Speaker 1: From Mahart where Innovation of Money and Power Collie in
Speaker 1: Silicon Valley, NBN. This is Bloomberg Technology with Caroline Hyde
Speaker 1: and Ed Ludlove.
Speaker 2: I'm Caroline Heinde of Bloomberg's World headquarters in New York.
Speaker 3: I'm Ed Ludlow in San Francisco. This is Bloomberg Technology.
Speaker 3: Coming up.
Speaker 2: We take a deep dive into the shock olster of
Speaker 2: Sam Altman from Open Ai. What happened, what lies ahead
Speaker 2: for the AI startup as most of the company's staff
Speaker 2: threatened to depart and.
Speaker 3: A clear win for Microsoft shares of the tech giant rises.
Speaker 3: Analysts see risks contained for the company's AI ambitions as
Speaker 3: Altman joins Microsoft to lead a new advanced AI research team.
Speaker 2: Plus, we'll speak to developers in the field of AI
Speaker 2: and the venture capitalists backing them this hour to discuss
Speaker 2: what the ecosystem looks like for these startups and in
Speaker 2: the upheaval and Open Ai.
Speaker 3: This we speak, there are hundreds of Open Ai staff
Speaker 3: that are taking action. Let's break down the news with
Speaker 3: Bloomberg's Rachel Metz, who is joining me on set in
Speaker 3: San Francisco, having stayed up with me all weekend to
Speaker 3: break this story. What do we know about what's happening
Speaker 3: inside Open AIHQ right now?
Speaker 4: It sounds like the majority of the company's employees have
Speaker 4: said that they will leave if their demands are not there.
Speaker 4: They are really upset about this ousting of Sam Altman
Speaker 4: and then the subsequent resignation of Greg Brockman.
Speaker 3: So the numbers, I think are that five hundred and
Speaker 3: ninety nine out of seven hundred and seventy staff. In
Speaker 3: other words, the vast majority of staff have signed this letter.
Speaker 3: Who side did this staff on here? I mean, this
Speaker 3: is hard to understand that we're talking about everyone other
Speaker 3: than those that have departed already.
Speaker 4: Yeah, pretty much. I mean this What I thought was
Speaker 4: really interesting when I saw this letter early this morning
Speaker 4: is that it makes it very very clear whose side
Speaker 4: most of the employees are on. Like I think before
Speaker 4: there was a sense that a lot of people were
Speaker 4: on Sam Aultman's side, but it wasn't crystal clear. This
Speaker 4: is saying, hey, we almost all of us are very angry,
Speaker 4: so angry we're willing to leave our jobs at what
Speaker 4: has been the world's leading independent AI company.
Speaker 2: Rachel number twelve took my eye on the list of
Speaker 2: those who have signed this letter. It's Ilia Ilia Siskeva,
Speaker 2: who is on the board, who.
Speaker 3: Made the cools.
Speaker 2: We understand through all of your guys reporting made the
Speaker 2: calls to Sam Auntlan and Gregg himself to basically let
Speaker 2: them know that they're no longer going to be at
Speaker 2: the company.
Speaker 3: Yeah.
Speaker 4: That's really a bit confusing, right, I mean at first
Speaker 4: I was like, hmm, but you know, it's been a
Speaker 4: really long day that's lasted three days, So yeah, I
Speaker 4: mean I think there he we did. I think it
Speaker 4: was this morning that he made a mistake, right and
Speaker 4: he I mean it sounds I don't think he wants
Speaker 4: the company to explode. Perhaps he didn't anticipate what the
Speaker 4: consequences would be of the actions he was taking.
Speaker 2: And no wonder we are getting so much views and
Speaker 2: theories being shared ultimately about corporate governance. Will go into
Speaker 2: that much more later in the show, Rachel, But I'm
Speaker 2: interested in also ultimately who's being drafted in to replace it.
Speaker 2: How on earth does the new CEO of open AI
Speaker 2: try to ensure that we don't have this mass departure.
Speaker 4: That is an excellent question. So the person who was
Speaker 4: named very late yesterday as the new CEO by the board,
Speaker 4: Emmett's sheer. He was a co founder of the video
Speaker 4: game streaming service Twitch, which has also of course been
Speaker 4: used to for all kinds of streaming at this point,
Speaker 4: em it is a little bit is more on the
Speaker 4: conservative side of tech chnology development in the sense that
Speaker 4: he is in favor of slowing things down somewhat, which
Speaker 4: is what Ilia had been also pushing. So sort of,
Speaker 4: you know, aligned with the board members and with Ilia,
Speaker 4: He's gonna probably have to do a lot of convincing
Speaker 4: to the staff if he wants to get them to
Speaker 4: stay with him in charge. It's going to be very
Speaker 4: interesting to see what happens over the next I was
Speaker 4: about to say days, but let's say hours.
Speaker 3: Well, let's recap. It's only been forty eight hours essentially,
Speaker 3: maybe more since news broke that Sam Outman have been fired.
Speaker 3: This is the timeline of what happened. You and I
Speaker 3: and all of our colleagues spent most of the weekend
Speaker 3: with everyone else thinking Sam's coming back. This is happening
Speaker 3: based on the reporting since explained to us what actually
Speaker 3: happened and the chronology of events.
Speaker 4: So it how far back do you want me to go?
Speaker 5: Here.
Speaker 3: Gosh, let's say we start with Sam being fired on Friday.
Speaker 4: Okay, on Friday, we were told that Sam had been
Speaker 4: fired by the board, which I think came as a
Speaker 4: shock to probably pretty much anybody except for the board.
Speaker 4: Once that happened, it was a scramble to figure out, well,
Speaker 4: you know, what happened here was did something really bad happen?
