wants it.

With all of that in mind, there are a lot of ways to interpret Altman’s response to Nadella’s hiring announcement Sunday evening: “The mission continues.”

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