Typically, when a startup is trying to raise a big funding round, they arrange a series of bespoke meetings with venture capital firms, providing each one with a white-glove pitch.
In late 2023, when OpenAI sought $300 million from investors, CEO Sam Altman chose a different approach. On a group video call, he presented a bevy of top-flight VCs, including Sequoia, Lightspeed, and NEA, with a take-it-or-leave-it proposition and let them debate it among themselves.
One VC partner, who’s firm had previously backed Altman companies and was on the call, thought they’d clicked the wrong link when they found themself across a virtual table from their fiercest competitors.
“I was like, this is surreal,” this investor said. The offer on the table was also unconventional. Everyone on the call could buy in at a $29 billion post-money valuation, with returns capped at 3x, terms non-negotiable. Altman said the structure would keep OpenAI insulated from undue influence, free to pursue the good of humanity.
“I was like, try again,” the partner said. “He likes to act altruistic, but I’d rather he just tell me his true intentions.” This VC was unenthused by a deal structure with limited upside and no downside protection, and put off by Altman’s Shark Tank-style pitch. They ultimately passed, but watched as rivals scrambled to write checks, even those who had expressed a distaste for Altman in the past.
An inevitable backlash
This was one of several similar stories collected by Business Insider during a recent reporting trip through Silicon Valley. In some corners of this clubby world, over $7 coffee and artisanal cocktails, the meteoric rise of OpenAI and Sam Altman is giving way to an inevitable backlash.
“He’s one of the more intellectually dishonest guys in tech,” said another VC, who has interacted with Altman and invested alongside him. “I’ve had plenty of meetings with him where he says things where I’m like, that just cannot possibly be true, but he can kinda get away with it.”
Silicon Valley can be a fickle place. VCs jockey for access to the hottest deals, and when they lose out they sometimes get mad and quietly badmouth startup founders who rejected their overtures. The bitterness only grows if the startups in question become wildly successful.
However, during BI’s sweep through the valley, growing discontent with Altman was palpable. As OpenAI gears up for a $100 billion funding round and his AGI revolution continues apace, VCs are more eager than ever to throw shade at him in private. Most refrain from criticizing him in public, and the investors who spoke with BI asked not to be identified. After all, no one wants to get cut out of the next round, even if it’s pitched to a group over video again.
“He’s a kingmaker,” a Silicon Valley startup founder and angel investor who knows Altman. “There’s a fear associated with not being in on what he’s doing.” Sam Altman and OpenAI did not respond to requests for comment.
“The platform of Sam”
Some who know Altman paint a picture of a benevolent visionary, a thoughtful steward of a promising technology. They see his plan to build a far-reaching AI empire that touches everything from nuclear fusion to anti-aging technology as a leap forward for humanity.
Others say he’s more interested in self-promotion than human advancement. All agree he’s a masterful storyteller who could sell sand in the Sahara. But as Altman lays out a sweeping vision for the transformation of society, not everyone in Silicon Valley is buying it.
Databricks CEO Ali Ghodsi is skeptical of Altman’s multitrillion-dollar plans for artificial general intelligence, where machines handle many economically valuable tasks better than humans.
“If your worldview is that you have AGI and it’s basically superhuman, and these are like the gods, we invented god, yeah then maybe you should turn the whole planet upside down. I don’t think that’s what’s happening,” Ghodsi said.
Multiple people described Altman’s “reality distortion field”, referencing Steve Jobs’s famous ability to will a thing into existence through sheer force of character.
“He’s building the platform of Sam,” said the startup founder, “which is why his side projects get funded like public companies.” This person also expressed skepticism about Altman publicly eschewing wealth while also running a personal investment fund from inside OpenAI.
Thrown for a Loopt
Although Altman only recently became a household name, those who work in tech have been hearing his name dropped for years. And not always in glowing terms.
Loopt, Altman’s ill-fated Four Square competitor, sold for parts in 2012. Two years later, Altman was anointed head of legendary startup incubator Y Combinator, but was later fired for self-dealing, according to a report from The Washington Post.
The Post reported that YC founder Paul Graham flew from the UK to San Francisco to personally fire Altman, his protege and hand-picked successor. There were reportedly concerns about Altman putting his own interests ahead of the companies he was supposed to be nurturing, along his habit of making personal investments in YC companies through a separate fund he ran with his brother.
“There are holes a mile deep in this guy’s resume, but he’s managed to figure out how to take his chess pieces and move them correctly, and now one of the things went crazy and he’s an AI expert,” the startup founder said.
“Him and his brother have always been super hyped,” added the irked VC partner who was on the group video call in 2023, referring to Sam and his brother Jack Altman. “It’s always been like, oh the Altman brothers, it’s just going to be way overpriced just because of who they are.”
A certain something
Many of the VCs who spoke with BI said Altman has a certain something. He can sell a vision, and identify and motivate talent. You can’t run the world’s most important AI startup without skills and savvy.
But for some investors, his habit for self-mythologizing, his need to be the main character, is a dealbreaker.
“He’s a megalomaniac,” said the VC who has spent time with Altman and been involved in some of the same deals. “For the same reason I don’t trust Elon, I just don’t trust somebody whose aspirations are so clearly about themselves.”
The Alexander the Great of AI
Almost as popular as gripes about his self-aggrandizement are theories about what makes Altman tick. For some, he’s a lovable charlatan in the vein of an Adam Neumann, the former CEO of WeWork. Others think he craves power and influence. Some think that he might be a true believer in his own messianic narrative.
“He says that this is his calling, and he’s going to shepherd humanity through the biggest revolution ever, it’s almost like religious for him,” said the partner who was on the group pitch.
Some who know him say Altman’s ambition is to be the Alexander the Great of AI. The ancient Greek warrior famously conquered much of the known world without ever losing a battle. He also died unexpectedly from a fever at the age of 32 at which point his empire collapsed into war and chaos.
The fate of Altman’s nascent empire is yet to be decided.
