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)

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.

EXCELLENT analysis Ossama

>"Non-exclusive" means no monopoly concerns (anyone can license Groq's tech)

- except that you can bet only Nvidia gets the absolute top of the line architechture and design - - - - - all others get 2nd best or worse.

>The "non-exclusive" label is legal fiction. When you acquire all the IP and hire everyone who knows >how to use it, exclusivity doesn't matter.

But the “non exclusive” part is what significantly weakens any case the US DOJ may consider bringing forth, if at all..

If I was in the Nvidia camp I would be admiring how brillant the strategy was all formulated, in fact, I have to believe that IP attorney's were consulted on how best to avoid DOJ scrutiny.

On the other hand, there will be those who can see how this limits competition. It would be interesting to have some of our HN attorneys weigh on on this deal.

As you said about the remaining employees: . . . Their equity is worthless. . . <they> got nothing while Chamath made $2B. Is Chamath a conniving scoundrel ? I'll let others judge. Maybe someday we'll see Zuckerberg and Chamath in the ring together - - Elon seems to have bowed out.

Regulations shouldn’t have to change with every new fintech innovation, and the IRS already has the necessary laws in place to catch and prosecute abuse of unpredicted loophole technicalities as tax fraud with intent. We’re better off applying a general tax to “gross revenue not paid as wages” and directing it to a universal basic income fund. The purchase price is gross revenue, and the less they pay out as employee wages, the more the (not subject to deductions) tax charge becomes. Sure, they might still fuck over workers, but at least the workers could afford to quit (thanks, UBI) — and VCs would face the choice of taking half the payment and fucking over workers, or taking the same size payment while not fucking over workers. They may be selfish, but they’re not so self-destructive as to choose the former out of spite: it would utterly destroy their ability to hire brilliance in the future, especially once people can afford to say no.

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

if we use your logic then every law written would be failure since at some point people would discover loophole/flaw that would get abused

the fix is we use more ambiguous words or just stronger government control

see how China "control" capitalist on this case if you want absolute government control

nVidia's big problem right now is they have more money than they can productively spend and are way down the stupid money hole just looking for any kind of return. This is a failure of capitalism.

Sure, but the US has a history of not acting.

If it was a normal acquisition, it would automatically trigger anti-trust investigations. Under the current administration, I think it is unlikely the acquisition would be blocked (although it probably should be...), but it would involve more bureaucracy, and would take longer.

Google also hired the core Windsurf engineering and research team, not OpenAI:

https://www.reuters.com/business/google-hires-windsurf-ceo-r...

>What is keeping Google/Amazon/Microsoft from licensing Groq’s tech?

Nothing, but they likely can't implement it as well as they could had they bought Groq first.

Unlike other SaaS "acquisitions" of late, this will be not as straightforward closure of a subscription business.

The $1.5B contract with the Saudi Arabia is substantial and investors will want that monetized too, there are also existing DCs GroqCloud have in the ME region and also other spots around the world that are quite valuable for their hardware and power agreements etc.

Nvidia has CIFUS and other regulatory concerns and also don't want to compete against their customers be a neo cloud provider, the Saudis likely still want their DC build outs to proceed.

All this to say, the remaining parts while no longer as glamorous is still worth a lot and cannot be easily sold to big tech co. GroqCloud is more be like Nokia Technologies/ Networks rather be killed.

---

As a result, staff not part of the Nvidia deal likely have solid jobs and also now the opportunity to climb the ladder quickly now that a lot of leadership positions have opened up.

They are also going to have to be compensated higher in cash or poached by an upcoming chip startup as they are no longer tied to equity options vesting scheduled of a very valuable company (Pre deal Groq or now Nvidia).

In any scenario they will come out better of the deal, not as much they could have in a full acquisition yes, but certainly better than most engineers not working for a hyped AI startup nonetheless.

That’s just it.

We’ve entered a new era. Big companies don’t need your startup. They only need your smart guys. Just those few guys. You keep the rest of your engineers and figure out what to do with them.

And lately, the answer has been, “wind it all down”.

This sucks so bad for most of their employees. But it’s a signal to the labor market:

Be very honest about what you are when you’re considering working at an AI startup. Are you an AI expert? Or a TF/Pytorch monkey? There’s an enormous difference between those two things. If you’re not the key guy, require a good salary up front. Because I don’t see a future where the “acquiring” companies start needing you as well.

It's not like larger companies don't also screw over their employees in various ways. After having to leave AWS due to my fully distributed team that was formed during WFH being forced to "return" to an office that most of ever never lived near, I've preferred working for smaller companies not because I care about equity (I'm in the fortunate position that I can survive comfortably and save for retirement on my salary rather than needing to rely on the value from options/RSUs), but because my confidence in my ability to predict where things are headed goes down increasingly with each additional level of management between me and whoever has the power to arbitrarily decide to upend my employment on a whim. In the long run, I'll probably be fine if my employer doesn't make me rich, so as long as my projected retirement age isn't actively getting pushed back based on my current income and spending, I'd rather optimize for minimizing the likelihood I suddenly find myself unemployed due to untenable working conditions or getting unexpectedly laid off. My experience at startups has been that it's a lot easier to tell when things might start to get dicey several months down the line and start to prepare for if I need to find another gig. With a large company, I've seen that happen much more suddenly for people who had no reason to suspect they might need to in advance.

