Emergency podcast: chaos at OpenAI

The Verge's Nilay Patel and Alex Heath join David Pierce after a long, winding weekend reporting on the dramatic shakeup at OpenAI, still in progress. Further reading: Turmoil at OpenAI: after firing Sam Altman, what's next for the creators of ChatGPT? Sam Altman fired as CEO of OpenAI OpenAI’s new CEO is Twitch co-founder Emmett Shear OpenAI board in discussions with Sam Altman to return as CEO Emmett Shear named new CEO of OpenAI by board Hundreds of OpenAI employees threaten to resign and join Microsoft Microsoft hires former OpenAI CEO Sam Altman How ChatGPT Fractured OpenAI - The Atlantic Email us at [email protected] or call us at 866-VERGE11, we love hearing from you. We’re doing a survey on how people use The Verge (and what they’d want from a Verge subscription). If you’re interested in helping us out, you can fill out the survey right here: http://theverge.com/survey Learn more about your ad choices. Visit podcastchoices.com/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:01Speaker 00

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• 1:10Nilay Patel?

  Hello and welcome to an emergency crossover episode of The Vergecast and Decoder. I'm Eli Patel. I host both shows. I've got David Pierce with me. Hello. Alex Heath is here. Hello. We are supposed to be off on both shows this week, but given what happened with OpenAI over the weekend, which is a story about org charts in many ways. We had no choice but to do an emergency episode of our podcast, especially because Alex and I spent our weekends on the phone, breaking a bunch of news about the discussions that led to what at this moment is Sam Altman, Microsoft employee, which I can confidently say is an outcome no one thought would happen in this entire saga. This is so bananas. It is.

• 1:54Nilay Patel?

  The whole thing is insane. I'm very much in the weeds on this whole thing. So David, can you help us get through what happened this weekend? Because it is crazy.

• 2:04David Pierce?

  Yes. Okay, so we're gonna do the following in three parts because I think this is the only way to do it in a way that makes any sense. The first thing we're gonna do is just basically tell the story of the last 96 hours, starting from sort of midday Friday until where we are right now. Things are still changing. There's a non-zero chance that real news will break while we're recording this, but we're gonna get as close to the moment as we can as we do this. And so I just want to tell the story all the way through. Then I want to talk about the the org charts piece that you're talking about. We're gonna talk about OpenAI as a company and how this happened. And I know that's a thing you two have spent a lot of time trying to sort through and others have done really good reporting on over the course of this weekend. So we're gonna talk about that. And then at the very end, I wrote this

• 2:48David Pierce?

  down as just winners and losers, but I think it's useful to talk about kind of what this landscape looks like going forward. So, all of that said, let's just start at the beginning. And the beginning is Friday afternoon, at least as far as I can tell, out of absolutely nowhere, OpenAI publishes a blog post saying, in basically as many words, "We have fired Sam Altman as our CEO." That's where all of this begins. So the board fires him, they kick Greg Brockman off of the board, he then, a few hours later, immediately quits. And as far as we understand, and you two should correct me if I'm wrong, because I think the like minutes leading up to this are very important, no one, including most people

• 3:32David Pierce?

  at OpenAI, had any idea this was coming, correct?

• 3:36Speaker 05

  It's not only that they didn't know it was coming, they were actually on a company holiday. So they were taking a like day of rest because of all the craziest of the previous week where they were announcing all these products that Sam was the face of. So not only were they weren't prepared, but it was actually when they were all actively not looking at what was going on at the company.

• 3:55David Pierce?

  And then externally, the company was totally business as usual, right? Sam had just been on the Hard Fork podcast. He had taped an interview with Casey Newton and Kevin Roos, an interview which they had to can because he got fired two days later. He had been doing other appearances, like from all external appearances, this was totally business as usual for this company. And Sam was completely shocked when the board called him into a Google Meet.

• 4:20Speaker 05

  Which is also very funny and fired him. And for everything we understand about that Google meet is they basically read him the statement, which is you have not been consistently candid with your communications to the board, and we don't think that we can trust you around the company. And that's all he got, that's all anyone has gotten.

• 4:36David Pierce?

  So Alex, one of the things we all immediately started talking about was the ruthlessness of this statement.

• 4:44Speaker 05

  Yeah.

• 4:45David Pierce?

  Normally, when you're getting rid of your CEO, even if you're essentially firing your CEO, you find a way to do this sort of slowly and nicely so that they get to like, step away to spend more time with their family, or, you know, take some time off or whatever. And everybody pretends this is nice even when it's not. This was the opposite of that. Like, I don't know that I can remember a thing that felt as much just like a knife of a blog post as this one.

• 5:09Speaker 05

  Oh, yeah, this is ice cold. I mean, this is saying that you are firing someone in a fairly direct way for a situation like this. Usually, when it is a co-founder and it is someone as high-profile as Sam Altman, like Neel I was saying, this will be very managed, it will phase out, you know, he'll phase out of the company. It looks like, you know, he's wanting to pursue his passions, those kinds of words. And this was like, no, we have knifed Sam Altman in the back in the night. And, I mean, just like what Neel I was saying about this being business as usual, he was literally at a conference the day before and the night before even, and I'm told was like, I've got to go, I've got a meeting.

• 5:53Speaker 05

  And I think it was right when all this was starting. So he was literally onstage representing OpenAI with a bunch of artists in Oakland right before all this happened.

• 6:03David Pierce?

  Okay, so all this happens, Miro Maradi, the CTO of OpenAI, is promoted to interim CEO, and this is where we are. So then immediately, everybody starts scrambling to figure out what the hell is going on here, basically, was the vibe at the time. You guys start talking to people, and this one answer about what was going on starts to trickle out. Again, this all feels like thousands of years ago now, but my memory of this is like, The leading reason became a split between sort of two factions at OpenAI. One that said, basically, we are a research project designed to make sure that we can make AI good for the world, and another side that said this is a gigantic business that we're going to continue to run like a gigantic business.

• 6:48David Pierce?

  And that starts to percolate up as like, first, sort of a leading, like, educated guess. And then we got some reporting that said that was part of the split. But how would you frame kind of what we learned in the early hours of like, what the actual fight was that led to Sam being fired? Neelai, what was your sense?

• 7:06Nilay Patel?

  You know, I still think we don't know, especially because today, Ilya Sutskever is saying that he regrets his actions. But the theory on Friday night, on Friday night, the theory that started bubbling out, and the thing everyone started talking about was that the nonprofit of OpenAI, which owns OpenAI, the commercial entity of which Sam is the CEO and Microsoft. The theory on Friday night that started bubbling out is that OpenAI is a nonprofit. That's the board of directors. That nonprofit controls a commercial entity of which Sam was the CEO and of which Microsoft is an investor. That board thought the commercial entity was moving too fast to commercialize LLMs, right?

• 7:51Nilay Patel?

  But that they thought that the danger of the products was too high for how fast Sam was moving. And there are some religious split, ideological split. Like, that was all very hazy between the people who believed we were on a course to destroy humanity and Sam Altman saying, we're going to do a store for GPTs and you can make laundry, buddy. That was out there. Like, that was the conversation that was happening was, is Sam moving too fast with a dangerous technology? Did the board can him for that? Is Ilya? A religious believer in the idea that we need to be safer, which is what OpenAI was founded to do this safely and make AGI.

• 8:30David Pierce?

  And the existence of that tension is not new, by the way, like that, whether or not that led to what has happened in the last four days.

• 8:36Nilay Patel?

  Yeah.

• 8:37David Pierce?

  I think you're right. We still don't know, but the existence of that tension between those two sides is pretty real and well established at this point.

• 8:43Speaker 05

  That tension is why we have Anthropic and why Elon is doing another AI company right now. So OpenAI has been consistently chaotic and consistently splitting itself apart really since the beginning. I just don't think anyone expected it to split from the top in such a dramatic way. And Neil, I think maybe now is where it's probably good to explain who actually made this decision because really this comes down to six people, right? And so we should, we should go through exactly who the people were that made this decision because increasingly it's becoming clear that now it's three people against the rest of OpenAI, which is just an insane position.