Speaker 4: It sounded very mysterious, and information started coming from Open
Speaker 4: Ai executives themselves in the form of memos they were
Speaker 4: sending internally that the board has not told us of
Speaker 4: any malfeasance, for instance, which I think was the word
Speaker 4: used in a memo that bred Lightcap sent out to Yes, yeah,
Speaker 4: thank you. So then it started to sound like Mira Marati,
Speaker 4: who was named interim CEO. She had been the chief
Speaker 4: technology officer and increasingly a prominent figure at the company
Speaker 4: alongside Sam. It sounded like perhaps she was going to
Speaker 4: rehire Sam Altman and Greg Brockman, who had been also
Speaker 4: at the company and quit after Sam was ousted. Then,
Speaker 4: in a last minute twist, it sounded like Emmett Sheer
Speaker 4: was hired, and now everybody assigned this letter, or not everybody,
Speaker 4: but most people assigned this letter saying, oh, we're going
Speaker 4: to join this company that Microsoft is now creating, that
Speaker 4: Sam and Gregor are going to run. So if you
Speaker 4: you know, if you don't bring them back essentially So,
Speaker 4: I don't know about you, guys, but I keep just
Speaker 4: kind of turning left and right. I'm not really sure
Speaker 4: what's going to happen next year.
Speaker 2: Whiplash and a whole lot of discussion on what is
Speaker 2: meant to be holiday week. Rachel Mets, We thank you
Speaker 2: so much making time for us when I know you've
Speaker 2: just been at the grindstone with your reporting. We thank
Speaker 2: you so much. And look we just finished where well,
Speaker 2: Rachel was discussing where next for Microsoft as it sets
Speaker 2: up this new AI focus point, what is the impact
Speaker 2: on the publicly traded company, what of Satyr and Nadella
Speaker 2: and really his ability to turn this story around in
Speaker 2: the final few hours joining us as Jeffrey's senior Internet analyst,
Speaker 2: brend Phil Brent, You've got a rating on Microsoft four
Speaker 2: hundred dollars price target? Is this a positive as it stands.
Speaker 6: As a standard, It's a win win for Microsoft. I
Speaker 6: mean they get the number one up, up and coming
Speaker 6: individual and tech leading AI journey. And then secondarily, they've
Speaker 6: been talking about this for a long time. How do
Speaker 6: they reduce their independence on one vendor like open ai
Speaker 6: and spread their AI bats across open source, across their
Speaker 6: own languages, across other languages. And we think that Altman
Speaker 6: can probably steer that chip in a really good way.
Speaker 6: From internally at Microsoft, obviously, from a hiring perspective, if
Speaker 6: you've got over five hundred people signing a petition that
Speaker 6: feel this strong, I've never seen this in my coverage
Speaker 6: at Tech in twenty years, or literally five hundred people
Speaker 6: sign a letter.
Speaker 7: Internally, you've never seen this at Tech ever.
Speaker 6: So if they feel that strongly about him, and he says, hey,
Speaker 6: would you like to come over here to Microsoft? Like,
Speaker 6: what's the tailent pool? Microsoft can to look like? You
Speaker 6: know two months from now, it's going to be insane.
Speaker 3: Well, friend. The question that I hear out in the
Speaker 3: market is will Microsoft buy out the rest of open Ai?
Speaker 3: Can Microsoft buy out the rest of open Ai?
Speaker 7: I don't know if they can.
Speaker 6: They obviously have an eleven billion dollar plus stake, so
Speaker 6: they care for the future.
Speaker 7: They want to ensure this happens.
Speaker 6: My view is actually open Ai will get eventively.
Speaker 7: That board settled down.
Speaker 6: We'll get the employee settled down and hopefully keep everyone
Speaker 6: in place. And I don't know their incentive structure, but
Speaker 6: I'm not sure that I'd want to lose all my
Speaker 6: incentive comp and stock options in open Ai just because
Speaker 6: I'm upset the CEO left.
Speaker 7: I don't think that makes a lot of sense.
Speaker 6: So my sense is this ship will be calmed at
Speaker 6: open Ai Microsoft with Via Nadella.
Speaker 7: He's the best negotiator intact.
Speaker 6: He'll figure out a way to ensure that they keep
Speaker 6: this intact, keep their investment preserved, but also have the
Speaker 6: best of having you know, Sam and team there. So
Speaker 6: I look at I think there's going to be a
Speaker 6: better outcome, hopefully for open Ai and their employees, where
Speaker 6: they can get SOMEDISI board members in and get them
Speaker 6: calmed down. I understand why they're is upset, but again,
Speaker 6: I can't recall a story in twenty years where that
Speaker 6: many people signed a petition would walk out. I think
Speaker 6: that you're going to end up seeing a situation where
Speaker 6: there's a middle ground that's met and that hopefully both
Speaker 6: camps survive peacefully and we move on and we can
Speaker 6: of enjoy our Thanksgiving weak.
Speaker 2: Do you think Microsoft remains the key player in AI? Therefore,
Speaker 2: can they remain basically still having the distance between themselves
Speaker 2: and ultimately the viewpoint that alphabet's behind.
Speaker 7: For example, Microsoft's crushing it.
Speaker 6: I was up at the Microsoft Developer Conference Seattle last
Speaker 6: week and you could barely get in to see some
Speaker 6: of these demos. The pace of innovation is like nothing
Speaker 6: I've seen covering tech for twenty years. You talk to
Speaker 6: product managers that are not spokespeople for Microsoft and talk
Speaker 6: about the pace of the innovation. And we were talking
Speaker 6: about months when they said it was go time to
Speaker 6: launch in a product. Now the product isn't perfect, it's
Speaker 6: not gonna it's not going to be the smoothest ride
Speaker 6: out of the gate. But the level of innovation is
Speaker 6: beyond anything we have seen at any any time I've
Speaker 6: spent covering Microsoft, even as a developer of Microsoft in
Speaker 6: the nineties. This pace of innovation is off the charts.
