Not clear that this is true financially. Of course, it sucks to be at a sinking ship, but in most of these the people left behind are compensated as both employees and shareholders.
Don't all shares / options go to zero in Chapter 11, or is that only true in Chapter 7 when the lenders take over?
In any case, I'm not sure Character.ai's assets will be worth much or that the employees will have any sort of liquidation preference.
The fact that the legal entity has no money doesn't mean they didn't get paid.
You can figure out a bit about what likely happened by what is not happening. NVIDIA/Groq are being sued for leaving former employees out of the acquisition: https://www.cnbc.com/2026/10/05/nvidia-groq-deal-stockholder...
Which to me implies that in that case, at least current employees were taken care of, and the court will likely force the former employees to also be taken care of because Delaware law doesn't like it when you discriminate in ways that were not spelled out ahead of time.
This is also partially why your common stock options can be valued significantly less than the price the company value would imply: because it’s not an even share in the business.
Assuming you're talking about the Trados Inc litigation, the situation was:
* Raised 52m
* Acquired for 52m
* 8m paid to exec team to stay in place
* Common stock got zero
The lawsuit determined that the board did have a fiduciary duty to the common stock, but that the common stock had no economic value, so they were not actually being harmed here, aka this is basically the best deal the company could have gotten, but it didn't clear the pref stack.
In the Groq/Character deals, they very obviously cleared the pref stack, so common stock deserves to get a piece of the licensing deal at the rate of the stock they held. It's annoying because its a dividend and doesn't benefit from QSBS, etc, but common stock is getting paid there.
You join a company, are granted ISOs/RSUs/etc, and they matter at some point when a liquidity event happens.
Now the liquidity events are "acquihireasitions", the execs and senior AI/ML eng get buyouts to go to a new company -- everyone else: regular eng, designers, PMs, marketers, recruiting, etc. everyone else is just left with nothing.
I wouldn't join an AI startup unless I was on the ML side, and I'm not: I'm just a "regular ass product engineer" so screw me I guess.
Everyone who had stock (including common stock) at character.ai was bought out at the $2.6bn price: https://www.theinformation.com/articles/google-hires-charact...
The buyout included guaranteed payouts for people who had unvested stock for 2 years post-acquisition.
These transactions are opaque and confusing, but employees are generally not being fucked over here.
https://news.bloomberglaw.com/mergers-and-acquisitions/matt-...
"Hi-quired," although not sonorous, is at least a new word for a specific thing, instead of a word for a closely related thing that would just confuse anyone who heard it. I might've just gone for "Hire-quired" because it's obvious what it means and it seems a little bit easier to say.
Do we also need to retire ‘head hunting’, because it brings to mind cartoonishly outdated notions of savagery?
Reject modernity, embrace tradition.
---
poach (verb) poached; poaching; poaches
Intransitive verb
1. To encroach upon, especially for the purpose of taking something.
2. To trespass for the purpose of stealing game; also, to take game or fish illegally.
Transitive verb
1. To trespass on.
2. a. To take (game or fish) by illegal methods.
b. To appropriate (something) as one's own.
c. To attract (someone, such as an employee or customer) away from a competitor.Do you object if someone says, "I adopted a new strategy"? After all, children are adopted, and one could say that using this phrase trivializes a deeply important human relationship.
Do you object if someone says, "She's a fan of my work"? After all, a fan is a machine that blows air. It could be said that referring to a person as a fan reduces them to an appliance whose purpose is to serve someone else.
Do you object if someone says, "I have a date tonight"? After all, a date is a fruit. Someone could say that calling a romantic partner a "date" is to objectify them and reduce them to something consumed for pleasure.
All this other stuff people are trying to make up falls under those two when a company buys another.
Meanwhile, the way that plays out is that Google hires all the talent by fairly paying more than the startup can, then can turn around and say "your company is a dead man walking, you can either sell us your tech, or crash and burn with nothing", and the only fiscally responsible decision is to sell.
Antitrust is also federal and is probably generally supreme over state law. E.g. even if Google fairly acquires talent according to state law, it can still be determined to violate antitrust.
This poaching scenario (where Big Co pays above market to a large number of employees to drive a competitor out of business) is very similar to dumping (selling goods below market etc.), which has been illegal for a long time even though "selling goods" is generally legal.
