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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

#401

Post by Eridrus »

SecretDreams wrote: post #391
Eridrus wrote: post #382

Earlier quoted context omitted.

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 speculatio…

Do you actually know this is what happened?

Dividends to only one class seems crazy. I would be kind of shocked if that was legal.

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

#402

Post by SecretDreams »

Eridrus wrote: post #401
SecretDreams wrote: post #391

Earlier quoted context omitted.

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 speculatio…

Do you actually know this is what happened? Dividends to only one class seems crazy. I would be kind of shocked if that was legal.

No, I have no visibility. I'm saying speculation is rampant is all.

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

#403

Post by lumost »

baruch wrote: post #378
keeganpoppen wrote: post #376

Earlier quoted context omitted.

that is a great point. it’s one thing to occasionally rugpull employees, who are still at least paid for their services and robbed only of their EV on their options (i say “only”, though i find this increasingly common practice to be absolutely deplorable, to be clear). but how could investors possibly be happy with this becoming the new normal? will it get to the point where these sorts of faux acquisitions also inv…

The company still got $20B of cash(?) in its books, it can pay dividends to its shareholders (investors) and they get their payment. The company can go down the drain afterwards. If it can still make money with its remaining assets that's only a nice small bonus. So the only ones getting shafted are the employees.

I suppose the firm could simply roll the 20 billion into a long term asset. It’s not a big deal to anyone except employees if the asset never pays out. Departed employees would not be privy to how the money is eventually exited from the now shell company 20 years hence.

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

#404

Post by IceWreck »

bossyTeacher wrote: post #254
nickysielicki wrote: post #34

Groq press release: https://groq.com/newsroom/groq-and-nvidia-enter-non-exclusiv... > Today, Groq announced that it has entered into a non-exclusive licensing agreement with Nvidia for Groq’s inference technology. The agreement reflects a shared focus on expanding access to high-performance, low cost inference. > As part of this agreement, Jonathan Ross, Groq’s Founder, Sunny Madra, Groq’s President, and other member…

> As part of this agreement, Jonathan Ross, Groq’s Founder, Sunny Madra, Groq’s President, and other members of the Groq team will join Nvidia to help advance and scale the licensed technology. A really strange agreement where top executives of a company "join" another company for the benefit of the other company. If it quacks like a duck...

This is exactly what Google did with Windsurf and similar to what Meta did with Scale AI. Seems like a rising trend,

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

#405

Post by lumost »

tgma wrote: post #340
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…

The implicit promise is only partially true. Very rarely you can find a proven talent that will actually forego significant salary. Often time when that happens the person is close to founders and will have a significant role in shaping the startup and will get quasi-acquired too. This promise may have been more true before 2010s where public companies were not paying as much in liquid cash and private companies were…

That just means you’re pulling from the lower end of the talent pool. There is nothing wrong with this, but usually talent is correlated with outcome. Most hot startups which are going places are near impossible to get into even for folks with good offers.

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

#406

Post by mlazos »

This is the absolute biggest grift of the century by the groq team. They never shared actual TCO, and I remember a Seminalaysis article about the power consumption being actually insane - this makes sense because they scale the number of chips to fit a single model when they have no dram. They have good inference latency but there was no way the economics were going to work out. Meanwhile Nvidia with every advantage in the world decides they’re worth 20B? It actually doesn’t make sense at all. The only scenarios the groq system would be worth it is in the exact throughput-optimized scenarios Nvidia already thrives in.

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

#407

Post by Ianjit »

fancyfredbot wrote: post #36

The price is 40x their target revenue. That's twice the price to revenue multiplier applied to Anthropic in their most recent funding round, and really really hard to portray as a good deal. I don't think it really helps Nvidia's competitive position. The serious competition to Nvidia is coming from Google's TPU, Amazon's Trainium, AMD's Instinct, and to a much lesser extent Intel's ARC. Grow recent investors got bac…

Good deal for Donald Trump Jr.

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

#408

Post by mrandish »

kasey_junk wrote: post #348
sigmoid10 wrote: post #313

Earlier quoted context omitted.

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…

At my last job search I didn’t consider any equity based startups seriously because of this trend. It was already such a tenuous path as it stood, but now with the norm established it seems like it’s become impossible for a rank and file employee to get paid out. I’m more curious how angel investors are being treated in these exits. If _they_ dry up the whole pipeline goes away

Investors with enough into the deal to fight it in court get enough to not fight it. Key employees needed by the 'not acquirer' get compensation sufficient to retain them, although increasingly much of this is under a deferred vesting arrangement to ensure they stay with the 'not acquirer'.

Non-essential employees and small investors without the incentive or pockets to fund a legal fight get offered as little as possible. This structure also provides lots of flexibility to the 'not acquirer' when it comes to paying off existing debts, leases, contracts, etc. Basically, this is the end of being an early employee or small angel investor potentially resulting in a lucrative payoff. You have to remain central and 'key' all the way through the 'not acquisition'. I expect smaller early stage investors will start demanding special terms to guarantee a certain level of payout in a 'not acquisition'. I also expect this to create some very unfortunate situations because an asset sale (as they used to be done), could be a useful and appropriate mechanism to preserve the products and some jobs of a failing (but not yet fully failed) company - which was better for customers and some employees than a complete smoking crater.

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

#409

Post by nurettin »

impulser_ wrote: post #97

Are they buying them to try and slow down open source models and protect the massive amounts of money they make from OpenAI, Anthropic, Meta ect? It quite obvious that open source models are catching up to closed source models very fast they about 3-4 months behind right now, and yeah they are trained on Nvidia chips, but as the open source models become more usable, and closer to closed source models they will eat i…

> It quite obvious that open source models are catching up to closed source models very fast they about 3-4 months behind

> Maybe I'm way off on this.

If by open source, you mean downloadable from huggingface and SOTA you mean opus 4.5, yes you are way off.

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

#410

Post by exac »

gchadwick wrote: post #72
nickysielicki wrote: post #34

Groq press release: https://groq.com/newsroom/groq-and-nvidia-enter-non-exclusiv... > Today, Groq announced that it has entered into a non-exclusive licensing agreement with Nvidia for Groq’s inference technology. The agreement reflects a shared focus on expanding access to high-performance, low cost inference. > As part of this agreement, Jonathan Ross, Groq’s Founder, Sunny Madra, Groq’s President, and other member…

Another example of the growing trend of buying out key parts of a company to avoid any actual acquisition? I wonder if equity holding employees get anything from the deal or indeed if all the investors will be seeing a return from this?

In my career I've seen startups "shut down" and lay off the NA team.

I've seen venture capital acquire startups for essentially nothing laying off the entire product team aside from one DevOps engineer to keep everything running. I've seen startups go public and have their shares plummet to zero before the rank-and-file employees could sell any shares (but of course the executives were able to cash out immediately). I've seen startups acquired for essentially nothing from the lead investor.

In none of these scenarios did any of the Engineers receive anything for their shares.

Yet every day people negotiate comp where shares are valued as anything more than funny money.

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