• 9:22Nilay Patel?

  Which is insane. Also, this is not a public company, so we don't have a record of these votes. The board has not said anything. We don't know if this was a unanimous vote. We don't know if a majority, like the reporting is that it's a majority vote, but because of what Ilya is saying today, it is actually really unclear what happened here.

• 9:40Speaker 05

  Well, here's what we know. So Sam and Greg posted on X that Ilya, who is a co-founder, the chief scientist, really described to me by many as like the brains of the operation, one of the most influential AI researchers in the world, worked at DeepMind before, kind of the AGI doom person, I would say, the most prominent one inside the company. He was the one who told Sam and Greg that they were being fired by the board. At that time, the board was six people, including Sam and Greg. So Greg is the board chair. So the board chair found out he got fired from his own board, which is, I don't know how that works.

• 10:15Nilay Patel?

  No clue.

• 10:15Speaker 05

  What's clear, because we know Ilya was the one who communicated the message, is that the board needed a majority, so they needed four people. The other three members of the board, besides Ilya, are not OpenAI employees, right? So they got Ilya to side with them, kick Sam and Greg out without any notice. And now Ilya is saying, after all of this, and after pretty much all of the company is set to resign and go to Microsoft with Sam, I actually regret this, and I also will go to Microsoft with Sam if we don't bring them back.

• 10:48David Pierce?

  Okay, we're gonna get to that. Like, A, Heath, unbelievable spoiler alert on this story. Like, come on.

• 10:54Nilay Patel?

  Sorry. Anybody listening to this is well and spoiled. Like, if you're listening to an emergency episode of this, it's like, you're in it.

• 11:00David Pierce?

  That's fair. Yeah, no, I think where all this goes is very interesting, and I think the Ilya piece of this is actually super interesting. But just to get back to Friday night, because I think like, the timeline here actually matters a lot. So Friday night, we start learning the reasons it happened. I believe three high-level OpenAI employees all resign right after this all goes down with Sam and Greg. Sam and Greg, as far as we can tell, and I'm curious if you guys have heard anything about this, immediately go to work spinning up a new AI company. I think it was very obvious to everybody immediately that they could just, like, have a company with an LLC and a name, and people would throw billions of dollars of investment at it.

• 11:37Nilay Patel?

  Yeah.

• 11:37David Pierce?

  And so they started, the things that have been reported are that they were building, or they were thinking about building, an AI chip company to rival Nvidia. There's been the thing with Sam and Johnny Ive and Maso-san working on AI hardware. Sam's the largest investor in Humane, which is forever hilarious. Did you guys learn anything about what the, like, counter idea might have been if we landed in the world of Friday Night, where they just went off and started their own company?

• 12:05Nilay Patel?

  No, and I think it's actually important to fill that in a little bit. I don't know if you've ever been fired. You know, the first thing you do is you plot your revenge, like, very emotionally plot your revenge, right? And that is what was happening. That is what that communication was. We'll just start a new company. Like, it just, these are still people. They are very human people, as we discovered throughout their actions of the weekend. They might think they're the masters of the universe, they might be playing with $80 billion worth of shareholder value, but they are people, like...

• 12:39Nilay Patel?

  Just deeply emotional flawed people, just like everybody else. And so that first wave was very much a revenge wave. Like, they had no notice, so they had necessarily no plan. So we'll start a new company. I can get the money. Everyone will come over. That was a burst of communication that I think was rooted in just the emotion of the moment. Then I think everyone got some sleep. And then we entered into Saturday where Alex and I broke the news that the investors were pressuring the OpenAI board to bring these folks back, which bled into today. And again, the absolutely unpredictable outcome of today.

• 13:22Nilay Patel?

  But I think the Friday night, we're just gonna go start a new company, was just the first heated emotion of that moment. And all the people around them were very much saying, hold up. Like, can we just Ctrl Z this thing and fix it? Like, I heard, like, my interest is just fixing it. You know, like, very directly from some people, like, I'm just trying to fix it. This is ridiculous. This should have never happened.

• 13:46David Pierce?

  So I believe that. But also, Alex, tell me if you agree with me on this or not. I would assume that every venture capitalist on earth with Sam Altman's phone number called him on Friday night and said, tell me how to give you money for your next thing.

• 13:59Nilay Patel?

  For sure. So, I mean, is your point that, like, they should have just left and not tried to?

• 14:05David Pierce?

  No, I just, I think, Neelai, I think you're right. But I also think the sort of parallel universe in which they went to start that company is not that far off.

• 14:13Nilay Patel?

  Right. I'm not saying, I'm not saying it was impossible, right? It was, it was a very easily accomplished thing. I think you're correct. The money was flowing. The, the support was public, right? You saw Vinod Khosla, who runs Khosla Ventures, just publicly tweeting how much he supported Sam. Like, the money was available from all of his existing investors, probably from Microsoft, right? But the thing that I'm just trying to underline here is that first wave on Friday night of we'll start our own thing was reflexive. It was not considered. And I, there, there's a big gap between we'll support you in whatever your next thing is and writing a check against a business plan. And that gap was, as far as we can tell, that no one ever thought about crossing that chasm.

• 14:55David Pierce?

  Okay, that's fair. All right. And so let's get to Saturday, because that's when stuff gets even weirder somehow. But first, we're gonna take a quick break. We'll be right back.

• 15:08Speaker 00

  This episode is brought to you by Michelob Ultra. Good times mean competitions between you and your friends. Like seeing who can throw some pigskin the farthest, or rush the field the fastest. Winner gets an ultra. Because it's not just a superior light beer, it's also giving fans superior access to their favorite sporting events. Superior is worth playing for. Visit michelobultra.com/superioraccess to enter. Enjoy responsibly. Copyright 2026 Anheuser Busch InBev Michelob Ultra Beer, St. Louis, Missouri.

• 15:37Speaker 01

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• 16:11David Pierce?

  All right, we're back. So we've had the breakup. We've had the feelings. Everybody's putting up angsty away messages. And then Saturday morning, in the Bay Area somewhere, reconciliation begins. Neil, take me through the beginning of the story on Saturday.

• 16:27Nilay Patel?

  So what we had heard is the investors in OpenAI, which is mostly the commercial entity, they were putting a lot of pressure on, hey, we need to at least know what happened. We need to know your reasoning. And we need to see if we can resolve this situation. That led to, what I am guessing, is yet more Google Meet calls. And I just want to keep highlighting this because I think we are all imagining some very tense in-person meetings. And really, everyone was kind of just on the phone.

• 16:56David Pierce?

  I mean, we're all imagining the boardroom from Succession, right? That's what's in everybody's mind as we go through this. Like, a bunch of people sitting around a table raising their hands, like, with great intentions.

• 17:05Nilay Patel?

  I'm saying I don't even know if their cameras were on. Like, this is a lot of people who are alone, or in small groups of people in various places.

• 17:14Speaker 05

  Also, just very important note, $10 billion from Microsoft's can still not make you use Teams.

• 17:24Nilay Patel?

  It is the most important.

• 17:26Speaker 05

  Uh huh.

• 17:26Nilay Patel?

  So we start hearing there's all this pressure and Alex actually hears, hey, they might bring him back. So Alex and I just start calling everyone and we broke this, we beat, I don't remember who we beat, but we beat someone by six minutes to the story. The OpenAI's board is in negotiations to bring Altman back. And the most important piece of that story is he was ambivalent about it. That was reporting that we had and his condition was, I'm not going to go work for these people again. They just fired me for no reason. They all have to go.

• 17:57Speaker 05

  Which is understandable.

• 17:59Nilay Patel?

  Yeah, like it's just an incredible condition to impose, right? So even from that moment, like we get this reporting, we break the story. We're like high fiving, I'm thinking, and Alex is thinking, okay, to make this happen, four people have to publicly admit they made a mistake and resign in disgrace.

