How Could Blockchain Governance Have Prevented the Mess at OpenAI?

In the last few days our feeds were flooded with astonishing news from OpenAI: the board ousted Sam Altman, the CEO, the visionary behind the company and one of the creators of ChatGPT, an integral tool to many of us since its inception.

Allegedly, the board's loss of trust in the CEO prompted an abrupt dismissal, catching everyone off guard, including Microsoft, which had committed a staggering $13 billion investment in the company. One might assume that such a significant investor would get a prompt heads-up and an explanation for such a drastic decision. Moreover, OpenAI was on the verge of finalizing its next round of investments. What’s even worse, the OpenAI employees learned about the departure of their dear CEO after it was announced publicly.?

The Consequences for OpenAI.

The exact consequences and how this will play out and affect the future of OpenAI is still unknown, especially considering the instability of the current board. After firing Sam, OpenAI appointed the interim CEO? Mira Murati, the CTO of the company. But soon, they changed their mind, and demoted her from the role, and appointed a new person? - Emmett Shear.?

Microsoft, relying heavily on OpenAI's technology, reacted unfavorably to the news, particularly due to the lack of prior knowledge regarding Sam Altman's termination. In response, Microsoft promptly recruited Sam Altman to lead their AI division. This decision wasn't unexpected, given his instrumental role in building a tool that gained over 5 million users in less than a week. ?But, Sam wasn’t the only one who left OpenAI. Soon he was joined in Microsoft by the (now former) company president Greg Brockman. The drama, however, doesn’t end there: almost 700 OpenAI employees threatened to quit their jobs if Sam didn’t return as their CEO and the current board wasn’t dismissed. The Board was soon replaced and Sam was reinstated as the CEO.

In this article we will examine how decentralized governance, DAO-like structure and blockchain-based governance could have prevented this mess. This piece is not about whether the Board made the right decision or not, we are here to see how these events would unfold within decentralized governance systems. So let’s get on with it.?

The Failure of the OpenAI Corporate Governance.

I was scrolling the latest news and articles and saw many on the topic how OpenAI corporate governance failed the company, and I couldn't agree more.

Then it came to me: but blockchain-based decentralized governance wouldn't have failed and couldn't have failed because the underlying tech, blockchain and smart contracts, are highly independent of humans and their execution is autonomous.

The Constitution, the Whitepaper or the Governance paper of the DAO would clearly outline the process under which decisions are made. The governance framework is transparent and accessible to everyone.

The One or The Few don't have the bigger power than the Collective - the Community.

The Power of the People.?

The letter signed by 700 employees quickly showed us how the people can influence and override decisions that were made by the few. We must not forget that the power lies with the people, not with a group of people. The corporate world taught us that our opinions don’t matter and have no power, but the reality is a lot different.

The Board of OpenAI is made of a former Facebook executive, an AI researcher, a tech entrepreneur and a computer scientist, and they made the call and fired the person, the face of the project, because they “felt like they couldn’t trust him anymore”. When asked to explain why and show some evidence, they fell short and couldn’t really provide the answers. Not even to Satya Nadella, the CEO of Microsoft. That seems a bit sketchy, doesn’t it??

How Would This Play Out in a DAO-like Environment??

We know that the Web3 community sometimes forgives, but never forgets, and many are very quick with their fingers and upskilled in their research.?

For illustration purposes, let’s name our experiment the OpenAI DAO.

To begin with, if the Board (we would have that function implemented in the governance and the Constitution) had their doubts in the honesty of Sam Altman and his ability to further lead the development of the project, they would have to inform the OpenAI DAO Community on a designated platform (a forum) about their concerns.

In order to do so, they would have to show the reasoning behind such suspicion and provide evidence to support their claim.

There would be a deadline for the DAO community discussion before the final proposal for Sam’s removal would be posted. This governance prescribed timeframe would give the Community time to discuss the Board’s concerns, ask questions, share opinions and do their own research on the matter.?

After the opinions and feedback would be collected, the proposal for Sam’s removal would be updated and moved to the final stage: posted on the governance designated platform that would be token-gated.

But before we dive into details, let’s see who could be the OpenAI DAO community.?

OpenAI DAO Community Members.

When we look at DAOs, decentralized autonomous organizations that operate on smart contracts which make this? environment transparent, autonomous, pretty secure, and highly immutable, we would think of them as the perfect environment for people who are affected by any decisions to be its Community. Since OpenAI has millions and millions of users, we would really have to be careful of who we see as the Community members, and we could even divide them in tiers. (Sorry but you gotta protect your governance and the internet is full of trolls!)

Tier 1 would be investors and people who contributed to the development of the project. Those would be VCs and the C-level executives, the management, employees and of course the Board.?

Now we need to decide who would be the OGs of the project. In the launch phase, the DAO Whitepaper could say that the first 1000 who paid the subscription would receive the token that grants them the OG status. Now you may ask, why only 1 000 considering the number of people who are actually using the tool?? Here, I am going with the assumption that they really didn’t think that ChatGPT would take the internet by the storm and acquire over 5 million users in less than a week. Furthermore, it would be quite messy to grant an OG status to thousands and thousands or millions of people. Again, you gotta guard your governance.

Furthermore, the right to participate in the governance discussions concerning a project of size like this, should be earned, not given just because you paid $20 for a subscription package. That trust is earned through honesty and contributions, not because you have money to pay for an enterprise solution and beat the $20 ones.?

