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OpenAI Staff Threaten Mass Exodus to Join ex-CEO Altman

OpenAI shocked the tech world when it fired former CEO and co-founder Sam Altman. JUSTIN SULLIVAN / GETTY IMAGES NORTH AMERICA/AFP/File
OpenAI shocked the tech world when it fired former CEO and co-founder Sam Altman. JUSTIN SULLIVAN / GETTY IMAGES NORTH AMERICA/AFP/File
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OpenAI Staff Threaten Mass Exodus to Join ex-CEO Altman

OpenAI shocked the tech world when it fired former CEO and co-founder Sam Altman. JUSTIN SULLIVAN / GETTY IMAGES NORTH AMERICA/AFP/File
OpenAI shocked the tech world when it fired former CEO and co-founder Sam Altman. JUSTIN SULLIVAN / GETTY IMAGES NORTH AMERICA/AFP/File

Hundreds of staff at OpenAI threatened to quit the leading artificial intelligence company on Monday and join Microsoft, deepening a crisis triggered by the shock sacking of CEO Sam Altman.
In a fast-moving sequence of events, Altman, who was ousted by the board on Friday, has now been hired by Microsoft where he will take the lead in developing a new advanced AI research team, AFP said.
There was talk Monday that OpenAI is interested in Altman returning, and that he may be open to the idea under certain conditions.
"We want to partner with Open AI and we want to partner with Sam so irrespective of where Sam is he's working with Microsoft," chief executive Satya Nadella said in a streamed Bloomberg interview.
"That was the case on Friday. That's the case today. And we absolutely believe that will be the case tomorrow."
In a letter released to the media, the vast majority of OpenAI's 770-strong staff suggested they would follow Altman unless the board responsible for his departure resigned.
"Your actions have made it obvious that you are incapable of overseeing OpenAI," the letter said. "Microsoft has assured us that there are positions for all OpenAI employees at this new subsidiary should we choose to join."
A key AI executive at Microsoft confirmed that they all were welcome from OpenAI if the board that removed Altman doesn't resign.
Among the signatories was co-founder Ilya Sutskever, the company's chief scientist and a member of the four-person board who pushed Altman out.
"I deeply regret my participation in the board's actions," Sutskever said in a post on X, formally Twitter. "I never meant to harm OpenAI."
Another signatory was top executive Mira Murati, who was appointed to replace Altman as CEO when he was removed on Friday, but didn't last the weekend in the job.
"We are all going to work together some way or other, and I'm so excited," Altman said on X.
OpenAI has appointed Emmett Shear, a former chief executive of Amazon's streaming platform Twitch, as its new CEO despite pressure from Microsoft and other major investors to reinstate Altman.
After the startup's board sacked Altman, US media cited concerns that he was underestimating the dangers of its tech and leading the company away from its stated mission -- claims his successor has denied.
Nadella wrote on X that Altman will lead a new advanced AI research team at Microsoft, joined by OpenAI co-founder Greg Brockman.
Global tech titan Microsoft has invested more than $10 billion in OpenAI and has rolled out the artificial intelligence pioneer's tech in its own products.
Nadella said Microsoft remains committed to its partnership with OpenAI.
The drama was the talk of Silicon Valley on Monday.
"I know that some people are going to hate me for this, but this is the best show I've seen in my life," added Miguel Fierro, the tech giant's Principal Data Scientist Manager.
Altman shot to fame with the launch of ChatGPT last year, which ignited a race to advance AI research and development, as well as billions being invested in the sector.
His sacking triggered several other high-profile departures from the company, as well as a reported push by investors to bring him back.
But OpenAI stood by its decision in a memo sent to employees Sunday night, saying "Sam's behavior and lack of transparency... undermined the board's ability to effectively supervise the company."
'Badly' handled
Shear confirmed his appointment as OpenAI's interim CEO in a post on X on Monday, while also denying reports Altman had been fired over safety concerns regarding the use of AI technology.
"It's clear that the process and communications around Sam's removal has been handled very badly, which has seriously damaged our trust," Shear wrote.
Generative AI platforms such as ChatGPT are trained on vast amounts of data to enable them to answer questions, even complex ones, in human-like language.
They are also used to generate and manipulate imagery.
But the tech has triggered warnings about the dangers of its misuse -- from blackmailing people with "deepfake" images to the manipulation of images and harmful disinformation.