Speaker 6: They are so far ahead of everyone else. And we
Speaker 6: do believe that, you know, Amazon is gonna also be
Speaker 6: in the mix. So our thesis is Amazon and Microsoft.
Speaker 6: When the enterprise Google wins the consumer market, they're very
Speaker 6: different markets, but all three will have a seat at
Speaker 6: the table.
Speaker 3: All right, Jeffrey, Senior Internet analyst Brent Hill on the
Speaker 3: Microsoft side of this story. Coming up on the program,
Speaker 3: we will continue the conversation on Sam Mountain and on
Speaker 3: open ais one. Hundreds of employees threaten to leave the
Speaker 3: company if the board doesn't reside the VC The AI
Speaker 3: reaction is next. This is Bloomberg Technology to recap our
Speaker 3: top story. In a letter to the open ai board
Speaker 3: from hundreds of employees, the vast majority of those left
Speaker 3: that open ai is saying they will resign from the
Speaker 3: company and join the newly announced Microsoft subsidiary led by
Speaker 3: Sam Outman and Greg Brockman. If the board of open
Speaker 3: ai does not resign, lots of implications joining us now,
Speaker 3: as someone that knows open Ai very well worked with
Speaker 3: that company now leads his own startup, Octane. Let's bring
Speaker 3: a match licked Octane AI CEO. First off, what have
Speaker 3: you heard from open ai? You are essentially a developer
Speaker 3: that relies on the underlying technology. You're trying to build
Speaker 3: using underlying technology. Have you had any update from open Ai?
Speaker 8: Yeah, so, Octer the I We've been around since twenty sixteen,
Speaker 8: we now are built on top of open EI's GPT four.
Speaker 9: We help entrepreneurs run AI automations.
Speaker 8: We've helped them generate over half a billion dollars and
Speaker 8: a lot of that is because of what OPENINGI has
Speaker 8: provided us. So this weekend has been really tumultuous. I'm
Speaker 8: a big believer in Sam. The community is a big
Speaker 8: believer in Sam. I know him from back when I
Speaker 8: was my combinator in twenty twelve.
Speaker 9: But open aie we just had dev day.
Speaker 8: I was there. It was the peak of their technology.
Speaker 8: Excitement was off the church. It went really really well.
Speaker 8: Now there's a little bit of a lot of mistrust
Speaker 8: on what's going to happen.
Speaker 9: I am hearing from open.
Speaker 8: Ai that they are expressing support for developers. They're going
Speaker 8: to make sure the API stay up, the technology is
Speaker 8: not going to go down. But this weekend has been
Speaker 8: a lot for anyone in the AI ecosystem.
Speaker 3: Now, let's stay with your relationship with Sam and the
Speaker 3: company from minute. You know lots of people that work there,
Speaker 3: You're friends with people who rely on the ecosystem as well.
Speaker 3: In your minds, is there a path forward where Sam
Speaker 3: comes back to open ai or were looking at a
Speaker 3: new look open ai and trying to understand how you
Speaker 3: work with them and how others work with this new
Speaker 3: look open Ai.
Speaker 8: It's it's really unclear. I think over the weekend we
Speaker 8: thought Sam was going to come back. Now that Satya has,
Speaker 8: you know, announced that he's over at Microsoft, Soya also,
Speaker 8: you know, obviously has to make sure that the Microsoft
Speaker 8: stock is performing well. I don't know if he can
Speaker 8: flip back on that. So it's a really sticky situation.
Speaker 8: It's it's unclear. I have no idea what's going on.
Speaker 8: I don't think that open i employees know what's going.
Speaker 2: On, Matt. Much of this is about a concern of
Speaker 2: the pace of innovation. How you ever had any concern
Speaker 2: are indeed the ability for open ai to live up
Speaker 2: to the amount of demand that we were seeing as well?
Speaker 8: Open ai has treated something that literally is magic. They're
Speaker 8: on the forefront of AI. They're the soul of no
Speaker 8: matter what.
Speaker 9: Anybody wants to say, They're the soul of the AI
Speaker 9: community or the movement. Right now in terms of you know,
Speaker 9: have I thought about is ai going to go too
Speaker 9: fast or is it going to go too slow?
Speaker 8: I think that this disruption is definitely causing it to
Speaker 8: go slower, and I would like it to go faster
Speaker 8: as well as a lot of people in the AI community.
Speaker 8: We rely on this technology. It's allowing you to put
Speaker 8: human like intelligence inside of your code, which means that
Speaker 8: the program can write content, it can talk like a human,
Speaker 8: and it can make reasoning decisions like a human. It
Speaker 8: can be autonomous, and it's just getting better at a
Speaker 8: breakneck speed. So this disruption with Opening Eye, for myself
Speaker 8: and for anyone building on top of this technology, means
Speaker 8: that it isn't going to go slower. Is it going
Speaker 8: to be pulled back? What's going to happen next? It's
Speaker 8: this is not an ideal situation by any means.
Speaker 2: What do you think it means in terms of your
Speaker 2: desire to work with a newly formed unit with a
Speaker 2: Microsoft or indeed without the competitors MAP.
Speaker 8: I think the Opening Eye was seen as someone that
Speaker 8: you could beats.
Speaker 9: It was too big to beats.
Speaker 8: And one of the interesting things that is happening because
Speaker 8: of this weekend, because of all of this chaos, is
Speaker 8: now no matter what happens, let's say they bring back SAM,
Speaker 8: everyone everybody stays open. AI is not infallible. They are
Speaker 8: someone you can beat now, and that actually opens up
Speaker 8: a tremendous amount of opportunities for new people, whether they're
Speaker 8: ex employees of open ai or other entrepreneurs, to go
Speaker 8: start companies that compete with open ai. And I think
Speaker 8: that that's going to happen. This leaves a huge open
Speaker 8: for that. Any event that a lot of people leave
Speaker 8: open Ai, maybe a bunch joined Microsoft and go join
Speaker 8: Sam and Greg, a lot of the other ones are
Speaker 8: going to start companies, and I think more capital than
Speaker 8: ever is going to flow into AI.