• 18:17Speaker 05

  Yeah.

• 18:18Nilay Patel?

  This is a high mountain. Who knows what will happen next? And then we spent the rest of the weekend on the phone.

• 18:23David Pierce?

  Yeah, Alex, what was your sense of whether that those were kind of real requests? Whether that was again, Sam saying, I'd like to come back. Here's my rational list of what it will take. Or Sam being like, fuck me, fuck you.

• 18:38Speaker 05

  I think it was pretty clear that Sam had the upper hand as of like Saturday midday. And then, you know, we had reported that they had a 5pm deadline to reach a deal with the board. And the thing that was going to happen at that point was if it wasn't reached, Sam's camp was telling the board, there's going to be mass resignations. You know, the entire company is behind us.

• 19:01David Pierce?

  Is that why you think he had the upper hand? Like just because it was so clear so quickly that OpenAI as a company was behind him?

• 19:07Speaker 05

  I think what everyone underestimated is the resolve of what ultimately was three people to not have him come back. But at the, and the thing is like, the board has been radio silent, you know, aside from that initial statement and an internal email that reiterated the statement to employees Sunday night, no one from the board has said anything publicly, not that they haven't elaborated on anything. So that's important, but it seemed like Sam was getting the upper hand. The 5pm deadline passes on Saturday. I'm at a party and Eli is like, or I'm like stepping aside and Eli is calling me and we're like, what is happening? Does this mean mass resignations? And then we look on X and I want to note, it is deeply ironic that all of this has been playing out on X because it's all training data for Grok.

• 19:53Speaker 05

  It's all training data for Elon's OpenAI competitor.

• 19:56Nilay Patel?

  This is all just a plan to poison Grok. You're like, Grok, how do I replace the CEO? And it's like, here's some ideas.

• 20:02Speaker 05

  Right. And it's also, there's a lot of deeper irony there with Elon we could get into at some point. But we saw this very public display of support for Sam Saturday night with pretty much everyone at OpenAI, you know, quote tweeting him with the heart emoji, right?

• 20:19David Pierce?

  Yeah. So Sam tweets something like, I love the OpenAI team. And as if they had, you know, coordinated this in like a high school cafeteria, they all quote tweeted it with hearts.

• 20:30Speaker 05

  They all quote, exactly. Major high school caf vibes. And then we're all thinking like, okay, this maybe means he won? Like we're all, we're like, Eli and I are scratching our heads. And then, you know, you wake up the next day and you realize that was a pressure campaign to show that Sam actually did have the backing of the whole company.

• 20:49Nilay Patel?

  Yeah. And so we had heard, we, we had reported this 5pm deadline, 5pm Pacific. So that deadline just comes and goes and we are scrambling texting everyone in the universe like, what is happening? This was a deadline, right? Everyone's supposed to quit. So they start tweeting the hearts. And it was actually very unclear whether this was, we're all quitting right now or Sam has won. And the online reaction was like instantly polarized, right? Binary reaction, like people are like, Sam's won, it's done. And our instinct was, we would know, right? Like, this is cryptic. We're doing high school away messages on X.

• 21:31Nilay Patel?

  It's absolutely not done, but we still don't know. And there was no further conversation after that. Like, I was basically told, go to bed by a source. Like, you're done for the day. Like, we did this thing. It's the show of force. Like, everyone has to go to sleep now. We'll try again tomorrow. So that was the end of that day. I will say that my favorite conspiracy theory about this is that a misaligned AI was instructed to get people to watch the Las Vegas F1 Grand Prix, which started at 1 a.m. Eastern. And I was like, this almost worked. Like, I almost watched this. But I went to bed anyway. Then we woke up the next morning, and we were, it was basically the status quo. Like, this pressure campaign had not moved anything. We were told, Kara Swisher

• 22:14Nilay Patel?

  has reported this, we were told that there was a noon Pacific deadline, which they blew right by. And then we reported again, there was another 5 p.m. deadline. So my response to that was, is this real? Like, you can only issue so many 5 p.m. ultimatums in your life, especially in sequential days. And I was told, yes, this is a hard deadline. It's real today. Like, either this happens at 5 p.m. today, or we go in another path. And I thought, oh, man, how do I report this? And that is when Sam tweeted a picture of himself in the OpenAI offices, holding a guest badge with the caption, "First and last time I ever wear this badge." Which is, right, that's the ultimatum. Like, either this is getting fixed, or I'm never coming back here again. And so that was when I felt comfortable saying, okay, it's like, we're doing

• 22:57Nilay Patel?

  the 5 p.m. thing again, but I've got the guy, like, issuing the ultimatum. Like, this makes sense to me.

• 23:04David Pierce?

  Yeah. So then, they then spent the whole day at OpenAI headquarters hashing this out, basically having what I would assume is just the same fight over and over and over again. Sam trying to get the board to resign in disgrace, and the board not wanting to resign in disgrace.

• 23:18Nilay Patel?

  There was some internal discussion there about picking the successors for the board. And the feeling... And we don't have this on the site, but so this is a little shakier, but the feeling was they, people were suggesting candidates. We heard a lot of what I would call like web 1.0 names. Sheryl Sandberg was in the mix, like, right? Marissa Mayer is in the mix, like, all these like old heads who are from that era, you know, the adults, like, we're gonna hire adult supervision for Google. Like, I was like, when is Eric Schmidt gonna show up? Right? Like, this is, these are the kinds of people we're talking about.

• 23:53Speaker 05

  Yeah, I mean, if you saw a very public web 1.0 tech executive, like tweeting support of Sam over the weekend, they were most likely trying to get on the board.

• 24:03David Pierce?

  Dick Costolo just appears out of nowhere.

• 24:05Nilay Patel?

  At one point, Alex was like, these people are just like in the firmament, they're available to show up and like run your company for a couple of years, like.

• 24:11Speaker 05

  Brett Taylor, we should know, I mean Brett Taylor, with like, the guy who literally just negotiated the sale of Twitter to Elon in the second most dramatic boardroom tech situation of the last decade. Yeah.

• 24:22Nilay Patel?

  Yeah, it's like, it's just like, I keep calling them capital A adults, although no one here was acting like an adult, but like they, you know, they have that rep, like, here's the cast of characters. And we heard that such an Adela was mediating this conversation, right? And his point of view was, he's pretty neutral, he just wants this over with, he needs, he needs a story to tell Microsoft shareholders on Monday morning. And that is Microsoft's interest is stability for its shareholders, because they have this massive dependency in OpenAI.

• 24:50David Pierce?

  And that was one of the other things we should have said on Friday, is that this all happened while the markets were still open on Friday and Microsoft's stock, like, tanked as a result of this happening. Like, this was the biggest public blowback on this was gonna come back to Microsoft in a pretty real way. So it makes sense that Nadella was going to be directly involved in doing this.

• 25:10Nilay Patel?

  And in this ticking clock for Microsoft, I think it is underappreciated, but it was very real that Microsoft needed a crisp thing to say on Monday morning, one way or another. So I always had it in the back of my head, like, at some point, this has to hit some kind of resolution, because Microsoft will not demand it, but will just create a resolution to say to its shareholders. So there's all this like vetting of these like old heads. The OGs come to town, right? So the vibe I'm getting, and again, we don't actually know if everyone was all together. We know there was a lot of OpenAI people at headquarters. We don't know if the board was there, actually.

• 25:50Nilay Patel?

  But the vibe we're getting is people are firing names at this board and the board is not taking it seriously. And in the meantime, they are running their own search for a new CEO because their interim CEO, Mira Maroti, has sided with Sam in the meantime, like publicly during the hearts campaign on Twitter. She's posting the heart, right? So she's

• 26:11David Pierce?

  What a sentence.

• 26:12Nilay Patel?

