The Bulletin #43: The OpenAI Saga, Biden's Climate Law, and the Gift of Christmas to the Economy
In this week's bulletin - The expulsion (and return) of Sam Altman, Biden's 2022 Climate Law and why the 4th quarter is the most important time for the US economy! 🎄
Welcome back from Thanksgiving break!🦃 Hope you had a restful time with loved ones over this short holiday (and ate your body weight in food). Enjoy The Bulletin!
🤖 What’s Going On With OpenAI?
What a week its been for Sam Altman. In a turn of events that has captivated the tech landscape, OpenAI has welcomed Sam Altman back into the helm as CEO, concluding a riveting five-day saga.
In case you missed it, here is quick timeline of events:
🛫Friday, November 17: Altman's Departure
Sam Altman steps down as OpenAI CEO.
Board cites inconsistent communication, hindering their ability to fulfill responsibilities.
Mira Murati appointed as interim CEO.
Co-founder Greg Brockman quits in response.
⏱️Sunday, November 19: Shear Appointed Interim CEO
Emmett Shear becomes interim CEO, replacing Murati.
Shear expresses dissatisfaction with the handling of Altman's removal.
Microsoft announces hiring Altman for a new AI department.
🪧Monday, November 20: Employee Protest
Nearly all 800 employees sign a letter demanding the board's resignation and Altman's return.
Threaten to quit and join Microsoft's AI department if demands are not met.
Letter questions the board's competence in overseeing OpenAI.
🔙Tuesday, November 21: Altman's Return Agreement
Altman reaches an agreement in principle to return as OpenAI CEO.
New board members announced, including Bret Taylor, Larry Summers, and Adam D'Angelo.
Employee protest appears to influence the decision.
Altman and OpenAI collaborate to finalize the details of his reinstatement.
One of the reasons given for Altman’s initial expulsion was his inconsistent communication with the board, hindering their ability to fulfill responsibilities. Reading between the lines, online users developed theories as to the real reasoning for the coup:
⭕ Disagreements on long-term strategy: It is widely believed that Altman favorited pushing AI development aggressively while board members wanted to move more cautiously.
🔒 Security or privacy concerns: After Microsoft reportedly suspended use of ChatGPT internally late last week, there were concerns that OpenAI experienced a major security breach were raised
💸 Financial Discrepancies: OpenAI could be facing undisclosed financial challenges due to Altman pursuing financially-demanding projects against the board’s approval.
🦾 AI Ethics Concerns: Differences in Altman's techno-optimistic views on AGI and the board's mission to ensure AI benefits all humanity could have caused internal disagreements.
Nevertheless, Altman's reinstatement, met with jubilation from the ChatGPT creator's employees, signifies a decisive victory for those advocating the swift commercialization of technology. The reshaping of OpenAI's board, highlighted by the departure of key figures and the introduction of an interim board led by industry veterans like Bret Taylor, Larry Summers, and Adam D’Angelo, is set to pave the way for a more stable and effective governance structure.
With potential Microsoft representation and a strategic focus on rapid innovation, Altman's return signals a shift in priorities, prompting questions about the nuanced interplay between business objectives and safety considerations in the realm of A.I. development. This unfolding narrative also sparks contemplation on potential investigations into Altman's conduct and the broader implications for corporate governance in cutting-edge tech enterprises.
As the industry undergoes a period of reflection, venture capitalists are recalibrating their strategies, drawing lessons from the OpenAI and FTX episodes, and emphasizing the need for a renewed focus on traditional corporate governance. The story serves as a compelling reminder for investors to navigate the evolving A.I. landscape with a discerning eye and a cautious approach. 🧑💻
🌳Biden’s Climate Law And Its Impact On The Green Economy
In the dynamic aftermath of President Biden's signing of the 2022 climate law, a captivating financial frontier has emerged, reshaping the landscape of green investments.
This legislative landmark has not only accelerated clean-energy projects but has also given birth to a bustling marketplace where smaller companies can now trade their green tax credits to larger corporations, potentially fostering an annual transaction volume of up to $80 billion. While hailed for broadening the funding horizons for emission-reducing technologies, there's a nuanced debate around whether this aligns with President Biden's pledge to hold corporate America more accountable.
