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Element AI sold for $230M, as founders saw value mostly wiped out: document

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Re: Element AI sold for $230M, as founders saw value mostly wiped out: document

#41

Post by jldugger »

musicale wrote: post #26
qeternity wrote: post #17

Earlier quoted context omitted.

Really good insight. When I put engineering job posts up, we get loads of PhD applications...a staggering amount. And all of these people look great on paper. It’s only when you start talking to them off script that you understand a career in academia has radically different incentive pressures than the private sector. We end up passing on most, not because they aren’t brilliant, but because they’re very one dimensio…

It must be surprising to find "brilliant" people who are apparently incapable of learning how to do new things.

I don't find it surprising at all, sadly. After a reorg, one of my colleagues on a different team (largely Master's degrees in ML) told our new team member: 'You shouldn't be worried, being assigned to their team is an honor. They're hardest to get into -- it's full of people who didn't just skip all the hard courses.'

In many ways, hiring advanced degree holders is a crapshoot. They have skills you probably can't train, but often times come in with fewer software development skills than your undergrad intern, despite theoretically having more years of experience. You don't need to know git to publish in IEEE, or write unit tests or readable code, or debug an edge case, and your only code reviewer is a professor who doesn't care about this either. 'Good enough to publish' is a far cry from 'customers will pay for it.'

Re: Element AI sold for $230M, as founders saw value mostly wiped out: document

#43

Post by dang »

nrmitchi wrote: post #4

The actual title is "Element AI sold for $230-million as founders saw value mostly wiped out". This is an important difference, since the submitted title here implies they were entirely wiped out. It looks like this company raised ~$250M, and sold for $230M. This isn't any sort of nefarious "founders got wiped out"; they sold for less money than they raised and this is the typical outcome in that situation. Also, fro…

Thanks—we've reverted the title to what the article says (shortened slightly to fit the 80 char limit).

Submitters: "Please use the original title, unless it is misleading or linkbait; don't editorialize." https://news.ycombinator.com/newsguidelines.html

Re: Element AI sold for $230M, as founders saw value mostly wiped out: document

#44

Post by rfrey »

throwawayeai wrote: post #13
ReDeiPirati wrote: post #11

Unlike Landing.ai and C3.ai, Element.ai was lacking of a solid go-to-market strategy from day 1.

I worked at Element AI, and that was true from the inside to an extent that was borderline terrifying. On orientation we were told that EAI's strategy was to hire as many smart individuals as possible. There was no focus on delivering an actual product, it was demo after demo of semi-impressive DL models. It makes me sad thinking of all the brilliant colleagues I had that were simply wasting their talent.

That strategy worked out ok for DeepMind.

Re: Element AI sold for $230M, as founders saw value mostly wiped out: document

#45

Post by lostmsu »

rfrey wrote: post #44
throwawayeai wrote: post #13

Earlier quoted context omitted.

I worked at Element AI, and that was true from the inside to an extent that was borderline terrifying. On orientation we were told that EAI's strategy was to hire as many smart individuals as possible. There was no focus on delivering an actual product, it was demo after demo of semi-impressive DL models. It makes me sad thinking of all the brilliant colleagues I had that were simply wasting their talent.

That strategy worked out ok for DeepMind.

And OpenAI. So far.

Re: Element AI sold for $230M, as founders saw value mostly wiped out: document

#46

Post by sjg007 »

yourapostasy wrote: post #21
ReDeiPirati wrote: post #11

Unlike Landing.ai and C3.ai, Element.ai was lacking of a solid go-to-market strategy from day 1.

> Unlike Landing.ai and C3.ai... What do you believe the go-to-market strategy is of those two? For C3.ai, my interpretation was they're trying to become the Microsoft of ML, re-packaging the entire ML pipeline into a more consumable developer experience. They seem currently focused more upon the model analytics part of the pipeline than say, training data selection or ETL to ingest raw data (whether to train upon or…

You should read the history of C3.ai to understand where it fits in the market.

https://www.forbes.com/sites/alexkonrad/2020/12/09/billionai...

Re: Element AI sold for $230M, as founders saw value mostly wiped out: document

#47

Post by sjg007 »

shuckles wrote: post #28
yourapostasy wrote: post #21

Earlier quoted context omitted.

