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Nvidia to buy assets from Groq for $20B cash

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Re: Nvidia to buy assets from Groq for $20B cash

#391

Post by SecretDreams »

Eridrus wrote: post #382
isubkhankulov wrote: post #368

Earlier quoted context omitted.

There have been at least a half dozen of these deals in the past 1-2 years including Google “licensing” CharacterAI to pull their founders back into Google as valued employees. In the deal mentioned above: my guess is that preferred class shareholders and common shares got paid out but the common shareholders had such a low payout that it rounded down to zero for most employees. This can happen even in a regular acqu…

Liquidation preferences are typically 1x these days, so they only matter when companies are sold at fire sale prices where basically nobody is making any money. The deals are all weird so it's hard to really know what's happening, but if Groq gets $20b, I don't see how common stock holders don't get paid.

Special dividend to priority class and retain the rest to grow the remaining sham company?

I've seen some discussion that paying out normal employees might look more like an acquisition on paper which they may want to avoid for ftc reasons. I've also seen some discussion that this is a quid pro quo to the trump family to get Nvidia back into China (jr. bought in at the September financing round..).

Lots of speculation in general, including why nvda chose to spend 20bil on this.

Re: Nvidia to buy assets from Groq for $20B cash

#393

Post by h2zizzle »

sigmoid10 wrote: post #313
jbkkd wrote: post #271

Earlier quoted context omitted.

I have a friend who worked in a company that got "not acquired" in a similar deal. She didn't see a dime out of it, and was let off (together with a big chunk of people) within 6 months.

As this gets more common, I think it will eventually lead to startups having a hard time attracting talent with lucrative equity compensation. It will be interesting to see how long it takes until this catches on among employees, but I already wouldn't take any positions in startups with a significant payment in equity anymore. The chances are slim that this pays out anyways, but now even when you are successful, noo…

>As this gets more common

Boy, it would be so nice if a major correction were to drain these massive companies' warchests so that it doesn't become more common.

Re: Nvidia to buy assets from Groq for $20B cash

#394

Post by citizenpaul »

sigmoid10 wrote: post #313
jbkkd wrote: post #271

Earlier quoted context omitted.

I have a friend who worked in a company that got "not acquired" in a similar deal. She didn't see a dime out of it, and was let off (together with a big chunk of people) within 6 months.

As this gets more common, I think it will eventually lead to startups having a hard time attracting talent with lucrative equity compensation. It will be interesting to see how long it takes until this catches on among employees, but I already wouldn't take any positions in startups with a significant payment in equity anymore. The chances are slim that this pays out anyways, but now even when you are successful, noo…

If you ask me there has been a major shift into trying to make "startups" into just another form of corporation. It started years ago when I started seeing things like "Founder Engineer - 0.5% equity" in jobs here.

Re: Nvidia to buy assets from Groq for $20B cash

#396

Post by crote »

petcat wrote: post #343
crote wrote: post #330

Earlier quoted context omitted.

Startups often pay a shitty salary in exchange for a decent chunk of stock options, with the implicit promise that you'll make bank if you work hard and make the company successful. Getting screwed out of your payout by such a totally-not-an-acquisition is wage theft. It's like promising a sales-related bonus at the beginning of the year, and then in December changing the metric to "AI-related sales to the CEO's golf…

Startup options are worthless. The only value most people will ever extract from a startup is the experience they had working there, and the salary that was put in their bank account. I understand that a lot of inexperienced people (like in this thread) think they're going to get rich though. No, it is not "wage theft" to not get rich when the company exits (by whatever means).

Nobody expects to get rich off working for a startup. The risks are massive, and very few exit with billion-dollar deals. This is taken into account by the people who work there and accept those stock options: 99.xx% chance of being worth essentially zero, but a tiny yet nonzero chance of being able to retire early when it does a billion-dollar exit. It's a lottery ticket, not a promise - every startup employee understands that.

Groq is now changing the deal after the fact by making those stock options worthless 100% of the time. It's like you participate in a lottery, and then the organizer decides to just not do a draw and keep all the proceeds for themselves. Sorry, but that's theft.