  She's gone over. I mean, it is just absolutely childish. When I say these are very flawed human people, like we're going to win this fight by posting hearts on Twitter is, I don't know what to say about it. One day I will like have had enough time to process that situation. But Mira has gone over to Team Sam, like very publicly. So the board needs a new CEO. So that they're getting tossed these names and everyone is hoping that they will accept some names and resign. And the new names will take over. And in the meantime, they are looking for a new CEO. And that is more or less what is happening all day Sunday as the 5pm deadline draws ever near.

• 26:47David Pierce?

  So we hit that deadline and again, nothing. Alex, what would you have? Where was your head at sort of the end of Sunday? Like, obviously, things get crazy several hours after that deadline. But like, where were we at the end of that day on Sunday, do you think?

• 27:02Speaker 05

  I was feeling like if we didn't have an announcement by five, it wasn't going to work out. And we were kind of getting back channel that by midday Sunday, things were taking a turn. And I didn't, obviously, no one could have expected what actually happened. This is the most, like I was saying at the top, bananas thing. But yeah, I think people were generally people who were close to the story were thinking like, okay, he made it very clear publicly. This is the last time he's setting foot in the building. The deadline has passed and it's not looking good.

• 27:36David Pierce?

  And, and there's a version of that that would have been a very dramatic weekend that ended in a relatively okay thing, right? Sam and Greg go off to do something. They bring some OpenAI people with them. OpenAI hires a new CEO. Everybody moves on with their lives like that. There's a version of this where like a lot of people had a lot of feelings, but it turns into a relatively normal corporate change, right? But that is obviously not what happened.

• 28:01Nilay Patel?

  Right. The negotiation to bring Sam Altman back has failed. Mira Murati continues as interim CEO. Microsoft wishes Sam the best and says they'll support him in the new venture. Right. Again, the, the thing that needed to happen by Monday morning was a Microsoft statement to the market. And you really just cannot underestimate how much pressure that was applying to the situation. Like, yeah. So I'm expecting that statement, right? Like, here's the forcing function. We just have to be ready for this deal is going to fall apart. Microsoft is going to issue some holding statement and say, you know, we have a deal with OpenAI, everything's fine, our contracts are rock solid. Brad Smith, our chief legal officer, is a great lawyer, like, whatever Microsoft is going to say to calm everybody down.

• 28:46Nilay Patel?

  But instead, and all credit to Bloomberg, Bloomberg has a report, I don't know, 10 minutes before the thing actually happens, that Mira Murati has hatched a plan as interim CEO to just rehire Sam and Greg as employees, while the board is out calling people to interview them to be the CEO to replace Mira. And so what comes out in the end, I'll just like fast forward a little bit, is Mira's plan was to quickly hire Sam and Greg as employees again, forcing the board to fire all three of them, which would have led to presumably lawsuit, like, who knows what was going to happen in that moment?

• 29:26Nilay Patel?

  But that was the last swing of chaos when it was, I think, obvious, oh, this just fell apart. Like, we're not in a place where we're negotiating for people resigning. We're in a place where we're actively trying to create legal leverage for a lawsuit to come. And the board is actively trying to replace the person that they just hired to replace the CEO they fired.

• 29:52Speaker 05

  Sorry, it's just, it's, I know, it's just like, this whole thing has been such a blur for Neelai and I. Like, when you say all this out loud, it's just truly, it's insane.

• 30:01David Pierce?

  And it does seem like, I think your instinct there is right, Neelai, that it's, at that point, what you're saying is, "I'm not gonna quit, you have to fire me."

• 30:08Nilay Patel?

  Yep.

• 30:08David Pierce?

  Like, "I'm going to cause so much trouble for you that you're gonna have to get rid of me, and then I'm gonna have ammo, kind of in whatever direction I want to use it."

• 30:15Nilay Patel?

  Yeah, exactly, right, and the rehiring of Sam and Greg is like a deeply funny idea. Like, you have to fire them again.

• 30:23David Pierce?

  Just like, hire them as interns and watch them get fired, yeah.

• 30:27Nilay Patel?

  And all three of them will then sue the board. And this is when Alex and I just started sending out hundreds of text messages. This is about to fall apart. Like, this is absolutely about to fall apart. And it fell apart, and it fell apart in the weirdest way possible, which is the board just, I didn't even announce.

• 30:46Speaker 05

  No.

• 30:46Nilay Patel?

  The information broke.

• 30:47Speaker 05

  Yeah, this is just like coming from sources, like, the board has been in a bunker somewhere. They don't have a crisis comms team, they don't have like people speaking to the media. They've just been radio silent, but it starts to trickle out that they've actually named a new CEO. Uh, and it's Emmett Shear.

• 31:05David Pierce?

  Not on my bingo card for who is gonna be the next CEO of OpenAI.

• 31:08Speaker 05

  Not on anyone's bingo card, I think it's very safe to call this one out of left field. Emmet was the co-founder of Twitch, which is a live streaming video site, not an AI company. He's not seen as a AI leader. He posted shortly after it leaked that he was being named CEO, that he got the call for the job that day, and took a few hours to decide, and, you know, he's a free agent. He left Twitch earlier this year before mass layoffs, they've had two rounds of layoffs since. Uh, I can confidently say that the vibe within Amazon is that Twitch has been, uh, a, hmm, how should I put this? Uh, shitshow, uh, since Amazon bought it.

• 31:52Speaker 05

  And so no one really thought of Emmett, except the board, apparently. He is now the CEO and he sent this note internally to employees saying that he was going to conduct an independent review of the board's actions, which is hilarious because he was hired by the board. I don't think that's possible to have an independent review when you are the person, you're represented by the people that you're reviewing. I mean, it just doesn't make sense. And also, those people can callously fire you whenever they want, which they've proven twice in 48 hours that they can do. Okay, and we've been dancing around this this whole time. I really think at this point, we should just say who these people are because at the end of the day, three people set all this in motion. Three people have caused OpenAI to explode from within.

• 32:37Speaker 05

  So should we just get into that? Yeah, do it. Okay, so OpenAI is very strange in how it's structured. And this is something that people haven't really been paying attention to because we've been so focused on just the the success of their products with ChatGPT. But OpenAI started as a nonprofit. And so it has this weird structure where there's a nonprofit, there's a flow chart, which is like perfect for Decoder. There's a flow chart on OpenAI's website and I challenge you to look at this flow chart and try to make sense of it. It is one of the most confusing. I just want to be very clear. You can definitely make sense of it and they've drawn it to be more confusing than it actually is. Okay, well. That is 100% true. We're going to redraw the flow chart now because it's all different. So there's this nonprofit with this board that controls it.

• 33:21Speaker 05

  And importantly, the board of OpenAI does not have equity in OpenAI, which is a really wild thing. And so that's the context of the board. There's three of them really that aren't OpenAI people. So one of them is Adam D'Angelo, who is the CEO of Cora. He operates, I should note, a competing AI chatbot platform called Poe. He was the original CTO of Facebook. He's a he's a known quantity in Silicon Valley. He's a really well-connected guy. There's a woman named Helen Toner, who has ties to the effective altruism movement. She used to work at Open Philanthropy. She's now at Georgetown. She funds AI safety stuff. She was actually on our stage at Code in September.

• 34:02Nilay Patel?

  Casey Newton, talking about AI safety. And then the other one is a woman named Tasha McCauley, who is the former CEO of GeoSim Systems. And as far as I can tell, basically no one in tech that I know knows who she is. Okay, so that's the three people. And they are the ones who basically decide to bring Emmett in. Because as we find out in the next turn of the story, the guy that we thought was the architect, the mastermind of all of this flipped, which we can get into.

• 34:32David Pierce?

  Yeah, so Emmett's a weird choice.

• 34:34Nilay Patel?

  Emmett's a weird choice and also openly a decelerationist, which is a phrase that the AI community loves to use. Like, there's videos of him being like, this is terrifying. We should slow it down. This will extinguish all value in the cone of light, which is a real thing he says.

• 34:51David Pierce?

  Wow.

• 34:51Nilay Patel?

