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Column: OpenAI’s board had safety concerns. Big Tech obliterated them in 48 hours

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Column: OpenAI’s board had safety concerns. Big Tech obliterated them in 48 hours

It’s not every day that the most talked-about company in the world sets itself on fire. Yet that seems to be what happened Friday, when OpenAI’s board announced that it had terminated its chief executive, Sam Altman, because he had not been “consistently candid in his communications with the board.” In corporate-speak, those are fighting words about as barbed as they come: They insinuated that Altman had been lying.

The sacking set in motion a dizzying sequence of events that kept the tech industry glued to its social feeds all weekend: First, it wiped $48 billion off the valuation of Microsoft, OpenAI’s biggest partner. Speculation about malfeasance swirled, but employees, Silicon Valley stalwarts and investors rallied around Altman, and the next day talks were being held to bring him back. Instead of some fiery scandal, reporting indicated that this was at core a dispute over whether Altman was building and selling AI responsibly. By Monday, talks had failed, a majority of OpenAI employees were threatening to resign, and Altman announced he was joining Microsoft.

All the while, something else went up in flames: the fiction that anything other than the profit motive is going to govern how AI gets developed and deployed. Concerns about “AI safety” are going to be steamrolled by the tech giants itching to tap in to a new revenue stream every time.

It’s hard to overstate how wild this whole saga is. In a year when artificial intelligence has towered over the business world, OpenAI, with its ubiquitous ChatGPT and Dall-E products, has been the center of the universe. And Altman was its world-beating spokesman. In fact, he’s been the most prominent spokesperson for AI, period.

For a high-flying company’s own board to dump a CEO of such stature on a random Friday, with no warning or previous sign that anything serious was amiss — Altman had just taken center stage to announce the launch of OpenAI’s app store in a much-watched conference — is almost unheard of. (Many have compared the events to Apple’s famous 1985 canning of Steve Jobs, but even that was after the Lisa and the Macintosh failed to live up to sales expectations, not, like, during the peak success of the Apple II.)

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So what on earth is going on?

Well, the first thing that’s important to know is that OpenAI’s board is, by design, differently constituted than that of most corporations — it’s a nonprofit organization structured to safeguard the development of AI as opposed to maximizing profitability. Most boards are tasked with ensuring their CEOs are best serving the financial interests of the company; OpenAI’s board is tasked with ensuring their CEO is not being reckless with the development of artificial intelligence and is acting in the best interests of “humanity.” This nonprofit board controls the for-profit company OpenAI.

Got it?

As Jeremy Khan put it at Fortune, OpenAI’s structure was designed to enable OpenAI to raise the tens or even hundreds of billions of dollars it would need to succeed in its mission of building artificial general intelligence (AGI) … while at the same time preventing capitalist forces, and in particular a single tech giant, from controlling AGI.” And yet, Khan notes, as soon as Altman inked a $1-billion deal with Microsoft in 2019, “the structure was basically a time bomb.” The ticking got louder when Microsoft sunk $10 billion more into OpenAI in January of this year.

We still don’t know what exactly the board meant by saying Altman wasn’t “consistently candid in his communications.” But the reporting has focused on the growing schism between the science arm of the company, led by co-founder, chief scientist and board member Ilya Sutskever, and the commercial arm, led by Altman.

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We do know that Altman has been in expansion mode lately, seeking billions in new investment from Middle Eastern sovereign wealth funds to start a chip company to rival AI chipmaker Nvidia, and a billion more from Softbank for a venture with former Apple design chief Jony Ive to develop AI-focused hardware. And that’s on top of launching the aforementioned OpenAI app store to third party developers, which would allow anyone to build custom AIs and sell them on the company’s marketplace.

The working narrative now seems to be that Altman’s expansionist mind-set and his drive to commercialize AI — and perhaps there’s more we don’t know yet on this score — clashed with the Sutskever faction, who had become concerned that the company they co-founded was moving too fast. At least two of the board’s members are aligned with the so-called effective altruism movement, which sees AI as a potentially catastrophic force that could destroy humanity.

The board decided that Altman’s behavior violated the board’s mandate. But they also (somehow, wildly) seem to have failed to anticipate how much blowback they would get for firing Altman. And that blowback has come at gale-force strength; OpenAI employees and Silicon Valley power players such as Airbnb’s Brian Chesky and Eric Schmidt spent the weekend “I am Spartacus”-ing Altman.

