From Mahart where Innovation of Money and Power Collie in Silicon Valley, NBN. This is Bloomberg Technology with Caroline Hyde and Ed Ludlove.
I'm Caroline Heinde of Bloomberg's World headquarters in New York.
I'm Ed Ludlow in San Francisco. This is Bloomberg Technology. Coming up.
We take a deep dive into the shock olster of Sam Altman from Open Ai. What happened, what lies ahead for the AI startup as most of the company's staff threatened to depart and.
A clear win for Microsoft shares of the tech giant rises. Analysts see risks contained for the company's AI ambitions as Altman joins Microsoft to lead a new advanced AI research team.
Plus, we'll speak to developers in the field of AI and the venture capitalists backing them this hour to discuss what the ecosystem looks like for these startups and in the upheaval and Open Ai.
This we speak, there are hundreds of Open Ai staff that are taking action. Let's break down the news with Bloomberg's Rachel Metz, who is joining me on set in San Francisco, having stayed up with me all weekend to break this story. What do we know about what's happening inside Open AIHQ right now?
It sounds like the majority of the company's employees have said that they will leave if their demands are not there. They are really upset about this ousting of Sam Altman and then the subsequent resignation of Greg Brockman.
So the numbers, I think are that five hundred and ninety nine out of seven hundred and seventy staff. In other words, the vast majority of staff have signed this letter. Who side did this staff on here? I mean, this is hard to understand that we're talking about everyone other than those that have departed already.
Yeah, pretty much. I mean this What I thought was really interesting when I saw this letter early this morning is that it makes it very very clear whose side most of the employees are on. Like I think before there was a sense that a lot of people were on Sam Aultman's side, but it wasn't crystal clear. This is saying, hey, we almost all of us are very angry, so angry we're willing to leave our jobs at what has been the world's leading independent AI company.
Rachel number twelve took my eye on the list of those who have signed this letter. It's Ilia Ilia Siskeva, who is on the board, who.
Made the cools.
We understand through all of your guys reporting made the calls to Sam Auntlan and Gregg himself to basically let them know that they're no longer going to be at the company.
Yeah.
That's really a bit confusing, right, I mean at first I was like, hmm, but you know, it's been a really long day that's lasted three days, So yeah, I mean I think there he we did. I think it was this morning that he made a mistake, right and he I mean it sounds I don't think he wants the company to explode. Perhaps he didn't anticipate what the consequences would be of the actions he was taking.
And no wonder we are getting so much views and theories being shared ultimately about corporate governance. Will go into that much more later in the show, Rachel, But I'm interested in also ultimately who's being drafted in to replace it. How on earth does the new CEO of open AI try to ensure that we don't have this mass departure.
That is an excellent question. So the person who was named very late yesterday as the new CEO by the board, Emmett's sheer. He was a co founder of the video game streaming service Twitch, which has also of course been used to for all kinds of streaming at this point, em it is a little bit is more on the conservative side of tech chnology development in the sense that he is in favor of slowing things down somewhat, which
is what Ilia had been also pushing. So sort of, you know, aligned with the board members and with Ilia, He's gonna probably have to do a lot of convincing to the staff if he wants to get them to stay with him in charge. It's going to be very interesting to see what happens over the next I was about to say days, but let's say hours.
Well, let's recap. It's only been forty eight hours essentially, maybe more since news broke that Sam Outman have been fired. This is the timeline of what happened. You and I and all of our colleagues spent most of the weekend with everyone else thinking Sam's coming back. This is happening based on the reporting since explained to us what actually happened and the chronology of events.
So it how far back do you want me to go?
Here.
Gosh, let's say we start with Sam being fired on Friday.
Okay, on Friday, we were told that Sam had been fired by the board, which I think came as a shock to probably pretty much anybody except for the board. Once that happened, it was a scramble to figure out, well, you know, what happened here was did something really bad happen?
