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OpenAI investors considering suing the board after CEO's abrupt firing (reuters.com)
186 points by mfiguiere on Nov 21, 2023 | hide | past | favorite | 115 comments



While the unfolding situation at OpenAI is certainly complex, one can't help but question the role of D'Angelo in this scenario. Given his entanglement in AI development and his recent ventures that place him in direct competition with OpenAI, his continued presence on the board raises legitimate concerns. The essence of board membership, especially in a field as intricate and rapidly evolving as AI, should be rooted in unconflicted support and clear alignment with the organization's goals. If the circulating rumors hold any weight—those hinting at his involvement in the CEO's abrupt dismissal—then it only compounds the argument for a reconsideration of his board role. Entrepreneurship, while often a game of strategic moves, must also adhere to a code of ethics. If these stories of past betrayals among peers are more than just whispers, it does raise questions about the integrity of leadership and decision-making within such influential tech circles. In the interest of transparency and maintaining trust within the tech community, perhaps it's time for D'Angelo to reevaluate his position and possibly step down, ensuring OpenAI can navigate its path without potential conflicts.


I have trouble finding respect for Adam knowing he permitted Quora to gradually transform from something promising to trashing it’s quality for financial sellout to the point that it can no longer be taken seriously. I don’t understand how someone can let that happen.


Yeah I was thinking last night after hearing his involvement in this, does anyone else realize that Quora is basically unusable now? I mean it started from such a noble cause to answer all of humanity's questions to literally tricking end-users into clicking ads...


It’s not just this, you are given answers to related questions when the answer to your actual question is further down. Possibly to increase stickiness? It doesn’t make sense.


This is the most confusing thing any time I've clicked a quora link. I have no idea what I'm looking at. Who designed that? It's crazy how bad it is. They probably got a promo for it lol


It used to be good/great in the past but nowadays I avoid Quora like the plague, due to its massively confusing interface.


Quora is the text version of the Chumbox.

The chumbox is slang for the part of news site web design you... try to ignore. These sites managed to optimize their design for <10% of users who will click just about anything.


> I mean it started from such a noble cause to answer all of humanity's questions to literally tricking end-users into clicking ads...

I'm pretty sure you've just described the web.


Cough cough Reddit.


I'm honestly curious how Quora is still in business. I wouldn't say I was a heavy user, but I used to use it fairly frequently, and then it just became a minefield of walls and dark patterns such that whenever I get a Quora result in search I just go somewhere else. I used to hear people talk about Quora but now I never hear any sort of discussion about it from tech types, besides jests and disdain.

I completely realize that my experience may not track your average Joe, but I read an article from this summer that said Quora was planning an IPO, and I just am trying to wrap my head around how there would be any decent valuation.


Their SEO is very good. "I got it from Quora" is still an answer which carries some weight. And a lot of those answers have a long shelf life - easily 4+ years, even 20 in the case of, say, an answer about Steve Jobs.

So you have a site, with a lot of valuable links, on a platform where anyone can & will create more, with widespread name recognition. That's valuable.


Their SEO was/is technically extremely poor (per Google's rules) and should have gotten their content largely banished from Google. They were intentionally violating one of Google search's primary SEO rules: do not show the Google bot and users a meaningfully different site. Quora was doing exactly that, providing a very different experience to the non-signed in search user (arriving to the site via search results) vs Google bot. Google let Quora get away with SEO murder (speculation on HN has always been that it was due to the close relationships in SV), which is the sole thing that has kept Quora propped up (otherwise its traffic would have been properly obliterated for its blackhat SEO practices).


I always assumed Quora was a classic example of a company that raised too much money.

They had a fantastic, high quality service up to around 2015 - but they raised at least $226m at a (one point) $1.8bn valuation by 2017: https://techcrunch.com/2017/04/21/uniquorn/

Justifying that valuation requires a metric ton of growth hacking that appears to be incompatible with maintaining a high level of quality on a Q&A site.


Quora is my biggest internet disappointment by far. I used to spend a lot of time there between 2013-2017. It wasn't perfect but there were great questions, great authors to follow, and the feed consistently served me quality content.