  It's amazing. And his point of view is we should slow AI innovation way down before, so we can get a handle on how dangerous it is. So you can see where the board is, right? This is a split that we've been hearing about the entire time. OpenAI is playing with dangerous toys and Sam is running too fast. So we've brought in Emmett Shear to slow this whole thing way down.

• 35:13David Pierce?

  Yeah, I think that's right. And then on the flip side, very early this morning, Neil, I think to your point correctly, to get something out before the stock markets opened, Microsoft announces it has hired Sam Altman and Greg Brockman to run, I believe the phrase is an AI research lab.

• 35:31Nilay Patel?

  An advanced AI research team, is their statement. And can I just read this statement from Satya Nadella?

• 35:37David Pierce?

  Please do.

• 35:37Nilay Patel?

  Which just contains magnitudes. "We remain committed to our partnership with OpenAI. I have confidence in our product roadmap, our ability to continue to innovate with everything we've announced at Microsoft Ignite and in continuing to support our customers and partners. We look forward to getting to know Emmett Shear and OAI's new leadership team and working with them. And we are extremely excited to share the news that Sam Altman and Greg Brockman, together with colleagues, will be joining Microsoft to lead a new advanced AI research team. We look forward to moving quickly to provide them with the resources needed for their success." In the journalism business, we call that burying the lead. And importantly, Sam Altman is being given the title of CEO at Microsoft,

• 36:18Nilay Patel?

  which is inside Microsoft's corporate politics like a big deal, right? There are not a lot of CEOs at Microsoft. Usually when they acquire a big company, they give those people the CEO title. So the person who leads LinkedIn has a CEO title. The person who leads GitHub has a CEO title. Phil Spencer is now the CEO of Microsoft Gaming. That's a big deal. You can go listen to that decoder episode where I ask him what that that title shift means. And it basically means he has his own resources, right? He's split off from Microsoft. Your own P and L. Well, even to listen to that episode. It basically means you have your own resources and you are more of a free agent to run your little division like it's a own little company. So this is the arrangement Sam is getting.

• 37:02Nilay Patel?

  What I will tell you is I read this statement, especially that we look forward to getting to know Emmett Shear. They don't know, they don't know these people. They don't know what's going to happen with OpenAI. They don't know if Emmett's going to turn the pace of innovation way down, but they are able to tell the market, hey, the the face of the AI winning that we've been doing as Microsoft now works at Microsoft. Does Sam Altman have a contract to work at Microsoft yet? Like, I don't know the answer to my question. Does Sam Altman, the guy who used to run Y Combinator, who has his hands in every startup in the universe, has multiple investment funds, is thinks of himself as the guy who was running the hottest AI startup in the world on its way to making AGI? Does he want to be a Microsoft employee? I like, I truly do not know the answer to that question.

• 37:47Nilay Patel?

  I do know that this statement utterly worked to not only calm the market, but to send Microsoft's stock skyrocketing. And we are now sitting here saying, do we need to pre-write? Microsoft is now a $3 trillion company. Because the stock, as we are speaking, is like to the moon. So this statement worked. I'm just cautioning everyone. This, in my view, is a holding sta- it's still a holding statement.

• 38:12Speaker 05

  Well, I think knowing what we know about Sunday, knowing that Microsoft really wanted to have this buttoned up by markets open, this was decided like, it was like, almost like 1 a.m. Pacific.

• 38:23Nilay Patel?

  Yeah, I was asleep. Like, straight up, I was like, I'm done now.

• 38:26Speaker 05

  I'm thinking that like, okay, surely nothing more is to come. And then at like, around 1, Nadella tweets us, and luckily, Tom Warren is waking up in London and gets it on the site. It's nuts. But, but I think there's an important thing here, which is we know that Microsoft wanted to get this done. I have to imagine that whatever got Sam and Greg to agree to go to Microsoft was a lot. I imagine they had all the leverage in that situation, because they'll, they'll just go do their own thing, right? Like, we've all been saying. Microsoft cannot make it look like the, the company that they have literally bet their AI Azure future on is imploding before their very eyes. And so, I have to imagine this is gonna go down as one of the best packages ever, from a big tech company to, to a team to

• 39:11Speaker 05

  come there, because they had all the leverage that night.

• 39:14David Pierce?

  I agree. So, this, just real quick, this brings us to winners and losers.

• 39:18Nilay Patel?

  Wait, we're not done with the story yet.

• 39:19David Pierce?

  We're not. There's one more turn, but we're gonna get to that. But first, we're gonna take a break. We'll be right back.

• 39:30Speaker 00

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• 40:33David Pierce?

  All right, we're back. And we are back with the last and current turn of the story, which is a letter. So much of this all is just happening, people writing texts to each other. It makes me very happy. Neil, since you're our quote reader for the day, do you want to read part of this letter?

• 40:48Nilay Patel?

  Yeah.

• 40:48David Pierce?

  It's truly spectacular. From a bunch of OpenAI employees, they wrote an open letter to the board.

• 40:55Nilay Patel?

  Keep in mind, this all starts with a 5pm deadline, which is there's going to be mass resignations unless Sam comes back. They've blown the deadline twice, and Sam has now announced to go to Microsoft. The markets think Microsoft has conducted the greatest aqua hire in tech history with no regulatory oversight. Like, I have a version of that idea from like 5,000 people in my text message inbox. Like, Sachin Nell is a genius. Okay, what no one is counting on is like, oh, people still want to do the plan, right? Like, if you say you either hire Sam, or we all resign, a lot of people are going to try to resign when you don't hire Sam back. So 500-plus employees out of, what is it, 700 employees?

• 41:41David Pierce?

  Yeah.

• 41:41Speaker 05

  I mean, by the time this episode comes out, it will have been the whole company.

• 41:44Nilay Patel?

  The letter says, "We, the undersigned, may choose to resign from OpenAI and join the newly announced Microsoft subsidiary run by Sam Altman and Greg Brockman. Microsoft has assured us that there are positions for all OpenAI employees at this new subsidiary should we choose to join. We will take this step imminently unless all current board members resign and the board appoints two new lead independent directors such as Brett Taylor and Will Hurd and reinstates Sam Altman and Greg Brockman. Importantly, Ilya has signed this letter, and he has tweeted, 'I deeply regret my participation in the board's actions. I never intended to harm OpenAI. I love everything we've built together, and I will do everything I can to reunite the company.'" Mira has signed this letter,

• 42:24Nilay Patel?

  and Sam has now quote tweeted Ilya with three heart emojis, which I, just saying this, I want to point out, we are talking about $10 to $80 billion in shareholder value is happening with heart emojis on Twitter. It's-

• 42:38Speaker 05

  It's the most emo thing.

• 42:39Nilay Patel?

  I've listened to Letter to Elise like 10 times this weekend, because when I was in college, I would just use the lyrics to Letter to Elise by the Cure as my "aim away" message.

• 42:48Speaker 05

  That's where we are emotionally with this situation. This means the board might succumb to this pressure campaign because they're going to lose their entire company. All these employees are tweeting, OpenAI is nothing without its people. The board might succumb, they might reinstate Sam. This whole Sam is now the CEO of a Microsoft research team might not come to pass. I truly do not know what happens next. And that's what I mean by Microsoft needed some clarity and they got it today in a move, which maybe seems like Nadal is a genius, but also may have just created enough stability for the next chapter to play out.

• 43:23David Pierce?

  So Alex, there are two things in here that jump out to me that I'm really curious about. One, this means Microsoft has made very clear, very loudly that anyone who wants to leave OpenAI can go work for Microsoft, which is a pretty ruthless thing to do to a company that you've been saying, we, you know, are committed to our partnership and look forward to getting another leader, new leadership team. And the other thing is this is the final form of the kind of the board against the world thing. This is not quote tweets and heart emojis. This is literally the vast majority of the company saying in no uncertain terms, we will leave unless you do this. I'm always of the mind that it's one thing to make big noises about quitting your job. It's another thing entirely to quit your job.

• 44:03David Pierce?

  This does feel like the board is going to have to call a lot of bluffs and in a way that it's probably going to lose at this moment in time. Right?