It sounded very mysterious, and information started coming from Open Ai executives themselves in the form of memos they were sending internally that the board has not told us of any malfeasance, for instance, which I think was the word used in a memo that bred Lightcap sent out to Yes, yeah, thank you. So then it started to sound like Mira Marati, who was named interim CEO. She had been the chief technology officer and increasingly a prominent figure at the company
alongside Sam. It sounded like perhaps she was going to rehire Sam Altman and Greg Brockman, who had been also at the company and quit after Sam was ousted. Then, in a last minute twist, it sounded like Emmett Sheer was hired, and now everybody assigned this letter, or not everybody, but most people assigned this letter saying, oh, we're going to join this company that Microsoft is now creating, that
Sam and Gregor are going to run. So if you you know, if you don't bring them back essentially So, I don't know about you, guys, but I keep just kind of turning left and right. I'm not really sure what's going to happen next year.
Whiplash and a whole lot of discussion on what is meant to be holiday week. Rachel Mets, We thank you so much making time for us when I know you've just been at the grindstone with your reporting. We thank
you so much. And look we just finished where well, Rachel was discussing where next for Microsoft as it sets up this new AI focus point, what is the impact on the publicly traded company, what of Satyr and Nadella and really his ability to turn this story around in the final few hours joining us as Jeffrey's senior Internet analyst, brend Phil Brent, You've got a rating on Microsoft four hundred dollars price target? Is this a positive as it stands.
As a standard, It's a win win for Microsoft. I mean they get the number one up, up and coming individual and tech leading AI journey. And then secondarily, they've been talking about this for a long time. How do they reduce their independence on one vendor like open ai and spread their AI bats across open source, across their own languages, across other languages. And we think that Altman can probably steer that chip in a really good way.
From internally at Microsoft, obviously, from a hiring perspective, if you've got over five hundred people signing a petition that feel this strong, I've never seen this in my coverage at Tech in twenty years, or literally five hundred people sign a letter.
Internally, you've never seen this at Tech ever.
So if they feel that strongly about him, and he says, hey, would you like to come over here to Microsoft? Like, what's the tailent pool? Microsoft can to look like? You know two months from now, it's going to be insane.
Well, friend. The question that I hear out in the market is will Microsoft buy out the rest of open Ai? Can Microsoft buy out the rest of open Ai?
I don't know if they can.
They obviously have an eleven billion dollar plus stake, so they care for the future.
They want to ensure this happens.
My view is actually open Ai will get eventively.
That board settled down.
We'll get the employee settled down and hopefully keep everyone in place. And I don't know their incentive structure, but I'm not sure that I'd want to lose all my incentive comp and stock options in open Ai just because I'm upset the CEO left.
I don't think that makes a lot of sense.
So my sense is this ship will be calmed at open Ai Microsoft with Via Nadella.
He's the best negotiator intact.
He'll figure out a way to ensure that they keep this intact, keep their investment preserved, but also have the best of having you know, Sam and team there. So I look at I think there's going to be a better outcome, hopefully for open Ai and their employees, where they can get SOMEDISI board members in and get them calmed down. I understand why they're is upset, but again, I can't recall a story in twenty years where that
many people signed a petition would walk out. I think that you're going to end up seeing a situation where there's a middle ground that's met and that hopefully both camps survive peacefully and we move on and we can of enjoy our Thanksgiving weak.
Do you think Microsoft remains the key player in AI? Therefore, can they remain basically still having the distance between themselves and ultimately the viewpoint that alphabet's behind.
For example, Microsoft's crushing it.
I was up at the Microsoft Developer Conference Seattle last week and you could barely get in to see some of these demos. The pace of innovation is like nothing I've seen covering tech for twenty years. You talk to product managers that are not spokespeople for Microsoft and talk about the pace of the innovation. And we were talking about months when they said it was go time to launch in a product. Now the product isn't perfect, it's not gonna it's not going to be the smoothest ride
out of the gate. But the level of innovation is beyond anything we have seen at any any time I've spent covering Microsoft, even as a developer of Microsoft in the nineties. This pace of innovation is off the charts. They are so far ahead of everyone else. And we do believe that, you know, Amazon is gonna also be in the mix. So our thesis is Amazon and Microsoft. When the enterprise Google wins the consumer market, they're very different markets, but all three will have a seat at the table.