Speaker 9: You know, just this year, I.
Speaker 8: Started a venture capital firm called Theory Forge Ventures with
Speaker 8: Ben Park to do just that.
Speaker 9: And this is a sad situation with open ai.
Speaker 8: It makes me sad, but at the same time investors
Speaker 8: are going to be clamoring in.
Speaker 2: Mat Schicked obtain Ai CEO and indeed avention Capitalist. We
Speaker 2: thank you so much. Turning back to where we left
Speaker 2: off with our open Ai conversation, the drama, the impact
Speaker 2: on the AI landscape more broadly, Sarahgayo, founder of Conviction.
Speaker 2: It's a venture firm purpose built to serve AI native
Speaker 2: companies and what we were just talking to Matchlick who
Speaker 2: thinks that more innovation will start ups are going to
Speaker 2: come of this, Sarah, do you abide by that silver
Speaker 2: lining to what feels like a cloud right now?
Speaker 5: I mean I would start by saying I have such
Speaker 5: enormous respect for the work Sam and Greg and Illi
Speaker 5: and the entire openI team have done over the years.
Speaker 5: Right So before we talk about silver aligning, I think
Speaker 5: we should talk about the contribution they've had in terms
Speaker 5: of igniting a technology revolution. It's just very sad to
Speaker 5: see it happen. And since your respect to Ilia for
Speaker 5: you know, a public apology for something he regrets, whatever
Speaker 5: the outcome, this is his life's for work and he
Speaker 5: has made a tremendous contribution to the enhancement of AI
Speaker 5: and many of the startups that we back and partner
Speaker 5: with open ai in like Harvey, which is legal AI
Speaker 5: and a portfolio company for open Ai. We benefit from
Speaker 5: all of that innovation. I think that being said, the ecosystem,
Speaker 5: the landscape is much more open than it was a
Speaker 5: week ago, which is wild to say. Opening is both
Speaker 5: revered and feared. In its current state, it is much diminished.
Speaker 3: Sarah, delight to have you on the show. You know
Speaker 3: everyone you know the players. You yourself and not invested
Speaker 3: in open ai, but the ecosystem you are so closely
Speaker 3: connected to. Just tell me your reaction, frankly, your how
Speaker 3: you felt this weekend watching that unfold.
Speaker 5: Yeah, I mean I started with sort of respect and
Speaker 5: sadness for friends who work at open AI. I think
Speaker 5: my secondary action is really just as champion level business people,
Speaker 5: you have to hand it to Saya and Kevin and
Speaker 5: managing all of this. The multiple on Microsoft stocks and
Speaker 5: Saya took it over in twenty fourteen is up ten
Speaker 5: x from what was already one of the largest five.
Speaker 7: Companies in the world.
Speaker 5: So I am and I'm just floored by their ability
Speaker 5: to navigate the situation. It's incredibly hard to be this
Speaker 5: aggressive and strategic and steering so large a ship and
Speaker 5: anticipating the title wave and coming out so far ahead.
Speaker 5: So all roads from here are paved the gold for Microsoft.
Speaker 5: I think, going back to the first question, we are
Speaker 5: an AI focused early stage investing firm, right and so
Speaker 5: a part of it is a recognition that there are
Speaker 5: opportunities at every layer, which we continue to believe, but
Speaker 5: now even more so for the independent foundation model labs
Speaker 5: such as mistral and inflection and anthropic, and I think
Speaker 5: there I think there's increasing interest in open source from yes,
Speaker 5: corporations and developers just in having more control over their
Speaker 5: own models and running them monitor on their own infrastructure,
Speaker 5: and infrint platforms like Base ten, and so there will
Speaker 5: be continued capital for startups making these bets from investors
Speaker 5: like in Conviction, and of course we're full stack and
Speaker 5: application level companies as well.
Speaker 3: You've invested in startups building your own large language models.
Speaker 3: You've interviewed on your podcast leaders some of the firms
Speaker 3: with making bigger models with much many more billions of parameters.
Speaker 3: Does this weekend make it a more competitive marketplace for
Speaker 3: building generative AI technology?
Speaker 5: I think companies are. So there's sort of two dimensions, right,
Speaker 5: There's like what it takes to compete, and of course
Speaker 5: like the reaction from the ecosystem of customers and developers.
Speaker 5: This set of events, of course gives all of open
Speaker 5: AI's customers and developers pause. They're making long term bets
Speaker 5: and they want to understand the incentives and staying power
Speaker 5: of their partners. My experienced startup founders are sometimes reluctant
Speaker 5: to ask for the early check or seem too profit
Speaker 5: seeking or capitalists to their customers. But I think transparency
Speaker 5: is key. That's a lesson from this weekend. I've heard
Speaker 5: so many customers ask startups, how are you planning to
Speaker 5: make money? Or even ask me as an investor in
Speaker 5: these starts, is the business viable? I am willing to pay,
Speaker 5: but I don't want to make the wrong bet. Well,
Speaker 5: they make it, and the nonprofit board here is explicitly
Speaker 5: prioritizing other goals they have above customers and developers, and
Speaker 5: so I think that I think that does change the
Speaker 5: ecosystem in terms of other opportunities, like we should not
Speaker 5: trivialize the work that open Ai had done has done
Speaker 5: over the years. Right, creating foundation models is a huge effort,
Speaker 5: and so from an infrastructure, data, partnerships, pooling and talent perspective,
Speaker 5: I think you know the ship of theseus. It's a
Speaker 5: thought experiment, like if you rebuild a ship entirely with
Speaker 5: new parts, is it the same ship. It's a question
Speaker 5: of identity, and it's often applied to human consciousness and
Speaker 5: sci fi, but it applies to organizations too.
