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The core team of the star AI unicorn Character.AI was taken away by Google.

Not only did the two founders - Noam Shazeer and Daniel De Freitas, the authors with the "greatest contribution" to Transformer - announce their return, but some members of the research team also followed suit.

Although it is stated on the surface:

Most of the Character.AI team will stay and continue to build Character.AI products and serve the growing user base.

Google has signed a non-exclusive licensing agreement with the company.Google gave money。

How much exactly? According to Bloomberg, people familiar with the matter revealed that Google will acquire Character.AI's investor shares at a valuation of US$2.5 billion (approximately RMB 17.9 billion) -

That’s higher than Character.AI’s previously reported valuation of $1 billion, but still only half of the $5 billion the company was negotiating with investors in its early stages last year.

Netizens still found the highlight: Isn’t it just a shell left behind?

Many people also think of the other two star AI startups, Inflection and Adept, which also used this method.“Acquisition by Hire”In different ways, they have joined the arms of Microsoft and Amazon respectively:

Microsoft paid money to obtain Inflection's technology license, and the founder of Inflection and most of its employees directly joined Microsoft to establish a new department.

Similarly, Amazon and Adept, a startup founded by another Transformer author, have similar operations and were investigated by the U.S. Federal Trade Commission (FTC): This is probably an attempt to circumvent antitrust investigations through technology licensing.

In fact, despite having more than 20 million users, Character.AI has recently been plagued by financing difficulties and acquisition rumors.

Just yesterday, Musk refuted a rumor:

At present, there is no specific statement on what Chazelle and Freitas will do when they return to Google DeepMind, but the welcome queue has already lined up:

Returning to Google with his employees

Let’s first review the incident in full.

In 2021, Chazer left Google and founded Character.AI with his colleague Freitas.

While still at Google, they were mainly responsible for buildingLaMDA, which is a language model for AI conversations.

Chazelle is one of the eight authors of Transformer and is recognized as the one with the "greatest contribution" - he rewrote the entire project code based on his own ideas, bringing the system to a new level, and making the Transformer project "kick off the sprint."

The main purpose of founding Character.AI is to further researchA more personalized superintelligence。

Now, after more than two years of development, Character.AI has accumulated more than 20 million users with its "various AI characters".

The founder's background and fast-growing traffic attracted investors' attention.March 2023Character.AI completed a $150 million financing round with a valuation of $1 billion, led by a16z, with participation from former GitHub CEO Nat Friedman, Elad Gil, A Capital and SV Angel.

However, after that, this star AI unicorn began to run into trouble:

Four months after this round of financing, there were reports that Character.AI was negotiating a new round of financing, but there was no further news.

This year, Character.AI has been repeatedly reported to have difficulty in raising funds. On July 4, Character.AI was reported to be considering selling to Google and Meta.

There are several core issues.

First,Difficult to cash out。

Although Character.AI has traffic in the United States comparable to ChatGPT, statistics show that the number of daily active users once reached 9 million, but the proportion of paying users is not high.

According to Sensor Tower, Character.AI's total revenue on mobile will be around $200,000 in July 2024. The company's estimated revenue in 2024 is only $16.7 million.

Second,Too expensive。

Character.AI mentioned in its official statement that at the beginning, Character.AI built its products based on self-built models.

But in the past two years, building your own model has become less advantageous: choosing a third-party large model and devoting more resources to optimizing the product experience has become a more cost-effective option.

VFX author and TED host Bilawal Sidhu analyzed this:

Like many startups in the first innings of generative AI, Chazelle and Character.AI had no choice but to build their product from the ground up.
But the situation is very different now. As a startup, Character.AI faces high costs in training its basic models, and venture capitalists are increasingly unwilling to subsidize these expenses.
For Google, this collaboration will allow it to better tap talent and obtain model licenses (similar to Microsoft's collaboration with OpenAI), while maintaining a certain cooperative relationship with Character.AI.
As the price war continues, with a plethora of base models to choose from, startups like Character.AI may be forced to transform into a “package startup.”
Character.AI will likely be built on top of Llama 3.1 or any model developed by Google.

In addition, Character.AI's main products, such as role-playing and emotional companionship, also face the problem of contradiction between user needs and regulatory requirements.

Now, Character.AI's problems have finally been solved thanks to Google:

The two co-founders of Character.AI will lead some employees to join Google DeepMind.

Meanwhile, Character.AI General Counsel Dominic Perella has been appointedInterim CEO。

Here is a brief introduction to Dominic Perella. He graduated from New York University School of Law and worked as an executive at Snap Inc. for seven years. He was core involved in the preparations for Snap's IPO. Since joining Character.AI in September 2023, he has been in the core leadership.

In addition to personnel flow, Character.AI and Google also agreed in the cooperation agreement:

Character.AI will provide Google with theirNon-exclusive license to current LLM technology。
In exchange, Google needs to provide Character.AI withfunds

By the way, before the Character.AI change, one of the core technologiesPrompt PoetOpen source, this is a solution that simplifies the prompt design and management process through a templated approach.

Star AI startups face a reshuffle

In fact, it is not only Character.AI that has been "sold", but also Inflection and Adept which operate in the same way.

Stability AI, whose founders and core team all ran away, and Perplexity, the leader in AI search, are both rumored to be seeking acquisitions.

A new round of reshuffle has begun to emerge.

Many industry insiders have noticed:

It seems that AI startups are starting to collapse without real revenue.

Of course, each company has its own difficulties. Some are facing financial difficulties like Character.AI, some are facing product failures like Humane, and some are facing severe talent loss.

But the commonality comes down to what the CEO of Databricks said at this point in time:

It doesn’t matter how cool what you do is, what matters is whether you can survive?

On the one hand, this wave of AI startups driven by big models has reached new heights in burning money, but only a few can actually make money, and at this stage they are still mainly relying on financing.

On the other hand, if the valuation is too high, each subsequent round of financing will become more difficult.

Selling yourself to a giant may be the best way to survive.

After all, the giants have resources at their disposal and are more concerned with gathering talent and core technologies.

According to QuantumBits, AIGC industry investment is shifting in direction:The snowball effect of model-level investment and financing is obvious, resources are concentrated at the top, and potential capital focuses on the application layer.

This trend has not only erupted abroad, but has also shown signs in China.

Players who are not in the first tier will face more and more pressure on funding and profitability. Players in the first tier will have to rely on financing to continue as their resource needs grow and commercialization becomes difficult to scale in a short period of time…

The reshuffle and elimination rounds will continue, and mergers and acquisitions will surely take place simultaneously in the country.

What do you think?