Paul Graham claims Sam Altman wasn't fired from Y Combinator

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Sam Altman walking away from a dissolving OpenAI logo

Image Credits: Darrell Etherington with files from Getty under license

In a series of posts on X on Thursday, Paul Graham, the co-founder of startup accelerator Y Combinator, brushed off claims that OpenAI CEO Sam Altman was pressured to resign as president of Y Combinator in 2019 due to potential conflicts of interest.

“People have been claiming [Y Combinator] fired Sam Altman,” Graham writes. “That’s not true.”

Altman became a partner at Y Combinator in 2011, initially working there on a part-time basis. In February 2014, Graham named him president of Y Combinator.

Altman — along with Elon Musk, Peter Thiel, Y Combinator founding partner Jessica Livingston and others — announced OpenAI as a nonprofit in 2015, raising $1 billion.

Altman for several years split his time between Y Combinator and OpenAI, effectively running both. But — according to Graham — when OpenAI announced in 2019 that it would establish a for-profit subsidiary of which Altman would be CEO, Livingston told Altman that he had to choose one or the other: OpenAI or Y Combinator.

They told him “if he was going to work full-time on OpenAI, we should find someone else to run YC, and he agreed,” Graham writes. “If he’d said that he was going to find someone else to be CEO of OpenAI so that he could focus 100% on YC, we’d have been fine with that too.”

Graham’s retelling of events contradicts reporting that Altman was forced to resign from Y Combinator after the accelerator’s partners alleged he’d put personal projects, including OpenAI, ahead of his duties as president. According to a Washington Post story last November, Graham cut an overseas trip short to personally give Altman the boot.

Helen Toner, one of several ex-OpenAI board members who moved to remove Altman as OpenAI’s CEO over allegations of deceptive behavior before Altman managed to claw the role back, also claimed in an appearance on the Ted AI Show podcast that the true reasons for Altman’s departure from Y Combinator were “hushed up at the time.”

Reportedly, some Y Combinator partners took specific issue with the indirect stake in OpenAI Altman held while Y Combinator’s president. Y Combinator’s late-stage fund invested $10 million in OpenAI’s for-profit subsidiary.

But Graham says that the investment was made before Altman was full-time at OpenAI — and that Graham himself wasn’t aware of it.

“This was not a very big investment for those funds,” Graham wrote. “And obviously it wasn’t influencing me, since I found out about it 5 minutes ago.”

Graham’s posts seem conspicuously timed with an op-ed in The Economist penned by OpenAI board members Bret Taylor and Larry Summers that pushes back against assertions made by Toner and Tasha McCauley, another former OpenAI board member, that Altman can’t be trusted to “reliably withstand the pressure of profit incentives.”

Toner and McCauley might have a point. The Information reports that Altman is considering turning OpenAI into a for-profit corporation as investors, in particular Microsoft, push the firm to prioritize commercial projects.

Elon Musk sues OpenAI and Sam Altman over 'betrayal' of nonprofit AI mission

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Elon Musk sues OpenAI and Sam Altman over 'betrayal' of non-profit AI mission

Image Credits: Michael Kovac / Vanity Fair / Getty Images

Elon Musk has sued OpenAI, its co-founders Sam Altman and Greg Brockman, and its affiliated entities, alleging the ChatGPT makers have breached their original contractual agreements by pursuing profits instead of the nonprofit’s founding mission to develop AI that benefits humanity.

Musk, a co-founder and early backer of OpenAI, claims Altman and Brockman convinced him to help found and bankroll the startup in 2015 with promises it would be a nonprofit focused on countering the competitive threat from Google. The founding agreement required OpenAI to make its technology “freely available” to the public, the lawsuit alleges.

The lawsuit, filed in a court in San Francisco late Thursday, says that OpenAI, the world’s most valuable AI startup, has shifted to a for-profit model focused on commercializing its AGI research after partnering with Microsoft, the world’s most valuable company, which has invested about $13 billion into the startup.

“In reality, however, OpenAI, Inc. has been transformed into a closed-source de facto subsidiary of the largest technology company in the world: Microsoft. Under its new board, it is not just developing but is actually refining an AGI to maximize profits for Microsoft, rather than for the benefit of humanity,” the lawsuit adds. “This was a stark betrayal of the Founding Agreement.”

The lawsuit follows Musk airing concerns about OpenAI’s shift in priorities in the past year. According to the legal complaint, Musk donated over $44 million to the nonprofit between 2016 and September 2020. For the first several years, he was the largest contributor to OpenAI, the lawsuit adds. Musk, who left OpenAI’s board in 2018, has been offered a stake in the for-profit arm of the startup but has refused to accept it over a principled stand, he said earlier.

X, the social network owned by Musk, last year launched Grok, a rival to ChatGPT.

Altman has also addressed some of Musk’s concerns in the past, including the close ties with Microsoft. “I like the dude. I think he’s totally wrong about this stuff,” he said of Musk’s criticisms at a conference last year. “He can sort of say whatever he wants but I’m like proud of what we’re doing and I think we’re going to make a positive contribution to the world and I try to stay above all that.”

OpenAI’s launch of ChatGPT in late 2022 sparked an AI arms race, with rivals still scrambling to match its uncannily human-like responses. Microsoft CEO Satya Nadella landed a gloved jab at the rest of the industry last month. “We have the best model today … even with all the hoopla, one year after, GPT4 is better,” he said. “We are waiting for the competition to arrive. It will arrive, I’m sure, but the fact [is] that we have the … leading LLM out there.”

An email exchange between Musk and Altman, presented as evidence in the lawsuit. Image Credits: TechCrunch/screenshot

The Thursday lawsuit alleges close alignment between Microsoft and OpenAI, citing a recent interview with Nadella. Amid a dramatic leadership shake-up at OpenAI late last year, Nadella stated that if “OpenAI disappeared tomorrow … we have all the IP rights and all the capability. We have the people, we have the compute, we have the data, we have everything. We are below them, above them, around them.” The lawsuit presents this as evidence that OpenAI has strongly served Microsoft’s interests.

The lawsuit also centers around OpenAI’s GPT-4, which Musk claims constitutes AGI — an AI whose intelligence is at par, if not higher, than humans. He alleges OpenAI and Microsoft have improperly licensed GPT-4 despite agreeing that OpenAI’s AGI capabilities would remain dedicated to humanity.

Through the lawsuit, Musk is seeking to compel OpenAI to adhere to its original mission and bar them from monetizing technologies developed under its nonprofit for the benefit of OpenAI executives or partners like Microsoft.

The suit also requests the court rule that AI systems like GPT-4 and other advanced models in development constitute artificial general intelligence that reaches beyond licensing agreements. In addition to injunctions forcing OpenAI’s hand, Musk asks for accounting and potential restitution of donations meant to fund its public-minded research should the court find it now operates for private gain.

“Mr. Altman hand-picked a new Board that lacks similar technical expertise or any substantial background in AI governance, which the previous board had by design. Mr. D’Angelo, a tech CEO and entrepreneur, was the only member of the previous board to remain after Mr. Altman’s return. The new Board consisted of members with more experience in profit-centric enterprises or politics than in AI ethics and governance,” the lawsuit adds.