• 44:11Speaker 05

  Yeah, I mean, what I was hearing over the weekend is that Ilya is really the wild card here. He has a lot of respect internally. He's a co-founder, he runs the research teams. The fact that he flipped and is now saying, I'm also going to go to Microsoft, means there really is no OpenAI anymore. Because that was always the key man is like, if Ilya is still there, there's still a chance that, you know, they're not going to be this like breakneck commercial entity that they have been under Altman, but they at least will do leading research because the research community respects him. If he is gone, it is literally Adam D'Angelo, Tasha McCauley and Helen Tonner. Those people are going to be all that's left of OpenAI.

• 44:51David Pierce?

  Yeah, he was kind of the truest believer, right? Like, if you wanted to pick somebody who was like the most held on to the Original vision of OpenAI, you'd probably pick Ilya, right?

• 45:01Speaker 05

  So The Atlantic has this incredible in-depth story about OpenAI that everyone who's listening to this should go read. And there is a scene where they had a leadership offsite, I think it was last year. And Ilya has a wooden effigy that he literally sets on fire at the meeting to represent non-aligned AGI, which is, you know, this is like the idea that, you know, they're creating AGI in an unsafe way. I mean, it's kind of a religious thing in more ways than I think people get in the AI community. But yeah, that's, that's, I think for you, if you want to understand kind of the cultural divide, which is maybe where we go next here, but like the culture divide within OpenAI has become somewhat religious in the last year or so, as the company's become commercialized.

• 45:46Nilay Patel?

  I told Alex that a real headline we should write after this is the rich people are crazy. Because this is religious fervor now. These are people who believe that they are going to create the power to destroy the universe. And that is how they talk about it. It's not like a imposition of class warfare on billionaires. It's, no, you should listen to the billionaires talk and you should listen to what they call effective acceleration and deceleration. And there's a schism there that is beyond cultural, right? It has reached a level of religious fervor that is making them act irrationally. And that might be appropriate. Like if you thought that the thing you were building could destroy the world,

• 46:31Nilay Patel?

  you should probably reach into some like principles that are not just made up, which is like how you find religion. But that's like, there's no moderating force on that, right? There's no like centuries of church dogma or liturgy, like whatever. There's some forum posts about effective accelerationism that they're all reading, that they've just made up. And like, that's weird. And it's, it's worth some scrutiny outside of the sort of boardroom or chart battles that, you know, that's where I like to focus my attention. But there's something here that is making these people act irrationally. And with not just like religious fervor,

• 47:11Nilay Patel?

  but with like martyrdom fervor, like they will kill the company because they believe this is so right.

• 47:17Speaker 05

  Right. And what's great about this story is that this tension is actually personified in the org chart. So going back to how ridiculous it is that the way that OpenAI is structured, they have this nonprofit board that controls the company effectively. They can fire people, et cetera. They get to decide when the company has reached AGI, which is a very important power to place in a company that's whole mission is around creating AGI. And so you have that one side of the equation. And on the other side, you have the for-profit entity that OpenAI created under Sam Altman to raise all of the money from Microsoft, hire all of the top talent from all of the big tech companies that they have in the last year to build wildly successful commercial products.

• 48:01Speaker 05

  And Sam Altman is on stage at Dev Day. I was there a couple of weeks ago saying, we are going to be the app store for AI. We are going to start sharing our revenue with you. We are going to give more of our technology to our developers. We are going to be a platform. So inherent in the org structure is this tension where the commercial entity is charging ahead with something that the board is tasked with protecting and ultimately deciding. And incentives drive behavior here. And so it's just really interesting to look at like, maybe this was always going to happen. You know, the favorite theory I've heard over the weekend was like, this is actually Elon Musk's poison chalice because he named OpenAI.

• 48:43Speaker 05

  He really set it up, gave it its first donation, set up the nonprofit structure. And maybe this was always going to happen.

• 48:51David Pierce?

  Well, and then importantly, stopped giving that money when he stopped being part of the company. It was a big part of like Semaphore's reporting from a while ago.

• 48:59Speaker 05

  Right.

• 48:59David Pierce?

  That was part of when OpenAI realized, we need a lot more money to do the kinds of things we're doing. They went to Microsoft to get both the capital and the compute to do it. And all of a sudden, you're just kind of off to the races. And as soon as you decide you want the money, it becomes very hard to not want the money anymore. That's one of the things we've seen over and over. And like this idea. That you can have a nonprofit overseeing a for-profit company is not unheard of in tech. It's fairly unusual, but like Mozilla is a version of this kind of org chart. Signal is a version of this kind of org chart. Like, it's possible to do, but it comes with a really complicated set of trade-offs in every case. Like Mozilla's thing, and Neel, I know you and I have both talked to Mitchell Baker, the CEO of Mozilla, about this. Mozilla's for-profit company gets most of its money from Google.

• 49:43Nilay Patel?

  Yep.

• 49:43David Pierce?

  Which to Mozilla, the nonprofit that wants to make the internet better, feels really bad. But without that money, you can't do the work anymore. And so this tension is never going to stop going away, or this tension is never going to go away. And so you eventually need somebody in charge who is either so mission-driven that they stay that way no matter what. Or you get into the Sam Altman thing where you eventually start chasing the money and then the money gets big. And then that's what you become.

• 50:11Nilay Patel?

  So I said this earlier, and I'm not going to try to describe an org chart on a radio show. But it is very true that the flow chart that OpenAI has published about its ownership structure is consciously more complicated than it needs to be. There's only three boxes on the structure. Most of the extra boxes are just labeling who owns what. So there's OpenAI, the public charity at 501(c)(3) that owns a holding company, which co-owns OpenAI, the commercial entity with Microsoft. That's it. That's the whole structure of this thing. There's a charity that owns a holding company so that employees can have some equity on the holding company. And then there's the commercial thing that goes off and does all the work.

• 50:56Nilay Patel?

  That structure exists all over the place. It does not exist in Silicon Valley. So outside of Mozilla and these other things that are run is, you know, they're sort of like not capitalistic in their way.

• 51:07David Pierce?

  Right.

• 51:07Nilay Patel?

  In Silicon Valley, everything is like a Delaware organized C corp with VCs on the board. And now all over the place, super voting shares for founders. Like, there's a way to do it, and they do that because this stuff happens when you don't.

• 51:22Nilay Patel?

  Like, that's why they do it, right? Like founder drama with their VCs, like the story of Uber exists, right? The story of Apple exists, like, you know, every single year Meta shareholders vote to remove Mark Zuckerberg?

• 51:34Speaker 05

  Yeah.

• 51:34Nilay Patel?

  Yeah. And he just outvotes them because he has super voting shares. Like, it just doesn't matter that the shareholders of Meta are like, get this guy out of here, year after year, because he has super voting shares. Right. So you get a structure like this, and these shenanigans become possible. But then you look around the world and you see functional structures like this at very big companies, at very important companies. Uh, someone pointed out to me that Bosch, which is a huge German engineering firm, very successful in the car world and the engineering world, is organized basically like this. There are companies that are owned by the towns they're in in Europe. Like, all these other structures exist, and this org chart, people look at it and you look at it like this is crazy.

• 52:14Nilay Patel?

  If you just spend a few seconds looking at what these boxes mean, and I don't know why some of them are ovals and some of them are squares, like, it's just three boxes. Yeah. Right? At the end of the day, there's OpenAI, the charity that owns a holding company that owns OpenAI Global, which is the commercial entity, and Microsoft is a big investor in that entity. And that means Microsoft does not have a lot of control over this board, which I think has become a real problem for Microsoft at this point in time. It means that Sam Altman did not have super voting shares to stop it, but it also, very importantly, means that the board was too small and too inexperienced, made a hasty decision, and there was no governance check on their behavior.

• 52:56Nilay Patel?

  And I think that is like the fundamental mistake of the structure, not the structure itself.