> Unlike Landing.ai and C3.ai... What do you believe the go-to-market strategy is of those two? For C3.ai, my interpretation was they're trying to become the Microsoft of ML, re-packaging the entire ML pipeline into a more consumable developer experience. They seem currently focused more upon the model analytics part of the pipeline than say, training data selection or ETL to ingest raw data (whether to train upon or…

I attended a presentation by Tom Siebel, founder of C3, around 2011 who said the "inspiration" from C3 came from hiring ~10 of the best management consultants from McKinsey who told him that Enterprise IoT was going to be a big deal. My guess is the AI part came later as a way of productizing a data processing pipeline. The event was strange and really disabused me of many assumptions I had about startup origin stori…

Enterprise IoT is going to be a big thing... You know because as Deloitte says to paraphrase, "your stuck on a plane that's going nowhere because of a technical.. turns out its a 10cent part.. how are you going to get there? You need a smart factory ecosytem, ... it's not a supply chain but a supply network" or however, the podcast ad goes.

C3, Palantir, Salesforce and probably a few other companies / consults are investing in this space. It's the whole integrate all the data silos into some cloud, public or private, with +snowflake style data storage and build your business around data in order to drive real time feedback to solve customer problems.

But you are not wrong, "productizing a data processing pipeline" is big business.

Re: Element AI sold for $230M, as founders saw value mostly wiped out: document

#48

Post by Aeolun »

nrmitchi wrote: post #4

The actual title is "Element AI sold for $230-million as founders saw value mostly wiped out". This is an important difference, since the submitted title here implies they were entirely wiped out. It looks like this company raised ~$250M, and sold for $230M. This isn't any sort of nefarious "founders got wiped out"; they sold for less money than they raised and this is the typical outcome in that situation. Also, fro…

> only employees actually get wiped out

Presumably they were paid a salary while they were working there.

Having to find a new job now sucks, of course, but I find it hard to say they got wiped out.

Re: Element AI sold for $230M, as founders saw value mostly wiped out: document

#49

Post by mlthoughts2018 »

brutus1213 wrote: post #23
mlthoughts2018 wrote: post #18

It’s funny to see this around the same time as this other thread where people are going through so much mental gymnastics to avoid obvious conclusions of how horrible it is to work for a startup, https://news.ycombinator.com/item?id=25493646

If the start up offers market-rate wages, I am not seeing the downside. Job insecurity vs. chance to get more experience/lottery ticket? Seems reasonable .. but then again, I don't work at a startup.

Start ups don’t offer market rate compensation. Typically salaries will lag by 30% or more compared with even mid-level tech companies, not even considering FAANG at all. That’s just base salary. Most startups don’t pay a bonus, and the equity is usually very poor on an annualized basis, and it’s mostly tied up in options where you have to deal with the strike price and tax issues.

A wildly successful compensation outcome for an employee at a startup would be ~75% of a comparable market salary plus a few hundred thousand dollars of post-tax income from equity after 8-10 years, amounting to say $25,000 per year of equity/bonus.

At a totally mid range tech company or large company with some technology, you would make 100% of that market rate and probably make $25,000 just in a bonus per year, plus an additional $30k to $50k of RSUs per year, which you don’t have to wait 8-10 years to sell.

In an extremely conservative estimate, you’re probably losing $200,000 of post tax equity / bonus income over 8 years by choosing a startup over a mature but run-of-the-mill tech company or other large company that has tech teams.

If your market salary is ~ $150k, the startup is probably paying $115k and will give worse raises and promotions. Conservatively that’s another $180k of lost post-tax income over 8 years (35k delta times 8 minus taxes).

In total that’s about $400k of lost post-tax income by working at the start up for 8 years, and the alternative I’m comparing to is a very conservative estimate $150k base, $50k equity $25k bonus assuming no stock growth or raises, which is a totally run of the mill offer in large cities even 5 years ago for roles with 3-4 years of experience.

And that’s under a huge IF the startup is wildly successful and all those options are actually worth a few hundred thousand after taxes. That’s a rare outcome. They could be worth nearly nothing, and then you’re talking about foregoing around $550k of post tax income over 8 years (225k all in per year minus 115k at a failing startup, per year, x8 then less taxes).

Is the high, high risk of leaving $550k on the table worth it for vague promises of “interesting work” that isn’t guaranteed?

Re: Element AI sold for $230M, as founders saw value mostly wiped out: document

#50

Post by gumby »

throwawayeai wrote: post #13
ReDeiPirati wrote: post #11

Unlike Landing.ai and C3.ai, Element.ai was lacking of a solid go-to-market strategy from day 1.

I worked at Element AI, and that was true from the inside to an extent that was borderline terrifying. On orientation we were told that EAI's strategy was to hire as many smart individuals as possible. There was no focus on delivering an actual product, it was demo after demo of semi-impressive DL models. It makes me sad thinking of all the brilliant colleagues I had that were simply wasting their talent.

This was why jg bought DeepMind. Presumably they hoped lightning would strike twice.
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