5 ms·

Do they face any real consequences?

by Davidzheng 3y ago

ar_lan 3y ago
Lost money. Same consequence either way, so there is no incentive for them to leave.
- Davidzheng 3y ago
  They don't have equity in openai though right. You mean from reputation loss?
  - jacquesm 3y ago
    For starters about 700 employees seem to think their livelihood matters and that the board didn't exercise their duty of care towards them.
    - JumpCrisscross 3y ago
      > about 700 employees seem to think their livelihood matters and that the board didn't exercise their duty of care towards them It is difficult to see how such a duty would arise. OpenAI is a non-profit. The company's duty was to the non-profit. The non-profit doesn't have one to the company's employees; its job was literally to check them.
      - jacquesm 3y ago
        To check them does not overlap with 'to destroy them at the first opportunity'. There is no way that this board decision - which now is only supported by three of the original nine board members - is going to survive absent a very clear and unambiguous reason that shows that their only remedy was to fire the CEO. This sort of thing you don't do by your gut feeling, you go by the book.
        JumpCrisscross 3y ago
        > no way that this board decision...is going to survive absent a very clear and unambiguous reason that shows that their only remedy was to fire the CEO The simplest explanation is Altman said he wasn't going to do something and then did it. At that point, even a corporate board would have cause for termination. Of course, the devil is in the details, and I doubt we'll have any of them this week. But more incredulous than the board's decision is the claim that it owes any duty to its for-profit subsidiary's employees, who aren't even shareholders, but some profit-sharing paper's holders.
        jacquesm 3y ago
        True, but then the board would have been able to get rid of the controversy on the spot by spelling out their reasoning. Nobody would fault them. But that didn't happen, and even one of the people that voted for Altmans' removal has backtracked. So this is all extremely murky and suspicious. If they had a valid reason they should spell it out. But my guess is that reason, assuming it exists, will just open them up to more liability and that is why it isn't given. > But more incredulous than the board's decision is the claim that it owes any duty to its for-profit subsidiary's employees, who aren't even shareholders, but some profit-sharing paper's holders. Technically they took over the second they fired Altman so they have no way to pretend they have no responsibility. Shareholders and employees of the for-profit were all directly affected by this decision, the insulating properties of a non-profit are not such that you can just do whatever you want and get away with it.
        JumpCrisscross 3y ago
        > the board would have been able to get rid of the controversy on the spot by spelling out their reasoning I don't think they have an obligation to do this publicly. > even one of the people that voted for Altmans' removal has backtracked I don't have a great explanation for this part of it. > Shareholders and employees of the for-profit were all directly affected by this decision, the insulating properties of a non-profit are not such that you can just do whatever you want and get away with it We don't know. This is truly novel structure and law. That said, the board does have virtually carte blanche if Altman lied or if they felt he was going to end humanity or whatever. Literally the only thing that could go for the employees is if there are, like, text messages between board members conspiring to tank the value of the company for shits and giggles.
    - dragonwriter 3y ago
      Neither for-profit corporations nor charities have a general legal duty of care for the livelihood of their employees.
      - jacquesm 3y ago
        It's all about diligence and prudence. I don't see much evidence of either and that means the employees may well have a point. Incidentally: the word 'care' was very explicitly used in the letter.
