7 ms·

>People are calling what the board did a coup, but Altman is trying (failing?) to stage a coup. The board removed the board's chairman and fired the CEO. That'

by sigmar 3y ago

>People are calling what the board did a coup, but Altman is trying (failing?) to stage a coup. The board removed the board's chairman and fired the CEO. That's why it was called a coup. >The shareholders can fire the board, but that’s not what he’s asking for. And so far we haven’t heard anything about them getting fired nonprofits don't have shareholders (or shares).

shmatt 3y ago
Then the board essentially owns the company, if I understand your comment correctly. So it’s like if Yann LeCun says he’ll come back to Meta once Zuck sells all his shares
- junofan 3y ago
  There’s no owners. No ownership interest to sell. The board answers to the courts.
  - eightysixfour 3y ago
    Sort of. The board also answers to two other groups: • Employees • Donors or whoever is paying the bills In this case, the threat appears to be that employees will leave and the primary partners paying the bills will leave. If this means the non-profit can no longer achieve its mission, the board has failed.
    - cthalupa 3y ago
      It's possible that the failure occurred at some point in the past. If the board truly believes keeping Altman is inherently incompatible with achieving their charter, they have to let him go. The fallout from that potentially kills the company, but a small chance of achieving the charter is better than no chance. If that's the case, then the failing would be in letting it get to this point in the first place.
ummonk 3y ago
OpenAI isn’t a nonprofit company, and it has shareholders. Edit: nvm I missed the point was about firing the board.
- bitvoid 3y ago
  From what I understand, the for-profit OpenAI is owned and governed by the non-profit OpenAI. The board of the latter are the ones who fired him.
  - dragonwriter 3y ago
    > From what I understand, the for-profit OpenAI is owned and governed by the non-profit OpenAI. That's functionally true, but more complicated. The for profit "OpenAI Global LLC" that you buy ChatGPT subscriptions and API access from and in which Microsoft has a large direct investment is majority-owned by a holding company. That holding company is itself majority owned by the nonprofit, but has some other equity owners. A different entity (OpenAI GP LLC) that is wholly owned by the nonprofit controls the holding company on behalf of the nonprofit and does the same thing for the for-profit LLC on behalf of the nonprofit (this LLC seems to me to be the oddest part of the arrangement, but I am assuming that there is some purpose in nonprofit or corporate liability law that having it in this role serves.) https://openai.com/our-structure https://openai.com/our-structure and particularly https://images.openai.com/blob/f3e12a69-e4a7-4fe2-a4a5-c63b61f26ab7/org-structure.svg https://images.openai.com/blob/f3e12a69-e4a7-4fe2-a4a5-c63b6...
- skywhopper 3y ago
  Check again.
- sigmar 3y ago
  {the entity} of which they are the board does not have shareholders and unless there's something funky in the charter: there's no mechanism to fire members of the board (other than board action). The shareholders of the llc aren't relevant in this context, as they definitely can't fire the nonprofit's board (the whole point of their weird structuring). https://openai.com/our-structure https://openai.com/our-structure
hskalin 3y ago
So who governs the board? Or who "owns" the company?
- chasd00 3y ago
  In a 501.3c I think the board is the top. From what I understand they’re usually funded through grants that have requirements that need to be met for each disbursement. If you fail then the money stops but there’s no “firing” the board they just stop getting funds.
- milkshakes 3y ago
  First, the for-profit subsidiary is fully controlled by the OpenAI Nonprofit. We enacted this by having the Nonprofit wholly own and control a manager entity (OpenAI GP LLC) that has the power to control and govern the for-profit subsidiary. Second, because the board is still the board of a Nonprofit, each director must perform their fiduciary duties in furtherance of its mission—safe AGI that is broadly beneficial. While the for-profit subsidiary is permitted to make and distribute profit, it is subject to this mission. The Nonprofit’s principal beneficiary is humanity, not OpenAI investors. Third, the board remains majority independent. Independent directors do not hold equity in OpenAI. Even OpenAI’s CEO, Sam Altman, does not hold equity directly. His only interest is indirectly through a Y Combinator investment fund that made a small investment in OpenAI before he was full-time. https://openai.com/our-structure https://openai.com/our-structure
  - fulladder 3y ago
    Can you explain the third point a little more? If Altman has no meaningful economic interest in the company, what was his motivation for being involved at all? Why did he choose to spend his time this way? I'm aware that Altman has made the same claim (close to zero equity) as you are making, and I don't see any reason why either of you would not be truthful, but it also has always just seemed very odd.
    - plorg 3y ago
      Ideology
x86x87 3y ago
nope. a coup implies something that is outside of normal operation. the board removing the CEO can and will happen.
- tsunamifury 3y ago
  The fact that HN engineering grunts have no idea what table stakes are vs titles and authority shows how they aren’t cut out for executive brinksmanship. Sam has superior table stakes.
  - gtirloni 3y ago
    Such as?
    - tsunamifury 3y ago
      Talent following Financial backing to make a competitor Internal knowledge of roadmap Media focus Alignment with the 2nd most valuable company on the planet. I could go on. I strongly dislike the guy but you need to recognize table stakes even in your enemy. Or you’ll be like Ilya. A naive fool who is gonna get wrecked thinking doing the “right” thing in his own mind will automatically means you win.
      - cthalupa 3y ago
        From everything we can see Ilya appears to be a true believer. A true believer is going to act along the axis of their beliefs even if it ultimately results in failure. That doesn't necessarily make them naive or fools - many times they will fully understand that their actions have little or no chance of success. They've just prioritized a different value of you.
        jacquesm 3y ago
        That's fair, but by messing this up OpenAI may well end up without any oversight at all. Which isn't the optimum outcome by a long shot and that's what you get for going off half-cocked about a thing like this.
norsurfit 3y ago
Also, the board made a decision without the board's chairman - Greg Brockman - involved. Also, it looks like the board didn't follow it's own internal rules about meetings.
- stingraycharles 3y ago
  Also, the investors were not informed. It’s insane their largest investor and partner MSFT was blindsided by this. Anyone with just a little bit business sense knows this.
  - MacsHeadroom 3y ago
    This is the board of the non-profit. It has no investors. The board does not answer to anyone.
    - BoiledCabbage 3y ago
      And how does this non-profit pay for its immense server costs?
      - deleted 3y ago
        [deleted]
      - Obscurity4340 3y ago
        All corporations are basically Russian dolls at this point.
      - fakedang 3y ago
        The point still stands, the board does not have "investors". Microsoft knowingly donated to the for profit entity of the non profit. Open AI isn't a PBC, it's a 501c non profit. So the board can act that way, without the knowledge of the investors. That being said, this is a case of biting the hand that feeds you. An equivalent would be if a nonprofit humiliated its biggest donor. The donor can always walk away, claiming her future donations away, but whatever she's donated stays at the nonprofit.
bmitc 3y ago
It would be a coup if the board placed themselves in power, which they didn't. They just did their job description.
- baby 3y ago
  Sam and Greg were part of the board apparently, so definitely a coup (we can debate for hours if it's a coup or not, but come one, imagine the scene being played in a movie and not being played as a coup). Another way to think about these is that companies are basically small countries.