Then they flipped the switch on the new algorithms / monetization strategies and it all turned to shit. All of the thoughtful writers were replaced by whoever could churn out the most sensational (and usually blatantly false) answers. Whenever Google leads me there now I am physically pained by the awful user experience and absolute drivel in the top answers.

So yeah, not impressed at all with D'Angelo


One of my favorite use-cases for Kagi is to block Quora from all of my search results.


A classic case of enshittification. Quora is the new Yahoo Answers.

The funny thing is that there will be a new one soon probably.

Or is it the AI app he’s already building?


Wasn’t this the game?

Cheat people into generating top quality content for you. Once you have enough, put all of it behind a paywall. And use all that content as your chips in the new AI game.


Also interesting that D’Angelo was the one who was negotiating with OpenAI leadership as representative of the board,[1] and the employee protest letter states that the board "informed the leadership team that allowing the company to be destroyed would be consistent with the mission" during these negotiations.[2]

[1] https://www.bloomberg.com/news/articles/2023-11-20/openai-s-...

[2] https://www.wired.com/story/openai-staff-walk-protest-sam-al...


Note that "allowing the company to be destroyed" is outside of the literal quote (which is just "consistent with the mission"), so "destroyed" may be an appraisal by the leadership that the board doesn't share.


Some speculate that Helen and Adam were on the verge of being forced out by Sam, the former in the lieu of new investors needing a board seat for their person and the latter due to conflict of interest (via Poe after GPT Store launched on Devday). Once Ilya bought into their concerns, Adam and Helen, without informing any stakeholder (incl Microsoft), moved swiftly and decisively before any director changed their mind (like Ilya eventually did).

https://twitter.com/alexandrosM/status/1727026942560330172 / https://archive.is/l89JO


If you're an investor in OpenAI's for-profit unit, the very clear lawsuit target is D'Angelo. His extreme conflict of interest problem is a personal bankruptcy waiting to happen given the value destruction OpenAI has just (probably) suffered. Investors should be promptly slapping a multi billion dollar lawsuit down on the table: resign or else.

Then stop messing around and fully split off the for-profit unit, run by Altman. They're in perpetual conflict. The non-profit can use its ownership stake (liquidate it gradually) for funding for a very long time and can still pursue its mission of safe AGI. It should provide tens of billions of dollars in funding for the non-profit. The for-profit can then be unleashed to fully pursue commercialization related to GPT without hold-backs.

The absurd fantasy of the dual OpenAI missions co-existing in peace needs to die. They can't co-exist peacefully within one body, everything about their requirements to thrive going forward puts them at odds with each other (from speed, to compensation, to funding requirements, to management approach).


Nothing is absurd about expecting a company, run by a group of people, to uphold the values and mission its existence was predicated upon, down to the name of the company itself. Especially in such a short time frame.


Of course it's absurd: it was all a game of playing pretend. That's the fantasy part.

It hadn't been open AI for a long time.

The entity that you're referring to no longer exists at present. They can revive it by splitting these inherently at-conflict entities apart.

With tens of billions in funding via stock liquidation they can go back to pursuing actual open AI and have a lot of money to throw at doing so, without concerns for conflict with a for-profit mission in relation to a funding source.

Today the mission of being open with their AI tech is at conflict with the funding base: GPT commercialization. At least with how they have been operating for years now. There's no fixing that in the current structure.


All great points, it’s wild that this small non-profit board had so much power with so little at stake for themselves. That’s a typical feature of a non-profit board, but in this case the entity wasn’t a typical non-profit.

To your points, such a split makes too much sense and the ship has probably sailed when the employees showed they have no loyalty or responsibilities to the organization itself.


This seems the simplest explanation, and relevant to the post, cause for a lawsuit. Helen could be principled about the mission, but difficult to say Adam was, given what he stood to gain.


Given that this debacle turned out to be NOT about AI safety (as Emmet Shear confirmed), the whole "slowing down" angle becomes about interests.

Who else had the commercial/totally-for-profit interest in slowing OpenAI down, and was in a position to do something about it?

It is hard to see what unfolded as anything but active sabotage.


Indeed, this is most puzzling and it is now a 33% chance that he's the one that started all this. If it turns out that is true the chances of a successful suit go up considerably.


Who cares who started this? All four are equally responsible. You can’t vote then say it wasn’t your fault (unless you were literally coerced).


