The board’s recent abrupt removal of OpenAI (better known for the launch of ChatGPT) CEO Sam Altman sparks an essential dialogue on the delicate relationship between founders and board members for scaling start-ups. And let me mention it is always a two-way street of give and take, with no defined solutions. Hence, blaming anyone side squarely without knowing the exact facts of the case will be unfair.
While the debates surrounding this incident will undoubtedly persist, it underscores a crucial lesson for founders as they traverse the path of growth, attract private equity, and become answerable to an expanding shareholder audience.
As start-ups evolve, it becomes imperative for founders to establish effective modes of communication with their boards, often comprised of seasoned industry veterans and seniors representing the interests of growth capital providers. The transition from an agile, innovative start-up to a mature entity with increased accountability, transparency, and a defined reporting structure requires careful navigation. The boardroom demands a different level of maturity, emphasizing the need for clear communication channels and a shared vision.
Conversely, boards play a pivotal role in supporting start-up founders. Successful entrepreneurs, usually marked by their ‘out of the box’ thinking and a degree of maverick solutions, need guidance to adapt to the more professional and scrutinized environment that comes with scaling.
Balancing the board and the founder dynamic is essential to ensure a harmonious and effective leadership structure.
A start-up’s aspiration for scale and institutional capital necessitates shedding the traditional start-up demeanor. The informal garage or hostel campus setup diverges significantly from a formal board-driven organizational structure. The transformation requires founders to embrace heightened levels of accountability and transparency to avoid any misunderstanding. Maturity becomes a hallmark of the corporate culture, essential for attracting the desired investment and fostering sustainable growth.
However, amid this shift towards a more structured environment, boards must preserve the spirit of entrepreneurship and innovation. Administrative duties should not stifle the founder’s ability to ideate and innovate and make him feel like a subordinate reporting to a higher authority. The board’s role is not just to govern but to inspire and cultivate an environment where creative ideas can thrive and benefit larger masses.
In the case of Sam Altman’s abrupt departure, the coming days will likely provide clarity, but the incident raises concerns about the etiquette and sensitivity surrounding such decisions. Drawing parallels to Steve Jobs’ removal and eventual return to Apple, one hopes for Sam’s swift reinstatement and a resolution of any underlying differences or misunderstandings.
The founders’ and founding teams’ drive and intensity must align seamlessly with the board’s expectations for transparency, communication, and a shared vision to ensure the preservation and growth of the best ideas. As the story matures, we have seen several senior members announce their resignation from Open AI, including its co-founder – it is a loss to the larger cause with which it was set up with the backing of global giants like Microsoft and Alphabet Inc.
There is a dire need to set up better processes and systems to smoothen the working between founders and board – a helping hand like coaching or having a corporate coach can be an excellent way to build bridges. Or else, it will result in the premature dimming of promising innovations, a risk not worth taking in the dynamic world of start-ups.