It’s not hard to see why. OpenAI had been in talks to sell shares to investors at an $86-billion valuation. Microsoft, which has invested over $11 billion in OpenAI and now uses OpenAI’s tech on its platforms, was apparently informed of the board’s decision to fire Altman five minutes before the wider world. Its leadership was furious and seemingly led the effort to have Altman reinstated.

But beyond all that lurked the question of whether there should really be any safeguards to the AI development model favored by Silicon Valley’s prime movers; whether a board should be able to remove a founder they believe is not acting in the interest of humanity — which, again, is their stated mission — or whether it should seek relentless expansion and scale.

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See, even though the OpenAI board has quickly become the de facto villain in this story, as the venture capital analyst Eric Newcomer pointed out, we should maybe take its decision seriously. Firing Altman was not likely a call they made lightly, and just because they’re scrambling now because it turns out that call was an existential financial threat to the company does not mean their concerns were baseless. Far from it.

In fact, however this plays out, it has already succeeded in underlining how aggressively Altman has been pursuing business interests. For most tech titans, this would be a “well, duh” situation, but Altman has fastidiously cultivated an aura of a burdened guru warning the world of great disruptive changes. Recall those sheepdog eyes in the congressional hearings a few months back where he begged for the industry to be regulated, lest it become too powerful? Altman’s whole shtick is that he’s a weary messenger seeking to prepare the ground for responsible uses of AI that benefit humanity — yet he’s circling the globe lining up investors wherever he can, doing all he seemingly can to capitalize on this moment of intense AI interest.

To those who’ve been watching closely, this has always been something of an act — weeks after those hearings, after all, Altman fought real-world regulations that the European Union was seeking to impose on AI deployment. And we forget that OpenAI was originally founded as a nonprofit that claimed to be bent on operating with the utmost transparency — before Altman steered it into a for-profit company that keeps its models secret.

Now, I don’t believe for a second that AI is on the cusp of becoming powerful enough to destroy mankind — I think that’s some in Silicon Valley (including OpenAI’s new interim CEO, Emmett Shear) getting carried away with a science fictional sense of self-importance, and a uniquely canny marketing tactic — but I do think there is a litany of harms and dangers that can be caused by AI in the shorter term. And AI safety concerns getting so thoroughly rolled at the snap of the Valley’s fingers is not something to cheer.

You’d like to believe that executives at AI-building companies who think there’s significant risk of global catastrophe here couldn’t be sidelined simply because Microsoft lost some stock value. But that’s where we are.

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Sam Altman is first and foremost a pitchman for the year’s biggest tech products. No one’s quite sure how useful or interesting most of those products will be in the long run, and they’re not making a lot of money at the moment — so most of the value is bound up in the pitchman himself. Investors, OpenAI employees and partners such as Microsoft need Altman traveling the world telling everyone how AI is going to eclipse human intelligence any day now much more than it needs, say, a high-functioning chatbot.

Which is why, more than anything, this winds up being a coup for Microsoft. Now they’ve got Altman in-house, where he can cheerlead for AI and make deals to his heart’s content. They still have OpenAI’s tech licensed, and OpenAI will need Microsoft more than ever.

Now, it may yet turn out to be that this was nothing but a power struggle among board members, and it was a coup that went wrong. But if it turns out that the board had real worries and articulated them to Altman to no avail, no matter how you feel about the AI safety issue we should be concerned about this outcome: a further consolidation of power of one of the biggest tech companies and less accountability for the product than ever.

If anyone still believes a company can steward the development of a product like AI without taking marching orders from Big Tech, I hope they’re disabused of this fiction by the Altman debacle. The reality is, no matter whatever other input may be offered to the company behind ChatGPT, the output will be the same: Money talks.

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Column: They say San Francisco is coming back as a tech hub, but it never really left

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Column: They say San Francisco is coming back as a tech hub, but it never really left

Michael Suswal’s first eye-opening encounter with the vibrancy of San Francisco came in 2017.

That’s when he and his fellow co-founders of Standard AI, an artificial intelligence startup funded by the incubator Y Combinator, moved from New York to San Francisco for the summer.

“Initially we planned on going back to New York,” says Suswal, 44. “But after living in the Bay Area for two or three months, between us we had way more network contacts than we had had in our combined 50 years living in New York.”

Where else would you go that would have more support, more connections, the right type of environment and the right investors?

— Michael Suswal, Generation Lab

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When COVID hit, Suswal told me, he moved to Seattle and worked from home. Last year, when he and a partner opted to co-found a new company, they pondered the best place to start.

