How Instability on OpenAI's Board Led to Sam Altman's FiringA Small Board Composed of Many Insiders Created the Conditions for a Shock Firing
Having a small board of directors composed largely of current employees left OpenAI with insufficient governance and oversight, creating the conditions for Sam Altman's firing.
Technology or financial firms considering an investment in OpenAI should have demanded a more stable and competent board before parting with their money, according to Colin Levy, director of legal at Malbek. Levy said OpenAI should have adjusted the board's composition, structure and governance as the firm's for-profit tech business got larger and brought more diverse perspectives and backgrounds to the table (see: OpenAI CEO Emmett Shear Tries to Right Ship Amid Mass Exodus).
"Everything the board has done with respect to Altman is more or less the opposite of what one would probably want to be doing, particularly if you're a startup being funded by just a few folks," Levy said. "This essentially is a case study about what not to do as a board if you're trying to let go of a CEO or other executive."
In this video interview with Information Security Media Group, Levy also discussed:
- Tension between OpenAI's nonprofit mission and its need for outside cash;
- Lack of due diligence in the process leading to Sam Altman's termination;
- The need for board vacancies to be filled promptly when directors depart.
Levy is the legal evangelist at Malbek, a leading contract life cycle management company, and an adviser for Proxy, a legal workflow management platform. He focuses on the intersection of business, technology and law and is a strong advocate for legal technology, on a mission to educate and inspire others about the possibilities that legal tech has to offer.