Sam Altman, CEO of OpenAI, attends the Asia-Pacific Economic Cooperation (APEC) CEO Summit in San Francisco, California, U.S. November 16, 2023.
Carlos Barria | Reuters
A wide swath of Silicon Valley has hitched its hopes and fortunes over the past few years to the kind of generative artificial intelligence technologies that OpenAI helped popularize.
Many industry experts point to the debut of ChatGPT late last year as an iPhone-like moment, ushering a potential shift in the way people interact with computers via written prompts that can produce creative, seemingly human-like text.
Just as Apple had the late Steve Jobs acting as the company’s esteemed figurehead, articulating the appeal of the iPhone and personal computers to the masses, so too did OpenAI have its own charismatic leader in Sam Altman.
With Altman out as CEO — at least for now — after his sudden firing on Friday, the Apple comparisons are flowing freely. Jobs was fired as CEO of Apple in 1985, a move that lives in Silicon Valley lore, since it was after his return in 1997 that Apple found the path that eventually made it the most valuable company in the U.S.
Altman, who previously ran startup accelerator Y Combinator, has spent the past year cozying up to world leaders and making routine appearances at tech events, turning the 38-year-old executive into an industry celebrity, in the mold of Jobs, Meta CEO Mark Zuckerberg, Amazon founder Jeff Bezos and Tesla CEO Elon Musk.
Along with Altman, OpenAI’s board removed Greg Brockman from his role as chairman. Later Friday, Brockman said he was quitting the company.
“What happened at OpenAI today is a Board coup that we have not seen the likes of since 1985 when the then-Apple board pushed out Steve Jobs,” longtime startup investor Ron Conway said Friday evening in an X post. “It is shocking; it is irresponsible; and it does not do right by Sam & Greg or all the builders in OpenAI.”
Efforts are already underway by OpenAI investors to get Altman back, according to people familiar with the matter. Microsoft, Tiger Global, Sequoia Capital and Thrive Capital are among a number of OpenAI’s top backers that are trying to reinstate Altman, said the people, who asked not to be named because discussions are confidential. The Verge reported on Saturday that Altman is “ambivalent” about the possibility of returning.
Airbnb CEO Brian Chesky referred to Altman in an X post as “one of the best founders of his generation” who “has made an immense contribution to our industry.”
Silicon Valley reacts to OpenAI
Matt Schlicht, the CEO of the startup Octane AI, told CNBC that Altman and Brockman, who was formerly the chief technology office of Stripe, “made a technology available that we’d only ever dreamed about” and called it “the most exciting and powerful development of our lifetime.”
Octane is one of many new startups using the so-called large language models that OpenAI packages under its GPT family of software tools. Schlicht said the technology has so far “enabled us to put human-level intelligence inside of our code, and because of that we have helped entrepreneurs generate over half a billion in revenue.”
“I’ve known both Sam and Greg for over a decade, they are incredible and inspiring leaders,” Schlicht said. “After hearing about their untimely departure I was immediately filled with sadness. Innovation in the world was suddenly halted.”
Ryan Jannsen, CEO of Zenlytic, shared Schlicht’s sentiment.
“The AI community is reeling,” Jannsen said, adding that technologists are confused about the circumstances related to Altman’s firing and what it means for OpenAI going forward.
“Sam and OpenAI were the catalyst that showed the world what AI tech is capable of,” Jannsen said. “A huge amount of the excitement and activity in AI today is very directly thanks to their pioneering work.”
Whether or not Altman returns, the turmoil at OpenAI could give rivals an advantage in what’s quickly become a highly competitive market for advanced LLMs. From heavily funded startups like Anthropic and Cohere to cloud computing giants Google and Amazon, companies will likely be “looking for the next best alternative,” given the perceived instability at OpenAI, said industry analyst Patrick Moorhead.
“They’re not the only game in town,” Moorhead said.
Josh Wolfe, a partner at venture firm Lux Capital, said OpenAI is taking a huge reputational hit at a time when companies are deciding what models they’re going to use as building blocks.
“There was a perception of steady, predictable, reliable reputable progress and engagement and communication with industry,” Wolfe said. “The surprise capriciousness of the move signals total unpredictability, which is terrible for companies making plans to work with or trust OpenAI.”
