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Character.ai CEO Noam Shazeer Returns to Google
- treesciencebot 2y agoWas this an Inflection.ai style acquisition considering C.AI was profitable?
- fnbr 2y agodo we know they were profitable? I doubt it, if they pulled this. I think they had high DAU/MAU but low paid users. this is basically Inflection 2.0.
- minimaxir 2y agoIn contrast to something like Adept.ai, this appears just be the CEO + some key employees exiting, not a complete team poaching that leaves the company a shell of what it was. It doesn't necessairly imply Character.ai's business isn't doing well, but a CEO leaving is still indeed weird.
- tikkun 2y agoThey are likely unprofitable.
- tikkun 2y agoI'm puzzled. Did Noam get $500mm+ from this? Character.ai could've been at $100mm+ ARR if they did a bit more of a monetization push based on my very rough estimates. If it was an acquisition I would've been imagining $3b+ price range. Huge get by Google! (Side note, Gemini 1.5's new alpha release from this week is now at the top of the lmsys leaderboard and sentiment on twitter for it is that it's strong, maybe as strong as sonnet 3.5, so it'll continue to be an interesting race between meta, openai, anthropic, gdm.) Edit: Okay perhaps it's - Noam keeps his C.ai stock, gets a big pay package from Google ($5mm-$15mm/year kinda range? not sure). Most of the value in C.ai remains, and he keeps his stock.
- riku_iki 2y ago> I'm puzzled. Did Noam get $500mm+ from this? where did you get $500mm number?..
- tikkun 2y agoI imagine he still had 15%+ of the company, so if there was a big payout, he would've gotten a big slice. Treat all my estimates with a grain of salt, though, please. I'm imagining he didn't get a huge payout and he actually kept most of his equity?
- riku_iki 2y agoI think he just steps down as CEO, there is no company acquisition happening, so no one gets paid. I think company essentially failed to generate revenue and/or get new investment round.
- tikkun 2y agoYes that seems right. Though I think they could've gotten a new investment round if they wanted one, I'd be surprised if that was the cause.
- BoorishBears 2y agohttps://www.theinformation.com/articles/google-hires-character-ai-cofounders-and-licenses-its-models https://www.theinformation.com/articles/google-hires-charact... Investors are being bought at 2.5B valuation
- jchonphoenix 2y agoThis is another inflection style "acquisition." Highly unethical of the founders and screws over all your employees and investors who are left holding the bag. For those asking, c.ai has very high cost and looks like a typical consumer company that burns money for use, so they were decent on revenue but not near profitability.
- nextworddev 2y agodon't forget Adept
- hankchinaski 2y agoEverybody has a price
- alphabetting 2y ago> Character’s leaders told staff on Friday that investors would be bought out at a valuation of about $88 per share. That’s about 2.5 times the value of shares in Character’s 2023 Series A, which valued the company at $1 billion, they said. https://www.theinformation.com/articles/google-hires-character-ai-cofounders-and-licenses-its-models https://www.theinformation.com/articles/google-hires-charact...
- pton_xd 2y ago> investors would be bought out at a valuation of about $88 per share. That’s about 2.5 times the value of shares in Character’s 2023 Series A, which valued the company at $1 billion Those investors almost certainly have a liquidation preference. How much did employee shareholders get? I'd guess zero. "I am confident that the funds from the non-exclusive Google licensing agreement, together with the incredible Character.AI team, positions Character.AI for continued success in the future,” Shazeer said in a statement given to TechCrunch." That's a pretty hilarious statement from a Founder/CEO, given the circumstances.
- fngjdflmdflg 2y ago>liquidation preference. How much did employee shareholders get? I'd guess zero. But they aren't filing for chapter 11? I assume all shareholders will be bought out, including the employees, and this will be paid for by Google who will license their models, presumably as a scheme to pay off of the investors as I doubt they actually need those models at all. (assuming the linked source is correct.)
