Tuesday , 21 May 2024
Home Business Sam Altman’s exit undermines company’s commercial potential

Sam Altman’s exit undermines company’s commercial potential

Unlock the Editor’s Digest for free

In tech founder mythology, rejection is a crucial stage of the hero’s journey, followed by triumphant return. OpenAI co-founder Sam Altman almost completed this arc in the space of a weekend. His departure leaves the artificial intelligence company in a vulnerable position.

On Friday, OpenAI’s board decided it had lost confidence in its chief executive. The bloodless statement provided was at odds with Altman’s swift removal. It came just one week after OpenAI’s generative AI chatbot ChatGPT hit a significant milestone, reaching 100mn weekly users.

Altman has been the face of OpenAI, impeccably connected in Silicon Valley and able to charm Washington. He has helped push the company towards commercial endeavours. The chaos around his exit, near reinstatement and subsequent replacement will give investors pause. OpenAI hoped to soon sell shares at an $86bn valuation — 66 times its reported annual revenue run rate. This is now in peril.

In public, OpenAI investor Microsoft has pledged support for the company. It has little choice. Disagreement will undermine faith in its expensive bet on OpenAI just as it attempts to persuade customers to start paying for AI-powered tools. But Altman’s departure knocked Microsoft’s share price by nearly 2 per cent on Friday. It fell another percentage point in after-hours trading.

In the battle between OpenAI investors and board members, priorities differ. The four-person board, which lacks heavy-hitting corporate experience, controls OpenAI’s non-profit parent and is charged with safeguarding the creation of artificial general intelligence. Investors are concerned with monetisation. Costs outweigh revenue. Further funding is required. Altman’s exit presents the possibility that he will create a new company that will compete for customers and venture capital.

Founders and co-founders at companies such as Reddit, Twitter, LinkedIn, Zynga, Dell and Google have all left and returned as CEO to various degrees of success. Comebacks depend on exit circumstances. Disagreements about strategy leave the door open. Poor personal behaviour does not. Altman’s exit falls into the first category. A future comeback is not out of the question.

Few co-founders lead their company in perpetuity. A 2018 study by the Harvard Law School Forum on Corporate Governance found that most companies were not led by their founder at the time they listed. Those who remained in place tended to have voting rights. Altman lacked the equity that might have provided him with these. His departure serves as a powerful reminder of the benefits of voting power.

Our popular newsletter for premium subscribers is published twice weekly. On Wednesday we analyse a hot topic from a world financial centre. On Friday we dissect the week’s big themes. Please sign up here.


Source link

Leave a comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Related Articles


The statue that moved — and the cousin I never knew

In July 1985, a number of Irish religious statues began to move. There...


Think Clothes Were ‘Better’ 50 Years Ago? Our Investigation Might Surprise You

LATE LAST YEAR, old trench coats began trending on X (formerly known...


The ‘Happy Dream’ of Running a Circus

When people ask me what I do for a living, and I...


US carries out second strike against Houthis

Unlock the Editor’s Digest for free Roula Khalaf, Editor of the FT,...