Speaker 3: Right, if okai has the.
Speaker 5: Weights and then all of the advantages that we were
Speaker 5: just talking about. They're huge, but an organization is also
Speaker 5: a sera culture.
Speaker 3: Yeah, yeah, conviction fanta serago. It's just great to have
Speaker 3: you on the show and get that perspective. Thank you.
Speaker 2: Some breaking news for you right now the United States,
Speaker 2: the Justice Department, being exact, is seeking more than four
Speaker 2: billion dollars from Finance, that of course being the cryptocurrency
Speaker 2: exchange to end a criminal case. It's years long investigation
Speaker 2: negotiations between the DJ and Finance, including in fact of
Speaker 2: the plussibit that its founder cz would face criminal charges
Speaker 2: in the United States under an agreement to resolve the
Speaker 2: probe into alleged money laundering, bank forward and sanctions violations.
Speaker 2: That's some update on cryptobeded back to our key number
Speaker 2: one story.
Speaker 3: Okay, all change at open ai and my goodness, how
Speaker 3: quickly things do change. Earlier this year, Bloomberg's Emily Chang
Speaker 3: caught up with now former open Ai CEO Sam Outman's
Speaker 3: talk about his relationship with Microsoft.
Speaker 4: Listen to this, how would you describe your relationship with
Speaker 4: Sacha Inadella?
Speaker 7: How much control they have?
Speaker 2: You know, I've heard people say, you know.
Speaker 10: Microsoft is just going to buy open Ai you're just
Speaker 10: making big tech bigger.
Speaker 7: Companies not for sale. Thank you. I don't know how
Speaker 7: to be more clearer than that, we have a great
Speaker 7: relationship with them.
Speaker 11: I think it's a these like big major partnerships between
Speaker 11: tech companies usually don't work.
Speaker 7: This is an example that are working really well.
Speaker 3: Okay, fast forward present day. This is the latest. After
Speaker 3: a game of musical chairs, Microsoft announces that Altman and
Speaker 3: his co founder Greg Brockman will join the company. Will
Speaker 3: join Microsoft. This announcement on literally on the heels of
Speaker 3: a frenetic weekend in Silicon Valley following the aftermath of
Speaker 3: Altman's firing on Friday, Microsoft shares continuing to push higher
Speaker 3: in the session at one point nine percent. Bloomberg's Dina
Speaker 3: bass is our Microsoft correspondent and alongside the rest of us,
Speaker 3: has been all over this story all weekend. Let's first
Speaker 3: talk about this new unit within Microsoft. Setia announces it
Speaker 3: late late late last night. What do we know?
Speaker 9: Musical chairs and or a game of growth?
Speaker 10: So what we what we know is you know, Microsoft
Speaker 10: at Satiez spent the weekend trying to figure out a
Speaker 10: way with other investors to get Sam and Gregory and
Speaker 10: stated to the company. As of late Sunday night, there
Speaker 10: were conversations with Mira Maratti, the interim CEO, trying to
Speaker 10: do exactly that those with board members are conversations. Those
Speaker 10: conversations failed, and so Nadela had to go to plan being,
Speaker 10: which was, Okay, we'll just hire Sam and brag ourselves,
Speaker 10: because the concern that Microsoft had was, you know, when
Speaker 10: there's all this people in open ai start seeing everybody
Speaker 10: threatening to jump ship, and you saw that mass about
Speaker 10: pouring support Saturday night for Sam that it very much
Speaker 10: referrels not just microsoft thirteen billion dollar investment in open
Speaker 10: add but Microsoft's entire shredding SATA has revamped the entire
Speaker 10: company's product line around artificial intelligence, and that artificial intelligence
Speaker 10: depends on open Ai. If open Ai ceases to exist
Speaker 10: in the way that Microsoft had expected, that is an
Speaker 10: enormous problem for Microsoft.
Speaker 2: But for now the deal brokering seems to be in
Speaker 2: its advantage and have Acreisi saying that the hiring is
Speaker 2: a clear win for Microsoft. It's basically an AQUAHAI. What
Speaker 2: are some of the difficulties around doing this culturally and
Speaker 2: indeed potentially even regulatory in the long term.
Speaker 10: Sure, we don't know whether regulators will look at this
Speaker 10: that there.
Speaker 9: I heard the discussion and.
Speaker 10: Emily's question, and well, why not just have Microsoft buy them?
Speaker 9: Microsoft both because of.
Speaker 10: The complicated and nonprofit for profits structure of open ai
Speaker 10: and for regulatory reasons.
Speaker 9: I really could not have just outright thought open ai A.
Speaker 9: Most experts think, what are the problems?
Speaker 10: Well, Microsoft has its own artificial intelligence effort. It's been
Speaker 10: working on in that area for more than two decades,
Speaker 10: and there has been some tension over the last.
Speaker 9: Couple of years around the way in which.
Speaker 10: Microsoft and Adula chose to really prioritize, both in terms
Speaker 10: of resources and focus the work of open AI over
Speaker 10: some of Microsoft's internal projects. Some people most concerned about
Speaker 10: that perhaps of lust Microsoft, but there's still AI researchers there,
Speaker 10: or some question of how you integrate those things without
Speaker 10: making you know, a real sort of you know issue
Speaker 10: with people that.
Speaker 9: Are already there. Then there's just you know, there are
Speaker 9: more mounding details.