All right, Jeffrey, Senior Internet analyst Brent Hill on the Microsoft side of this story. Coming up on the program, we will continue the conversation on Sam Mountain and on open ais one. Hundreds of employees threaten to leave the company if the board doesn't reside the VC The AI reaction is next. This is Bloomberg Technology to recap our
top story. In a letter to the open ai board from hundreds of employees, the vast majority of those left that open ai is saying they will resign from the company and join the newly announced Microsoft subsidiary led by Sam Outman and Greg Brockman. If the board of open ai does not resign, lots of implications joining us now, as someone that knows open Ai very well worked with that company now leads his own startup, Octane. Let's bring a match licked Octane AI CEO. First off, what have
you heard from open ai? You are essentially a developer that relies on the underlying technology. You're trying to build using underlying technology. Have you had any update from open Ai?
Yeah, so, Octer the I We've been around since twenty sixteen, we now are built on top of open EI's GPT four.
We help entrepreneurs run AI automations.
We've helped them generate over half a billion dollars and a lot of that is because of what OPENINGI has provided us. So this weekend has been really tumultuous. I'm a big believer in Sam. The community is a big believer in Sam. I know him from back when I was my combinator in twenty twelve.
But open aie we just had dev day.
I was there. It was the peak of their technology. Excitement was off the church. It went really really well. Now there's a little bit of a lot of mistrust on what's going to happen.
I am hearing from open.
Ai that they are expressing support for developers. They're going to make sure the API stay up, the technology is not going to go down. But this weekend has been a lot for anyone in the AI ecosystem.
Now, let's stay with your relationship with Sam and the company from minute. You know lots of people that work there, You're friends with people who rely on the ecosystem as well. In your minds, is there a path forward where Sam comes back to open ai or were looking at a new look open ai and trying to understand how you work with them and how others work with this new look open Ai.
It's it's really unclear. I think over the weekend we thought Sam was going to come back. Now that Satya has, you know, announced that he's over at Microsoft, Soya also, you know, obviously has to make sure that the Microsoft stock is performing well. I don't know if he can flip back on that. So it's a really sticky situation. It's it's unclear. I have no idea what's going on. I don't think that open i employees know what's going.
On, Matt. Much of this is about a concern of the pace of innovation. How you ever had any concern are indeed the ability for open ai to live up to the amount of demand that we were seeing as well?
Open ai has treated something that literally is magic. They're on the forefront of AI. They're the soul of no matter what.
Anybody wants to say, They're the soul of the AI community or the movement. Right now in terms of you know, have I thought about is ai going to go too fast or is it going to go too slow?
I think that this disruption is definitely causing it to go slower, and I would like it to go faster as well as a lot of people in the AI community. We rely on this technology. It's allowing you to put human like intelligence inside of your code, which means that the program can write content, it can talk like a human, and it can make reasoning decisions like a human. It can be autonomous, and it's just getting better at a
breakneck speed. So this disruption with Opening Eye, for myself and for anyone building on top of this technology, means that it isn't going to go slower. Is it going to be pulled back? What's going to happen next? It's this is not an ideal situation by any means.
What do you think it means in terms of your desire to work with a newly formed unit with a Microsoft or indeed without the competitors MAP.
I think the Opening Eye was seen as someone that you could beats.
It was too big to beats.
And one of the interesting things that is happening because of this weekend, because of all of this chaos, is now no matter what happens, let's say they bring back SAM, everyone everybody stays open. AI is not infallible. They are someone you can beat now, and that actually opens up a tremendous amount of opportunities for new people, whether they're ex employees of open ai or other entrepreneurs, to go start companies that compete with open ai. And I think
that that's going to happen. This leaves a huge open for that. Any event that a lot of people leave open Ai, maybe a bunch joined Microsoft and go join Sam and Greg, a lot of the other ones are going to start companies, and I think more capital than ever is going to flow into AI.