That might cause the board to split up further, there is already one defector from the 'gang of four'. If D'Angelo started it the other two might say they were pressured by him and come out publicly against him (like Ilya Sustkever did).


I'm starting to wonder if it was a gang of four or if it was a gang of three and they used one of the cofounders (Ilya) to turn on his cofounders to get control of the company.


Likely the second or it was a gang of one who used the inexperience of the other board members to get them to act against their own long term interests. That does not absolve them, they are still board members and they should own their decisions.


That's a big reason why VC's prefer co-founders rather than solo founders.


I know it’s nuts, but is there any chance this was orchestrated to some degree? If someone wanted to throw off the non profit structure, they couldn’t have done a better job than this. I mean, it really works out well for Microsoft.


You forgot the "It's important to keep in mind" part.


Perhaps ironic? Your wording sounds exactly like is was written by ChatGPT (especially the last sentence)!


First thing I thought of, but I didn't want to be the first one to throw out accusations. That comment has the same unnatural writing patterns that ChatGPT uses. Something about the style makes me feel uneasy when reading it.


What's funny is that, as content written by AI becomes normalized across media, which it inevitably will, people will necessarily imitate the style of AI if they want to appear serious.


:)


and a smile face exactly like how chatgpt would do, too! ;)


Did Sam Altman have any conflicts of interest, between OpenAI's charter and his other investments?


The answer to that one is of indeed YES.

It would appear that there are different rules when profit is involved, which ironically is exactly what OpenAI's nonprofit parent was intended to prevent.


Yes, it would be funny if it wasn't tragic: the exact scenario they wanted to prevent materialized but from the one angle where they weren't covered. I predict this is the last time that a non-profit is put in charge of a for profit that has investors. That mistake is not going to be made again. And it also shows how risky it is to put together new governance structures even if they seem to be a good idea at the time. Because the fig leaf suddenly turned into a hammer the size of which would be hard to replicate in a normal governance setting. Unparalleled destruction with zero regards for the consequences.


Purely hypothetical but this presents a tiny angle which Adam could come out of this as a reasonable person... if all of this was basically him saying "I have to go. You have to go. We are both compromised and our positions are now against the charter" then maybe Sam was fighting against that because of the team he built and loves leading. This is one reason I would accept Adam's role if it is just him hanging on to make sure Sam is out before leaving himself.

But if that's the case then just say it.


It's a stretch but it could be true. Unlikely though. And if it were true I would have expected Sustkever to spill the beans by now.


the one angle where they weren't covered

Not sure what this is from the thread context.

Unparalleled destruction with zero regards for the consequences.

Isn't this the size of the hammer needed, in case there's a danger of misaligned runaway superintelligence?


> Isn't this the size of the hammer needed, in case there's a danger of misaligned runaway superintelligence?

Possibly, but then you are better off not to develop the thing in the first place.

And you should only break the glass in a break-the-glass moment.


If a single “donor”/investor owns you you cannot enforce anything nonprofit or not.


Which investment?


Absolutely, but that seems to have been a prerequisite for joining the board of OpenAI.


Yes but that's most boards these days, at least by the standards of a layperson.


D'Angelo is mad he weaponized web design against Quora users for years because he would go bankrupt otherwise, and now he is going bankrupt anyway. Adam is at war with god, not OpenAI.


Adam is at war with god, not OpenAI.

Where does the phrase, "is at war with God," denoting opposition to fundamental laws of reality, come from?


Stab in the dark here, but I would not be surprised if such a phrase is untraceable in origin due to long usage. There are many ancient stories where men battle with gods and they are analogous to fighting nature. Especially considering many gods are considered to be those that control nature and who's moods are characterized by it. We can even find references in the bible but I don't read Hebrew so idk if these are direct translations and not bothering to check changes from versioning. But I suspect that this phrase, in some form or another (battling with god, fighting god, etc), is rather old and not even unique to westerners. So I wouldn't be surprised if the phrase is older than language itself. But I'm not a linguist or historian and this is pure conjecture. Just someone who enjoys language and mythos as hobbies.


My guess would be that it's from Kate Bush's Running Up That Hill (A Deal with God), which leans on the story of Sisyphus. She never actually uses the word "war", but does use various war metaphors ("see how deep the bullet lies", etc.).


