You Don't Need AI to Know How This Story Ends

Nov 2023

OpenAI’s leadership drama is all anyone can talk about entering this short holiday week. Perhaps more fascinating than the unfolding developments is the speed at which they’re playing out in the media. I couldn’t binge-watch this faster!

However, there’s one big nit I’d pick with the non-stop coverage. Every breathless update usually leads with some version of “can this story get any crazier?” Let’s be honest: the way this story is developing isn’t crazy at all. It’s entirely predictable for anyone that knows anything about the tech industry. Here’s why:

First, tech founders are venerated like no one else in the business world. Short of a massive misstep or personal failing, they will always win. Why? Because they are the irreplaceable, scarce fuel that powers Silicon Valley’s innovation economy. When the news first broke on Friday, we didn’t know if Altman’s ouster was over a strategy issue or a juicy personal scandal. By Monday, Altman is at Microsoft and OpenAI is in OpenRevolt with a large group demanding he return, including the regretful board member who supposedly engineered the departure. The tech industry closed ranks quickly. The Vinod Khoslas of the world are weighing in, suggesting that investors should just write the check and get out of the founder’s way. Sometimes flawed, always brilliant, the prevailing view is that what founders do is too hard, too important for society and too vital to enabling the Valley ecosystem. Founders are also binary. They’re either heroes or anti-heroes. Sometimes both (yes, I mean him).

Second, innovation culture is always about money and fame, not virtue. The OpenAI drama sets up as an existential man vs. technology conflict. Can we develop AI safely so it doesn’t destroy our race? Spoiler alert: technology has already won over “effective altruism.” If we’ve learned anything about Silicon Valley it’s that technology creates vast wealth. That sounds like a win for man, but only for a precious few. You’ve seen this show already with the Internet, smartphones and social media. Fears of how new technologies and platforms may impact society and individuals are always brushed aside in favor of what’s sold as the greater good. The difference with AI is that it’s potentially way more powerful than all preceding megatrends combined. An infinitesimal percentage of the world’s people will get very rich off of AI … but only by handing technology the victory in this conflict. No board of directors composed of virtuous think-tankers will change this.

And that brings us to a key player in this saga. Boards of directors seem to always be playing the weak hand in corporate political dramas. That this one overplayed its hand badly shouldn’t surprise anyone. OpenAI is a unique entity to be sure, with an unconventional economic ownership and governance structure designed to check the power of the products it is building. But this structure nonetheless failed and may be in the early stages of destroying tens of billions of value (or, more accurately, transferring it to the usual tech suspects and a slew of next tier VC-backed AI startups). The lesson here is that, while there are many outstanding executives and leaders serving as directors, as a group boards – especially those populated with academics and luminaries – often have a fatal blind spot when it comes to fully understanding and considering the investors who ultimately determine business value. This fact can lead to short-sighted and costly decisions no matter how well-intended.

Taken all together, the innovation economy is an unstoppable force. If the human race is ultimately destroyed, my bet is that it won’t be a bird virus or extreme heat that does it. We’re too smart not to solve those problems. So smart, in fact, that it’s a safe bet we’ll invent the cause of our own demise and celebrate its creators. Joking aside, it’s that fear that makes the OpenAI drama so compelling. And even though I know how it ends, I’m still going to gobble up every development.