Practically overnight, OpenAI went from one of the strongest brands in tech to a highly damaged one. It’s still not clear why Sam Altman was fired but the way OpenAI’s board released the news and reacted to the backlash left the company’s reputation in shambles. And while details are still emerging, there are lessons tech startups can apply when they have difficult news, such as layoffs or major changes to announce. #1 - Provide clear messages
OpenAI’s initial blog post communicated that Altman "was not consistently candid in his communications" but this language was so vague that no one knew what it meant, causing speculation to run wild.
Perhaps there were legal reasons the board couldn’t share details. Perhaps it was simply “a coup” as some media outlets speculated. Regardless, the lack of a clear storyline explaining why he was fired left a massive hole for the rumor mill to fill. And Microsoft’s hiring of Altman a few days later begged the question: if he did something so wrong at OpenAI, why would Microsoft bring him on board?
OpenAI’s announcement did not outline a clear vision for the future and the succession plan was to appoint an interim CEO and a search for a replacement, signaling further uncertainty.
While Altman’s firing is a spectacular example of a mismanaged layoff announcement, it is far from the only one. In this case, a company botched the announcement of one major dismissal. As the economy slowed down in recent years, similar situations arose when startups announced a funding round and then, a few weeks later, announced layoffs. These companies tended to be skewered by the press, employees, and former employees, especially if company management was not able to very clearly explain why layoffs occurred in light of an influx of funds.
#2 - Don’t Surprise Your Investors, Employees, and PR Team
According to news reports, the announcement took Microsoft and other major investors and employees by surprise. Notably Microsoft CEO Satya Nadella only learned of the announcement a minute before it appeared on OpenAI's blog, according to Axios.
It’s critical to take the time to give major stakeholders a heads up and an opportunity to provide feedback and concerns. As far as we can tell, there wasn't a reason why Altman needed to be forced out quickly.
The move caused enormous HR turmoil. OpenAI president Greg Brockman quit shortly after the announcement, interim CEO Mira Murati was hired and then replaced by Emmett Shear. All of this while there were negotiations to bring Altman back to the company, which ultimately failed. Many employees threatened to resign. And the Chief Scientist who was a driver for the firing issued an apology in which he regretted his “participation in the board’s actions.”
It’s critical to continuously monitor the situation and provide updated communication as it unfolds. Altman was fired, then there was talk he might return (he didn't) and then he was hired by Microsoft. Speculation in the media ran wild about what was happening, and OpenAI made no further comment to clarify. Further details will come out eventually but it would have been better if it had directly come from OpenAI, rather than having the story come out in dribs and drabs from other sources, such as disgruntled employees. Or from Sam Altman himself.
Which leads us to the next point… #3 - Consider the strength of personal brand
Sam Altman built an incredibly strong personal brand and OpenAI was largely associated with his name. When a tech company founder has an aura of a guru, their removal will cause a bigger shakeup than a company with a less known executive. That said, the removal of any CEO can often signal weakness and instability to stakeholders and customers. Even if a CEO is largely unknown, it must be done with a clear strategy and plan, preferably with the coordination and cooperation of the individual.
In this day and age, individuals have their own platforms and personal brands. Altman garnered a lot of support through his informal posts on social media that came off as coming from the heart. He comes across as a true leader with posts that put him above the fray, such as “one team. one mission.”
While the OpenAI crisis is unusually explosive, even mini crises can damage a brand’s reputation and lead to loss of revenue, customers, and employees. It can take years to build a brand and moments to damage it. The pile-up we’re witnessing at the moment at OpenAI is a harsh reminder of the importance of strategic thoughtful communications. Key Takeaways:
Communicate internally and with partners ahead of time to ensure key stakeholders understand WHY the move is being made and provide the opportunity to get feedback ahead of time.
Bring your comms team on board early. Be completely open with them so they can flag potential damage and prepare for fallout.
Be clear in your communications, especially outlining how these steps will impact the company and what is the vision for the future.
Try to foresee the recipients’ reactions (employees, partners, etc.) and address their concerns, preferably before the news goes public.
When possible, coordinate with the impacted party/parties.
Understand the consequences when matters involve an executive with a strong personal brand