You know, just this year, I.
Started a venture capital firm called Theory Forge Ventures with Ben Park to do just that.
And this is a sad situation with open ai.
It makes me sad, but at the same time investors are going to be clamoring in.
Mat Schicked obtain Ai CEO and indeed avention Capitalist. We thank you so much. Turning back to where we left off with our open Ai conversation, the drama, the impact on the AI landscape more broadly, Sarahgayo, founder of Conviction. It's a venture firm purpose built to serve AI native companies and what we were just talking to Matchlick who thinks that more innovation will start ups are going to come of this, Sarah, do you abide by that silver lining to what feels like a cloud right now?
I mean I would start by saying I have such enormous respect for the work Sam and Greg and Illi and the entire openI team have done over the years. Right So before we talk about silver aligning, I think we should talk about the contribution they've had in terms of igniting a technology revolution. It's just very sad to
see it happen. And since your respect to Ilia for you know, a public apology for something he regrets, whatever the outcome, this is his life's for work and he has made a tremendous contribution to the enhancement of AI and many of the startups that we back and partner with open ai in like Harvey, which is legal AI and a portfolio company for open Ai. We benefit from all of that innovation. I think that being said, the ecosystem, the landscape is much more open than it was a
week ago, which is wild to say. Opening is both revered and feared. In its current state, it is much diminished.
Sarah, delight to have you on the show. You know everyone you know the players. You yourself and not invested in open ai, but the ecosystem you are so closely connected to. Just tell me your reaction, frankly, your how you felt this weekend watching that unfold.
Yeah, I mean I started with sort of respect and sadness for friends who work at open AI. I think my secondary action is really just as champion level business people, you have to hand it to Saya and Kevin and managing all of this. The multiple on Microsoft stocks and Saya took it over in twenty fourteen is up ten x from what was already one of the largest five.
Companies in the world.
So I am and I'm just floored by their ability to navigate the situation. It's incredibly hard to be this aggressive and strategic and steering so large a ship and anticipating the title wave and coming out so far ahead. So all roads from here are paved the gold for Microsoft.
I think, going back to the first question, we are an AI focused early stage investing firm, right and so a part of it is a recognition that there are opportunities at every layer, which we continue to believe, but now even more so for the independent foundation model labs such as mistral and inflection and anthropic, and I think there I think there's increasing interest in open source from yes, corporations and developers just in having more control over their
own models and running them monitor on their own infrastructure, and infrint platforms like Base ten, and so there will be continued capital for startups making these bets from investors like in Conviction, and of course we're full stack and application level companies as well.
You've invested in startups building your own large language models. You've interviewed on your podcast leaders some of the firms with making bigger models with much many more billions of parameters. Does this weekend make it a more competitive marketplace for building generative AI technology?
I think companies are. So there's sort of two dimensions, right, There's like what it takes to compete, and of course like the reaction from the ecosystem of customers and developers. This set of events, of course gives all of open AI's customers and developers pause. They're making long term bets and they want to understand the incentives and staying power of their partners. My experienced startup founders are sometimes reluctant to ask for the early check or seem too profit
seeking or capitalists to their customers. But I think transparency is key. That's a lesson from this weekend. I've heard so many customers ask startups, how are you planning to make money? Or even ask me as an investor in these starts, is the business viable? I am willing to pay,
but I don't want to make the wrong bet. Well, they make it, and the nonprofit board here is explicitly prioritizing other goals they have above customers and developers, and so I think that I think that does change the ecosystem in terms of other opportunities, like we should not trivialize the work that open Ai had done has done over the years. Right, creating foundation models is a huge effort, and so from an infrastructure, data, partnerships, pooling and talent perspective,
I think you know the ship of theseus. It's a thought experiment, like if you rebuild a ship entirely with new parts, is it the same ship. It's a question of identity, and it's often applied to human consciousness and sci fi, but it applies to organizations too.