        dragonwriter 3y ago
        > It's all about diligence and prudence. Diligience and prudence apply to the things to which they actually are obligated in the first place, which the employees’ livelihood beyond contracted pay and benefits for the time actually worked simply is not included in.
        jacquesm 3y ago
        > which the employees’ livelihood beyond contracted pay and benefits for the time actually worked simply is not included in Quite a few of those employees are also stockholders, besides that this isn't some kids game where after a few rounds you can throw your cards on the table and walk out because you feel that you've had enough of it. You join a board because you are an adult that is capable of forethought and adult behavior. I don't quite get why this is even controversial, there isn't a board that I'm familiar with, including non-profits that would be so incredibly callous towards everybody affected by their actions with the expectation that they would get away with it. Being a board member isn't some kind of magic invulnerability cloak, and even non-profits have employees, donors and benificaries who all have standing regarding decisions affecting their stakeholdership.
        dragonwriter 3y ago
        > Quite a few of those employees are also stockholders None of them are stockholders, because (except for the nonprofit, which can't have stockholders even as a corporation) none of the OpenAI entities are corporations. Some of them have profit-sharing interests and/or (maybe) memberships in the LLC or some similar in interest in the holding company above LLC; the LLC operating agreement (similar function to a corporate charter) expressly notes that investments should be treated as donations and that the Board may not seek to return a profit; the holding companies details are less public, but it would be strange if it didn't have the same kind of thing since the only thing it exists is to hold a controlling interest in the LLC, and the only way it would make any profit is from profits returned by the LLC.
jacquesm 3y ago
Good question. Potentially: Liability based on their decisions. If it turns out those were not ultimately motivated by actual concern for the good of the company then they have a lot of problems.
- Schiendelman 3y ago
  It’s not a company - which is why they’re able to do this. We’ve just learned, again, that nonprofits can’t make these kinds of decisions because the checks and balances that investors and a profit motive create don’t exist.
  - jacquesm 3y ago
    That doesn't matter. Even the members of the board of a non-profit are liable for all of the fall-out from their decisions if those decisions end up not being defensible. That's pretty much written in stone and one of the reasons why you should never accept a board seat out of your competence.
  - munificent 3y ago
    > the checks and balances that investors and a profit motive create https://en.wikipedia.org/wiki/List_of_industrial_disasters https://en.wikipedia.org/wiki/List_of_industrial_disasters
- dragonwriter 3y ago
  > If it turns out those were not ultimately motivated by actual concern for the good of the company then they have a lot of problems. The boards duty is to to the charitable mission, not any other concept of the “good of the company”, and other than the government if they are doing something like pursuing their own private profit interest or acting as an agent for someone elses or some other specific public wrongs, the people able to make a claim are pretty narrow, because OpenAI isn't membership-based charity in which there are members to whom the board is accountable for pursuit of the mission. People keep acting like the parent organization here is a normal corporation, and its not, and even the for-profit subsidiary had an operating agreement subordinating other interests to the charitable mission of the parent organization.
paulddraper 3y ago
Reputation/shame is a real consequence. Granted, much of the harm is already done, but it can get worse.