“We thought, where else would you go that would have more support, more connections, the right type of environment and the right investors? Building a company is hard. It takes everything you’ve got, and even then there’s an 80% chance of failure. So why would you stack the deck against yourself? It was a no-brainer to come back here.”

Generation Lab, which Suswal co-founded with longevity expert Alina Su and UC Berkeley bioengineering professor Irina Conboy, aims to market a technology that can help customers identify and manage long-term medical conditions.

Suswal’s take is different from what you might have heard from the news media and red-state politicians over the last few years. They spin a narrative of a region — indeed, the entire state of California — in secular decline. Of a Silicon Valley whose best days are behind it. Of wholesale flight of money and talent to new, welcoming places such as Miami and Austin.

But there has never been much truth to that narrative generally, and it’s more dubious than ever today, when the Bay Area has emerged as a center of artificial intelligence investing.

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There is no shortage of newsy nuggets to illustrate the “doom loop” narrative about San Francisco.

On Tuesday, for instance, Macy’s announced that it would close its gigantic store overlooking Union Square sometime in the next three years. But the closure is part of a major corporate retrenchment involving the closings of 150 stores nationwide, 30% of the total.

Nor is there anything historically new about San Francisco-bashing. The practice dates back to the Gold Rush, when the city’s powerful attraction as a jumping-off place for Forty-Niners seeking their fortunes in the nearby hills generated an equally potent counter-narrative.

Hinton R. Helper, a visitor from North Carolina who would eventually gain notoriety as a white supremacist, reported in 1855 on the city’s “rottenness and its corruption, its squalor and its misery, its crime and its shame, its gold and its dross…. Degradation, profligacy and vice confront us at every step.”

It’s a short distance from Helper’s screed to the map that Florida Gov. Ron DeSantis displayed during a televised debate with Gov. Gavin Newsom in November, purportedly showing deposits of human waste around San Francisco. (That didn’t help DeSantis’ presidential campaign avert an early demise, any more than Helper’s critique stemmed the flow of fortune-seekers into California.)

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It’s true that the frenzy in artificial intelligence investing has brought a jolt of capital to the entrepreneurial economy of the Bay Area, but that’s merely the latest iteration of a story that dates back to the emergence of Silicon Valley in the late 1960s — or even to the founding of Hewlett-Packard in Palo Alto in 1939.

The region has undergone a long sequence of technology booms and busts over the decades, but each bust has set the stage for the next boom. In the 1980s, the valley’s chipmakers lost their dominance in semiconductor memory to Japanese competitors.

But within a few years, as UC Berkeley economist and political scientist AnnaLee Saxenian observed in her definitive study of the region, “Regional Advantage,” in 1994, new semiconductor and computer startups such as Sun Microsystems had emerged and Silicon Valley had “regained its former vitality.” By 1990, Silicon Valley was home to “one-third of the 100 largest technology companies created in the United States since 1965,” Saxenian wrote.

The key to its enduring stature atop the innovation economy has been the Bay Area’s infrastructure of institutions (Stanford and UC Berkeley) and legal, technical and financial professionals, and its population of technology workers — all having created “dense social networks and open labor markets.”

By contrast, the Silicon wannabes tend to put all their eggs in one basket, and when that basket’s contents spill out, there’s little to fill it up again.

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Miami is a telling example. Its mayor, Francis X. Suarez, tried to establish the city as the center of cryptocurrency financing and innovation. The FTX crypto exchange bought naming rights to the arena where the NBA’s Miami Heat play. International conferences for bitcoin and crypto adherents filled the conference center in 2022.

Miami associated itself with the first “city coin,” a crypto token that Suarez claimed would help boost the municipal budget.

The effort hasn’t panned out. FTX collapsed as its founder, Sam Bankman-Fried, was indicted and subsequently convicted of fraud; the Heat’s arena now carries the name of Kaseya, a Miami software firm.

Attendance at crypto conferences has dwindled. MiamiCoin, which was valued at 5 cents when it came on the market in August 2021, now trades for about 16-thousandths of a cent, if anyone cares — there doesn’t seem to have been a trade in eight months. The city is searching for relevance in the modern technology landscape.

The same sources that talked up the flight of entrepreneurs from the Bay Area to Miami, Austin and other Silicon wannabes are now running articles about startup founders moving back; often the return is accompanied by complaints about the lack of a true innovation culture in their new homes, as well as traffic congestion and housing prices soaring out of reach — much the same as one would find in any large city.

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As my colleague Hannah Wiley reported recently, San Francisco’s adherents are trying to seize the narrative reins by reminding people that the city and region offer unique advantages to entrepreneurs, especially in technology-related fields.