To me, it's a "Deal with God" not being at war with God. Deals with gods and deals with devils seem to have something in common, in a way which is topical to discussing OpenAI.


That's the perennial debate about the song. Does Bush want to swap places with her ex-lover, or does she want to swap places with God so that God can feel the pain of continually running up that hill? My take has always been the latter, given the Sisyphus metaphor (Sisyphus was condemned by a god to keep rolling a boulder up a hill). It's not war, no, but there is clearly some major hostility.


For me personally, likely Memnoch the Devil by Anne Rice.

One of those random books you purloin in youth, and a total departure from her standard narrative fiction fare. It's a retelling of the original cosmic myth from the... rebellious perspective.


So OpenAI has no conflict of interest clause?


For those keen on following this situation as it evolves, consider subscribing to keywords 'OpenAI' and 'Sam Altman' via my Telegram HackerNews alerts bot to receive related stories. The bot is completely free and open-source. My aim here isn't financial gain or power, but rather to offer a useful tool for the community (https://github.com/lawxls/HackerNews-Alerts-Bot).


Based on my understanding[1] about the board, essentially it's all "I know a guy who knows a woman who knows a guy" situation. I.e. a conflict-of-interest minefield.

Also, none of them seem to have the temperament either (they are all relatively very young) to be able to handle such a complex topic as AI.

[1] https://news.ycombinator.com/item?id=38350890


youth wouldn't have a bearing on their ability to comprehend the complexities of AI, but maybe they have less experience with startups/companies/management.


I agree. I indeed meant the non-technical complexities that (a certain kind of valuable) experience brings.


The concerns are not about the health of the company here...


The bigger question should be – why does a "non profit" have investors in the first place?


There are multiple corporate entities that make up "OpenAI". See box diagram: https://images.openai.com/blob/f3e12a69-e4a7-4fe2-a4a5-c63b6...

(image from https://openai.com/our-structure)

The non-profit entity (OpenAI Inc 501(c)(3)) "owns & controls" the for-profit entity (OpenAI Global LLC). Somewhat similar to non-profit Mozilla Foundation owning the for-profit entity Mozilla Corporation: https://www.mozilla.org/en-US/about/governance/organizations...

The non-profit 501(c)(3) entity doesn't have investors but they have a governing board that made decisions about the for-profit entity that severely degraded its equity value. Investors and employees are very upset about what the 501(c)(3) did.


The bad bit is that the board governs all of the entities directly or indirectly, even the ones that nominally would not have been in a position to affect the mission of the company. That creates yet another layer of possible conflicts of interest. For example, they could have allowed the small investors and the employees' entity to be governed by that group, but instead they chose to govern them.

This is a mistake that is made quite frequently and one that I always advise against: if you have no stake in an entity you shouldn't be governing it if you have a role elsewhere in the org chart because one day you might find that the interests between those two positions collide.


The structure doesn't make a lot of sense to me. A for-profit entity is for making a profit regardless of who governs it. It may in some way make the Effective Altruism people feel better about it but if they wanted that kind of control staying a non-profit was the way forward. Getting an $80 Billion valuation Effectively threw the Altruism out the window. Altman did what every SV CEO would do in his situation - the opportunity to dominate the sector presented itself and he moved to secure it. That is what CEOs do or they get fired. Not only that - that is what the employees want them to do because they get rich.


per FT:

> What’s the point of all these subsidiaries?

> They’re to give Microsoft a stake in the commercial bit while wearing no responsibility for the Asimov-y stuff that concerns the management layer. This seemed to suit both parties. “From the beginning, [Microsoft] accepted our capped equity offer and our request to leave [artificial general intelligence] technologies and governance for the Nonprofit and the rest of humanity,” they said in 2019.

https://www.ft.com/content/6dd292c0-a551-4609-8649-f6b69b20f... (paywalled)


I don’t think the nonprofit does, the majority owned subsidiary does.

It is not a terrible setup if you need funding to get off the ground but also want to be able to operate the nonprofit on a stream of income being thrown off by the for profit subsidiary going forward.


I know everyone nods when this is said, but is a non-profit owning a for profit entity actually a thing? Isn't the profit motive a thing that taints the transitive closure?


Yes, it's a relatively recent development. https://nonprofitquarterly.org/newmans-philanthropic-excepti...


