Another day of chaos at OpenAI

Welcome to Runtime! Today: After a parade of executive departures, OpenAI is becoming a very different company, allegations of price-fixing hit SAP, and the latest enterprise moves.

(Was this email forwarded to you? Sign up here to get Runtime each week.)

Sam's the man

As we approach the two-year anniversary of the launch of OpenAI's ChatGPT, which kicked off the enterprise generative AI tech boom, the organization that produced that breakthrough bears little resemblance to its late-2024 counterpart. And as companies like Google and Meta continue to push the boundaries of large-language models, Microsoft's close partnership with OpenAI — once thought of as a key competitive advantage — is entering a very different phase.

Enterprise tech was stunned Wednesday by the "abrupt" (in CEO Sam Altman's words) departure of OpenAI CTO Mira Murati, who led the company's product and engineering teams during the development of ChatGPT and the subsequent GPT models that kicked off an investment frenzy. Hours later, OpenAI announced that Chief Research Officer Bob McGrew and Barret Zoph, who led "the post-research training team at OpenAI" according to his LinkedIn, would also be leaving.

"Mira, Bob, and Barret made these decisions independently of each other and amicably, but the timing of Mira’s decision was such that it made sense to now do this all at once, so that we can work together for a smooth handover to the next generation of leadership," Altman said in a post on X that is really hard to accept at face value.
Altman said he was informed of Murati's decision to leave Wednesday morning, which if true is unusually short notice for the departure of a high-level executive at a tech company.
In her own post to X, published several hours before Altman's, Murati said "I’m stepping away because I want to create the time and space to do my own exploration," which raises more questions than it answers.
Altman announced the promotion of several current executives to fill the vacant roles, and declared "I have over the past year or so spent most of my time on the non-technical parts of our organization; I am now looking forward to spending most of my time on the technical and product parts of the company.”

Meanwhile, Reuters, The Wall Street Journal, and Financial Times all reported the same day that OpenAI is finalizing the process of turning itself into a for-profit company and moving away from the complicated organizational structure that governed its early years.

Under the new structure, OpenAI will look much more like a traditional tech startup, albeit one of the most well-funded tech startups to ever exist.
The non-profit that technically controls the business end of OpenAI would be reduced to having a minority stake in the for-profit company, which is in talks to raise as much as $6.5 billion in new funding (and is far from profitable).
Altman would receive 7% of the company under this new structure, which would be worth $10.5 billion at the valuation being discussed for the new funding.
Altman said Thursday that any link between the departures of the three senior OpenAI executives and the restructuring activity was "totally not true," which is again a little hard to believe.

So where does OpenAI go from here? Rather than pursuing some vision of "shared prosperity" that Altman described in a gauzy essay just days ago, it increasingly looks like a company that wants the spoils of the AI boom for itself. And it's going to have to reach that goal without some of the core people that convinced Microsoft to pour billions into the company, people who didn't necessarily sign up to become the next big tech vendor.

It isn't just Murati, McGrew, and Zoph that have left OpenAI in recent months; co-founder and chief scientist Ilya Sutskever left in May, and in the midst of all this turmoil co-founder and president Greg Brockman went on sabbatical until the end of the year.
OpenAI has also gone on a hiring spree since Altman returned to the company after his brief and poorly explained ouster last November, which has a way of resetting corporate culture, as Fortune noted.
It's hard to see how OpenAI can satisfy investor demands as a for-profit company without devoting significantly more time to chasing enterprise business, which will make its relationship with Microsoft even more awkward.
The OpenAI of the future is going to look a lot different than the OpenAI that brought the world ChatGPT, and nobody in Silicon Valley has any idea how that will pan out.

The price is a little too right

Enterprise tech companies have a love/hate relationship with the federal government, which is an enormous potential customer but uses an enormously frustrating procurement process. They often turn to government-focused resellers like Carahsoft to get a piece of that pie, but according to the Department of Justice, SAP might have gone too far.

Court records indicate the DOJ has been investigating SAP on the suspicion that it "illegally conspired with Carahsoft to fix prices on sales to the US military and other parts of the government," according to Bloomberg. This is not a criminal investigation at the moment, and both companies are cooperating with the government, but it's not a great look.

"The long-running civil probe is focused on the companies possibly rigging the market for the more than $2 billion worth of SAP technology that the US government has purchased since 2014," Bloomberg reported. ServiceNow and Okta also reportedly used Carahsoft when working with the government, but it's not clear if they are also involved in the investigation.

Enterprise moves

Ketan Karkhanis is the new CEO of ThoughtSpot, joining the company after serving as executive vice president and general manager of Salesforce's flagship Sales Cloud product for the last two years.

Chris Stori is the new CEO of Bright Machines, following several years in various leadership roles at Cisco.

Baran Erkel is the new chief strategy officer at UserTesting, with plans to focus on acquisitions and strategic partnerships following seven years in a similar role at Nintex.

Vivek Raghunathan is the new senior vice president of engineering at Snowflake, according to a report by The Information confirmed by the company.