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- For a moment, OpenAI looked like it might collapse as staff threatened to follow Altman out the door.
- Silicon Valley no longer wants the fate of OpenAI resting in the hands of one person.
- "The company will be totally fine without me," Altman said on Wednesday.
It's rare to witness raw, naked panic in Silicon Valley. It's happened twice this year, though.
These moments strip away the carefully crafted thought-leadership blogs and backslapping social media posts that are the usual fare in tech circles. Then we get to see something closer to the truth.
The first of these revelatory moments came in early spring when venture capitalists panic-tweeted their favorite bank, SVB, into an unprecedented failure.
The second happened this month when OpenAI had a near-death experience that almost wiped out billions of dollars in investment from top VCs and Microsoft.
OpenAI CEO Sam Altman was fired by the board. He then threatened to join Microsoft and OpenAI employees were ready to follow him, which would probably have rendered the startup almost worthless and its products relatively useless.
A few days before this chaos, OpenAI was about to be valued at $86 billion in a special new investment round. So the panic erupted swiftly. VCs threatened to sue OpenAI's board, and some jockeyed to get in on whatever new situation might replace the fizzled startup.
Both calamities this year were avoided. All SVB depositors, including many VCs and their startups, were backed by the FDIC. And in OpenAI's case, Altman was brought back as CEO and all the employees stayed.
The OpenAI chaos finally subsided on Wednesday evening when new board members were announced and official — much calmer — statements were issued.
Until this moment, the consensus was that Altman came through this crisis looking even more powerful and crucial to OpenAI's future. A close reading of Wednesday's statements paints a different picture, though.
'The company will be totally fine without me'
Silicon Valley just realized that the fate of the world's most important AI company rested in the hands of just one person. It panicked and will no longer accept this situation.
Altman granted an interview to The Verge to go along with Wednesday's official announcements, but he forgot a key talking point. So he called the publication back to reiterate what is probably the central message that OpenAI – and especially its financial backers Microsoft and those VC firms – want to project:
"I learned that the company can truly function without me," Altman told The Verge. "The company will be totally fine without me."
Altman drove this home in his official statement, too, saying OpenAI's leadership team "is clearly ready to run the company without me."
"It's clear to me that the company is in great hands, and I hope this is abundantly clear to everyone," he added.
Looking for a Plan B
This makes sense. The startup's near-death experience unsettled the companies and developers that have come to rely on OpenAI's artificial intelligence platform. Some of these partners started looking around for other providers.
"A lot of friends of mine who were founders doing AI, basically look at this and go, we need a plan B, we can't depend on our entire stack on OpenAI models, because it could disappear tomorrow, just like it almost did," said Wesley Chan, cofounder of FPV Ventures.
Several startup founders told Business Insider that they were considering switching to an open source model like Meta's Llama 2, or Anthropic's Claude. And some said they were looking to switch cloud providers to Google or Amazon Web Services from Microsoft Azure.
The 'platform risk' of OpenAI
"This kind of drama just made some people think about their backup plan more," said Guillermo Rauch, CEO of Vercel, a startup that helps developers build websites that integrate with many of the biggest AI models.
The chaos made open-source AI models look more attractive because they rely on broad communities of contributors, rather than one startup that might suddenly lose all its employees.
"What's the better wave to ride long term?" Rauch wrote in a message to BI. "Open source (e.g.: Llama / Mistral), whose reasoning power is less than OpenAI, but has the entire weight of a huge ecosystem behind it, or the proprietary LLMs."
At the height of the crisis, one of Vercel's AI engineering leads pinged Rauch to say "let's remove platform risk of OpenAI" and get a backup running, the CEO recalled.
"This is a trend that has been cooking, and nothing was going to stop it," Rauch said. "But the feedback I'm getting from developers is that events like these make them re-prioritize and accelerate some of those explorations."
Expunging doubts
If OpenAI wants to become the next massive tech platform, it needs to expunge doubts like this as quickly as possible. And the best way to do that is to promise that the company will always be around — no matter who is CEO.
"We will enhance the governance structure of OpenAI so that all stakeholders – users, customers, employees, partners, and community members – can trust that OpenAI will continue to thrive," Bret Taylor, the startup's new board chair, said on Wednesday.
Madeline Renbarger contributed to this article.