If this format is recent, how does Mozilla (which is considerably older) and fit into this?


It's a setup that in practice usually ends up equivalent to the nonprofit not existing in the first place. Seems like this happened here, too.


What does existing mean here? That the nonprofit part ceases to exist? Or not effective?

Can you name some examples of such failed setup?


Because OpenAi needs prodigious amounts of money to build its various products, far more than can be raised from donors. So investors are needed since otherwise the company could not exist at all.


it doesn't (directly), the non profit owns a for profit company that has some investors with an upside cap.


Do we have a timeline for the board members leaving over the last few years? I'm curious how the numbers dwindled. If the more ideological non employees stayed then it would increase the division between them and the "employees."



I commented in another thread that the timing of this uniquely enabled this coup. The board went from 9 at the beginning of the year to 6 before Sam's firing: https://news.ycombinator.com/item?id=38358208


That's a day later than I expected. The investors are not named, I wonder what the grounds are (there are several, quite narrow paths) and whether they will prevail. The fall-out from this will take months if not years to come to a close. TFA doesn't have much actual information and seems to be mostly speculative, the whole thing could have been made up and you wouldn't know the difference.


The same article was posted here yesterday.

And it is pure mumbo-jumbo; I haven't talked to anyone and I could have told you "Microsoft has a legal team that will be looking into this", which is all the article actually says.


Yes, it is a very thin article. You could have written this on Friday evening without any sources to back it up and nothing of value would be lost.


Given the board hasn't made a public statement at this point, I suspect it's because lawyers have advised them not to.


Yes, that's my reading as well. They want to avoid making things even worse than they already are.


Yeah you don’t want to be suing if it takes even 6 months to play out. The new company should be formed by Altman and the team, with MS funding and providing the IP. This has to be the best alternate route for Altman/engineers. I would say even Altman and team and MS 50/50. They both have leverage


Genuinely curious if they really could simply "provide the IP". Is there precedent for such a situation, seems like what is left of OpenAI could sue Microsoft.


What are those several narrow paths?

The article is pretty speculative but it does have a law professor basically saying he can't think of much.


Duty of care towards employees and investors, decision made too hasty, conflicts of interest, insufficient balance between the various interests and responsibilities.

Note that even if the grounds of the lawsuit are narrow if you prevail the damages can be immense. So the professor is talking about the likelihood of success, not about what will happen if the plaintiffs prevail. The plaintiff with the strongest motive (Microsoft) is now actively contributing to the damage so I doubt it is them that are going to sue.


Conflicts of interest sure if they were clear and proven. The rest sounds like there’s not much to work with.

The only actual action is firing an at will employee. The various supposed consequences are sort of second order effects that could easily be ascribed to the action of others and most of them haven’t actually happened as of now.

There’s a LOT of people in the world that have absolutely no interest in a court precedent that a board can’t just fire a CEO if they want to. This is basically a textbook application of the business judgement rule, and it’s even more clear cut since it’s a non profit and the board gets to decide how they want to interpret the mission.


I would rather not be on the receiving end of a lawsuit for any of those. Besides the possible reputation damage there is the real danger of personal liability.


Not really.

People can sue anyone for anything and do all the time. Being sued by powerful people is worse than being sued by random people. These are truisms and meaningless observations.

There's not really much of a case for the premise that you can sue the board of a charity for a hiring/firing decision. What's the rationale?

There isn't one. And the law professor quoted in the article basically said yeah I can't really think of one. And you haven't stated one here.

Look at this in the reverse. If the board of Microsoft fired Satya tomorrow suddenly would OpenAI have cause of action for a lawsuit against them? Of course not, what would even be the premise for that? It's literally the same fact pattern though.


MSFT doesn't have a fiduciary duty or a duty of care like a director does. They are shareholders.


Of course they don't. I said 'plaintiff' not defendant.


People make crap decisions all the time. So long as the board can claim it was their belief it was the best decision for the company/mission, is there a precedent for taking the team to task?

That being said, everything is securities fraud.


They can make the claim, that's easy. And then they will have to show all of the relevant documentation to prove that that claim is what they say it is. Meeting minutes, text messages, emails etc. And there had better not be evidence of deletion or alteration of any of those, which given the fact that there is already one defector will be very hard.


