The “traitorous eight,” the PayPal Mafia and . . . the OpenAI expats?
OpenAI’s meltdown is likely to become the latest installment in what’s becoming a Silicon Valley tradition: turmoil at a leading company spurring a round of employee departures that ends up seeding a fresh crop of startups.
The drama-filled weekend that’s now spilling into this week saw the ouster of co-founder Sam Altman from his role as CEO; the demotion and departure of co-founder, president and board chair Greg Brockman; and a near company-wide mutiny against the board of OpenAI’s nonprofit parent. The letter of no confidence in the board has been signed by over three-quarters of the company’s employees, including CTO Mira Murati, COO Brad Lightcap, chief strategy officer Jason Kwon, and even Ilya Sutskever, the OpenAI co-founder who helped oust Altman and now says he regrets doing so.
It’s hard to know how this will end. It’s possible that OpenAI’s board will be replaced, new management installed, and the majority of the startup’s employees placated by the moves. But more likely, Altman’s and Brockman’s decampment for Microsoft (and the new division it created for the company) will set the tone, encouraging others to leave, too. Indeed, the executives and workers who signed the open letter said they “may choose to resign from OpenAI and join the newly announced Microsoft subsidiary.”
Joining Microsoft would be an easy move for many employees. Altman and Brockman have been with the organization since the beginning, and their leadership has no doubt influenced the structure and culture of the subsequent for-profit subsidiary. No transition will be seamless, but if Microsoft CEO Satya Nadella follows through on his promise to give Altman and Brockman latitude to create their own identity and culture within the famously cutthroat and bureaucratic tech giant, then it’ll be the closest those former OpenAI employees will get to reclaiming their old gigs.
But OpenAI’s ranks are filled with some of the world’s leading AI researchers and engineers. Their inboxes are probably already overflowing with offers from recruiters and, more importantly, investors seeking to lure them away. Many of them will probably take a flier on building something new, under their own leadership.
Not all of them will be great founders or managers, but some of them will be, and that will be enough. It doesn’t take many people to alter the trajectory of an entire industry.
Just look at the PayPal Mafia, a loose grouping of more than a dozen former PayPal employees who left the payments startup in the wake of its acquisition by eBay. Following their departure, they used their talents and financial windfalls to do everything from bankrolling Facebook, Digg and Palantir to founding YouTube, SpaceX and Yelp, among others.
Decades before the PayPal Mafia, there was the “traitorous eight,” a group of Shockley Semiconductor Laboratory employees who were fed up with founder William Shockley’s management style. He was by all reports a terrible boss: domineering and paranoid with a knack for undermining his subordinates. (It should also be noted that he would later publicly espouse racist and eugenicist views.) As Shockley’s behavior became unbearable, engineers and executives began to look for a way out.
They found it in Fairchild Camera and Instrument, which set up a subsidiary to welcome the semiconductor engineers and executives (sound familiar?). Fairchild Semiconductor quickly became a giant in the field, but about a decade after its founding, key members started to leave. Gordon Moore and Robert Noyce founded Intel, and Jerry Sanders left with a small team to start AMD. Those are the most famous, but certainly not the only companies that claim a tie to Fairchild Semiconductor. As recently as a decade ago, over 90 tech firms in the Bay Area could trace their origins to Fairchild founders or employees.
How OpenAI’s crisis ultimately affects the broader tech industry will depend on the path that its employees take. Will they follow the traitorous eight’s model and head to Microsoft, perhaps spending several years there before striking out on their own to start an Intel-scale company? Or will they take the path that the PayPal mafia followed, embracing entrepreneurship from the start?
It will be a decade or more before we have defensible answers to those questions, but the seeds will be sown in the coming days. This is the moment that the AI sector has been waiting for.