OpenAI’s unusual structure
A big part of the challenge in understanding OpenAI is its unusual company structure. The board of OpenAI oversees the nonprofit, of which the corporate entity is a part, and “acts as the overall governing body for all OpenAI activities,” according to the blog post announcing Altman’s ouster.
The post said that a “deliberative review process by the board” concluded that Altman “was not consistently candid in his communications with the board, hindering its ability to exercise its responsibilities.”
Silicon Valley’s high-profile startup CEO firings typically involve wrongdoing, rather than just philosophical differences about where the company is headed.
Several investors told CNBC that OpenAI’s hybrid model presented a red flag from the beginning, in part because incentives can too easily be misaligned. Now, they said, the company risks severe brain drain if top talent chooses to follow Altman to his next project or a competitor in the industry.
Altman, meanwhile, has the advantage of having made such a name for himself that he’d have no problem raising money for a new project from investors who view him as the next great tech luminary.
“Sam Altman is a hero of mine,” former Google CEO and investor Eric Schmidt said in an X post. “He built a company from nothing to $90 Billion in value, and changed our collective world forever. I can’t wait to see what he does next. I, and billions of people, will benefit from his future work- it’s going to be simply incredible.”
Eric Schmidt, the former CEO of Google, arrives for the Inaugural AI Insight Forum in Russell Building on Capitol Hill, on Wednesday, Sept. 13, 2023.
Tom Williams | Cq-roll Call, Inc. | Getty Images
Airbnb’s Chesky wrote that he’d spoken with Altman and Brockman and that they have his “full support.”
“I’m saddened by what’s transpired,” Chesky wrote. “They, and the rest of the OpenAI team, deserve better. He added in a separate post that Altman is “one of the best founders of his generation.”
As for Microsoft, whose CEO Satya Nadella was reportedly caught off guard by the shakeup, several venture capitalists were surprised that the company could be so unaware of what was brewing given the billions they’ve invested in the company.
“I imagine Microsoft might ask for a board seat next time they decide to plow $15 billion into a startup,” said Zachary Lipton, a Carnegie Mellon University professor of machine learning and operations research.
Industry analyst Moorhead said Microsoft could “figure out how to buy this company and how to put Sam in charge.”
“That’s the first play, it’s potentially finding ways to remove the current board of directors, reinstall new board of directors and then bring Sam and company back in — making sure the band stays together,” Moorhead said.
Regardless of the current chaos, Carnegie Mellon’s Lipton said he expects investors to remain bullish on AI.
“This story has elements of corporate and ideological discord, but not even a whiff of diminished promise,” Lipton said.
Microsoft CEO Satya Nadella speaks at the Axel Springer building in Berlin on Oct. 17, 2023. He received the annual Axel Springer Award.
Ben Kriemann | Getty Images
Among the thousands of Microsoft employees who lost their jobs in the cutbacks announced this week were 830 staffers in the company’s home state of Washington.
Nearly a dozen game design workers in the state were part of the layoffs, along with three audio designers, two mechanical engineers, one optical engineer and one lab technician, according to a document Microsoft submitted to Washington employment officials.
There were also five individual contributors and one manager at the Microsoft Research division in the cuts, as well as 10 lawyers and six hardware engineers, the document shows.
Microsoft announced plans on Wednesday to eliminate 9,000 jobs, as part of an effort to eliminate redundancy and to encourage employees to focus on more meaningful work by adopting new technologies, a person familiar with the matter told CNBC. The person asked not to be named while discussing private matters.
Scores of Microsoft salespeople and video game developers have since come forward on social media to announce their departure. In April, Microsoft said revenue from Xbox content and services grew 8%, trailing overall growth of 13%.
In sales, the company parted ways with 16 customer success account management staff members based in Washington, 28 in sales strategy enablement and another five in sales compensation. One Washington-based government affairs worker was also laid off.
Microsoft eliminated 17 jobs in cloud solution architecture in the state, according to the document. The company’s fastest revenue growth comes from Azure and other cloud services that customers buy based on usage.
CEO Satya Nadella has not publicly commented on the layoffs, and Microsoft didn’t immediately provide a comment about the cuts in Washington. On a conference call with analysts in April, Microsoft CFO Amy Hood said the company had a “focus on cost efficiencies” during the March quarter.