One is Angela Hoover, 25, who launched her consumer-oriented AI search firm, Andi, in Miami with backing from Y Combinator. At first, Miami seemed inviting because it seemed to be host to a healthy startup community.

Attending AI events in San Francisco, however, made it “abundantly clear that the AI community was in San Francisco. It almost feels like you have a front-row seat to a play, and at the same time you’re in the play,” Hoover said.

“Despite what all the doom-and-gloom critics say, [the Bay Area] is still a hotbed of innovation,” Ali Diab, chief executive of Collective Health, told me. That’s what prompted the firm, which manages employer health plans, to return its headquarters to downtown San Francisco after allowing its workforce to disperse to a work-from-home system during the pandemic.

“Obviously, you have the AI revolution being driven from here,” Diab says, “but you also have powerhouse enterprise software companies like Salesforce and Slack.”

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Collective Health also discovered that the cost of office space in San Francisco was lower than elsewhere in the Bay Area, including Silicon Valley proper. About 120 of Collective Health’s 783 employees work in San Francisco, with the others distributed among offices in Chicago, Texas and Utah, or working remotely.

Diab was an early critic of the “doom loop” argument against San Francisco, observing in a mid-October op-ed in the San Francisco Chronicle that “as a Bay Area native, I’ve had to listen to people predict the demise of my city for my entire life.” In truth, he wrote, “the oft-cited challenges San Francisco faces are no different from those experienced by any other major city in the United States.”

Housing is “prohibitively expensive in almost every major American city,” he added. “New York, Chicago and Los Angeles haven’t solved their homelessness problems and neither have many other large cities.”

The story of a Bay Area exodus always was overstated. The image of Texas’ attraction for entrepreneurs has never moved much beyond three major tech companies that moved their headquarters there from California — Hewlett Packard Enterprise in Houston and Oracle and Tesla in Austin.

And the significance of these moves may be more imagined than real. In 2020, when Oracle announced its move to Austin from Redwood City, south of San Francisco, it said it was building a campus for 10,000 employees; the company has 164,000 workers worldwide.

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When Elon Musk sought a location for Tesla’s “global engineering headquarters,” the seat of the company’s innovative brainpower, he found it in Hewlett Packard’s former corporate headquarters — not in Austin, but Palo Alto. He announced his decision to move into that space in February 2023 at a joint event with Gov. Newsom.

Other states have never come close to California in the volume of their venture investments. In 2022, according to the National Venture Capital Assn., California firms raised $78.3 billion in venture funding, more than 40% higher than second-ranked New York. Florida ranked fifth with only $2.6 billion, followed by Texas with $2.4 billion (and Texas’ total fell by about half from the previous year).

San Francisco companies attracted nearly $31 billion in venture funding in 2022, according to CBRE. The Bay Area all told attracted $61 billion, accounting for 35% of all venture funding in the U.S.

Venture investing fell appreciably in 2023, and venture-backed companies experienced a spike in “down rounds” — in which their valuations are lower than they were in the previous round of venture infusions — starting in late 2022. But those trends appeared across the entire venture funding universe, and were more likely related to the run-up in interest rates and fears of a recession than to any California-centric phenomena.

In any case, AI was a distinct bright spot, accounting for about 1 in 5 of all venture deals in 2023 and one-third of all venture dollars invested, according to the accounting firm EisnerAmper.

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No one doubts that San Francisco and the Bay Area present challenges. Suswal says he was concerned that recruiting staffers to come to the area would be difficult. When he himself was considering moving back to San Francisco from Seattle last October, he “bought into a lot of the negative aspects of the city that were being published at the time,” he says. “But the city is in better shape than it gets credit for. … All the best people come here, because it’s well worth it.”

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Northrop Grumman could eliminate as many as 1,000 jobs in Southern California

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Northrop Grumman could eliminate as many as 1,000 jobs in Southern California

Defense contractor Northrop Grumman Corp. has told its employees that it could cut as many as 1,000 jobs in Southern California.

The affected employees are part of the company’s space sector and work at facilities in Redondo Beach, Manhattan Beach and Azusa. The company said it is working to match those employees with other, existing jobs within the company.

Although Northrop Grumman did not specify a reason for the cuts, the U.S. Space Force recently canceled a multibillion-dollar program to develop a classified military communications satellite with the company after cost overruns, a schedule delay and development difficulties, according to Bloomberg.