• 53:01Speaker 05

  Or we find out that, I, I, I don't think this is the case, but I just want to play devil's advocate, or we find out that like OpenAI invented God in the last two weeks. There's, there's this clip of Sam Altman, uh, at a conference in San Francisco the day before he was fired, saying that like, there's been a few moments in his career where they've gotten to push back the veil of ignorance. And like, he, he was talking as if like, you know, they had made fire, and he said, one of these moments happened in the last couple of weeks. So everyone is reposting that clip saying, What if they realized they had AGI? Or what if they realized the model was about to just accelerate in a way that no one could have predicted?

• 53:39Speaker 05

  I will say that Ilya has been doing a press tour and being pretty open that the model capability is going to progress a lot faster than everyone thinks. So there has been, you know, a lot of theory to that. But what it looks like right now is inexperience and the board not realizing what was going to happen when they made such a rash decision.

• 54:01Nilay Patel?

  And I just want to put this out there. The other thing I've heard is it's not that Microsoft and the commercial entity of OpenAI and Sam didn't think safety was a problem. Right? Like Kevin Scott, the head of AI at Microsoft was on stage with me at Code and we talked about AI safety and the limits and like how careful they should be. This is a thing that Microsoft is publicly talking about. So if OpenAI's board is saying, okay, we're going too far ahead. Their entire job is communicating that there's a misalignment. Their entire job is saying to Sam, hey, you're over the line. Like pull it back or we're going to fire you. Instead, they just fired him. Instead, they just went ahead. They gave Microsoft one minute notice that they're going to fire Sam.

• 54:46Nilay Patel?

  And so like the fundamental job of this board is to communicate and set limits and they just didn't do it.

• 54:52David Pierce?

  Yeah. Well, so and this is another good moment to put a button on what you said earlier on, Eli, which is that we actually don't know the whole story behind why he was fired in the first place. And Emmett Shear, in his weird, long tweet announcing that he is CEO, at the very end says, PPS, before I took the job, I checked on the reasoning behind the change. The board did not remove Sam over any specific disagreement on safety. Their reasoning was completely different from that. I'm not crazy enough to take this job without board support for commercializing our awesome models. So before that, I'm like, okay, OpenAI wants to go back to being essentially a research organization. Fine. Like whatever you want to say about that decision, that is at least a decision. Now it's like, okay, well then what are we, what are we doing here? What fight are we having here?

• 55:35David Pierce?

  It's, I'm sure there are people who know, but that part does not seem to have come out in any way that I find at all sort of satisfying.

• 55:42Speaker 05

  What I think we will find out is that this is a classic business dispute. I mean, yes, there are obvious concerns on different sides of the debate here about AI safety. And I do think that played a role. But what we just saw was a couple of weeks ago, OpenAI hastily, and I can say this confidently because I was part of the the press scrum and getting pre-briefed and all this about the the App Store stuff. Like, very hastily, OpenAI announced a major business expansion that Sam Altman led, right? They had this huge conference and were like, we are pushing ahead, we're going to be a new platform. And if I had to guess, that probably led to a lot of this because Sam was clearly caught by surprise.

• 56:26Speaker 05

  There was nothing, you know, normally if this had been like a long gesticulating thing over months, it would have leaked in dribs and drabs. And it really just came like a thief in the night. And so there was a breaking point here very recently. And the thing I can point to is Sam getting on stage and saying, guess what? We've been going 100 miles an hour, we're going to go 200 miles an hour and we're going to become an even bigger business.

• 56:50David Pierce?

  And what seems clear now is that a bunch of people at Microsoft, including Satya Nadella, saw that and said, hell, yeah. And at least one person inside of OpenAI said, hell, no.

• 57:00Speaker 05

  Yeah, I mean, this is like, essentially, this is capitalism versus hippies. I mean, that's what the story is.

• 57:06David Pierce?

  It's the story of Silicon Valley, man.

• 57:08Speaker 05

  Yeah.

• 57:08Nilay Patel?

  I think that's too reductive. I again, the religious aspect of this is just not to be underestimated. Microsoft sees this and says, yeah, go even faster because every one of these queries runs on an Azure server.

• 57:20Speaker 05

  Yeah, right.

• 57:21Nilay Patel?

  Right? Like, that's great for them. They're they're ready to go. The OpenAI board sees this and says, OK, you're going to give people the ability to make computers go take actions in the real world without any oversight. And let them build whatever AI tools on our model that they want and resell them and create a commercial incentive to do that without any safety checks whatsoever. And that is opposed to our mission. That is like real. That is a moral dilemma.

• 57:48Speaker 05

  Do you remember? I mean, we were just talking about this on the Vergecast. We were talking about how this store and these, this agent API thing is going to open them up to a world of hurt. I mean, they literally had to say on stage, we will indemnify you for any copyright violation that may occur from creating bots on our platform. It was very, and like I went to a Q and A with Sam after they announced this at Dev Day, and it was clear that they had not thought through the details, right? Like they, they hadn't decided on how much revenue they were going to share with creators, how the store incentives were going to be aligned. It was all just being done kind of on the fly. And we were all going like, this sounds like a disaster. Like it's a smart business play. If you are Sam Altman, the venture capitalist, right? It's like, yes, this is what you want to go do.

• 58:31Speaker 05

  You want to build a moat around, you know, the fastest growing consumer product of all time. You want to be a platform, but it was clear that they were moving a million miles a minute.

• 58:40Nilay Patel?

  Yeah. And also the problems are not hard to imagine. Okay, creator sets up a GPT bot that just spams people in their email with marketing messages. Does OpenAI want to be sharing revenue with that creator? Is that a thing you want to incentivize? You make it even worse. It's connected to Dolly, right? Okay, you want to make deep fake nudes of people. And that's an app you want to sell in the GPT store. Does OpenAI have the content moderation ability to stop it at scale? When millions of people realize this is a thing they should try to sell like?

• 59:13Speaker 05

  The most wild thing I heard at Dev Day was that OpenAI uses GPT to moderate GPT.

• 59:20Nilay Patel?

  Yeah.

• 59:20Speaker 05

  It uses the AI to moderate the AI. And that's how they were, and that's, and that's how they were going to approach the store. Yeah, I mean, it's, it's truly bananas.

• 59:28David Pierce?

  Yeah. So I think there's a lot still to sort out here, right? I think including the question of like, does Sam Altman actually ever work for Microsoft? And I think we're going to talk about this a lot for a long time, I suspect. But just to, let's just put a button on this moment for now. Because if we stay on here too long, more news will break and this will all be out of date. So we need to like, put this thing on the internet. Just five minutes, I want to do real quick, who won and who lost over the last four days? And then we're going to get out of here. I'm just going to throw some names at you and you guys are going to tell me winners and losers. Sound good? I mean, this sounds like an impossible exercise. It's gonna be great. I'm excited about it. Here we go. Person number one, Satya Nadella. I feel like big winner of the weekend, right?

• 1:00:05Speaker 05

  He might be the only winner.

• 1:00:07David Pierce?

  Okay.

• 1:00:08Speaker 05

  Everyone thinks he looks very clever today. I do not know long term if having your stock price swing this much on the actions of one or two people is a good thing for Satya Nadella.

• 1:00:20David Pierce?

  Fair. Okay, person number two, Sam Altman. I genuinely can't decide.

• 1:00:24Nilay Patel?

  Loser. Huge, huge loser.

• 1:00:25David Pierce?

  Really?

• 1:00:26Nilay Patel?

  Yeah.

• 1:00:26David Pierce?

  Huge loser.

• 1:00:27Nilay Patel?

  He was the guy. And now he, he might still be, he might start a new company, he might go work for Microsoft. He might take everyone with him. But losing the thing you founded is the worst. And it might be that he returns to OpenAI in 12 years like Steve Jobs. But in the meantime, right, the most likely outcome is he owns Next.

• 1:00:49David Pierce?

  Is this his Elon Musk style Joker origin story? Like, is that?

• 1:00:53Nilay Patel?

