AI Founders Exit Startups for Big Tech: Industry Impact

The tech industry is observing a growing trend where founders of promising artificial intelligence startups are departing their ventures to join larger technology companies, a phenomenon colloquially termed “reverse acquihires.” This often leaves the nascent startups in a precarious state, with remaining employees facing considerable uncertainty about the company’s future direction.

Character.AI, a startup founded three years ago by renowned AI researchers Noam Shazeer and Daniel De Freitas, recently experienced such a transition. Last August, Shazeer and De Freitas exited Character.AI to join Google, their former employer, as part of a significant $2.7 billion licensing deal with the search giant.

In the immediate aftermath of the founders’ departure, Dominic Perella, previously Character.AI’s general counsel, stepped into the role of interim chief executive officer. Perella faced his initial challenge during a staff retreat at the Silverado Resort in Napa, California, where approximately 100 employees, accustomed to Perella in his legal capacity, engaged him in a candid question-and-answer session. Employees pressed Perella on critical issues, seeking clarity on the company’s ongoing operations, strategic shifts, and resource reallocation.

Perella acknowledges the profound impact of a founder’s exit on a startup. However, he maintains that Character.AI is navigating this novel form of transaction relatively well. “Having your founder leave is a big change,” Perella stated, while also asserting, “We were left much better positioned than some of the other folks,” suggesting a more stable outlook for Character.AI compared to other startups that have undergone similar reverse acquihires.