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How Open AI's Board of Directors Imploded their Own Company.


week in review

Marketing campaigns, influencers, brands, and competitive strategies in the world.


OpenAI Scrambles to Reinstate former CEO Sam Altman; Apple and Disney Stop Advertising on X; Nike Names a New CMO.

November 22, 2023


Welcome back to another Week In Review. This weekend was filled with shocking stories and a blockbuster shakeup in C-suites, with several companies undergoing radical changes.


Sam Altman speaking on behalf of OpenAI at the APEC CEO Summit the day before he was fired. Photo by Justin Sullivan / Getty Images
Sam Altman speaking on behalf of OpenAI at the APEC CEO Summit the day before he was fired. Photo by Justin Sullivan / Getty Images

On Friday, Open AI Board of Directors ousted CEO Sam Altman who grew the organization from an upstart nonprofit to a multi multibillion dollar company ushering in the era of Artificial Intelligence. The removal of their longtime CEO created almost instant chaos for the OpenAI, particularly with major stakeholders like Microsoft which has invested $13 billion into Open AI. Over the weekend Microsoft and other partners rushed to reach out to Altman and the board and bridge the divide that has become deeply ingrained in the company.

Over the weekend Microsoft and other partners rushed to reach out to Altman and the board and bridge the divide that has become deeply ingrained in the company.



What no one expected, was for Microsoft to take the full house.


To the Board of Directors’ horror, Altman announced he would be working with Microsoft along with a former co-founder to develop their company’s AI capabilities. Moments after the announcement, a petition now containing 700 signatures, from the 770 total employees at Open AI, demanded the Board’s resignation and reinstatement of Altman as CEO. Even one of the members of the board signed the petition, commenting that he regretted his decision on Friday and wished to bring the company together again. That leaves only three directors left in the original six who have the choice to piece back together the company or face its complete implosion.


“[The Board] was at the kids poker table and thought they won until Nadella and Microsoft took this all over in a World Series of Poker move for the ages with the Valley and Wall Street watching with White Knuckles,” Said Dan Ives, Tech Analyst for Wedbush Securities.

In what can be seen as the biggest corporate shake up since Steve Job’s firing from Apple in 1985, Microsoft has taken the opportunity and ran with it; positioning themselves as the champion in AI. Offering to incorporate those in Open AI to their new program and giving full reign to the founding team of Open AI to continue their journey of revolutionizing Artificial Intelligence.

 


Next Up... Yet another wrench is thrown into the gears of X after owner Elon Musk commented, “You have said the actual truth” in response to an X post that claimed Jewish communities support "dialectical hatred against whites."


fingerprint with words everyone matter for another wrench is thrown into the gears of X after owner Elon Musk commented, “You have said the actual truth” in response to an X post that claimed Jewish communities support "dialectical hatred against whites."


In response, Apple, IBM, Disney, and other major advertisers have announced that they are pulling ads from the platform after a coalition of 164 Jewish rabbis and activists called on them to stop supporting Musk. This coupled with a report from the left-leaning nonprofit group Media Matters for America releasing a report highlighting how advertisers’ content is being positioned next to far-right content creators formed scathing accusations of X becoming an unfiltered and uncensored platform where antisemitism and racism are part of the status quo.


Musk has not had an easy ride since taking over what was formerly known as Twitter, with Reuters reporting monthly U.S. ad revenue at X declining at least 55% year-over-year each month since billionaire Elon Musk bought the company in October 2022. Mixed with the overwhelming drop in user engagement and brand recognition, X has a long road ahead to reposition itself as a platform for real and honest political conversations.

The company has taken part in several new initiatives as of late in what seems to be a move to address the loss of ad revenue. Selling programmatic ads via Google, aggressively selling advertising space to politicians ahead of the 2024 election and signing content creators for exclusive platform deals that would see influencers bring their audience to the app. Sadly for X, it seems that the nonstop tide of negative feedback and public perception has heavily impacted the company’s brand and customer loyalty. While many mistakes have fallen on Musk’s shoulders to carry, this pattern of ‘off the cuff’ commentary leading to devastating results for the platform is becoming unsustainable. What went wrong for Elon? He is a CEO known for producing innovative solutions to the biggest problems of the day; Unfortunately for him, social cohesion and management are not his forte.


 


Last but certainly not least, Nike named their former company executive Nicole Hubbard Graham to be their next Chief Marketing Officer.


Nike Store

Joe Dator, buy shoes, targeted advertising
Nicole Hubbard Graham

Nike reported a 2% decline in North American footwear sales in its latest quarter, facing serious competition for both athletes and casual consumers from brands including Hoka, On, Adidas, and New Balance. Nike also named 30-year company veteran John Hoke its first chief innovation officer, tasked with amplifying and accelerating the company’s innovation strategy and distinction. “We are focused and mobilized to address areas where we need to raise our game,” Chief Executive John Donahoe said during an earnings call in September.


And this switch up of executive management may be the first shot in a salvo of sales warfare soon to come. While Nike remains dominant as the world’s largest seller of athletic footwear and apparel, they are not sitting comfortably at the top. With consumers and industry analysts noticing a significant slowdown in product innovation compared to their energetic competition, Nike executives are making necessary plans to increase company innovation and brand appeal. What’s still unsaid is what tactics the company will employ to reestablish its brand as the cutting edge of athletic apparel. Will they focus and come out with new and innovative products or take a multilayered marketing approach and target different touchpoints while signing multiyear marketing deals with athletes is still unknown. The facts as they stand now point to Nike taking a holistic approach to tackling their sales dip by rejuvenating management, instilling a competitive drive in the team, and unleashing their war chest at the competition.



In Review

72 hours can redefine entire industries. Over the weekend three different burgeoning businesses went through extreme scrutiny and speculation over their potential. While some positioned themselves for success like never before, looking at you Microsoft; others shattered their short-term potential, deepening their divides and endangering their future.




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Nov 22, 2023
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