Right, if okai has the.
Weights and then all of the advantages that we were just talking about. They're huge, but an organization is also a sera culture.
Yeah, yeah, conviction fanta serago. It's just great to have you on the show and get that perspective. Thank you.
Some breaking news for you right now the United States, the Justice Department, being exact, is seeking more than four billion dollars from Finance, that of course being the cryptocurrency
exchange to end a criminal case. It's years long investigation negotiations between the DJ and Finance, including in fact of the plussibit that its founder cz would face criminal charges in the United States under an agreement to resolve the probe into alleged money laundering, bank forward and sanctions violations. That's some update on cryptobeded back to our key number one story.
Okay, all change at open ai and my goodness, how quickly things do change. Earlier this year, Bloomberg's Emily Chang caught up with now former open Ai CEO Sam Outman's talk about his relationship with Microsoft.
Listen to this, how would you describe your relationship with Sacha Inadella?
How much control they have?
You know, I've heard people say, you know.
Microsoft is just going to buy open Ai you're just making big tech bigger.
Companies not for sale. Thank you. I don't know how to be more clearer than that, we have a great relationship with them.
I think it's a these like big major partnerships between tech companies usually don't work.
This is an example that are working really well.
Okay, fast forward present day. This is the latest. After a game of musical chairs, Microsoft announces that Altman and his co founder Greg Brockman will join the company. Will join Microsoft. This announcement on literally on the heels of a frenetic weekend in Silicon Valley following the aftermath of Altman's firing on Friday, Microsoft shares continuing to push higher in the session at one point nine percent. Bloomberg's Dina bass is our Microsoft correspondent and alongside the rest of us,
has been all over this story all weekend. Let's first talk about this new unit within Microsoft. Setia announces it late late late last night. What do we know?
Musical chairs and or a game of growth?
So what we what we know is you know, Microsoft at Satiez spent the weekend trying to figure out a way with other investors to get Sam and Gregory and stated to the company. As of late Sunday night, there were conversations with Mira Maratti, the interim CEO, trying to
do exactly that those with board members are conversations. Those conversations failed, and so Nadela had to go to plan being, which was, Okay, we'll just hire Sam and brag ourselves, because the concern that Microsoft had was, you know, when there's all this people in open ai start seeing everybody threatening to jump ship, and you saw that mass about pouring support Saturday night for Sam that it very much referrels not just microsoft thirteen billion dollar investment in open
add but Microsoft's entire shredding SATA has revamped the entire company's product line around artificial intelligence, and that artificial intelligence depends on open Ai. If open Ai ceases to exist in the way that Microsoft had expected, that is an enormous problem for Microsoft.
But for now the deal brokering seems to be in its advantage and have Acreisi saying that the hiring is a clear win for Microsoft. It's basically an AQUAHAI. What are some of the difficulties around doing this culturally and indeed potentially even regulatory in the long term.
Sure, we don't know whether regulators will look at this that there.
I heard the discussion and.
Emily's question, and well, why not just have Microsoft buy them?
Microsoft both because of.
The complicated and nonprofit for profits structure of open ai and for regulatory reasons.
I really could not have just outright thought open ai A. Most experts think, what are the problems?
Well, Microsoft has its own artificial intelligence effort. It's been working on in that area for more than two decades, and there has been some tension over the last.
Couple of years around the way in which.
Microsoft and Adula chose to really prioritize, both in terms of resources and focus the work of open AI over some of Microsoft's internal projects. Some people most concerned about that perhaps of lust Microsoft, but there's still AI researchers there, or some question of how you integrate those things without making you know, a real sort of you know issue with people that.
Are already there. Then there's just you know, there are more mounding details.