All the other users, freebies and fans of the tech, would be observers and keyboard warriors on social media platforms and could potentially influence the final decisions of those who do have the governance rights.?

What Governance Would OpenAI DAO Have?

One of the main challenges that DAO face nowadays, is the governance and the voting system they implement. We mainly use 1 wallet equals 1 vote, next to weighted voting where the voting power is dependent on the tokens held in the wallet. The issue with 1 wallet : 1 vote is that one can have several wallets and override the governance; and the weighted voting brings the whale danger where small holders become unimportant next to big holders (in this case let’s say employees and VCs). A third option is the quadratic voting, which seems to be gaining popularity especially after getting support from Vitalik Buterin, the founder of Ethereum. In simple terms, quadratic vote is focused on expressing the preference of the direction, and allows “paying for the voting”.

If we take all this in consideration, 1 wallet : 1 vote could be a great option because the danger of creating multiple wallets by one person is mitigated if we implement the KYC. Fact is, VCs, C-levels, managers, and employees are already KYC-ed and are not following the “blockchain anonymity” dream. Not to forget the OGs and the contributors who earned the governance rights, to be frank, I don’t think they would mind doing the KYC. If we take the persona of an average or above average user? in consideration,? many of them wouldn’t be the “crypto bros and sisters” and don’t even know and care or understand the “blockchain anonymity” dream.?

The 1:1 vote is also the most simple to understand and explain to Jack and Jill who never took part in a DAO. Why complicate when you can make things simple? That’s how you make the new tech easy to use.

This would look something like this:

The VC that invested let’s say a million dollars gets one vote. The VC that invested $200 000 gets one vote.?

CTO, CFO, President, managers all get one vote each.?

Each employee gets one vote.?

With this, we bring VCs, all the VCs regardless of the size of their investment, and the employees to have an equal say in the future of the company. Ain’t that beautiful.?

The Community Discussion On An Open Forum.

The former Board expressed their concerns over Sam’s vision for the company’s future direction and “the potential harms done by powerful, unchecked AI” since Sam wanted to transition from a non-profit to a business that is building AI powered tools. In this case the Community could debate on the question whether this truly poses a threat to humanity, and whether Sam’s vision was a bit too much. And maybe, after all, we just want to use AI for fun and as a tool that takes some tasks off our busy schedule.?

They also claimed that Sam was not candid and trustworthy anymore. Apparently, Sam withheld some vital information from the Board and wasn’t transparent about what's really going on in the product development section.?

According to The Washington Post, this wasn’t Altman’s first booting. Years ago, he was fired by his mentor, Paul Graham, from Y Combinator because he was known to put his own personal interest before those of the company. This was also confirmed by two other people, so we can let ourselves trust “where there’s smoke there’s fire”.?

Now, the community could ask a question: Is Sam really that guy, and can we trust him with our assets and the future of this project??

I believe it would be safe to assume that the affected internet community would invest time and skills to dig up information and evidence that would either confirm or deny the allegations made by the Board.?

The Community Would Have the Final Say.

After thorough research and informed discussion, the final proposal would be posted on a governance designated? platform where all Community members who have governance rights, a governance token, would have the ability to vote and decide Sam’s destiny: whether he stays or leaves his spot as the lead of OpenAI.?

Empowering Individuals.

Even though this thought experiment is just letters and words on a digital paper and nothing more, its goal is to make us think and make us understand what people united can do. And people united have done throughout the past.

I always think back to the post-COVID events. When the pandemic hit, many companies were forced to adopt work from home policies otherwise they would completely shut down.?

This new work setting showed to companies that people are pretty capable of managing their own time even if they are not micromanaged in the office setting, and that they can be trusted to work from home. On the other hand, people started appreciating home cooked meals, saving on commute time, and spending more time with their families in comparison to junk food take outs at the office, spending too much time in the traffic and barely seeing their loved? ones.?

When the COVID19 pandemic was officially “closed”, and it was safe to return to offices, many didn’t want to.?

Even people who held high positions in multi-billion companies resigned because they were forced to go back to the office, and they didn’t want to.?

Many employees decided to quit because they didn’t want to go back to the office.

So what happened??

The companies became flexible, and they allowed the people to continue working from their homes due to the risk of losing great employees.

That was the moment when we learned that the people united can do great things.?

The OpenAI employees showed they hold more power than the Board itself. I mean, that Board got dismissed and Sam was reinstated. That tells us something, doesn’t it?

It tells us that everyone matters. No matter how small one thinks they are. That’s what blockchain gives us. It teaches us that our voice matters.??

DAOs may not be perfect the way they are now, but they are surely the future that awaits us.?

The future is decentralized. It’s on us to embrace it. ?

Hello dear Reader,

Thank you for coming this far. Hope you enjoyed my little thought experience. It came to me as an idea after seeing online different article discussing the failure of OpenAI's governance, and here I wanted to embark on a journey and discover how decentralized governance could have prevented it.

The article was written as "could have" and "would have" with the goal to showcase how implementing decentralized governance and DAO structure wouldn't have failed where the OpenAI corporate governance did.

I am Aleksa Mil aka Daolexa, DAO governance specialist and I talk a lot about DAOs. If you are new to Web3 or just curious about it, give me a follow. I post educational and fun content.

Until next time!