However, since the government (DoJ, FTC, etc.) is the ideal litigant, you actually need someone who works there to not get fired for long enough to complete investigation and enforcement. In a lot of anti-trust cases, all the direct participants benefit: the employees get paid more, Big Co consolidates power, and Small Co gets paid off. The "losers" are most distant like their customers or uninvolved competitors who aren't in a good position to sue.
does anyone know if the employees who didnt get poached got their equity paid out?
That the new "investor" choses to let their investment die may not matter, it would also be cheaper to selectively buy out investors than buy out all equity in the company.
"if it walks like a duck and talks like a duck, it's probably a duck" should apply to acquisitions. These types of acquisitions leave employees (+ other shareholders) holding the bag. It should be illegal.
Yes, by offering them things like equity in the company. This practice throws all that out the window though, in essence unilaterally renegotiating the terms of employment. When the leadership team can be acquired independently of the company then these employees can be left with nothing. Sometimes the corp doing the acquisition will throw a bone to the dregs left, but that does not appear to be legally required. It's exploitative and unjust.
In particular for the noncompete ban, I believe that trying to enforce a noncompete-adjacent action like this would open you up to being sued by the employees who would have been hired, and the hiring company, in California court.
Along with the rest of the top 5 states where almost everyone lives in the USA?
Have you ever even lived for a significant amount of time outside of California? Ever try New York, Texas, or Florida? Nobody is "shackled to their workstation" there either. California leads in unaffordable living and wealth inequality, and it's not even because those on top in California are living any better than even the upper middle class elsewhere.
The economy is much more than tech and most of those businesses are not in California and don't want to be.
Noncompete "agreements" are evil and run counter to every redeeming quality that a free market economy has. If your state allows them, they are in favor of indentured servitude, plain and simple. In contrast, California stands as a beacon for those who refuse such chains. We don't just ban noncompetes in California, we actively liberate those who move here from their out-of-state noncompetes.
And contrary to what you'll read on here, California is not just tech. We've got a massive agriculture industry (more than 50% of the country's produce), several of the best universities in the world, the entire entertainment industry (to such a degree that we're killing everyone's accents), one of the top financial sectors, and the largest manufacturing industry in the country. Hell, our restaurants are better than anywhere else in the country: I can walk down the street walk past multiple restaurants that would be the best in the entire state in most of the rest of the country, to a point that I take it for granted until I walk into a random restaurant in the heartland somewhere and expect it to be good.
We treat our companies well and our residents better. Hell, we even treat our non-residents better than any other state, given that our taxes subsidize the existence of the parasitic 41.
When the worst thing about your state is a housing shortage due to everyone wanting to be there, that's glowing praise.
The other 5 states don’t even come close economically. If California were a country it would be the 4th largest economy in the world. Fourth. Largest. Economy.
The next closest state is Texas and it’s down around 9 or 10 at half the GDP…
This is kinda amusing.
An antitrust case over an AI girlfriend... I didn't even know there was a monopoly on that.
How is hiring people "terrible practice"?
Please don't try to convince people to accept the current abuses of the system as inevitable or "both sides" when they clearly aren't.
Please stop only waking up under a Republican administration, or even worse just under the administration of a wrestling valet game show host.
> clearly aren't.
"Oh, please" and "it's just so obvious." If it's so clear, you should have less trouble explaining it than other things. And that doesn't mean explaining the bad things that your enemies do in power, but explaining how your friends weren't doing those things and actively ending them when they were in power.
Clinton did the massive deregulation that defined this century. Obama didn't prosecute anyone for 2008 financial crimes*, let Citigroup pick his cabinet, bailed out the banks, and flooded the stock market with free cash. Biden is literally the Delaware credit card prevent student loans from being discharged in bankruptcy guy, he had great people in Kanter, Khan and Chopra and undermined and ignored them consistently while breaking a railroad strike.
All absolute dirtbags who did what Republicans could have never gotten away with, because partisans who pretend to care fall asleep when Democrats are in power. A lot of consulting firms and nonprofits get flooded with state cash when Democrats are in power, and don't when Republicans are in power (and vice versa.) Patronage is more powerful than ethics when it comes to the middle class.
[*] Or for a worldwide torture network, or the people who admitted destroying evidence of the worldwide torture network. Or for the intentional lies that began two Middle East wars.
Yes, but Trump says silly things on social media.
But splitting big tech is unavoidable as otherwise they will sink the rest of the economy with them (and then it will be split anyway).