Enter the Inflation Reduction Act (I.R.A.), the driving force behind the rise of online platforms that essentially act as a Match.com for tax credits. Here’s how its changed the game:
⌛Historic Climate Legislation: President Biden's Inflation Reduction Act stands as a landmark in the fight against climate change, representing one of the most substantial investments in the American economy to date.
💵Economic Opportunity for All: The legislation not only addresses the climate crisis but also places economic opportunity at its core. It has already triggered a manufacturing and investment surge of over $115 billion, particularly benefitting disadvantaged communities with lower income, college graduation rates, and employment rates.
💳Low-Income Communities Bonus Credit: The Inflation Reduction Act introduces a groundbreaking Low-Income Communities Bonus Credit program, offering up to a 10 or 20-percentage point boost to the Investment Tax Credit for qualified solar or wind facilities in low-income communities. This initiative aims to increase clean energy facilities, encourage new market participants, and uplift communities facing adverse health, environmental effects, or economic challenges.
👷♂️Supporting Clean Energy Jobs: The legislation encourages clean energy developers to meet robust labor standards, fostering the creation of over 1 million jobs in energy and related manufacturing sectors. The Inflation Reduction Act incentivizes prevailing wages and the hiring of qualified apprentices from registered apprenticeship programs.
⚡Cost Reduction for Energy-Saving Measures: By extending and expanding credits like the Energy Efficient Home Improvement Credit and the Residential Clean Energy Credit, the Act aims to lower the costs of energy-saving property improvements and rooftop solar installations. This, in turn, is expected to save families hundreds of dollars annually on energy bills and support small businesses in improving energy efficiency.
🏛️Direct Payments for Governments and Non-Profits: Acknowledging the crucial role of state, local, tribal governments, non-profit organizations, and tax-exempt entities in building a clean energy economy, the Inflation Reduction Act allows them to receive certain tax credits as direct payments. This facilitates broader investments in local communities, streamlining access to key incentives.
🤝Freedman’s Bank Forum: The fact sheet precedes the Treasury Department’s third annual Freedman’s Bank Forum, where Biden-Harris Administration officials will discuss efforts to increase economic opportunity for communities of color.
Entrepreneurs, including some with ties to the Biden administration, are capitalizing on this transformative moment, navigating the uncharted waters of a market that is rapidly evolving. As the marketplace gains momentum, former skepticism is giving way to an undeniable reality – this financial shift is fundamentally transforming the way green investments are navigated, steering us toward a more sustainable future.🌿
🎁The Gift Of Christmas To The US Economy
As we dive into the most wonderful time of the year, the U.S. economy gears up for a festive finale to its fourth quarter. The holiday season, marked by parties, family gatherings, and the joy of gift-giving, holds significant sway over economic trends.
In a glance at the past three decades, a inflation-adjusted monthly retail spending graph in this interactive New York Times article the unveils December as the star of the show, with a distinctive peak. This festive surge is not limited to retail; it resonates in the broader economy, impacting the Gross Domestic Product (G.D.P.).
Traditionally, the last quarter outshines the preceding ones, reflecting Americans' resilience in spending through the darker months. Even during the challenging times of the Great Recession, the pattern endured. In 2020, despite pandemic woes, December spending rose, propelled by government stimulus and contributing to economic recovery. As we approach the holiday hustle of 2023, economists are tuned in, anticipating a promotion-driven season. With the Federal Reserve's measures to curb inflation, optimism surrounds the prospect of an economically vibrant holiday season. 🌟
🦃What We’re Consuming In Venture
This amazing CBS feature of our port-co, Fishwife! Give it a watch 💖
Andrew Chen’s (partner at A16Z) thoughtful breakdown of how to evaluate early-stage companies on their metrics
This HBR discussion on why African fintech startups are outlasting their Western counterparts and the essential strategies that they employ
An insightful Bloomberg article on the demand for shares of startups in secondary markets
That’s it for this week, feel free to email me at zyn_yee_ang@brown.edu with any inquiries!
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