How many overayed people as Microsoft really going to hire, how do they decide to you know, how do they compensate that people already at Microsoft who had a salary free this year feel about that compensation, all sorts of cultural issues. That said, people who say people from outside Microsoft cannot do well at Microsoft, I think are potentially
thinking about a Microsoft off. Ten years ago. Satya has acquired companies like LinkedIn, liked to get up, let them run on their own, and had them function quite effectively within Microsoft. He's also hired executives here. I think of CTO Kevin Scott, who leads the AI for you know, executives from outside who have become very senior and very important to Microsoft in a way that perhaps was not easy for outsiders to do in the office.
Many noting the title of sam Alman being that of a CEO internally. DNA Basqueta, thank you so much for all the iterations for that publicly sarded of the company. And let's just talk about what's left at open AI for a moment, because late Sunday, Emmitt Shecher was appointed interim CEO of open AI after the board quietly vetted candidates starting on Saturday night. Now here's what we know
about the appointment. Sources tell Bloomberg that she was seen as someone that can lead a large engineering group, but also as someone who recognizes an insistential threat from AI, and like some members of open AI's board, she has ties to the so called effective altruism movement. She has stepped down as CEO of Amazon's game streaming site Twitch earlier in the year, and in May he actually joined y Combinator as a visiting partner. Let's get a conversation
going with Zachary Lipton. Here's the chief technologist and scientific officer over at a Bridge. It's a company using Generator AI for automatic drafting of after visit clinical notes. You're also an assistant professor of machine learning at Cannie Mellon University. Zachary, the fact that you really focus on understanding the social impacts of machine learning in a philosophically coherent way is
the way it says on your website. Is that kind of what the tension was here ultimately own open ai philosophical at.
That I think it's important to draw a big distinction. There's a contingent of this community that is more focused on the idea of AI as a potential existential risk to humanity, and there's a bunch of us who are more a group of social scientists, ethhysists, some maybe socially inclined computer scientists who've looked at these problems from different angles, more focused on near term terrestrial actual harms of AI systems is operationalized in businesses today.
So there's.
A lot of work that I think very few people disagree is like serious or real problems and important today about understanding how we think about privacy, accountability, transparency, where liability goes once you have a greater degree of automation
in our decision making systems. But on the other side, there's a but people who are more focused on something but they call it X risk or this idea that AI is careening towards, you know, by mechanisms known or unknown, that there's this marching progress towards towards something that is a different kind of threat that needs to be regarded as more of like an epoch changing event, something more
analogous to nuclear weapons. And I'd say that, like my work, sits a little bit more in what they might call
near termism and this group of affective altruisms. Their philosophical position is that they are they think that however small a threat, if the risk, if they're wrong, is a wiping out of humanity, that this is the most important priority in the world, and I'd say it's a relatively fringe belief among technologists, among business people, but it does have some very well heeled backers, and it does have quite a bit of a foothold in San Francisco and
in particular in particular research labs and open AI does have some amount of influence this existentialist thinking.
Right, Zachary, Whether the existential threat is a fringe idea or not, what is? I think we can agree on the events of the last weekend being monumental. I guess within your career, both in academia and building generative AI tools, just reflect quickly on what you made of the last forty eight to seventy two hours.
Oh, it's quite wild, given that when I entered the field ten years ago, I had to explain to my parents what machine learning and AI were, and they were just glad that I wasn't trying to make a living plight in the sexophone anymore. So to go from there through the front page of the New York Times that there's a kervuffl in AI startup's pretty wild, you know.
I think in general, we're watching before our eyes the maturation of an industry and a lot of how we got here, and I think you see this all over the economy. I think we saw this with the dot com bubble and some amount of discord and some amount of insanity as we went from a sort of first generation set of companies with strange governance structures and you know, a certain kind of velocity to a more mature environment
than followed. You know, it didn't spell the doom of the Internet, but it certainly was a growing up period. I think what we're watching before our eyes is us moving from a period of this being brand new technology and people behaving in strange ways that are sort of exceptional by any normal standards, to a period that's going
to follow, which is going to be more robust. It's going to involve people depending on a much wider and more stable ecosystem of services provided by a larger set of companies.
