Nov 17 (Reuters) – The board of the company behind ChatGPT late on Friday fired OpenAI CEO Sam Altman – to many, the human face of generative AI – sending shock waves across the tech industry.

OpenAI’s Chief Technology Officer Mira Murati will serve as interim CEO, the company said, adding that it will conduct a formal search for a permanent CEO.

The announcement blindsided many employees who discovered the abrupt management shuffle from an internal announcement and the company’s public facing blog.

“Altman’s departure follows a deliberative review process by the board, which concluded that he was not consistently candid in his communications with the board, hindering its ability to exercise its responsibilities,” OpenAI said in the blog without elaborating.

Backed by billions of dollars from Microsoft (MSFT.O), OpenAI kicked off the generative AI craze last November by releasing its ChatGPT chatbot, which became one of the world’s fastest-growing software applications.

Trained on reams of data, generative AI can create brand-new human-like content, helping users spin up term papers, complete science homework and even write entire novels. After ChatGPT’s launch, regulators scrambled to catch up: the European Union revised its AI Act undefined and the U.S. kicked off AI regulation efforts.

Altman, who ran Y Combinator, is a serial entrepreneur and investor. He was the face of OpenAI and the wildly popular generative AI technology as he toured the world this year.

Altman posted on X shortly after OpenAI published its blog: “i loved my time at openai. it was transformative for me personally, and hopefully the world a little bit. most of all i loved working with such talented people. will have more to say about what’s next later.”

Altman did not return requests for comment. OpenAI was not reachable for further comment.

Murati, who has worked for Tesla previously, joined OpenAI in 2018 and later became the company’s chief technology officer. She oversaw products launches including ChatGPT.

At an emergency all-hands meeting on Friday afternoon after the announcement, Murati sought to calm employees and said OpenAI’s partnership with Microsoft is stable and its backer’s executives, including CEO Satya Nadella, continue to express confidence in the startup, a person familiar with the matter told Reuters.

The Information previously reported details of the meeting.

“Microsoft remains committed to Mira and their team as we bring this next era of AI to our customers,” a spokesperson for the software maker told Reuters on Friday.

In a statement published on Microsoft’s website Nadella added: “We have a long-term agreement with OpenAI … Together, we will continue to deliver the meaningful benefits of this technology to the world.”

EARTHQUAKE

Well wishers and critics piled onto digital forums as the news spread.

On X, former Google CEO Eric Schmidt called Altman “a hero of mine,” adding “He built a company from nothing to $90 Billion in value, and changed our collective world forever. I can’t wait to see what he does next. I, and billions of people, will benefit from his future work- it’s going to be simply incredible.”

“This is a shocker and Altman was a key ingredient in the recipe for success of OpenAI,” Daniel Ives, analyst at Wedbush Securities said. “That said, we believe Microsoft and Nadella will exert more control at OpenAI going forward with Altman gone.”

The full impact of the OpenAI surprise will unfold over time, but its fundraising prospects were an immediate concern. Altman was considered a master fundraiser who managed to negotiate billions of dollars in investment from Microsoft as well as having led the company’s tender offer transactions this year that fueled OpenAI’s valuation from $29 billion to over $80 billion.

“In the short term it will impair OpenAI’s ability to raise more capital. In the intermediate term it will be a non-issue,” said Thomas Hayes, chairman at hedge fund Great Hill Capital.

Other analysts said Altman’s departure, while disruptive, would not derail generative AI’s popularity or OpenAI or Microsoft’s competitive advantage.

“The innovation created by OpenAI is bigger than any one or two people, and there is no reason to think this would cause OpenAI to cede its leadership position,” said D.A. Davidson analyst Gil Luria. “If nothing else, Microsoft’s stake and significant interest in OpenAI’s progress ensure the appropriate leadership changes are being implemented.”

As late as Thursday evening, Altman showed no signs of concern at two public events. He joined colleagues in a panel on the sidelines of the Asia-Pacific Economic Cooperation (APEC) conference in San Francisco, describing his commitment and vision for AI.

Later he spoke at a Burning Man-related event in Oakland, California, engaging in an hour-long conversation on the topic of art and AI. Altman seemed relaxed and gave no indication anything was wrong, but left right after his talk was over at 7:30 p.m.

The event organizer said at the event that Altman had another meeting to attend.

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