- simonw 2y agoKey quote (from Character.AI): “Over the past two years, however, the landscape has shifted; many more pre-trained models are now available. Given these changes, we see an advantage in making greater use of third-party LLMs alongside our own. This allows us to devote even more resources to post-training and creating new product experiences for our growing user base.” My interpretation is that Character.AI realized they don't actually need to train their own foundation models from scratch to support their product - they can build cheaper, faster and probably better if they use LLMs trained by other companies (could be GPT-4o/Claude/Gemini via APIs, could be Llama 3.1 self-hosted). If they're not training foundation models any more, the talents of people like Noam Shazeer aren't so important to them. They need to focus on product development instead.
- htrp 2y agoI'd argue that their own foundational models are getting outperformed by the Llama finetunes on HF and at this point they're shifting cost structures (getting rid of training clusters in favor of hosted inference).
- zoogeny 2y agoI think this highlights the winner-take-all stakes of intelligence. It also suggests that there is little to be gained by specialization. Building a brand might actually be more short-term profitable since you can swap in the latest AI models as they become available. In other words, if advancing the SOTA AI is your dream, a product company may not be the right place. And if building a product company is your dream, then building foundational AI might not be the best strategy.
- robrenaud 2y ago> if advancing the SOTA AI is your dream, a product company may not be the right place. Does Meta get in the way of this? It's hard to compete with a company that is dead set on spending billions and seemingly wants to drive your SOTA AI product revenue to 0. If you are OpenAI or Anthropic right now, it seems like trying to run a great restaurant at a reasonable price right next to a good (great?) restaurant that is serving everyone for free.
- htrp 2y ago>Character.AI co-founder Daniel De Freitas is also joining Google with some other employees from the startup. Dominic Perella, Character.AI’s General Counsel, is becoming an interim CEO at the startup. So basically leaving a shell of a company and the GC to try and run it / wind it down.
- bogwog 2y agoIs this a cheat code for doing an acquisition without FTC scrutiny?
- tsunamifury 2y agoAnd screw investors
- agnokapathetic 2y agoper The Information -- investors don't get screwed, the board repurchased all shares at $88/share ($2.5B valuation).
- blackhawkC17 2y agoThe money to repurchase shares must be coming from an external source? I assumed Character.AI wasn’t profitable, like most AI startups.
- metadat 2y agoAbsolutely not yet profitable, not even close. Currently a money furnace.
- tsunamifury 2y agoThese two stories are hard to rectify unless the Google licensing deal is a lump sum of several billion dollars. Which feels borderline impossible. Even Microsoft didn’t do that with open AI and the AI trade is cooking very fast.
- crowcroft 2y agoThe new VC playbook could be. 1. Find an unhappy senior AI exec from who's published a few papers who's published a few papers. 2. Start a new org around them and hire a few key people with crazy salaries (which you can offer cause the time horizon for the company isn't that long). 3. Train a few models, release some good looking benchmarks (bonus points if big tech lend you their GPUs as part of some 'accelerator deal'). 4. Maybe find PMF and become incredibly rich. 4. If that fails, sign a massive but undisclosed licensing deal for your tech with big tech and give them your staff. Seems like a good way to take big bets in AI, while hedging most of the risk.
- m_ke 2y agoIn the CNN boom days after alexnet the playbook was: take your research lab, slap a c crop and new logo on it, keep doing your research and get acquired by FANG for high 8 figures. Only difference in this cycle is that you can't do real LLM research in academia these days so all of the top researchers are already at FANG.
- candiddevmike 2y agoThis isn't #4, there's no acquisition happening.
- nextworddev 2y agoThis playbook won't work within a year as M&A market cools and everyone wakes up to the real truth - that no one has any edge in LLM / AI infra development
- beoberha 2y agoAI is quickly becoming a commodity which is awesome for consumers. I think we’re going to see a huge shakeout of companies who dazzled with the initial allure of LLMs being replaced by the “killer AI apps” where we really start to rethink modern computing.