by sigmar 3y ago

shmatt 3y ago

Then the board essentially owns the company, if I understand your comment correctly. So it’s like if Yann LeCun says he’ll come back to Meta once Zuck sells all his shares

junofan 3y ago
There’s no owners. No ownership interest to sell. The board answers to the courts.
- eightysixfour 3y ago
  Sort of. The board also answers to two other groups: • Employees • Donors or whoever is paying the bills In this case, the threat appears to be that employees will leave and the primary partners paying the bills will leave. If this means the non-profit can no longer achieve its mission, the board has failed.
  - cthalupa 3y ago
    It's possible that the failure occurred at some point in the past. If the board truly believes keeping Altman is inherently incompatible with achieving their charter, they have to let him go. The fallout from that potentially kills the company, but a small chance of achieving the charter is better than no chance. If that's the case, then the failing would be in letting it get to this point in the first place.

ummonk 3y ago

OpenAI isn’t a nonprofit company, and it has shareholders. Edit: nvm I missed the point was about firing the board.

bitvoid 3y ago
From what I understand, the for-profit OpenAI is owned and governed by the non-profit OpenAI. The board of the latter are the ones who fired him.
- dragonwriter 3y ago
  > From what I understand, the for-profit OpenAI is owned and governed by the non-profit OpenAI. That's functionally true, but more complicated. The for profit "OpenAI Global LLC" that you buy ChatGPT subscriptions and API access from and in which Microsoft has a large direct investment is majority-owned by a holding company. That holding company is itself majority owned by the nonprofit, but has some other equity owners. A different entity (OpenAI GP LLC) that is wholly owned by the nonprofit controls the holding company on behalf of the nonprofit and does the same thing for the for-profit LLC on behalf of the nonprofit (this LLC seems to me to be the oddest part of the arrangement, but I am assuming that there is some purpose in nonprofit or corporate liability law that having it in this role serves.) https://openai.com/our-structure https://openai.com/our-structure and particularly https://images.openai.com/blob/f3e12a69-e4a7-4fe2-a4a5-c63b61f26ab7/org-structure.svg https://images.openai.com/blob/f3e12a69-e4a7-4fe2-a4a5-c63b6...
skywhopper 3y ago
Check again.
sigmar 3y ago
{the entity} of which they are the board does not have shareholders and unless there's something funky in the charter: there's no mechanism to fire members of the board (other than board action). The shareholders of the llc aren't relevant in this context, as they definitely can't fire the nonprofit's board (the whole point of their weird structuring). https://openai.com/our-structure https://openai.com/our-structure

hskalin 3y ago

So who governs the board? Or who "owns" the company?