And remind our audience that almost six hundred people representing the intellectual capital within open ai are currently threatening to leave and go to Microsoft. So Zachary lipped in a bridge Cdio Carnegie Mellon, assistant Professor of Machine Learning, breaking it down what a weekend it has been.
Now, look some other news that we're following for you. X CEO Linda Yakarino has acknowledged that some advertisers are taking a break a pause from the platform.
Now.
This pause follows some outrage over anti Semitic content and commentary on X, some of it in fact seemingly endorsed by the site's owner. In a musk now in a mement of staff on Sunday, Yacarino blamed quote a misleading a manipulated article for this pause in spending, referencing in fact a Media Matters piece that said ads from big brands were being placed near offensive content.
Ed coming up on Bluebow Technology, Tusk Ventures CEO Bradley Tusk joins us we go back to open AI, the drama and his impact on the AI space. We have to ask questions about corporate governance. That's coming up next. Also looking at shares of General Motors pairing some of their gain in the session up one point eight percent. The news curiously timed late Sunday night, Kyle Vote resigned as the CEO of Crew Use General Motors Autonomous Driving Unit GM, shuffling the debt, putting a lot of long
standing GM execs to run that unit. But goodness knows what happens next. This is Bloomberg Technology.
Of course, we.
Returned to the drama consuming open Ai and how it could impact the startup space more broadly after open ai CEO Simalmon was ousted by the company's board on Friday, prompting a campaign from investors and staff to bring him back. Well now, Microsoft has hired Samowan, while former Twitch leader Emitt Scheer is taking over as open AI's interim chief executive. For today's VC Spotlight, let's bring in Bradley Tusk for
his read on all of this. He is the CEO of Tusk Ventures and also the author of the upcoming book Obvious in Hindsight, satirical behind the scenes look at how technology and politics sort of intertwine the ways in which decisions are actually being made by those in power. Is all of this obvious in hindsight when you look at the corporate governance.
Structure, Yeah, it absolutely is. I mean, this was an insane structure, and this one's kind of unique in that it both you had such a big underlying company that is for profit with this nonprofit board on top of it. But I think it really raises questions about b corpse, and I think about ESG to a certain extent, and you know, there are fiduciary duties and there are incentives
that need to be aligned. When you have boards that clearly have sort of other incentives and other ideas and that aren't about the shareholders now, aren't about the employees, and aren't about the customers, you can create a lot of problems, which is what just happened.
Let's just go through ultimately what this board, how it differs from others. It's made up of thinking about four people now because of been there exactly gregorbin Fad, some helpment had been fired, but others like Reid Hoffmann had left over the course of the last year or so. And ultimately this is a not for profit board where the whole thesis was that it was the mission over
profits right now, is that replicated anywhere else? And is this something that ultimately venture should be learning from.
Yeah, so I haven't seen this specific structure anywhere else, and I can't imagine we ever will again after the debacle that this all was. But even when you get past that, you know the corpse, which are kind of hybrid versions of what we're talking about, where they are public corporations and their for profit, but they're meant to
be doing social good at least. I think, you know, vcs should be taking a hard look at the bylaws of the boards of B corps because then, by the way, I've got one or two of my portfolio, and I'm we're taking a look at it right now, because I don't want a situation where the board has a moral stance or an ideological stance, and that really comes at
the best interest of the company itself. Of course, there's always room on every board to talk about morality and ideology and everything else, but the end of the day, you have fiduciary duty to the shareholders or to the investors, or whoever it is, and that's what's got to be met. And so while I'm sure most B corpors are okay, it seems to me that the potential for what we
saw does exist. And what we're talking about companies like Auburns and Warby Parker and ben and Jerry's, and we're not just talking about kind of no name companies here. So I know that I'm concerned, and I think other vc should be looking at it too.
Bradley, I want to bring an update to our audience in the private markets. I think this is important. Joshua Kushner, who's the founder of Frive Capital, has posted on x every problem has a solution. In the background, there is a tender offer worth hundreds of millions of dollars that is in question here running this month, where open ai employees were due to sell shares with Frive Capital leading
that round. I know you're not an investor in open ai, but is there any world in which that tender goes ahead?
