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Nvidia's $20B antitrust loophole

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Re: Nvidia's $20B antitrust loophole

#121

Post by Salman23 »

lumost wrote: post #83
Salman23 wrote: post #51

Earlier quoted context omitted.

Yes I think you are right here. The purchase price is high enough for all parties to be get return on their shares, and whilst there will be a waterfall for who gets paid first, I doubt many people will be unhappy with this deal. Unlike Windsurf... who's 2nd employee only got 1% of what their shares were worth ( https://news.ycombinator.com/item?id=44673296 )

Doesn’t this depend on how the ip was structured? If it was kept as a separate entity, or the firm named ownership of the ip in nonstandard terms, then they could pay investors but not employees. Unfortunately, we could likely find thousands of different ways not to pay employees given they don’t have board seats, and are typically on non standard equity.

Definitely agreed that there exist thousands of different ways to not pay employees... but they don't have good incentive to cut them out.

Purely from a social contract lens, why would founders actively seek out ways to cut out their employees from a (potentially life changing) exit.

Re: Nvidia's $20B antitrust loophole

#123

Post by Retric »

Salman23 wrote: post #121
lumost wrote: post #83

Earlier quoted context omitted.

Doesn’t this depend on how the ip was structured? If it was kept as a separate entity, or the firm named ownership of the ip in nonstandard terms, then they could pay investors but not employees. Unfortunately, we could likely find thousands of different ways not to pay employees given they don’t have board seats, and are typically on non standard equity.

Definitely agreed that there exist thousands of different ways to not pay employees... but they don't have good incentive to cut them out. Purely from a social contract lens, why would founders actively seek out ways to cut out their employees from a (potentially life changing) exit.

So they get more money, founders are unlikely to start a new company after existing like this.

Re: Nvidia's $20B antitrust loophole

#124

Post by cj »

ece wrote: post #119
theptip wrote: post #115

Earlier quoted context omitted.

It’s also possible that both are correct, and the deal is actually illegal. It’s pretty common for deals to push close to the line to extract maximum value for one set of parties, and sometimes this is misjudged. I guess we just need to wait and see if the common holders are happy or sue.

If you join a startup, be ready to hire a lawyer.

Or accept the fact that stock options are worthless, and don't accept a job offer if you're unhappy with the offer sans stock options.

Re: Nvidia's $20B antitrust loophole

#125

Post by newyankee »

colechristensen wrote: post #103
websiteapi wrote: post #27

I wonder how the startup scene will adjust to this if it becomes mainstream. can employee contracts be modified to force compensation even in this case? seems difficult to write one up without weird second order effects. if this does end up being something that is legal and successfully circumvents anti trust, does it mean antitrust actually is a failure in practice? 2026 hasn't even begun and more shenanigans are in…

This won't last. It's just creative regulatory evasion and the loopholes will get closed.

but if it does, will it mean we are in the endgame. More and more value extraction by fewer and fewer people and entities under noble or complex reasoning.

Re: Nvidia's $20B antitrust loophole

#126

Post by toomuchtodo »

toomuchtodo wrote: post #58
georgeburdell wrote: post #25

This behavior is extremely damaging to the startup scene. Who would join a startup these days unless it’s run by a close friend or relative? At least in that case, the scorned junior employees would have social recourse.

If you join a startup, and have equity that isn’t special in some way (defending against liquidation preference or dilution), you’re the sucker. You’re just going to grind for someone else’s payday when a deal is made in a room you’re not in. You’ll only be made rich if someone with the power to drive the decision thinks you should be. As always, it’s who you know and being likable.

I’ve thought about this comment, and am replying to it to amend it (as the edit window has passed). I made this comment based on observations I’ve seen during this AI investment bubble and before it. Most times, common shareholders get the short end of the stick. But I will add, there are some “less than the majority” situations where I have seen employee shareholders treated with dignity and respect, and provided access to liquidity accordingly, and I would be remiss if I did not call that out. It will be challenging to know ahead of time, but there are decent people out there who won’t take advantage or use their power against you economically (imho). “Be lucky” is unfortunately not actionable.

Re: Nvidia's $20B antitrust loophole

#127

Post by SilverElfin »

LogicFailsMe wrote: post #112
ricardobeat wrote: post #85

Earlier quoted context omitted.

Those numbers are not realistic. At a company at this stage (series E I think?), you’ll be lucky to have 0.01% as an engineer. Most importantly, there is no guarantee there will be any payout at all. It’s not an acquisition and we don’t know the terms.

Series E was just 3 months ago. $2M for 3 months work seems fantastic to me. Series B equity was anytime through early 2021. This is a fantastic outcome for everyone in Groq. What I'm reading here is 100% envy and resentment of their success. But that only works if you're already rich or president, preferably both for best results.

Why are you assuming the employees’ equity participates in this licensing deal at all? They just have ownership in the leftover dying company as far as I can tell. How will they make that worth something, and get liquidity?

Re: Nvidia's $20B antitrust loophole

#128

Post by LogicFailsMe »

SilverElfin wrote: post #127
LogicFailsMe wrote: post #112

Earlier quoted context omitted.

Series E was just 3 months ago. $2M for 3 months work seems fantastic to me. Series B equity was anytime through early 2021. This is a fantastic outcome for everyone in Groq. What I'm reading here is 100% envy and resentment of their success. But that only works if you're already rich or president, preferably both for best results.

Why are you assuming the employees’ equity participates in this licensing deal at all? They just have ownership in the leftover dying company as far as I can tell. How will they make that worth something, and get liquidity?

And you don't think they'd be squealing like stuck pigs in the blogosphere if that were the case? There isn't even anything like that on Blind currently, but there sure are a lot of people with no skin in this deal whining about it to high heaven. This is not a winning attitude. $20B for Groq just normalized $1B for AI startups in general. Maybe less concern trolling here and more building something is in order?

Re: Nvidia's $20B antitrust loophole

#129

Post by chii »

theptip wrote: post #116
spiantino wrote: post #87

Earlier quoted context omitted.

i thought so at first, but I did some digging and changed my mind. it's possible the following is how it goes: - secondary transaction with the preferred shareholders (VCs) at some price that implies a 20b valuation - founders quit and get new employment agreements - some cash is transferred to the company as a license fee - no acquisition means no DOJ approval in this scenario the headline can be $20b but the cash e…

Don’t the founders (and the board) still have fiduciary duty to the common holders? You can’t stop the founders from leaving, but selling the crown jewel IP in a transaction that doesn’t benefit the shareholders seems a stretch.

> fiduciary duty to the common holders?

as long as the transaction is reasonable, they've held up this fiduciary duty.

And the minority holders will need to sue for damages in any case, it's not an "automatic" crime. The cost of that suit will be more than the value of the gains and damages awarded.

Therefore, minority shareholders in a startup are highly likely to get screwed - not to mention they don't get a say in decisions being made at the top.

The only thing preventing this is social pressure (ala, reputational damage, if the founder did it). And if the payday is high enough, the reputational damage is irrelevant (you'd be out of the game with a big enough payday!)

Re: Nvidia's $20B antitrust loophole

#130

Post by colechristensen »

newyankee wrote: post #125
colechristensen wrote: post #103

Earlier quoted context omitted.

This won't last. It's just creative regulatory evasion and the loopholes will get closed.

but if it does, will it mean we are in the endgame. More and more value extraction by fewer and fewer people and entities under noble or complex reasoning.

ok? and?
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