Nvidia CEO Jensen Huang in Taipei, Taiwan, on June 2, 2024.
Ann Wang | Reuters
Nvidia’s Blackwell Ultra chips, the company’s next-generation graphics processor for artificial intelligence, have been commercially deployed at CoreWeave, the companies announced on Thursday.
CoreWeave has received shipments of Dell-built shipments based around Nvidia’s GB300 NVL72 AI systems, Dell said on Thursday. It’s the first cloud provider to install systems based around Blackwell Ultra.
The Blackwell Ultra is Nvidia’s latest chip, expected to ship in volume during the rest of the year. The systems that CoreWeave is installing are liquid-cooled and include 72 Blackwell Ultra GPUs and 36 Nvidia Grace CPUs. The systems are assembled and tested in the U.S., Dell said.
CoreWeave shares rose 6% during trading on Thursday, Dell shares were up about 2% and Nvidia rose less than 2%.
The announcement is a milestone for Nvidia.
Read more CNBC tech news
AI developers still clamor for the latest Nvidia chips, which have improvements that make them better for training and deploying models.
Nvidia said Blackwell Ultra can produce 50 times more AI content than its predecessor, Blackwell.
Investors closely watch how Nvidia manages the transition when it announces new AI chips to see if there are production issues or delays. Nvidia CFO Colette Kress said in May that Blackwell Ultra shipments would start in the current quarter.
It’s also a win for CoreWeave, a cloud provider that rents access to Nvidia GPUs to other clouds and AI developers. Although CoreWeave is smaller than the cloud services operated by Amazon, Google, and Microsoft, its ability to offer Nvidia’s latest chips first give it a way to differentiate itself.
CoreWeave historically has a close relationship with Nvidia, which owns a stake in the cloud provider. CoreWeave went public earlier this year, and the stock price has quadrupled since its IPO.
Jeremy Allaire, CEO and co-founder of Circle Internet Group, the issuer of one of the world’s biggest stablecoins, and Circle Internet Group co-founder Sean Neville react as they ring the opening bell, on the day of the company’s IPO, in New York City, U.S., June 5, 2025.
NYSE
For over three years, venture capital firms have been waiting for this moment.
Tech IPOs came to a virtual standstill in early 2022 due to soaring inflation and rising interest rates, while big acquisitions were mostly off the table as increased regulatory scrutiny in the U.S. and Europe turned away potential buyers.
Though it’s too soon to say those days are entirely in the past, the first half of 2025 showed signs of momentum, with June in particular producing much-needed returns for Silicon Valley’s startup financiers. In all, there were five tech IPOs last month, accelerating from a monthly average of two since January, according to data from CB Insights.
Highlighting that group was crypto company Circle, which more than doubled in its New York Stock Exchange debut on June 5, and is now up sixfold from its IPO price for a market cap of $42 billion. The stock got a big boost in mid-June after the Senate passed the GENIUS Act, which would establish a federal framework for U.S. dollar-pegged stablecoins.
Venture firms General Catalyst, Breyer Capital and Accel now own a combined $8 billion worth of Circle stock even after selling a fraction of their holdings in the offering. Silicon Valley stalwarts Greylock, Kleiner Perkins and Sequoia Capital are set to soon profit from Figma’s IPO, after the design software vendor filed its public prospectus on Tuesday. Since its $20 billion acquisition agreement with Adobe was scrapped in late 2023, Figma has been one of the most hotly anticipated IPOs in startup land.
It’s “refreshing and something that we’ve been waiting for for a long time,” said Eric Hippeau, managing partner at early-stage venture firm Lerer Hippeau, regarding the exit environment. “I’m not sure that we are confident that this can be a sustained trend yet, but it’s been very encouraging.”
Another positive sign for the industry the past couple months was the performance of artificial infrastructure provider CoreWeave, which went public in late March. The stock was relatively stagnant for its first month on the market but shot up 170% in May and another 47% in June.
For venture firms, long considered the lifeblood of risky tech startups, IPOs are essential in order to generate profits for the university endowments, foundations and pension funds that allocate a portion of their capital to the asset class. Without handsome returns, there’s little incentive for limited partners to put money into future funds.
