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- Sam Altman has emerged from a boardroom battle at OpenAI bruised but victorious.
- A takeaway for other founders: control matters.
- Altman's former boss, Paul Graham, wrote a prescient essay about control at startups.
Sam Altman has been back in the OpenAI hot seat as CEO for about a week now.
On the surface, little appears different for the ChatGPT boss who was fired and rehired last month. He is in charge at the start of December, as he was at the start of November.
In practice, Altman will have relearned a valuable lesson about control.
Typically as a venture-backed startup grows, a founder's majority stake is diluted by the growing number of investors. A founder's narrative control can wane too if board members disagree with a founder's vision.
Altman did not, in practice, start with much control at OpenAI, despite being its CEO and, prior to the blowup, a board member. Firstly, he claims to have zero equity in the company. Secondly, the firm's unusual corporate structure places the board at a greater remove from its C-suite than the average startup.
Screenshot from OpenAI's website.
There is evidence this created tension.
After Altman's ousting, reports emerged of conflicts between Altman and board member Helen Toner, a researcher who wrote a paper that could be read as being critical of OpenAI's commitment to safety. This didn't sit well with Altman, per the Times. With Altman's return, Toner is now out.
Altman was likely already aware of the importance of founder control.
In 2010, four years before Altman became president of startup accelerator Y Combinator, and five years before OpenAI even existed, he contributed to an essay about founder control written by his one-time mentor and boss, Y Combinator cofounder Paul Graham.
Graham's post, from 2010, is a scribbly answer to a question he had back then: How common is it for founder-CEOs to retain control of the board? Graham emailed startups who had been through his startup accelerator to ask. He found most still had control past their first major round of funding.
"I feel like we're at a tipping point here," Graham wrote. "A lot of VCs still act as if founders retaining board control after a series A is unheard-of. A lot of them try to make you feel bad if you even ask — as if you're a noob or a control freak for wanting such a thing.
"But the founders I heard from aren't noobs or control freaks. Or if they are, they are, like Mark Zuckerberg, the kind of noobs and control freaks VCs should be trying to fund more of." (For context, majority control is often lost at the Series A stage of venture capital funding.)
Graham concluded that "the startups that can retain control tend to be the best ones. They're the ones that set the trends, both for other startups and for VCs."
The refreshed OpenAI looks friendlier to Altman's ambitions
Altman is not currently trying to sell a narrative that he is controlling OpenAI.
He told The Verge last month that his big takeaway from the board drama was that the company could function without him.
Still, look at what's changed. OpenAI's only female board directors have stepped down to be replaced with ex-Salesforce CEO Bret Taylor and former Treasury secretary Larry Summers — both friendlier to a more commercialized OpenAI. Microsoft, whose CEO is a keen supporter of Altman, will play parent to the new board as a non-voting observer.
A New Yorker article published last week claimed Altman approached other board members individually about replacing Toner. One anonymous source told the publication he played board members off "against each other."
OpenAI's version of founder control doesn't necessarily look like others: its CEO apparently doesn't hold the majority of stock. It might, however, now have a distinctly Altman-ish flavor.