Recently, space has been a difficult place to do business. Earlier this month, NASA’s Jet Propulsion Laboratory laid off 530 employees, or 8% of its workforce, in anticipation of massive federal budget cuts.

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Northrop Grumman said it has notified the state’s Employment Development Department and filed a Worker Adjustment and Retraining Notification Act notice about the job cuts, as required by law.

“This is ongoing, and a higher number of employees will receive WARN notices than may ultimately be impacted,” the company said in a statement.

Although Northrop Grumman is based in Falls Church, Va., California is a major hub for the company. The defense contractor’s historic 110-acre Space Park facility in Redondo Beach was built at the height of the Cold War and is the birthplace of the intercontinental ballistic missile, as well as the rocket engines that lowered the first crew onto the moon and, more recently, the building of the James Webb Space Telescope.

The company also has a major aircraft facility in Palmdale, where it is building the new B-21 stealth bomber, the center fuselage for the F-35 fighter jet, the RQ-4 Global Hawk drone and the MQ-4C Triton drone.

Northrop Grumman also has facilities in San Diego, Sunnyvale, Northridge, Woodland Hills and Ventura County. In all, the company employs about 30,000 people across the state.

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Video shows burglar vandalizing East Hollywood restaurant, causing $80,000 in damage

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Video shows burglar vandalizing East Hollywood restaurant, causing $80,000 in damage

It was a typical Sunday at El Zarape.

Families enjoyed Mexican food and good vibes at the East Hollywood restaurant inside a strip mall on Melrose Avenue as CicLAvia shut the street down to traffic.

But the next morning, when the first cook of the day showed up Monday at the restaurant, an entirely different scene awaited. She called the owner, Beto Mendez, right away.

At first, Mendez thought it might be some graffiti on the outside of the restaurant. He was wrong.

El Zarape on Melrose remains closed after burglar vandalized the restaurant.

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(Jason Armond/Los Angeles Times)

“The minute I got there I was in shock,” Mendez told The Times in an interview. “I saw the place completely destroyed.”

Mendez said there was $80,000 worth of damage inside.

Chairs were flipped over and tables were askew. One bar had been bashed in with a hammer while all the TVs were spray-painted with graffiti. Spray paint covered one of the bar’s surveillance cameras and seemingly all of the restaurant’s walls. A safe with $20,000 was taken.

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The incident was first reported by L.A. Taco.

Surveillance video shows a man in a light-colored hoodie and dark pants and Nikes shaking a can of spray paint inside the bar before any damage was done. The man then sprays one of the surveillance cameras with paint, video shows. While Mendez could not see any other people in the videos, he assumed that there was more than one vandal, based on the amount of damage, which included “C14” tagged on the walls.

Alberto Mendez is the owner of El Zarape on Melrose.

Alberto Mendez, the owner of El Zarape on Melrose, stands in his restaurant which was recently damaged when burglars broke in and ransacked the place.

(Jason Armond/Los Angeles Times)

Police told Mendez that the vandalism was related to the C-14 gang, also known as Clanton, he said. The Los Angeles Police Department did not immediately provide comment on the situation.

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C-14 is a gang that has existed in Los Angeles for about a century, originating on Clanton Street, which was later renamed 14th Place, according to a website that documents street gangs.

The gang is active in the neighborhood, with tags up and down Melrose.

The group even tagged a local house of worship, Trinity Episcopal Church, scrawling “C14” on its marquee in spray paint.

“This area is like an epicenter for a couple gangs,” said a man who works near El Zarape, who asked to remain anonymous out of safety concerns. “MS-13 and C-14 as well as some other little local cliques. There’s a lot of tagging all around the neighborhood.”

“If someone tagged the inside of the restaurant, it’s pretty serious,” he said.

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For Mendez, the destruction of his restaurant could not come at a worse time. Just two weeks ago, his ex-wife died. Mendez shared custody of their two teen daughters with her and now has full custody of them.

“They have that pressure and that stress of losing their mom already and I haven’t really told them nothing about the restaurant right now,” he said. “I would rather keep it to myself and handle it.”

Mendez is trying to raise money to reopen the restaurant and fix the damage via GoFundMe.

While Mendez said that the restaurant has had relatively few problems in the seven years it has been open, there was an incident after the Super Bowl on Feb. 11, according to Mendez and the other person who worked at a nearby business.

That day, the two men said, after the Kansas City Chiefs beat the San Francisco 49ers in Las Vegas, a man fired a gun into the air near El Zarape, then barricaded himself inside and police SWAT teams had to respond to arrest him.

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