OpenAI stunned the world when it announced it had fired CEO and co-founder Sam Altman, arguably the most recognizable face of AI development, setting off a whirlwind of events.

Sam Altman co-founded OpenAI and has helped lead the company through its growth and development, including the much-hyped release of ChatGPT. In a move that stunned the industry, the company’s board fired Altman last week, sparking consternation, confusion, and outrage among OpenAI employees and the industry at large. Immediately following Altman’s dismissal, company President and co-founder Greg Brockman resigned, after he was informed of his removal from the board.

Investors began immediately pressuring the board to reinstate Altman and Brockman, with hopes that progress was being made. Ultimately, the effort fell apart, leading Microsoft to hire both execs.

In the meantime, employees were so disturbed by the board’s handling of the affair that some 500 employees threatened to resign and follow them to Microsoft, according to a letter seen by CNN:

“Your actions have made it obvious that you are incapable of overseeing OpenAI,” wrote the employees. “We are unable to work for or with people that lack competence, judgement and care for our mission and employees.”

The letter says the employees plan to “imminently” move to Microsoft unless the two execs are reinstated and the entire board resigns.

Meanwhile, co-founder, board member, and Chief Scientist Ilya Sutskever — who is believed to have played a pivotol role in Altman’s ouster — expressed regret over his role in the whole affair:

I deeply regret my participation in the board’s actions. I never intended to harm OpenAI. I love everything we’ve built together and I will do everything I can to reunite the company.

— Ilya Sutskever (@ilyasut), November 20, 2023

Despite whatever regret Sutskever may be feeling, there’s no doubt there is a clear winner and loser as a result of the events he now regrets being a part of.

The Winner: Microsoft

Microsoft is the biggest winner of all in the entire debacle, hiring both Altman and Brockman to lead the company’s internal AI team. CEO Satya Nadella welcomed the two execs in an X post:

And we’re extremely excited to share the news that Sam Altman and Greg Brockman, together with colleagues, will be joining Microsoft to lead a new advanced AI research team. We look forward to moving quickly to provide them with the resources needed for their success.

— Satya Nadella, November 20, 2023

The employee letter CNN viewed says Microsoft has already promised jobs to any and all OpenAI personnel that leave the company:

“Microsoft has assured us that there are positions for all OpenAI employees,” the letter says.

Given that Microsoft has already invested billions in OpenAI, and its technology forms the bases of Microsoft Copilot (formerly Bard Chat), Microsoft stands to gain immeasurably from bringing on Altman, Brockman, and any other OpenAI employees.

The Loser: OpenAI and Its Board

It’s hard to image a bigger group of losers than OpenAI’s board of directors, as well as the company they help lead. The entire debacle has been a case study in how to mishandle a situation, with the board overestimating their own position and underestimating Altman and Brockman’s value to the company.

To make matters worse, the board has already lost the faith of key investors, many of whom invested in the company specifically because they appreciate the value a founder brings.

“The best companies are those whose visions are led and executed by their founding entrepreneurs, the people who put everything on the line to challenge the status quo—founders like Sam Altman—who face risk head on, and who are focused—so totally—on making the world a better place,” writes Vinod Khosla, OpenAI’s first venture capitalist investor, in an op-ed in The Information. “Things can go wrong, and abuse happens, but the benefits of good founders far outweigh the risks of bad ones.”

What Happens Next?

While Nadella expressed his intention to continue working with OpenAI, it’s hard to image such sentiment will prevail long-term with Altman and Brocklman leading its internal AI efforts. What’s more, if a significant number of OpenAI employees join Microsoft, OpenAI may experience a significant enough “brain drain” to render it incapable of competing with Microsoft, Google, Anthropic, and others.

In the meantime, Nadella told CNBC that OpenAI’s governance model needs to change:

“At this point, I think it’s very clear that something has to change around the governance,” Nadella said, adding that the company will have “a good dialogue with their board on that.”

One thing is clear: What OpenAI’s board does next will mean the difference between recovering from a disaster of its own making or destroying the very company they have been tasked with governing.