Don't intend to pay out in the unlikely event that you hit it big? Then don't offer stock options to your employees and pay market-rate salaries - plus of course a decent premium for the fact that (unlike an established company) your startup can go bust at any time and doesn't offer stable employment. You can't have it both ways.

Re: Nvidia to buy assets from Groq for $20B cash

#397

Post by lovich »

lumost wrote: post #359
sandworm101 wrote: post #341

Earlier quoted context omitted.

>> one of the founding employees If you were an employee, you were not a founder. A founding-employee would be someone who explicitly "invested" time/money into a company without compensation. If you are also an employee earning a wage you better have a written agreement stating what amount was "investment" and what amount was compensated wage.

Startups typically offer employees, particularly early employees, substantial equity compensation. If the employer is offering this compensation in bad faith, or otherwise preferring one equity holder over another without an explicit contract - then they are at the very least a crappy business partner. A founding engineer with a 2% stake could be missing out on 5-10 million of this transaction. As an aside, most foun…

> If the employer is offering this compensation in bad faith, or otherwise preferring one equity holder over another without an explicit contract - then they are at the very least a crappy business partner.

I don’t know about you, but every company I’ve ever worked at is a shitty business partner if that’s the metric. The standard has always been I get what we agreed to if I was lucky, and otherwise I got full “I’ve altered the deal, pray I don’t alter further” and dared you to defend your rights.

I actually have called their bluff a few times and gotten some money out of it, but it was always a year long event or more to resolution and involved risking even more money on lawyers.

Re: Nvidia to buy assets from Groq for $20B cash

#398

Post by [deleted] »

sandworm101 wrote: post #342
lumost wrote: post #213

Earlier quoted context omitted.

I wonder if such deals will create employee lawsuits. I'd certainly be looking at legal options if I was one of the founding employees.

>> one of the founding employees If you were an employee, you were not a founder. A founding-employee would be someone who explicitly "invested" uncompensated time/money into a company without compensation and also worked as an employee. If you are also an employee earning a wage you better have a written agreement stating what amount was "investment" and what amount was compensated wage.

[deleted]

Re: Nvidia to buy assets from Groq for $20B cash

#399

Post by crote »

sandworm101 wrote: post #341
lumost wrote: post #213

Earlier quoted context omitted.

I wonder if such deals will create employee lawsuits. I'd certainly be looking at legal options if I was one of the founding employees.

>> one of the founding employees If you were an employee, you were not a founder. A founding-employee would be someone who explicitly "invested" time/money into a company without compensation. If you are also an employee earning a wage you better have a written agreement stating what amount was "investment" and what amount was compensated wage.

Just one slight problem: people need to eat, and food costs money.

Your startup won't succeed when its founder starves to death. It's why the founder will usually get a bunch of cash during investment rounds [0]: they can't focus on the company if they are constantly worried about cash in their personal life. Unless the founder is already independently wealthy, it is a guarantee that they'll be employed by the company and being paid a living wage. Heck, in some countries this is even legally required!

According to your logic, no successful startup will ever have a founder, as any form of pay instantly degrades them to regular employee, and any kind risk taken and below-market salary is completely irrelevant. Never mind the fact that they are taking home a minimum-wage salary while working 100 hours a week - they are earning a wage so they can't possibly be a founder.

So if this logic already breaks down for the founder, why couldn't it also break down for early employees whose compensation is mostly in stock options? How is their situation any different from the founder's?

[0]: https://www.stefantheard.com/silicon-valleys-best-kept-secre...

Re: Nvidia to buy assets from Groq for $20B cash

#400

Post by chermanowicz »

brcmthrowaway wrote: post #101

What are the other top AI silicon vendors? Graphcore Tenstorrent SambaNova Rivos

the talk is that sambanova-intel is akin to a firesale, so who knows what the real story with any single company. same with graphcore.

https://www.datacenterdynamics.com/en/news/sambanova-explori...

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