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Character.ai has initiated voluntary Chapter 11 bankruptcy (blog.character.ai)
submitted 3 weeks ago by to c/technology@lemmy.world
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[–] 10 points 3 weeks ago (2 children)

There's no surprise here - the founding team already got picked up by Google in a reverse acquihire. What was left was just the corpse.

If you're trying to take this as a sign of impending AI Business failure, you should look probably elsewhere.

Reverse acquihires should probably be illegal to be honest. It leaves a lot of people out in the cold.

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  • [–] 2 points 3 weeks ago (1 child)

    Reverse aquihire means no trademarks and no company assets though, right? Just the talent s being hired away. That means the founding team have already noticed that company is going down, otherwise why leave the company you founded?

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  • [–] 5 points 3 weeks ago

    It means you:

    • Pay off the investors by licensing the tech, so they get made whole
    • Hire whichever employees you feel like taking from the team, typically the founders + their favourites
    • Leave the rest of the company in place

    You can do it as a founder as a type of exit where you get paid a whole lot of money.

    The bad part is that every other employee at the company basically gets stiffed. The "social contract" of startups is that you forego a big tech-level compensation package in favour of stock options which may provide returns at the point of an exit. In reverse acquihires this social contract is directly violated.

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