But in 2018, two things happened: First, Musk quit the board of OpenAI after he said he invested $50 million, cutting the then-unknown company off from more of the entrepreneur’s crucial financial backing.
And secondly, OpenAI’s leaders grew increasingly aware that developing and maintaining advanced artificial intelligence models required an immense amount of computing power, which was incredibly expensive.
Balancing ideals with the need for funding
A year after Musk left, OpenAI created a for-profit arm. Technically, it is what’s known as a “capped profit” entity, which means investors’ possible profits are capped at a certain amount. Any remaining money is re-invested in the company.
Yet the nonprofit’s board and mission still governed the company, creating two competing tribes within OpenAI: adherents to the serve-humanity-and-not-shareholders credo and those who subscribed to the more traditional Silicon Valley modus operandi of using investor money to release consumer products into the world as rapidly as possible in hopes of cornering a market and becoming an industry pacesetter.
Altman, a 38-year-old techno-optimist who previously led the prestigious startup accelerator Y Combinator, tried to thread the needle between the two approaches. He struck something of a middle ground by unveiling new OpenAI tools gradually, first to smaller groups, then larger ones, to fine-tune and refine the tools before making them public.
ChatGPT’s success attracts Big Tech money
When OpenAI kicked off a seismic shift in the tech industry with its launch of ChatGPT last year, the company’s most prominent investor, Microsoft, greatly increased its financial stake. It upped its commitment to OpenAI to the tune of $13 billion.
Microsoft became the financial engine that powered OpenAI, but the nonprofit’s board of directors still called all the shots. Despite Microsoft’s sizable investment, it did not have a seat on OpenAI’s board.
All of this set the stage for Altman’s sudden ouster from the company earlier this month.
The board itself has still not explained why it fired Altman — beyond saying, in vague terms, that it believed Altman had not been “consistently candid in his communications with the board.” And the company’s structure gives the board that right: it has complete, unchecked power to remove the CEO whenever it sees fit.