Sam Altman may have committed fraud at Loopt. Could the OpenAI firing be a similar incident?
There’s an old story that was popular in YC around 2011 was about Sam’s time at Loopt. It was presented positively, but I always felt like it was lionizing deliberate fraud. Or at least, demonstrates a history of intentionally deceiving business partners. I remember having heard this from startup fans around this time as a story of being ‘resourceful’, and being turned off.
The story goes that when he was running his own startup, Loopt, Altman faced a critical moment during a negotiation with a large company.
He invited many of his friends to join their offices during the meeting with the large company. These friends were instructed to pretend they were part of Loopt’s team and were busy working on deals with other major companies. This performance was intended to create an impression of high demand and intense interest in Loopt from various parties.
The strategy worked. The large company, perceiving Loopt as a highly sought-after entity with multiple ongoing deals, became more eager to close the negotiation favorably. Altman’s strategy and the execution of this plan played a significant role in securing the deal.
This incident has been cited as an example of Altman’s resourcefulness, but it struck me as unethical. It appears to be deliberate and material misrepresentation of his company, which probably constitutes fraud. Moreover, because Loopt was a commercial failure, the company he tricked probably lost millions on this deal.
Other than the hackernews discussion, I believe I’d heard it before in other places. Someone with more time might consider tracking down a video. It appears Sam has stopped mentioning it in recent years.
Moreover, if this is the story he used to publicly tell, I wonder about other business practices. I remembered hearing about a similar incident mentioned in this podcast. There were also products at Loopt that used other businesses branding without consent
All this comes back to the lack of “candor” alluded to in firing Sam, so I wonder if anyone with more context could give details about whether the OpenAI firing was a similar incident?