After a record year in 2021, which saw 155 U.S. venture-backed IPOs raise $60.4 billion, according to data from University of Florida finance professor Jay Ritter, every year since has been relatively dismal. There were 13 such offerings in 2022, followed by 18 in 2023 and 30 last year, collectively raising $13.3 billion, Ritter’s data shows.
The slowdown followed the Federal Reserve’s aggressive rate-hiking campaign in 2022, meant to slow crippling inflation. As the lower-growth environment extended into years two and three, venture firms faced increasing pressure to return cash to investors.
‘Backlog of liquidity’
In its 2024 yearbook, the National Venture Capital Association said that even with a 34% increase in U.S. VC exit value last year to $98 billion, that number is 87% below the 2021 peak and less than half the average for the four years from 2017 through 2020. It’s a troubling dynamic for the 58,000 venture-backed companies that have raised a total of $947 billion from investors, according to the annual report, which is produced by the NVCA and PitchBook.
“This backlog of liquidity drought risks creating a ‘zombie company’ cohort — businesses generating operational cash flow but lacking credible exit prospects,” the report said.
Other than Circle, the latest crop of IPOs mostly consists of smaller and lesser-known brands. Health-tech companies Hinge Health and Omada Health are valued at about $3.5 billion and $1 billion, respectively. Etoro, an online trading platform, has a market cap of just over $5 billion. Online banking provider Chime Financial has a higher profile due largely to a years-long marketing blitz and is valued at close to $11.5 billion.
Meanwhile, the highest valued private companies like SpaceX, Stripe and Databricks remain on the sidelines, and AI highfliers OpenAI and Anthropic continue to raise massive amounts of cash with no intention of going public anytime soon.
Still, venture capitalists told CNBC that there are plenty of companies with the financial metrics to be public, and that more of them are readying for the process.
“The IPO market is starting to open and the VC world is cautiously optimistic,” said Rick Heitzmann, a partner at venture firm FirstMark in New York. “We are preparing companies for the next wave of public offerings.”
There are other ways to make money in the meantime. Secondary sales, a process that involves selling private shares to new investors, are on the rise, allowing early employees and investors to get some liquidity.
And then there’s what Mark Zuckerberg is doing, as he tries to position his company at the center of AI innovation and development.
Mark Zuckerberg, chief executive officer of Meta Platforms Inc., during the Meta Connect event on Wednesday, Sept. 25, 2024.
Bloomberg | Bloomberg | Getty Images
Last month, Meta announced a $14 billion bet on Scale AI, taking a 49% stake in the AI startup in exchange for poaching founder Alexandr Wang and a small group of his top engineers. The deal effectively bought out half of the stock owned by investors, leaving them with the opportunity to make money on the rest of their holdings, should a future acquisition or IPO take place.
The deal is a big win for Accel, which led Scale AI’s Series A round in 2017, and is poised to earn more than $2.5 billion in the transaction. Index Ventures led the Series B in 2018, and Peter Thiel’s Founders Fund led the Series C the following year at a valuation of over $1 billion.
Investors now hope the Federal Reserve will move toward a rate-cutting campaign, though the central bank hasn’t committed to one. There’s also ongoing optimism that regulators will make going public less burdensome. Last week, Reuters reported, citing sources familiar with the matter, that U.S. stock exchanges and the SEC have discussed loosening regulations to make IPOs more enticing.
Mike Bellin, who heads consulting firm PwC’s U.S. IPO practice, said he anticipates a diversity of IPOs across sectors in the second half of the year. According to data from PwC, pharma and fintech were among the most active sectors for deals through the end of May.
While the recent trend in IPO activity is an encouraging sign for investors, potential roadblocks remain.
Tariffs and geopolitical uncertainty delayed IPO plans from companies including Klarna and StubHub in April. Neither has provided an update on when they plan to debut.
FirstMark’s Heitzmann said the path forward is “not at all clear,” adding that he wants to see a strong quarter of economic stability and growth before confidently saying that the market is wide open.
Additionally, other than CoreWeave and Circle, recent tech IPOs haven’t had big pops. Hinge Health, Chime and eToro have seen relatively modest gains from their offer price, while Omada Health is down.
But virtually any activity beats what VCs were experiencing the last few years. Overall, Hippeau said recent IPO trends are generally encouraging.
“There’s starting to be kind of light at the end of the tunnel,” Hippeau said.