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> When a company uses acquisition as a strategy to develop features, it is stagnating.

Google in it's heyday acquired: (a) Android (b) Google Maps (c) Youtube. It was anything but stagnating at the time.

From what I can tell, OpenAI is following a similar strategy.

Has Google made anything as impactful as Gmail and Chrome since those acquisitions? Stagnant doesn't mean unprofitable.

Google videos was a thing, it died. Google had an awesome modular phone project (Ari?), it died too. I can imagine they could have done something like M-series apple chips and an actual modular phone and phone OS that was superior to Apple products.

I had nearly the same reaction to the headline, I feel like they’re hitting a wall in terms of the things they can innovate on in house and are flailing and are looking for the next hit, in more ways than one. This is just a suggestion of that.

> When a company uses acquisition as a strategy to develop features, it is stagnating.

That’s a gross over-simplification. M&A has been the modern way to grow for decades.

For startups? OpenAI hasn't been public for long enough to no longer be considered a startup.

Acquisition is a common use of VC funding by startups. It perfectly fits the VC agenda which is to use funding to secure a competitive, ideally leading, position in the market.

M&A is a growth lever for startups, especially in a competitive market. Stripe bought Paystack. Databricks acquired Tecton, Neon, BladeBridge, Tabular, Arcion, MosaicML. Wiz bought Dazz, Gem Security, and Raftt. ServiceNow acquired Moveworks. Snowflake purchased Crunchy Data. CoreWeave agreed to buy Weights & Biases. Ripple acquired GTreasury. AlphaSense purchased Tegus. etc. etc.

>Bigger and established companies take the risk and it does mostly pan out ok in the end. But, they generally tend to use this strategy going forward.

Having been in several companies that been bought, disagree it's mostly pans out. Most of time, it's just a sub company that does whatever it was doing before and names on paychecks change.

However, revenue rarely increases to point purchase probably made sense or synergy is there.

That's why I said "ok" instead of "great" lol. sometimes it is a disaster, most of the time it's a minor loss or a break-even. when you consider that they could have just hired people and competed directly instead, it's usually a failure though.

It's a sign of executives feeling like they don't have enough control and influence over their own company to enable similar innovation and inventiveness like the competition.

Most M&A's are value destructive.

I suspect OpenAI wants the user data from Sky/Atlas, and Apple does not want to give it. Also, Apple are probably wanting to keep their options open wrt other AI providers - after all, it is increasingly clear that OpenAI is not the only game in town for thd core LLM tech.

Maybe it is the opposite of microservice architecture. Buying a company is like a macroservice.

Technically, it's macrodata refinement.

> When a company uses acquisition as a strategy to develop features, it is stagnating. At least it's past it's peak.

I feel like you might just be ignoring tons of acquisitions... back in 2004, Goole went on a spree and acquired a bunch of companies. I happen to know the founders of what later became Google Photos, but I think Google Maps was even more important... was it already past its peak?

Microsoft acquired Powerpoint in 1987. I don't think they peaked until long after that, but, hell: Microsoft acquired DOS in 1981, and there is no way in hell they had peaked before that point, lol.

I mean, you comment even talks about Siri... do you know that Apple bought that one in 2010? (They also bought the Shortcuts feature, acquiring a company called Workflow... which happens to be made by the same team as Sky ;P. But, I totally appreciate that 2017 might be considered after Apple "peaked", though I imagine most people would disagree, as Apple Silicon has been a massive market disruption... though, arguably, they bought PA Semi to pull off that project, lol.)

This is just how companies work.

I think Siri is a bad example, apple was around long before 2010. But you have a good point and I mostly concede. The only counterargument I have is that I don't think the culture of acquisition was the same pre '08 (just spitballing there)? Or maybe I'm just unaware. But these days I hear about companies acquired by capital-heavy bigcorps and just fizzle out, the company acquiring them being profitable but stagnant in terms of new innovations.

Look at Apple, their software game is mediocre now because of that culture, but they're at the top of their hardware game because instead of outsourcing and acquiring, they built in-house.

Others said this is an acquihire, and that might be the case, but are the new hires going to easily follow OpenAI's vision or try to interpret things according to what they're used to? If OpenAI is trying to do something major in the Apple world, why are they not building in-house? They can attract the talent and have the capital and the undertaking does not seem relatively big. OpenAI is also over-hyped, so it needs to show that it can churn out value on its own much more than Google in '04 or Microsoft in '81.

I'll conclude with this: so long as this is a tactical decision, you/others are 100% and I'm wrong. But if it is a strategic decision, then I'm bearish on the count of their strategy being flawed and timed poorly.

> Look at Apple, their software game is mediocre now because of that culture, but they're at the top of their hardware game because instead of outsourcing and acquiring, they built in-house.

Apple acquired Touch ID (AuthenTec) in 2012 and Face ID (PrimeSense) in 2013. They acquired most of the depth mapping tech for Portrait Mode (LinX Imaging) in 2015. They purchased a ton of companies on the road to making their chips, including PA Semi, Intrinsity, and Dialog Semiconductor. It seems like they acquired their flash memory controller (Anobit Technologies) in 2011?

I totally agree that Apple improves the stuff in house--or even kind of throws it away and starts over to achieve better verticality--after integrating the teams, but so do all of these companies if they aren't making some grave mistake (as was seemingly the case with pretty much everything that Twitter bought, lol). Like, AFAIK, it isn't actually that rare that companies successfully pull that off? WhatsApp didn't even have end-to-end encryption before Facebook bought them!

> Others said this is an acquihire, and that might be the case, but are the new hires going to easily follow OpenAI's vision or try to interpret things according to what they're used to?

FWIW, I honestly don't know how this is being characterized on either side, but a lot of times this is just how people are hired: the way you build something "in house" by "attracting the talent" (from your next paragraph) is to give them the moral equivalent of a big signing bonus from the "capital" you mention they have by acquiring a company someone started that is effectively the resume of not just one person but an entire team of people who are able to become a turn-key department.

This strategy has the fascinating benefit that often the money that is then paid for the company and earned by the various players (such as the founders) gets taxed at a long term capital gains rate rather than as income (as we'd expect a normal signing bonus), and if the turnaround is short enough and a lot of the original money came from angel investors or friends and family rather than venture capital, you don't need all that much of a multiple to make it worth everyone's involvement.

I'll only say that touch id and faceid isn't what comes to mind when I think about apple doing great in terms of hardware (I loathe those features myself, so I'm biased). When people say apple has better build quality, the m-series chips and now the wireless chips, that's what I meant.

Seems like an acquihire. Honestly, I'm shocked that Apple didn't purchase them, given that Apple has nearly ZERO to show after three years since ChatGPT.

I mean, this seems to be exactly the sort of thing Apple was trying to sell us, right? And they still haven't pulled it off.

Apple is the smart one then maybe. You don't need to hire all the non-technical people, that's what causes issues/stagnation. They could have poached all their people instead. Or, they could have developed a competitor in less than a year (imho). I doubt they'll integrate it with their core-brand any sooner anyways.

My concern is, Sam Altman is now thinking "meh, let's just buy that company" instead of "damn, we need to dig in and beat these small guys".

Approximately no one has ever heard of Sky, and ChatGPT has a billion users. This is an acquihire to get talent, nothing more.

Nah, it’s a way to pay himself and funnel money out because he invested in that company.

I'm quite sure that Sam Altman isn't spending any of his time trying to figure out how he can buy some tiny software company to make a few extra million. He's worth billions already.