I don't think this makes it much worse because that's hard to do, it's already terrible. Getting screwed by startup founders has been the status quo for at least 15 or 20 years now.

If you're just a worker then demand fair market wages, work healthy hours, and treat your useless class of shares as already used and discarded scratch off lottery tickets.

Right? As a former founder, I laugh every time I get a 'Founding Engineer' recruit email...

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.

It is definitely time to stop looking at equity as part of pay at a startup. The trend is extremely clear, startups aren't paying out to employees but the C suite gets internal raises and IPO is pushed to infinity. It is nice to have some paper laying around but that is all it is, paper. Go to a startup for a year. Get the experience, move and get a 20-50% pay increase and keep doing that every year and you will be way happier and financially healthier.

Yeah unless you are a founder or top investor it’s pretty much a guarantee that there will be no exit.

If you need a job for things like food and housing a startup is cool.

I fully expect to be lied to repeatedly though about my own pay, our prospects, etc. I had to learn the hard way that these lies are defacto legal because employees won't realistically be able to sue.

But hey, the base pay is probably enough.

I was talking with a great-sounding few-person early startup (nice people, non-evil business, interesting work, etc.), and they wanted me to fill a highly-skilled role... in-office in a VHCOLA, for $110K and "0.5%" in usual option schedule. (Presumably also with the usual barriers to options ever being exercised or liquidated equitably.)

Even fresh grads with no experience take home more in this town.

I live to work, and I'd be willing to spend a few more years in student-apartment quality of life, and to work like a strategic asset to make the startup successful. But I've learned that deal should include a FIRE lottery ticket, not a condo downpayment lottery ticket.

If your early startup doesn't want to share significant equity, https://levels.fyi/ provides TC numbers of what established companies are paying, even for people who wouldn't be good for a startup.

Maybe it's the recent years of what VC culture has devolved to. ("Why is your cap table cutting in early key hires significantly? Do you have a leadership problem, bro?") Maybe this is just another facet of the "mask-off" or "late-stage capitalism" that people have started calling out in other facets of society.

Oh FFS 0.1% of this acquisition is $20M. 0.5% is $100M. Junior to senior equity lies in this range. They'll be more than fine. They'll be 1%ers to 0.1%ers after taxes, yeesh. It's never ever enough. is it?

You're right but my understanding is that Groq's LPU architecture makes it inference-only in practice.

Like Groq's chips only have 230MB of SRAM per chip vs 80GB on an H100, training is memory hungry as you need to hold model weights + gradients + optimizer states + intermediate activations.

Would SRAM make weight updates prohibitive vs DRAM?

Physically building a datacenter yes. Repurposing a crypto datacenter for a new purpose, no. But days is hyperbolic no matter how you look at it unless they’re reusing ALL the existing infrastructure (network/security/hvac/physical server racks/some amount of compute). And aren’t actually including the time to procure the inferencing chips.

You can call up Cisco tomorrow and offer them a billion dollars to get you an entire datacenter worth of switches tomorrow and the answer is going to be no because they just don’t keep that much inventory sitting around. That’s why covid was such a shitshow.

I should give a caveat of: they could in theory redirect existing orders to you but would likely be violating contractual obligations and risk a lawsuit from the fortune 500 Peter they robbed to pay you Mr. Paul.

they are likely referring to their hardware deployment. Which can be done in days. The datacenter is owned and operated by someone else and they just bring in the racks.

It's going to be the same. It may never get better though.

Nvidia should still pay the 500+ employees their due, based on their percentage of ownership.

I would assume there's no accelerated vesting but there's also nothing stopping Nvidia from issuing refreshers of equal value to unvested options. That's been a common recruiting tactic for a long time.

Very interesting would love to read about this, do you have a link to the article?

I'm one of those shareholders. No word from anyone so far.

Nvidia hired all their top personnel and paid $20B to license their technology, but stopped short of actually acquiring the company. Very similar to how Google didn't buy Windsurf.

I assume it's more about what Groq had that Nvidia didn't want, which was competition (in inference hardware).

I'll just make note here for anyone else confused that Groq and Grok are distinct entities. They just have similar names.

Groq is more of a hardware focused company.

A chip dedicated to inferencing that's better than their GPUs.

Nvidia losses 200+ billions on recent weeks because Google TPU actually good and market realize that Nvidia have no "moat"

this is just panic buying to make stronger foothold

It will be interesting to see if this is an exit for investors and which ones. Given it wasn’t an acquisition but licensing.

> Why do I hate Chamath?

>Let's look at the sh he dumped on retail with his abysmal SPAC track record

I do not see why one would feel animosity towards Chamath for this reason. Was there fraud involved? Otherwise, all investors are liable for doing their own due diligence.

I agree, TFA seems to make a lot of assumptions. I kinda think they are correct just because they support the narrative that everyone involved is carefully taking care of their own, but it sure seems like it could go other ways.

OpenAI is trying to move as many requests as they can to a "smaller" model (still suspected to be ~200B).

This is about Groq (the semiconductor company), not Grok (xAI’s LLM).

I don't think Musk has anything to do with Groq AI (his Grok model is from xAI)

This is a about Groq, not Grok (Musk's chatbot).

Grok != Groq