Speaker 10: How many overayed people as Microsoft really going to hire,
Speaker 10: how do they decide to you know, how do they
Speaker 10: compensate that people already at Microsoft who had a salary
Speaker 10: free this year feel about that compensation, all sorts of
Speaker 10: cultural issues. That said, people who say people from outside
Speaker 10: Microsoft cannot do well at Microsoft, I think are potentially
Speaker 10: thinking about a Microsoft off. Ten years ago. Satya has
Speaker 10: acquired companies like LinkedIn, liked to get up, let them
Speaker 10: run on their own, and had them function quite effectively
Speaker 10: within Microsoft. He's also hired executives here. I think of
Speaker 10: CTO Kevin Scott, who leads the AI for you know,
Speaker 10: executives from outside who have become very senior and very
Speaker 10: important to Microsoft in a way that perhaps was not
Speaker 10: easy for outsiders to do in the office.
Speaker 2: Many noting the title of sam Alman being that of
Speaker 2: a CEO internally. DNA Basqueta, thank you so much for
Speaker 2: all the iterations for that publicly sarded of the company.
Speaker 2: And let's just talk about what's left at open AI
Speaker 2: for a moment, because late Sunday, Emmitt Shecher was appointed
Speaker 2: interim CEO of open AI after the board quietly vetted
Speaker 2: candidates starting on Saturday night. Now here's what we know
Speaker 2: about the appointment. Sources tell Bloomberg that she was seen
Speaker 2: as someone that can lead a large engineering group, but
Speaker 2: also as someone who recognizes an insistential threat from AI,
Speaker 2: and like some members of open AI's board, she has
Speaker 2: ties to the so called effective altruism movement. She has
Speaker 2: stepped down as CEO of Amazon's game streaming site Twitch
Speaker 2: earlier in the year, and in May he actually joined
Speaker 2: y Combinator as a visiting partner. Let's get a conversation
Speaker 2: going with Zachary Lipton. Here's the chief technologist and scientific
Speaker 2: officer over at a Bridge. It's a company using Generator
Speaker 2: AI for automatic drafting of after visit clinical notes. You're
Speaker 2: also an assistant professor of machine learning at Cannie Mellon University. Zachary,
Speaker 2: the fact that you really focus on understanding the social
Speaker 2: impacts of machine learning in a philosophically coherent way is
Speaker 2: the way it says on your website. Is that kind
Speaker 2: of what the tension was here ultimately own open ai
Speaker 2: philosophical at.
Speaker 12: That I think it's important to draw a big distinction.
Speaker 12: There's a contingent of this community that is more focused
Speaker 12: on the idea of AI as a potential existential risk
Speaker 12: to humanity, and there's a bunch of us who are
Speaker 12: more a group of social scientists, ethhysists, some maybe socially
Speaker 12: inclined computer scientists who've looked at these problems from different angles,
Speaker 12: more focused on near term terrestrial actual harms of AI
Speaker 12: systems is operationalized in businesses today.
Speaker 7: So there's.
Speaker 12: A lot of work that I think very few people
Speaker 12: disagree is like serious or real problems and important today
Speaker 12: about understanding how we think about privacy, accountability, transparency, where
Speaker 12: liability goes once you have a greater degree of automation
Speaker 12: in our decision making systems. But on the other side,
Speaker 12: there's a but people who are more focused on something
Speaker 12: but they call it X risk or this idea that
Speaker 12: AI is careening towards, you know, by mechanisms known or unknown,
Speaker 12: that there's this marching progress towards towards something that is
Speaker 12: a different kind of threat that needs to be regarded
Speaker 12: as more of like an epoch changing event, something more
Speaker 12: analogous to nuclear weapons. And I'd say that, like my work,
Speaker 12: sits a little bit more in what they might call
Speaker 12: near termism and this group of affective altruisms. Their philosophical
Speaker 12: position is that they are they think that however small
Speaker 12: a threat, if the risk, if they're wrong, is a
Speaker 12: wiping out of humanity, that this is the most important
Speaker 12: priority in the world, and I'd say it's a relatively
Speaker 12: fringe belief among technologists, among business people, but it does
Speaker 12: have some very well heeled backers, and it does have
Speaker 12: quite a bit of a foothold in San Francisco and
Speaker 12: in particular in particular research labs and open AI does
Speaker 12: have some amount of influence this existentialist thinking.
Speaker 3: Right, Zachary, Whether the existential threat is a fringe idea
Speaker 3: or not, what is? I think we can agree on
Speaker 3: the events of the last weekend being monumental. I guess
Speaker 3: within your career, both in academia and building generative AI tools,
Speaker 3: just reflect quickly on what you made of the last
Speaker 3: forty eight to seventy two hours.
Speaker 12: Oh, it's quite wild, given that when I entered the
Speaker 12: field ten years ago, I had to explain to my
Speaker 12: parents what machine learning and AI were, and they were
Speaker 12: just glad that I wasn't trying to make a living
Speaker 12: plight in the sexophone anymore. So to go from there
Speaker 12: through the front page of the New York Times that
Speaker 12: there's a kervuffl in AI startup's pretty wild, you know.
Speaker 12: I think in general, we're watching before our eyes the
Speaker 12: maturation of an industry and a lot of how we
Speaker 12: got here, and I think you see this all over
Speaker 12: the economy. I think we saw this with the dot
Speaker 12: com bubble and some amount of discord and some amount
Speaker 12: of insanity as we went from a sort of first
Speaker 12: generation set of companies with strange governance structures and you know,
Speaker 12: a certain kind of velocity to a more mature environment
Speaker 12: than followed. You know, it didn't spell the doom of
Speaker 12: the Internet, but it certainly was a growing up period.
Speaker 12: I think what we're watching before our eyes is us
Speaker 12: moving from a period of this being brand new technology
Speaker 12: and people behaving in strange ways that are sort of
Speaker 12: exceptional by any normal standards, to a period that's going
Speaker 12: to follow, which is going to be more robust. It's
Speaker 12: going to involve people depending on a much wider and
Speaker 12: more stable ecosystem of services provided by a larger set
Speaker 12: of companies.