Even if they just had a 12 second meeting, "You know what, the current CEO is trash. He did not send me a birthday card. Shows lack of character, unbefitting the company. He is gone" - does the board not have the broad latitude to make such decisions? Not sure they have to document the decision beyond the action.


No, a board is supposed to weigh their decisions carefully and only after due deliberation and concern for all possible outcomes should they decide.

This isn't a boy scout operation, it's the governance structure of a 90 billion dollar company. That comes with some requirements regarding temperament and wisdom.

They definitely would have to document the decision, if they wish to sidestep future liability due to being challenged on that decision and not being able to prove that they went through all of the required steps of the dance to make an irreversible decision with far reaching consequences.


Sure but Microsoft doesn't have standing.

You can't just sue to reverse decisions you don't like if you're not a party to the decision at all.

What's your theory of standing for this cause of action?


Lack of duty of care exercised by board members with conflicts of interest all over the place affecting innocent bystanders in their internal squabbles.


If anybody holds those "PPU's" and this action messes up a financial aspect of them - either the revenue or their market value - then the courts are the proper venue to sort out what the fuck these things even are and how that interplays with the non profit duties

If anybody holds actual equity, same thing applies, just slightly simpler.

Its completely a "we'll see" moment, and a lesson in not ever doing anything aside from the Delaware C-Corp when outside investors are involved.

Open AI tried the non-profit only route and only received $130 million, even with the stacked deck they had. Our system simply isn't compatible with altruistically crowdfunding things that would be optimal to be funded. They added the for-profit component and are selling shares of it at an $80bn valuation, that reality is not compatible with the non-profit's mission and duties. That's fine, I am only stating it as matter of fact.


Yea, you know it was investor FOMO when they accepted the ridiculous corporate structure that OpenAI has.


Wild speculation aside, it probably wouldn’t be a good thing for this lawsuit to be successful.

Broadly speaking, allowing a nonprofit to own and control a for profit is already a big loophole in the tax system. If the nonprofit then becomes technically beholden to the shareholders of the for profit, then what exactly is the point of the nonprofit?


There is such a thing as Directors and Officers insurance, which I assume was provided to every member of the board. Maybe someone with more legal expertise can advise here, but from what I know, it does not protect you against certain things. Being sued by another member of the board might be one of those.


It wouldn't shield you from things that you purposefully did wrong, for instance fraud.

Far more than you ever wanted to know about this:

https://www.investopedia.com/terms/d/directors-and-officers-...


Thanks, I was briefly considering being a director at a nonprofit. I concluded that it was way more risk & hassle than it was worth, even with D&O.


I've been a director on non-profit boards for 20+ years. These were small organizations, nothing at all high profile. Well-run boards with honest, dedicated members have little to worry about. Thing is, fundamental to board integrity is the concept that directors must avoid even the appearance of conflicts of interest. If directors adhere to this advice serious harm is unlikely.

The OpenAI board members were vivid examples of massive COI. It was bound to blow up in their faces. They really should have known better. Hard to believe such smart people could act so wrongly. Truly unbelievable.


Thank you. Both for speaking out and for your work.


Likewise, but for two different for profit companies. I figured that if I wanted to do that sort of thing I should focus on it entirely and first bone up on the exact ins and outs and I don't think I have the right temperament for such a role (to put it mildly).


This is a complete non-story. They have no recourse, as summed up in the second-to-last paragraph:

> Even if investors found a way to sue, Weitzel said they would have a "weak case."

In similar news, I am "considering becoming a billionaire".


Still don't know why Sam Altman was fired. Do the investors know?


I wonder who's holding the bag on this D&O policy. Likely going to be a spicy payout for some insurance companies.


Doesn't a non profit board (or any firm) not have an (strictly legal) obligation to investors?

https://hbr.org/2010/04/the-myth-of-shareholder-capitalism


A nonprofit board that has control of a for-profit LLC and a for-profit LP that acts as a holding company through which it controls the LLC has some obligations to the members of the former and the limited partners of the latter, but the exact obligations will depend on the governing agreements of each entity.


My takeaway is that: matters are complicated! Is there any well known precedent for this type of structure?


Is there any chance this had to do with the rape allegations from Sam Altman’s sister?




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