Character.ai CEO Noam Shazeer Returns to Google

Key quote (from Character.AI):<p>“Over the past two years, however, the landscape has shifted; many more pre-trained models are now available. Given these changes, we see an advantage in making greater use of third-party LLMs alongside our own. This allows us to devote even more resources to post-training and creating new product experiences for our growing user base.”<p>My interpretation is that Character.AI realized they don&#x27;t actually need to train their own foundation models from scratch to support their product - they can build cheaper, faster and probably better if they use LLMs trained by other companies (could be GPT-4o&#x2F;Claude&#x2F;Gemini via APIs, could be Llama 3.1 self-hosted).<p>If they&#x27;re not training foundation models any more, the talents of people like Noam Shazeer aren&#x27;t so important to them. They need to focus on product development instead.

Noam Shazeer is a long-time googler who worked on machine learning for quite some time (take a look at his patent history, for example <a href="https:&#x2F;&#x2F;scholar.google.com&#x2F;citations?view_op=view_citation&amp;hl=en&amp;user=wsGvgA8AAAAJ&amp;cstart=100&amp;pagesize=100&amp;sortby=pubdate&amp;citation_for_view=wsGvgA8AAAAJ:Tyk-4Ss8FVUC" rel="nofollow">https:&#x2F;&#x2F;scholar.google.com&#x2F;citations?view_op=view_citation&amp;h...</a>)). He was a favorite of Jeff Dean and did some of the most impressive work on ML that I saw at Google. I think at some point in the past, Noam saw that google wasn&#x27;t supporting his work very well (google research went through a dark time where many researchers with creative ideas were shut down, either for business or reputation reasons, see <a href="https:&#x2F;&#x2F;www.businessinsider.com&#x2F;google-ai-characterai-ceo-noam-shazeer-chatbot-2023-4" rel="nofollow">https:&#x2F;&#x2F;www.businessinsider.com&#x2F;google-ai-characterai-ceo-no...</a>) and I figure he made a startup because it was a more convenient position for him to do research, even if there wasn&#x27;t a strong revenue model. Now he returns to Google in a position of deep strength and will be able to continue to pursue extremely ambitious ideas with far less restraint.

&gt;Character.AI co-founder Daniel De Freitas is also joining Google with some other employees from the startup. Dominic Perella, Character.AI’s General Counsel, is becoming an interim CEO at the startup.<p>So basically leaving a shell of a company and the GC to try and run it &#x2F; wind it down.

I&#x27;m puzzled. Did Noam get $500mm+ from this?<p>Character.ai could&#x27;ve been at $100mm+ ARR if they did a bit more of a monetization push based on my very rough estimates. If it was an acquisition I would&#x27;ve been imagining $3b+ price range.<p>Huge get by Google! (Side note, Gemini 1.5&#x27;s new alpha release from this week is now at the top of the lmsys leaderboard and sentiment on twitter for it is that it&#x27;s strong, maybe as strong as sonnet 3.5, so it&#x27;ll continue to be an interesting race between meta, openai, anthropic, gdm.)<p>Edit: Okay perhaps it&#x27;s - Noam keeps his C.ai stock, gets a big pay package from Google ($5mm-$15mm&#x2F;year kinda range? not sure). Most of the value in C.ai remains, and he keeps his stock.

This is another inflection style &quot;acquisition.&quot; Highly unethical of the founders and screws over all your employees and investors who are left holding the bag.<p>For those asking, c.ai has very high cost and looks like a typical consumer company that burns money for use, so they were decent on revenue but not near profitability.

Have some familiarity with the players here. The founders are core model nerds and accidentally happen upon success as a majority sex chat product. They have little interest in that and investors are likely saying they won’t support any more core model research. The Google deal lets the founders go back to doing core model work for Google and the company to focus on a consumer only product that uses third party models.

AI is quickly becoming a commodity which is awesome for consumers. I think we’re going to see a huge shakeout of companies who dazzled with the initial allure of LLMs being replaced by the “killer AI apps” where we really start to rethink modern computing.

This is likely an aqui-hire structured to not trigger an anti-trust probe.<p>If there was any real intent to give c.ai a chance as a real business they would have hired a new ceo before the announcement.

&gt;In a big move, Character.AI co-founder and CEO Noam Shazeer [...]<p>It&#x27;s like those rich guy&#x2F;poor guy jokes.<p>Poor guy leaves his job, tries bootstrap its own company and fails, comes back to its old job. &quot;What a loser&quot;.<p>Rich guy leaves his job, gets 150M to start a company in a blue ocean with a significant competitive advantage over 99.99% of humans alive. Still manages to fail and comes back to its old job. &quot;What a bold move!&quot;

People seem to forget or be unaware running a startup is far from cozy and usually doesn&#x27;t work out - it isn&#x27;t for everyone and honestly - isn&#x27;t for most.<p>The more money you raise the more the pressure - and for deep researchers, this is usually noise that takes you away from your passion.<p>Shazz may be the kind of person that just wants to concentrate on research and doesn&#x27;t really care about the rest...

Seems like a way to do an &quot;acquisition&quot; while avoiding the brand risk of buying a mostly-porn company.

The new VC playbook could be.<p>1. Find an unhappy senior AI exec from who&#x27;s published a few papers who&#x27;s published a few papers. 2. Start a new org around them and hire a few key people with crazy salaries (which you can offer cause the time horizon for the company isn&#x27;t that long). 3. Train a few models, release some good looking benchmarks (bonus points if big tech lend you their GPUs as part of some &#x27;accelerator deal&#x27;). 4. Maybe find PMF and become incredibly rich. 4. If that fails, sign a massive but undisclosed licensing deal for your tech with big tech and give them your staff.<p>Seems like a good way to take big bets in AI, while hedging most of the risk.

Was this an Inflection.ai style acquisition considering C.AI was profitable?

Here’s their press release: <a href="https:&#x2F;&#x2F;blog.character.ai&#x2F;our-next-phase-of-growth&#x2F;" rel="nofollow">https:&#x2F;&#x2F;blog.character.ai&#x2F;our-next-phase-of-growth&#x2F;</a>