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Technology

Tesla Profit Margins Worst in Five Years

FILE - A Model X sports-utility vehicle sits outside a Tesla store in Littleton, Colo., on June 18, 2023. (AP Photo/David Zalubowski, File)
FILE - A Model X sports-utility vehicle sits outside a Tesla store in Littleton, Colo., on June 18, 2023. (AP Photo/David Zalubowski, File)
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Tesla Profit Margins Worst in Five Years

FILE - A Model X sports-utility vehicle sits outside a Tesla store in Littleton, Colo., on June 18, 2023. (AP Photo/David Zalubowski, File)
FILE - A Model X sports-utility vehicle sits outside a Tesla store in Littleton, Colo., on June 18, 2023. (AP Photo/David Zalubowski, File)

Tesla on Tuesday reported its lowest profit margin in more than five years and missed Wall Street earnings targets in the second quarter, as the electric vehicle maker cut prices to revive demand while it increased spending on AI projects.

The company said it was on track to produce new vehicles, including more affordable models, in the first half of 2025, although the models will result in achieving less cost reduction than previously expected. Shares fell 8% in after-hours trade, Reuters reported.

"Perhaps more than ever in the company's recent history, Tesla's investors need results; those will have to come fast - both for the humanoid robot and for the Robotaxi," said Thomas Monteiro, senior analyst at Investing.com.

The second quarter was tumultuous, with CEO Elon Musk shelving development of an all-new cheaper car in favor of less ambitious lower-cost models and working on creating self-driving taxis, helping to boost shares. The company also laid off more than 10% of its employees to cut costs, and Tesla said profit was also weighed down by restructuring charges and an increase in operating expenses largely driven by artificial-intelligence projects.

Tesla recorded automotive gross margin excluding regulatory credits of 14.6% in the second quarter, compared with estimates of 16.29%, according to 20 analysts polled by Visible Alpha. Dan Coatsworth, investment analyst at AJ Bell, said Tesla has now missed earnings targets for four quarters in a row. “There is a lot of talk about robotaxis, humanoid robots and autonomous driving, which provides an exciting narrative for investors but doesn’t get over the fact that these are tomorrow’s potential riches, not today’s."

Musk told analysts on a conference call that new competitors "have discounted their EVs very substantially, which has made it a bit more difficult for Tesla." The company's electric vehicle deliveries have fallen for two consecutive quarters as the automaker battles rising competition and slow demand stemming from a lack of affordable new models. Tesla's sales of China-made EVs, which are also exported to Europe and elsewhere, slumped in the second quarter from a year earlier, whereas BYD Co and other Chinese automakers posted strong sales growth.

Tesla said on Tuesday it expected a sequential increase in production in the third quarter.

The company reported revenue of $25.50 billion for the quarter, slightly ahead of last year and analyst targets, according to LSEG data.

Tesla's sales of regulatory credits nearly tripled to a record $890 million in the second quarter from a year earlier. Traditional automakers buy credits from Tesla to meet clean-vehicle production regulatory targets.

Net income was $1.48 billion in the second quarter, compared with $2.70 billion a year ago, with adjusted earnings of 52 cents per share missing the Wall Street consensus of 62 cents, as calculated by LSEG.

ROBOTAXIS Shares of Tesla have surged more than 30% since June 13, when shareholders voted to approve Musk's $56 billion pay package that was invalidated by a Delaware court in January. Its shares were also boosted by hopes for robotaxis.

Musk over the years has promoted Tesla as a technology company, most recently saying self-driving technology was key. Predictions of that technology maturing have been missed for years, but on Tuesday he forecast self-driving software would be able to drive Tesla vehicles without human supervision next year, saying he would be shocked if that were not the case.

Tesla said on Tuesday the "timing of Robotaxi deployment depends on technological advancement and regulatory approval." But Musk said during the conference call, "I don't think regulatory approval will be a limiting factor."

He also said Tesla was likely to win regulatory approval for its "supervised" Full Self-Driving software, which requires driver attention, in China and Europe by the end of this year.

Musk said Tesla has delayed the unveiling of its Robotaxi product to Oct. 10 from Aug. 8 to make some important changes to the robotaxi. He had announced the Aug. 8 unveiling date after Reuters reported that Tesla had pivoted to self-driving taxis after shelving plans to develop a long-promised all-new cheaper car expected to be priced at around $25,000.

"Elon is great at dangling the carrot in front of investors, but new ideas tend to be long on vision, but short on execution," said David Wagner, head of equity and portfolio manager at Tesla investor Aptus Capital Advisors.

Musk had said in 2022 that Tesla expected to mass-produce a robotaxi with no steering wheel or pedal by 2024. General Motors said on Tuesday its Cruise self-driving unit will focus its development efforts on a next-generation Chevrolet Bolt as it indefinitely delays its planned Origin vehicle that would not have a steering wheel.

Tesla said Cybertruck production "remains on track to achieve profitability by end of year."

Tesla said it has started validation of its first prototype Cybertruck vehicles using its breakthrough battery manufacturing technology called dry coating, which is "a major cost reduction milestone once ramped" and that production could launch in the fourth quarter.