Speaker 3: And remind our audience that almost six hundred people representing
Speaker 3: the intellectual capital within open ai are currently threatening to
Speaker 3: leave and go to Microsoft. So Zachary lipped in a
Speaker 3: bridge Cdio Carnegie Mellon, assistant Professor of Machine Learning, breaking
Speaker 3: it down what a weekend it has been.
Speaker 2: Now, look some other news that we're following for you.
Speaker 2: X CEO Linda Yakarino has acknowledged that some advertisers are
Speaker 2: taking a break a pause from the platform.
Speaker 4: Now.
Speaker 2: This pause follows some outrage over anti Semitic content and
Speaker 2: commentary on X, some of it in fact seemingly endorsed
Speaker 2: by the site's owner. In a musk now in a
Speaker 2: mement of staff on Sunday, Yacarino blamed quote a misleading
Speaker 2: a manipulated article for this pause in spending, referencing in
Speaker 2: fact a Media Matters piece that said ads from big
Speaker 2: brands were being placed near offensive content.
Speaker 3: Ed coming up on Bluebow Technology, Tusk Ventures CEO Bradley
Speaker 3: Tusk joins us we go back to open AI, the
Speaker 3: drama and his impact on the AI space. We have
Speaker 3: to ask questions about corporate governance. That's coming up next.
Speaker 3: Also looking at shares of General Motors pairing some of
Speaker 3: their gain in the session up one point eight percent.
Speaker 3: The news curiously timed late Sunday night, Kyle Vote resigned
Speaker 3: as the CEO of Crew Use General Motors Autonomous Driving
Speaker 3: Unit GM, shuffling the debt, putting a lot of long
Speaker 3: standing GM execs to run that unit. But goodness knows
Speaker 3: what happens next. This is Bloomberg Technology.
Speaker 13: Of course, we.
Speaker 2: Returned to the drama consuming open Ai and how it
Speaker 2: could impact the startup space more broadly after open ai
Speaker 2: CEO Simalmon was ousted by the company's board on Friday,
Speaker 2: prompting a campaign from investors and staff to bring him back.
Speaker 2: Well now, Microsoft has hired Samowan, while former Twitch leader
Speaker 2: Emitt Scheer is taking over as open AI's interim chief executive.
Speaker 2: For today's VC Spotlight, let's bring in Bradley Tusk for
Speaker 2: his read on all of this. He is the CEO
Speaker 2: of Tusk Ventures and also the author of the upcoming
Speaker 2: book Obvious in Hindsight, satirical behind the scenes look at
Speaker 2: how technology and politics sort of intertwine the ways in
Speaker 2: which decisions are actually being made by those in power.
Speaker 2: Is all of this obvious in hindsight when you look
Speaker 2: at the corporate governance.
Speaker 11: Structure, Yeah, it absolutely is. I mean, this was an
Speaker 11: insane structure, and this one's kind of unique in that
Speaker 11: it both you had such a big underlying company that
Speaker 11: is for profit with this nonprofit board on top of it.
Speaker 11: But I think it really raises questions about b corpse,
Speaker 11: and I think about ESG to a certain extent, and
Speaker 11: you know, there are fiduciary duties and there are incentives
Speaker 11: that need to be aligned. When you have boards that
Speaker 11: clearly have sort of other incentives and other ideas and
Speaker 11: that aren't about the shareholders now, aren't about the employees,
Speaker 11: and aren't about the customers, you can create a lot
Speaker 11: of problems, which is what just happened.
Speaker 2: Let's just go through ultimately what this board, how it
Speaker 2: differs from others. It's made up of thinking about four
Speaker 2: people now because of been there exactly gregorbin Fad, some
Speaker 2: helpment had been fired, but others like Reid Hoffmann had
Speaker 2: left over the course of the last year or so.
Speaker 2: And ultimately this is a not for profit board where
Speaker 2: the whole thesis was that it was the mission over
Speaker 2: profits right now, is that replicated anywhere else? And is
Speaker 2: this something that ultimately venture should be learning from.
Speaker 11: Yeah, so I haven't seen this specific structure anywhere else,
Speaker 11: and I can't imagine we ever will again after the
Speaker 11: debacle that this all was. But even when you get
Speaker 11: past that, you know the corpse, which are kind of
Speaker 11: hybrid versions of what we're talking about, where they are
Speaker 11: public corporations and their for profit, but they're meant to
Speaker 11: be doing social good at least. I think, you know,
Speaker 11: vcs should be taking a hard look at the bylaws
Speaker 11: of the boards of B corps because then, by the way,
Speaker 11: I've got one or two of my portfolio, and I'm
Speaker 11: we're taking a look at it right now, because I
Speaker 11: don't want a situation where the board has a moral
Speaker 11: stance or an ideological stance, and that really comes at
Speaker 11: the best interest of the company itself. Of course, there's
Speaker 11: always room on every board to talk about morality and
Speaker 11: ideology and everything else, but the end of the day,
Speaker 11: you have fiduciary duty to the shareholders or to the investors,
Speaker 11: or whoever it is, and that's what's got to be met.
Speaker 11: And so while I'm sure most B corpors are okay,
Speaker 11: it seems to me that the potential for what we
Speaker 11: saw does exist. And what we're talking about companies like
Speaker 11: Auburns and Warby Parker and ben and Jerry's, and we're
Speaker 11: not just talking about kind of no name companies here.
Speaker 11: So I know that I'm concerned, and I think other
Speaker 11: vc should be looking at it too.
Speaker 3: Bradley, I want to bring an update to our audience
Speaker 3: in the private markets. I think this is important. Joshua Kushner,
Speaker 3: who's the founder of Frive Capital, has posted on x
Speaker 3: every problem has a solution. In the background, there is
Speaker 3: a tender offer worth hundreds of millions of dollars that
Speaker 3: is in question here running this month, where open ai
Speaker 3: employees were due to sell shares with Frive Capital leading
Speaker 3: that round. I know you're not an investor in open ai,
Speaker 3: but is there any world in which that tender goes ahead?