chasd00 3y ago
In a 501.3c I think the board is the top. From what I understand they’re usually funded through grants that have requirements that need to be met for each disbursement. If you fail then the money stops but there’s no “firing” the board they just stop getting funds.
milkshakes 3y ago
First, the for-profit subsidiary is fully controlled by the OpenAI Nonprofit. We enacted this by having the Nonprofit wholly own and control a manager entity (OpenAI GP LLC) that has the power to control and govern the for-profit subsidiary. Second, because the board is still the board of a Nonprofit, each director must perform their fiduciary duties in furtherance of its mission—safe AGI that is broadly beneficial. While the for-profit subsidiary is permitted to make and distribute profit, it is subject to this mission. The Nonprofit’s principal beneficiary is humanity, not OpenAI investors. Third, the board remains majority independent. Independent directors do not hold equity in OpenAI. Even OpenAI’s CEO, Sam Altman, does not hold equity directly. His only interest is indirectly through a Y Combinator investment fund that made a small investment in OpenAI before he was full-time. https://openai.com/our-structure https://openai.com/our-structure
- fulladder 3y ago
  Can you explain the third point a little more? If Altman has no meaningful economic interest in the company, what was his motivation for being involved at all? Why did he choose to spend his time this way? I'm aware that Altman has made the same claim (close to zero equity) as you are making, and I don't see any reason why either of you would not be truthful, but it also has always just seemed very odd.
  - plorg 3y ago
    Ideology

x86x87 3y ago

nope. a coup implies something that is outside of normal operation. the board removing the CEO can and will happen.

tsunamifury 3y ago
The fact that HN engineering grunts have no idea what table stakes are vs titles and authority shows how they aren’t cut out for executive brinksmanship. Sam has superior table stakes.
- gtirloni 3y ago
  Such as?
  - tsunamifury 3y ago
    Talent following Financial backing to make a competitor Internal knowledge of roadmap Media focus Alignment with the 2nd most valuable company on the planet. I could go on. I strongly dislike the guy but you need to recognize table stakes even in your enemy. Or you’ll be like Ilya. A naive fool who is gonna get wrecked thinking doing the “right” thing in his own mind will automatically means you win.
    - cthalupa 3y ago
      From everything we can see Ilya appears to be a true believer. A true believer is going to act along the axis of their beliefs even if it ultimately results in failure. That doesn't necessarily make them naive or fools - many times they will fully understand that their actions have little or no chance of success. They've just prioritized a different value of you.
      - jacquesm 3y ago
        That's fair, but by messing this up OpenAI may well end up without any oversight at all. Which isn't the optimum outcome by a long shot and that's what you get for going off half-cocked about a thing like this.

norsurfit 3y ago

Also, the board made a decision without the board's chairman - Greg Brockman - involved. Also, it looks like the board didn't follow it's own internal rules about meetings.

stingraycharles 3y ago
Also, the investors were not informed. It’s insane their largest investor and partner MSFT was blindsided by this. Anyone with just a little bit business sense knows this.
- MacsHeadroom 3y ago
  This is the board of the non-profit. It has no investors. The board does not answer to anyone.
  - BoiledCabbage 3y ago
    And how does this non-profit pay for its immense server costs?
    - deleted 3y ago
      [deleted]
    - Obscurity4340 3y ago
      All corporations are basically Russian dolls at this point.
    - fakedang 3y ago
      The point still stands, the board does not have "investors". Microsoft knowingly donated to the for profit entity of the non profit. Open AI isn't a PBC, it's a 501c non profit. So the board can act that way, without the knowledge of the investors. That being said, this is a case of biting the hand that feeds you. An equivalent would be if a nonprofit humiliated its biggest donor. The donor can always walk away, claiming her future donations away, but whatever she's donated stays at the nonprofit.

bmitc 3y ago

It would be a coup if the board placed themselves in power, which they didn't. They just did their job description.

baby 3y ago
Sam and Greg were part of the board apparently, so definitely a coup (we can debate for hours if it's a coup or not, but come one, imagine the scene being played in a movie and not being played as a coup). Another way to think about these is that companies are basically small countries.