Yeah?
I mean I think to a certain extent it has to, because you have all of these employees who are probably not making that much money in terms of salary, because that's what happens when you work with a tech startup, and the promise is the pay you know, the rainbow, the podical at the end of the rainbow, and a tender offer offers liquidity for people who have been counting on it and relying on it. And you have employees who want to move homes or pay for their kids'
school or whatever it is. And so I think, you know, whether it's amateure, whoever's running that company, you have a responsibility because you're going to have a really unhappy workforce. You already have a workforce where over one hundred people signed a letter threatening to quit, and I think this would just exacerbate the problems. The question is at what valuations? They were talking about an eighty billion dollar valuation on
the secondary market for the tender offer. I think that if they can kind of get the ship righted and just wait a few weeks, it probably goes back to normal. But if it continues to be chaos, then obviously investors are not going to pay up at that amount, and the shareholders, if the employees, are going to lose value.
TuS Benches found an n see Brandy Tuss. Great to have you here on Blion dye Technology. Okay, let's wrap up our coverage of Sam Mountaman's exit from Open AI with the Bloomberg Big Take. We're joined by Bloomberg's Max Chafkin, who penned that monumental Business Week piece, but also Bloomberg's Actually vance, we have been in the trenches together for
three days uncovering everything that happened from about lunchtime Friday onwards. Actually, I'll start with you just reflect on everything that we've learned, but also this kind of side scoop. We had that Sam Outman was out there trying to raise tens of billions of dollars for a completely different chip company. What's that about.
Yeah, I mean, there's just so much going on here. Sam. He is a very ambitious guy. So he's out trying to make this new artificial intelligence chip that would compete against Nvidia, which open a eye is buy a ton of Nvidia chips, and you know, just another indication of all these other things going on on top of open AI that I think some of the board was concerned about.
And it sort of links towards the headline of your big take, the doomed mission behind Sam Altman's shock auster from open ai, doomed ouster, but also perhaps a doomed set of aligned or misaligned focuses coming from people who lead open AI.
Yeah.
I mean you had this nonprofit board where a lot of people were really concerned about these apocalyptic AI scenarios, and he had Sam Altman and kind of his allies who were sort of using the promise of a or the potential of apocalypse to sell this new technology, and those two things collided, right. I think Sam Maltman saw that as kind of a great way to market open AI.
But you had people who actually believed.
It and then who were getting increasingly worried over the past few weeks.
Yeah, right, Ashlely, Let's be honest. You and I had heard pretty early in the day Sunday that the board was digging in that there would be a new CEO. No one believed it, And now you have ilia out with a tweet apologizing just your final thoughts.
Well, yeah, Eliot's doing you know, coup inception, a coup, a pot of coup. I don't think this is over. It sounds like all these camps are still fighting to break open AI back. As of right now, seven hundred of the seven hundred seventy employees have vowed to leave the company of Sam and Greg are brought back. And so I don't think this is done. We still got another day or two of this.
Yeah, I just want to hear from Max the weirdest line you heard this week.
I mean, the idea of a counter coup that is taking place while the same coup is taking is going on. It's just like Ashley says, it's it's too crazy and we're talking about Remember this is like the most important part of one of the world's largest companies. You know, Microsoft is totally dependent on this relationship with open Ai. So seeing all of this chaos unfold around something that's so critical that so much money, many billions of dollars, are baked into, is just something Max Chafkin.
It was something that you wrote, Ashley Vance, it was something that you broke. It was an extraordinary herculean effort from all three of you. And that does it for this edition of Bloomberg Technology ED. I mean, we didn't even get to talk about the door dashes being done. Over the weekend.
They went for DoorDash, for food, to open AIHQ. There is so much to recap from a crazy weekend on open ai. So we have a podcast. Check it out wherever you get your podcast, Apple, Spotify, iHeart and on all the Bloomberg's from SF in New York. This is Bloomberg