Speaker 7: Yeah?
Speaker 11: I mean I think to a certain extent it has to,
Speaker 11: because you have all of these employees who are probably
Speaker 11: not making that much money in terms of salary, because
Speaker 11: that's what happens when you work with a tech startup,
Speaker 11: and the promise is the pay you know, the rainbow,
Speaker 11: the podical at the end of the rainbow, and a
Speaker 11: tender offer offers liquidity for people who have been counting
Speaker 11: on it and relying on it. And you have employees
Speaker 11: who want to move homes or pay for their kids'
Speaker 11: school or whatever it is. And so I think, you know,
Speaker 11: whether it's amateure, whoever's running that company, you have a
Speaker 11: responsibility because you're going to have a really unhappy workforce.
Speaker 11: You already have a workforce where over one hundred people
Speaker 11: signed a letter threatening to quit, and I think this
Speaker 11: would just exacerbate the problems. The question is at what valuations?
Speaker 11: They were talking about an eighty billion dollar valuation on
Speaker 11: the secondary market for the tender offer. I think that
Speaker 11: if they can kind of get the ship righted and
Speaker 11: just wait a few weeks, it probably goes back to normal.
Speaker 11: But if it continues to be chaos, then obviously investors
Speaker 11: are not going to pay up at that amount, and
Speaker 11: the shareholders, if the employees, are going to lose value.
Speaker 3: TuS Benches found an n see Brandy Tuss. Great to
Speaker 3: have you here on Blion dye Technology. Okay, let's wrap
Speaker 3: up our coverage of Sam Mountaman's exit from Open AI
Speaker 3: with the Bloomberg Big Take. We're joined by Bloomberg's Max Chafkin,
Speaker 3: who penned that monumental Business Week piece, but also Bloomberg's
Speaker 3: Actually vance, we have been in the trenches together for
Speaker 3: three days uncovering everything that happened from about lunchtime Friday onwards. Actually,
Speaker 3: I'll start with you just reflect on everything that we've learned,
Speaker 3: but also this kind of side scoop. We had that
Speaker 3: Sam Outman was out there trying to raise tens of
Speaker 3: billions of dollars for a completely different chip company. What's
Speaker 3: that about.
Speaker 1: Yeah, I mean, there's just so much going on here. Sam.
Speaker 1: He is a very ambitious guy. So he's out trying
Speaker 1: to make this new artificial intelligence chip that would compete
Speaker 1: against Nvidia, which open a eye is buy a ton
Speaker 1: of Nvidia chips, and you know, just another indication of
Speaker 1: all these other things going on on top of open
Speaker 1: AI that I think some of the board was concerned about.
Speaker 2: And it sort of links towards the headline of your
Speaker 2: big take, the doomed mission behind Sam Altman's shock auster
Speaker 2: from open ai, doomed ouster, but also perhaps a doomed
Speaker 2: set of aligned or misaligned focuses coming from people who
Speaker 2: lead open AI.
Speaker 7: Yeah.
Speaker 13: I mean you had this nonprofit board where a lot
Speaker 13: of people were really concerned about these apocalyptic AI scenarios,
Speaker 13: and he had Sam Altman and kind of his allies
Speaker 13: who were sort of using the promise of a or
Speaker 13: the potential of apocalypse to sell this new technology, and
Speaker 13: those two things collided, right. I think Sam Maltman saw
Speaker 13: that as kind of a great way to market open AI.
Speaker 3: But you had people who actually believed.
Speaker 13: It and then who were getting increasingly worried over the
Speaker 13: past few weeks.
Speaker 3: Yeah, right, Ashlely, Let's be honest. You and I had
Speaker 3: heard pretty early in the day Sunday that the board
Speaker 3: was digging in that there would be a new CEO.
Speaker 3: No one believed it, And now you have ilia out
Speaker 3: with a tweet apologizing just your final thoughts.
Speaker 1: Well, yeah, Eliot's doing you know, coup inception, a coup,
Speaker 1: a pot of coup. I don't think this is over.
Speaker 1: It sounds like all these camps are still fighting to
Speaker 1: break open AI back. As of right now, seven hundred
Speaker 1: of the seven hundred seventy employees have vowed to leave
Speaker 1: the company of Sam and Greg are brought back. And
Speaker 1: so I don't think this is done. We still got
Speaker 1: another day or two of this.
Speaker 2: Yeah, I just want to hear from Max the weirdest
Speaker 2: line you heard this week.
Speaker 13: I mean, the idea of a counter coup that is
Speaker 13: taking place while the same coup is taking is going on.
Speaker 13: It's just like Ashley says, it's it's too crazy and
Speaker 13: we're talking about Remember this is like the most important
Speaker 13: part of one of the world's largest companies. You know,
Speaker 13: Microsoft is totally dependent on this relationship with open Ai.
Speaker 13: So seeing all of this chaos unfold around something that's
Speaker 13: so critical that so much money, many billions of dollars,
Speaker 13: are baked into, is just something Max Chafkin.
Speaker 2: It was something that you wrote, Ashley Vance, it was
Speaker 2: something that you broke. It was an extraordinary herculean effort
Speaker 2: from all three of you. And that does it for
Speaker 2: this edition of Bloomberg Technology ED. I mean, we didn't
Speaker 2: even get to talk about the door dashes being done.
Speaker 2: Over the weekend.
Speaker 3: They went for DoorDash, for food, to open AIHQ. There
Speaker 3: is so much to recap from a crazy weekend on
Speaker 3: open ai. So we have a podcast. Check it out
Speaker 3: wherever you get your podcast, Apple, Spotify, iHeart and on
Speaker 3: all the Bloomberg's from SF in New York. This is
Speaker 3: Bloomberg