- bentoboox 2y agoThis is likely an aqui-hire structured to not trigger an anti-trust probe. If there was any real intent to give c.ai a chance as a real business they would have hired a new ceo before the announcement.
- moralestapia 2y ago>In a big move, Character.AI co-founder and CEO Noam Shazeer [...] It's like those rich guy/poor guy jokes. Poor guy leaves his job, tries bootstrap its own company and fails, comes back to its old job. "What a loser". Rich guy leaves his job, gets 150M to start a company in a blue ocean with a significant competitive advantage over 99.99% of humans alive. Still manages to fail and comes back to its old job. "What a bold move!"
- SXX 2y ago> gets 150M to start a company Oh there is a place where rich guys can "get" $150M, but poor guys couldn't.
- nextworddev 2y agoI think the rank and file employees will keep vesting at the 2.5 bn valuation for the next two years, according to The Information
- umeshunni 2y agoAt this point that valuation is almost certainly a mirage.
- philip1209 2y agoSeems like a way to do an "acquisition" while avoiding the brand risk of buying a mostly-porn company.
- atlasunshrugged 2y agoAnd I'm sure Google is hopeful that it also carries low regulatory risk from the FTC/DOJ
- swyx 2y agowhat is your basis for saying it is mostly-porn? they do a lot to make it SFW
- firejake308 2y agoI haven't used Character.ai personally, but assuming the user base is the same as the Silly Tavern userbase, and assuming that the Silly Tavern user base is accurately represented by the subreddit, then it's like 95% ERP
- stephencoyner 2y agoHere’s their press release: https://blog.character.ai/our-next-phase-of-growth/ https://blog.character.ai/our-next-phase-of-growth/
- varelse 2y ago[dead]
- dekhn 2y agoNoam Shazeer is a long-time googler who worked on machine learning for quite some time (take a look at his patent history, for example https://scholar.google.com/citations?view_op=view_citation&hl=en&user=wsGvgA8AAAAJ&cstart=100&pagesize=100&sortby=pubdate&citation_for_view=wsGvgA8AAAAJ:Tyk-4Ss8FVUC https://scholar.google.com/citations?view_op=view_citation&h...)). He was a favorite of Jeff Dean and did some of the most impressive work on ML that I saw at Google. I think at some point in the past, Noam saw that google wasn't supporting his work very well (google research went through a dark time where many researchers with creative ideas were shut down, either for business or reputation reasons, see https://www.businessinsider.com/google-ai-characterai-ceo-noam-shazeer-chatbot-2023-4 https://www.businessinsider.com/google-ai-characterai-ceo-no...) and I figure he made a startup because it was a more convenient position for him to do research, even if there wasn't a strong revenue model. Now he returns to Google in a position of deep strength and will be able to continue to pursue extremely ambitious ideas with far less restraint.
- tsunamifury 2y agoI think your strongly strongly overestimate how fast Google Forgets about you. Deep strength is a very rosey way to Put it.
- sieabahlpark 2y ago[dead]
- underdeserver 2y agoThey forget about most people quick. Noam Shazeer is not most people.
- tsunamifury 2y agoThis sort of toxic worship is so insane.
- underdeserver 2y ago
- tsunamifury 2y agoHave some familiarity with the players here. The founders are core model nerds and accidentally happen upon success as a majority sex chat product. They have little interest in that and investors are likely saying they won’t support any more core model research. The Google deal lets the founders go back to doing core model work for Google and the company to focus on a consumer only product that uses third party models.
- janalsncm 2y ago> core model research What do you mean by this? Fundamental research? It makes sense, most of the innovations now will be in things like clever caching mechanisms and reducing compute.
- SebFender 2y agoPeople seem to forget or be unaware running a startup is far from cozy and usually doesn't work out - it isn't for everyone and honestly - isn't for most. The more money you raise the more the pressure - and for deep researchers, this is usually noise that takes you away from your passion. Shazz may be the kind of person that just wants to concentrate on research and doesn't really care about the rest...