  Yeah, I don't, I, there's no, I come back to the very beginning. It's great to think that all these people are cogs in a machine and it's a narrative that's playing out and it's a, like, you know, people write about it that way. Sometimes we write about it that way. These are people, you know, and like, whatever he does next is going to be deeply colored by just the emotional damage of this weekend, in the sense that he can't trust the people he thought he could trust. And maybe that's just the reality of being the guy who ran Y Combinator for a long time. Maybe he was already like that, you know? He's been in the scene for a long time. He knows a lot of people. But to go from the top of the world to Microsoft employee in 48 hours, no matter what happens next, he is not the winner today.

• 1:01:33Speaker 05

  I think he is more a winner than Eli, but I don't think he's a full winner. I mean, I think, like, Sam, like I was saying, looks like he had all the leverage with Microsoft. Microsoft needed a way to message that this was under control. I imagine he extracted some insane deal terms out of Nadella late last Sunday night. And if he He does get the entire OpenAI team to come to Microsoft and he gets to run it like his own little fiefdom. Like LinkedIn has its own email, right? Like it's its own building, its own.

• 1:02:02Nilay Patel?

  Do you think he gets to use Google Meet?

• 1:02:05Speaker 05

  That's well, maybe that, you know, that may have been the biggest concession of all was that Nadella agreed that they don't have to use Teams internally. We'll find that out. I'm sure Tom is on that, but I mean, I'm thinking to why they created the commercial entity. It was because they needed funding for compute to train their models. And Microsoft showed up with a bag mostly of cloud credits, interestingly saying, we will give you all the compute you need. Microsoft has gone on what I've seen some analysts saying is the most expensive infra, private company infra build out of all time with its AI data centers, something like 50 plus billion dollars in the last few years. So if Sam gets the insulation of being an independent company within a mega cap company

• 1:02:50Speaker 05

  and all of the resources that he was desperately trying to raise money for, for the last few years anyway, and all the people from the company, I mean, it seems like he wins. I mean, you know, like, I don't, like, he seems like a winner to me. Certainly this is like for his like, yeah, trusting people, uh, not great, but I think he's more a winner than Eli.

• 1:03:10David Pierce?

  All right. I have a bunch more, but I actually think, I think you're right. Most of them are pretty easy. OpenAI, obvious loser. Google, winner or loser?

• 1:03:17Nilay Patel?

  Google is the most vindicated of any company right now, right? They, they got so much heat for being slow and not rushing the stuff to market. And now they're vindicated because OpenAI itself just tore itself apart over the idea of going a little bit slower. And Microsoft, which is, recall Nadella on Decoder, I want to make Google dance. I want them to know that it was me who made them dance. Incredible quote. Is now having to start a new division, set it up, give it research funding while navigating, meeting Emmett Shear, which is literally in the statement, they have to meet this guy.

• 1:03:55Speaker 05

  Like, if you're Google, you're like, wow, we were right to go slowly and carefully, and our moment will come to us. Also, we have better distribution for our AI search products than anybody in history. Like, maybe we'll just continue to steamroll the industry. I don't know if that's gonna happen. I don't know if Google can actually execute all the many, many questions. But if you are Sundar Pichai today, you're like, phew, missed that one. You know, like, you're just fine.

• 1:04:18David Pierce?

  I think that's right. I think that this is the most, like, aggressive wrench of instability into its biggest competitor that Google could have possibly hoped for. Bard still sucks, though, so there's that. Anthropic. Alex, you brought this up earlier. Is the team at Anthropic just, like, giggling and high-fiving right now?

• 1:04:36Speaker 05

  I mean, yeah, Anthropic was created for a similar reason. I don't know if there was a coup that was failed, and that's why Anthropic got formed, but they all worked at OpenAI. They had, they were the kind of more decelerationist, effective altruism, you know, movement. They broke off as a separate faction, created another AI lab, and, you know, they haven't had the commercial success of OpenAI. I think it's worth noting that the only AI startup that has been, you know, successful commercially is OpenAI. Like, there's Claude, there's all these chatbots, like, their usage pales in comparison. So, yeah, I think they are winning because of the instability. Like, maybe they'll be able to hire some of these people, but I really think everyone lost here, except in the short term, Nadella and Sam Altman. I really do.

• 1:05:21Nilay Patel?

  In the short term, every Microsoft employee is thinking about selling their stock to buy a house.

• 1:05:24David Pierce?

  Yeah, I've seen multiple tweets of just the screenshot of the stock price saying, "Thank you, Satya Nadella."

• 1:05:31Speaker 05

  Yeah, all those people won.

• 1:05:33David Pierce?

  Yep.

• 1:05:33Speaker 05

  Did anybody else win? It remains to be seen.

• 1:05:36David Pierce?

  Fair enough. Okay, last one, and then we should get out of here. ChatGPT, is this the end of the ChatGPT era?

• 1:05:41Speaker 05

  Is it even the end of the story? I don't know.

• 1:05:44David Pierce?

  Okay, fair. If we play this out in what seems like the most likely scenario right now, which is that OpenAI becomes significantly kneecapped in some meaningful way, it seems unlikely to me that all of the stuff that we saw two weeks ago at Dev Day comes out the way that we thought it was going to. It seems possible that this organization goes back to being more of a research organization, and ChatGPT, the fastest- Growing consumer internet product in history becomes a sideshow for this company again.

• 1:06:10Speaker 05

  I mean, if there's no one there to operate it.

• 1:06:12David Pierce?

  Well, yeah, there's certainly that.

• 1:06:14Speaker 05

  I mean, that's, that's the, that's where we are right now is like, there may not be an OpenAI by the end of the week. Right?

• 1:06:20David Pierce?

  Yeah.

• 1:06:20Speaker 05

  Like ChatGPT probably over, which is wild, but like they'll just recreate it inside Microsoft and it won't be as cool and it won't be as like, you know, breakneck and you know, move fast, break things, you know, Microsoft is like a, you know, regulated monopoly. They're going to move very slow and thoughtfully on like how this is rolled out because they have to, right? So yeah, I do think this marks, this decidedly marks the move fast, break things era of generative AI. I would think that's pretty safe to say.

• 1:06:50David Pierce?

  I think so too.

• 1:06:50Nilay Patel?

  Without question.

• 1:06:52David Pierce?

  The like craziest rise and fall of the app I can think of.

• 1:06:56Nilay Patel?

  Unless Microsoft just takes it, like I do not know what happens next. Like we're gonna, we're gonna end this podcast and I'm gonna go think about the art chart a little bit more. And by the time I'm done looking at the boxes, everything might be different. And I think that is, again, the weirdest outcome of all of this is we still don't know. It's been, we might be on to six CEOs of OpenAI by the end of this week at the rate we're going.

• 1:07:19Speaker 05

  Each one of the board members is going to become the CEO until there's only one of them left.

• 1:07:25Nilay Patel?

  It is nuts and it is, I think, one of the most riveting corporate dramas of our time, but it's also just frankly, one of the saddest.

• 1:07:32David Pierce?

  Yeah, agreed. All right. I think we're done here. Neil, you want to, you want to take us out?

• 1:07:36Nilay Patel?

  That's it. That's the Vergecast. That was also Decoder. We love hearing what you think of our shows. You can send us emails at [email protected] or [email protected]. We read them all. You can follow us all on Threads, where we broke a lot of news this weekend, sign of the time for Threads, I will say. Although most of the action was still happening on X, a lot of it happened on Threads. And very importantly, you can subscribe to Alex's newsletter, Command Line, which I am 100% confident without having asked Alex first, is going to be full of scoops about what's happening at OpenAI for the next 500 weeks to come.

• 1:08:07Speaker 05

  I hope so. I sure do.

• 1:08:09Nilay Patel?

  That's it. Rock and roll.

• 1:08:16David Pierce?

  And that's it for The Vergecast this week. Hey, we'd love to hear from you. Give us a call at 866-VERGE11. The Vergecast is a production of The Verge and Vox Media Podcast Network. Our show is produced by Andrew Marino and Liam James. That's it, we'll see you next week.

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