You probably don't know who Alexandre Wang is. But that will change: the 28-year-old is likely to become known as the man who spent $15 billion.
Wang is the CEO of Scale AI, a data company that works with giant AI leaders such as Meta and Openai. Meta is also reportedly trying to spend $15 billion to buy a 49% stake in Scale AI.
What does Meta gain for that investment? Which value scales nearly $30 billion in AI, about twice as much as its last valuation from a year ago?
In theory, that money can meta-knit the relationships with companies that are important to AI ambitions. In fact, the money buys the king and a few of him EU.
“This is a very expensive acquisition of Alexandre Wang,” wrote technology analyst Ben Thompson, reflecting the now-existing wisdom of investments that have not yet been announced. We have reached out to AI on both meta and scale for comment.
Acquihire is traditionally a transaction in which small startups with limited prospects sell to larger players, and are usually more interested in the company's employees than what they should be making. Often, the acquired company will stop anything it is trying to sell when the transaction closes.
Acquihire is usually considered a “soft landing” for startup founders and employees. This is because they secure employment for at least some people.
These transactions were very common in Silicon Valley until recently, when President Joe Biden's antitrust officials made M&A relatively rare.
Now they're starting to pick up again – especially when it comes to AI where the deals come with huge price tags. For example, last year Microsoft paid the $650 million reported for an AI startup inflection. Technically it's a licensing fee, but essentially the price that hires company founder Mustafa Suleyman and a portion of his team. Google then paid $2.7 billion for similarly structured transactions as Character.ai, primarily to hire founder Noam Shazeer and some of his employees.
Now, Zuckerberg appears to be making that pattern beyond that pattern in his latest deal, and reportedly hopes Wang will join a new AI lab where superstar researchers live.
As with Semafor's Reed Albergotti, it can be argued that the $15 billion pricing Zuckerberg is not paying. Because at least a portion of that money is considered to be an advancement in the future work scale that AI will make on the meta.
But most people I've spoken about in technology believe that the real motivation here is to fold the king. Not because Tim Cook wanted the company's headphones business, just like Apple's $3 billion acquisition, but because he wanted the taste and aura of co-founder Jimmy Iovin.
This makes it even more interesting that the king is not known as a brave AI scientist with his blue chips. He said, “It's not that Zuckerberg, a businessman with essentially a technical chop, has been attracting attention these days, and that information reports, not a huge pay offer.
And regardless of what Zuckerberg thinks Wang can do for him, he has many noteworthy stories from his past. Both Instagram co-founders and WhatsApp co-founders left the company after Zuckerberg spent billions of dollars. Instagram co-founder Mike Krieger is currently competing with Meta through his role as humanity's chief product officer.
Behind the discussion: Not many companies can afford to burn billions in recruitment agreements, but meta is definitely one of them. And, as Zuckerberg has, if you convince yourself, the future of technology – and your business is AI, and if it works, the amount you spend is ultimately worth it.
