Founders: Pay attention to what happened with OpenAI’s board...

Hello. Moscow adds Meta spokesperson to criminal wanted list. The reason Andy Stone was added to the list was not indicated, according to the Russian news agency.

— James Xu-Johnson

Founders: Pay attention to what happened with OpenAI’s board

If this company structure gives you the ick, you are not alone.

Structural struggles at OpenAI: OpenAI's unique company structure, where its nonprofit arm has complete control over the for-profit holding company, has raised concerns and sparked discussions. The nonprofit's power to oust the CEO without prior notice led to internal tensions, particularly as the for-profit side sought commercial success and a high valuation.

Cautionary tale for founders and boards: The OpenAI episode serves as a cautionary tale for founders and board members. Issues arising from conflicts between a nonprofit board and for-profit objectives underscore the importance of meticulous board selection, clear expectations, term limits, and alignment with the organization's long-term vision.

Board governance lessons: The fallout highlights the need for comprehensive bylaws and charters with clear guidelines for critical decisions, such as leadership changes and conflict resolution. The OpenAI board's lack of actionable rules and guidance, coupled with a vague philosophical mandate, resulted in confusion and a disastrous outcome. The incident underscores the importance of thorough investigations and clear terms for CEO ousting to protect shareholder interests and maintain transparency.

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Has the global unicorn club reached its peak?

What is a unicorn? Just a couple of years ago, the once-rare phenomenon of becoming a unicorn (a private company worth $1B+) was practically commonplace.

Unicorns are struggling: But unicorn births reached a low point in Q3’23 at 12, the fewest in over 6 years. many existing unicorns may struggle to keep their billion-dollar valuations should they seek to fundraise or exit.

The reasons Why: A handful of factors, which we’ve already begun to see play out, could fuel this reversal in the coming quarters:

Unicorn exits via IPO: As private-market financing dries up, more companies will be considering an IPO as a means to fundraise while also achieving liquidity for investors and employees.

Down rounds & shutdowns: In the worst-case scenario, some unicorns have shut down altogether. Just last month, digital freight forwarder Convoy (last valued at $3.8B) ceased operations. Two weeks later, healthcare AI company Olive shuttered, after having last raised funding at a $4B valuation in 2021.

Consolidation via M&A: Late last year, for instance, ultrafast delivery firm Getir bought out competitor Gorillas for $1.2B — a 61% discount to Gorillas’ 2021 valuation of $3.1B. The cybersecurity space has seen similar consolidation, with public player Check Point recently buying unicorn Perimeter 81 for less than $500M. (Read more)

Startups should consider hiring fractional AI officers

A recent study from Randstad, the recruitment company, found that job posts referencing generative AI skills have risen by 2,000% since March. It’s the third most sought-after skill set and one of the shortest in supply.

What is fractional AI? Fractional leadership is a recent workforce trend: seasoned executives with subject matter expertise working across two or more clients simultaneously.

Having a fractional AI officer is superior to hiring full-time in one crucial respect. AI — especially generative AI — is such a new technology that breadth of experience across multiple companies gives fractional executives an edge over their full-time counterparts.

The 3 stages of AI adoption:

• Workflow efficiency + productivity

• Customer experience

• Product innovation

Ready or not, this is happening…Among the Fortune 1000, 84% of companies plan to increase their data, analytics, and AI investments next year.

The implications of the OpenAI fiasco on startups

OpenAI’s management issues: Last week, OpenAI suffered management team infighting over the key direction of the company. The schism resulted in Sam Altman’s firing & Greg Brockman’s departure.

Who is running the game now, then? Where does that put the ecosystem now? → Microsoft has secured its leadership position. It owns the biggest commercial AI business in the world - about $1.5b in run-rate and counts members of the OpenAI team amongst its ranks.

The future cloud of AI: Last week, OpenAI represented the future cloud of AI : the technology developers & product managers used to build a demo, then a beta, then a full-fledged product, rather than building from scratch.

OpenAI’s dominant place is at risk: Anthropic and other competing LLM providers will take advantage in the market to compete more aggressively. As for startups, OpenAI’s dominant place in the developer ecosystem is suddenly at risk & presents an opportunity for smaller companies to fill a new void.

AI should make the 4-day work week possible for millions of workers

The question is whether they’ll use the free time for leisure—or more work…

Earthly thrives on a 4-day week: Earthly, a London-founded climate tech company, has had a four-day workweek for over two years. Its employees are more productive with trimmed hours, and with the addition of AI tools such as ChatGPT earlier this year.

How do earthly employees use AI? Earthly now uses the platform to sift through projects, brainstorm, research and streamline operations overall, which has freed up more time for company staff.

What are the benefits of employees using AI? Soon, some of the benefits Earthly has experienced could be seen across Britain—AI could reduce the hours worked by at least 10% for a whopping 88% of its workforce, according to a recent report by Autonomy, which helped carry out the world’s largest four-day workweek pilot last year.

What would people do with the extra day? In an influential 2013 paper, Carl-Benedikt Frey, an associate professor of AI & Work at the Oxford Internet Institute, predicted that automation could eliminate nearly half of all U.S. jobs. He also pointed out that the productivity boost in the U.S. during the 20th century led to shorter, 40-hour weeks (it used to be over 70 hours in some industries) which didn’t necessarily translate into an equivalent increase in leisure time.

So far, the odds are In favor of a 4-day week: The four-day workweek pilot in 2022, whose results were released in February, marked a major breakthrough with a 92% success rate among the U.K.’s 61 participating companies.

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