Do they face any real consequences?

ar_lan 3y ago

Lost money. Same consequence either way, so there is no incentive for them to leave.

Davidzheng 3y ago
They don't have equity in openai though right. You mean from reputation loss?
- jacquesm 3y ago
  For starters about 700 employees seem to think their livelihood matters and that the board didn't exercise their duty of care towards them.
  - JumpCrisscross 3y ago
    > about 700 employees seem to think their livelihood matters and that the board didn't exercise their duty of care towards them It is difficult to see how such a duty would arise. OpenAI is a non-profit. The company's duty was to the non-profit. The non-profit doesn't have one to the company's employees; its job was literally to check them.
    - jacquesm 3y ago
      To check them does not overlap with 'to destroy them at the first opportunity'. There is no way that this board decision - which now is only supported by three of the original nine board members - is going to survive absent a very clear and unambiguous reason that shows that their only remedy was to fire the CEO. This sort of thing you don't do by your gut feeling, you go by the book.
      - JumpCrisscross 3y ago
        > no way that this board decision...is going to survive absent a very clear and unambiguous reason that shows that their only remedy was to fire the CEO The simplest explanation is Altman said he wasn't going to do something and then did it. At that point, even a corporate board would have cause for termination. Of course, the devil is in the details, and I doubt we'll have any of them this week. But more incredulous than the board's decision is the claim that it owes any duty to its for-profit subsidiary's employees, who aren't even shareholders, but some profit-sharing paper's holders.
        jacquesm 3y ago
        True, but then the board would have been able to get rid of the controversy on the spot by spelling out their reasoning. Nobody would fault them. But that didn't happen, and even one of the people that voted for Altmans' removal has backtracked. So this is all extremely murky and suspicious. If they had a valid reason they should spell it out. But my guess is that reason, assuming it exists, will just open them up to more liability and that is why it isn't given. > But more incredulous than the board's decision is the claim that it owes any duty to its for-profit subsidiary's employees, who aren't even shareholders, but some profit-sharing paper's holders. Technically they took over the second they fired Altman so they have no way to pretend they have no responsibility. Shareholders and employees of the for-profit were all directly affected by this decision, the insulating properties of a non-profit are not such that you can just do whatever you want and get away with it.
        JumpCrisscross 3y ago
        > the board would have been able to get rid of the controversy on the spot by spelling out their reasoning I don't think they have an obligation to do this publicly. > even one of the people that voted for Altmans' removal has backtracked I don't have a great explanation for this part of it. > Shareholders and employees of the for-profit were all directly affected by this decision, the insulating properties of a non-profit are not such that you can just do whatever you want and get away with it We don't know. This is truly novel structure and law. That said, the board does have virtually carte blanche if Altman lied or if they felt he was going to end humanity or whatever. Literally the only thing that could go for the employees is if there are, like, text messages between board members conspiring to tank the value of the company for shits and giggles.
  - dragonwriter 3y ago
    Neither for-profit corporations nor charities have a general legal duty of care for the livelihood of their employees.
    - jacquesm 3y ago
      It's all about diligence and prudence. I don't see much evidence of either and that means the employees may well have a point. Incidentally: the word 'care' was very explicitly used in the letter.
      - dragonwriter 3y ago
        > It's all about diligence and prudence. Diligience and prudence apply to the things to which they actually are obligated in the first place, which the employees’ livelihood beyond contracted pay and benefits for the time actually worked simply is not included in.
        jacquesm 3y ago
        > which the employees’ livelihood beyond contracted pay and benefits for the time actually worked simply is not included in Quite a few of those employees are also stockholders, besides that this isn't some kids game where after a few rounds you can throw your cards on the table and walk out because you feel that you've had enough of it. You join a board because you are an adult that is capable of forethought and adult behavior. I don't quite get why this is even controversial, there isn't a board that I'm familiar with, including non-profits that would be so incredibly callous towards everybody affected by their actions with the expectation that they would get away with it. Being a board member isn't some kind of magic invulnerability cloak, and even non-profits have employees, donors and benificaries who all have standing regarding decisions affecting their stakeholdership.
        dragonwriter 3y ago
        > Quite a few of those employees are also stockholders None of them are stockholders, because (except for the nonprofit, which can't have stockholders even as a corporation) none of the OpenAI entities are corporations. Some of them have profit-sharing interests and/or (maybe) memberships in the LLC or some similar in interest in the holding company above LLC; the LLC operating agreement (similar function to a corporate charter) expressly notes that investments should be treated as donations and that the Board may not seek to return a profit; the holding companies details are less public, but it would be strange if it didn't have the same kind of thing since the only thing it exists is to hold a controlling interest in the LLC, and the only way it would make any profit is from profits returned by the LLC.

jacquesm 3y ago

Good question. Potentially: Liability based on their decisions. If it turns out those were not ultimately motivated by actual concern for the good of the company then they have a lot of problems.

Schiendelman 3y ago
It’s not a company - which is why they’re able to do this. We’ve just learned, again, that nonprofits can’t make these kinds of decisions because the checks and balances that investors and a profit motive create don’t exist.
- jacquesm 3y ago
  That doesn't matter. Even the members of the board of a non-profit are liable for all of the fall-out from their decisions if those decisions end up not being defensible. That's pretty much written in stone and one of the reasons why you should never accept a board seat out of your competence.
- munificent 3y ago
  > the checks and balances that investors and a profit motive create https://en.wikipedia.org/wiki/List_of_industrial_disasters https://en.wikipedia.org/wiki/List_of_industrial_disasters
dragonwriter 3y ago
> If it turns out those were not ultimately motivated by actual concern for the good of the company then they have a lot of problems. The boards duty is to to the charitable mission, not any other concept of the “good of the company”, and other than the government if they are doing something like pursuing their own private profit interest or acting as an agent for someone elses or some other specific public wrongs, the people able to make a claim are pretty narrow, because OpenAI isn't membership-based charity in which there are members to whom the board is accountable for pursuit of the mission. People keep acting like the parent organization here is a normal corporation, and its not, and even the for-profit subsidiary had an operating agreement subordinating other interests to the charitable mission of the parent organization.

paulddraper 3y ago

Reputation/shame is a real consequence. Granted, much of the harm is already done, but it can get worse.