India's startup world looks for lessons in Sam Altman ouster saga

Shortly after Altman was fired on November 17, veteran Indian entrepreneurs were quick to rebuke the OpenAI board's decision

The surprise sacking of OpenAI CEO Sam Altman has turned into a talking point in the corner rooms of Indian startups, spilling over to social media in good measure. 

Shortly after Altman was fired on November 17, Shaadi.com founder, Anupam Mittal, in a post on X (formerly Twitter), said: “This is what you get when you try to build disruptive tech with board-run companies and exotic management structures.”

Ashneer Grover, the co-founder of fintech major Bharatpe – who was ousted in 2022 for alleged financial discrepancies—was among those critical of OpenAI’s board. “Sam - I am going through the same things in India. First they come after your role/shares - then they come after you personally…It’s a template now of the startup boards and investors globally - all ego - no intellect. People are smart enough to see through," he wrote, in a now deleted post on X.

Although the details of Altman’s dismissal are still hazy, the board claimed it had lost confidence in his ability to lead the company. According to a blogpost by OpenAI, a review found that the CEO was not consistently candid with his communications with the board.

It is difficult to believe that Altman and team didn’t keep investors and the board privy of key developments, otherwise Microsoft wouldn’t have hired them, pointed out Yagnesh Sanghrajka, CFO and founder, 100X.VC — an early-stage investment firm. “A CEO’s primary role is to serve the shareholders, under the governance of the board…this situation underscores the importance of the board’s role as a custodian of shareholder interests, while the management focuses on execution. This dynamic is critical for the health of any company,” explained Anirudh A Damani, managing partner, Artha Venture Fund — a micro-VC fund.

 

Huge blow or temporary blip?

Whatever the reason behind the firing, views are mixed on whether the development would be a huge blow to the progress of AI. “While it’s hard to figure out why this happened, one thing is clear, this will definitely slow down the progress of AI,” said Harshil Mathur, co-founder and CEO of fintech unicorn Razorpay.

“The drive, energy, and speed at which Sam operates is infectious and impossible to replace. This is the Jobs firing of this generation,” Mathur further said.  

Others like Arundhati Bhattacharya, chief executive officer and chairperson at tech giant Salesforce India, does not expect a slow down in the evolution of technology. “The fact of the matter is that if you look at Silicon Valley today, every other person who has been in this area (AI) is actually setting up a company. There are a large number of companies that are coming up in the open AI or AGI (artificial intelligence general intelligence) space,” Bhattacharya told Business Standard. 

“I don't think this will slow down the evolution of technology. Yes, this is a problem with one company, but it's not something that other companies are not capable of doing, or managing. In my view, this is a temporary kind of blip which will take care of itself, and will evolve in the way that it needs to,” she said.

Her comments come shortly after Salesforce CEO Marc Benioff, in tweet on X, offered jobs to any OpenAI researcher who’s resigned.

DD Mishra, senior director analyst, Gartner, believes there may not be any short-term impact. ‘’This is an emerging area and changes like this are common in the industry, especially when the traction is high and maturity is evolving, but challenges often bring new opportunities. There are many unknown unknowns at the moment that led to the development of this situation and those are very relevant for any comment on how it will unfold in the future.’’ As many others, Mishra says that there are a lot of investments in OpenAI and the partnerships which it has forged, and one man’s presence or absence does not disrupt or derail things.

A worrisome hire

Following his ouster, Altman and fellow OpenAI co-founder Greg Brockman were promptly hired by tech major Microsoft to lead its new in-house advanced artificial intelligence research team. However, Indian founders pointed out that Microsoft’s hiring of the duo could potentially be a cause of concern.

“Hat-tip to Satya Nadella for pulling one of the biggest coups of history and the future by hiring Sam Altman and team, although concentration of AI with private tech is worrisome,” Mittal added.

Meanwhile, the move has also triggered a potential mass exodus of employees at OpenAI. Apart from Chief Technology Officer Mira Murati, Chief Data Scientist Ilya Sutskever and Chief Operating Officer Brad Lightcap, about 500 members of 770 OpenAI staff in a letter reportedly said they would quit unless the board resigned.

 

Evolving dynamics

According to Damani of Artha Venture Funds, In India, boards have usually tended to align more with management, sometimes acting too late in challenging situations. However, Indian startups are now witnessing a shift towards more proactive board actions that strike a balance between safeguarding shareholder interests and granting management the freedom.

“Every board member navigates this complex interplay, and the OpenAI situation exemplifies the consequences when the management and board are not in sync,” he said.

100X.VC’s Sanghrajka emphasized that Indian early-stage startup founders need to retain board control, as well as management and executive decisions, till they have a meaningful ownership in their companies, although “key investors should have a say in the same – provide suggestions and guidance to the founders, either through a board observer or director seat.”

(With inputs from Ayushman Baruah)