“Acquisitions” are shaking up AI startups, but they pose risks

But first, forget the milk; we will take the whole cow.

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The big story

Mergers and acquisitions (I)

In the age of AI, if you can’t hire them, acquire them.

Few things are more sought after in the business world today than AI specialists. Everyone wants to boost their business with generative AI.

But with a limited number of AI specialists, talent is not easy to find. The pay is high – seven-figure salaries – and the competition is even fiercer. You know it’s serious when Mark Zuckerberg gets into recruiting.

So why worry about just one AI specialist when you can have a company full of them?

The future of the AI ​​industry could be a wave of “acquisitions,” write Business Insider’s Rebecca Torrence and Riddhi Kanetkar, who mapped potential buyers and sellers in the space.

The M&A (M&A) industry is already off to a strong start this year, with 55 AI startup exits in the first quarter, according to data from Crunchbase.

And it’s not just cutting-edge tech companies that are making purchases. Acquisitions give non-tech companies a chance to jump-start an AI strategy that would be difficult to implement otherwise.

Acquisitions carry many risks.

Transactions can be tricky at the best of times, let alone in an overvalued market with high interest rates.

Companies looking to strike a deal are also flying a bit blind. Venture capitalists eager to back AI startups This means that there are many companies that are highly valued but not very substantial.

And then there is the risk that the people acquired will not be suitable.

Technologists have the luxury of being specific about their work culture. Remember when OpenAI employees were not enthusiastic about working at Microsoft amid Altman’s ouster?

But some startups may have no choice if funding becomes tight and an acquisition is their only option. And if that’s the case, that’s a problem, Julia Gudish Krieger, managing partner at Pari Passu Venture Partners, told me.

She has rarely seen acquirers work, because the motivation for the deal is often more about a soft landing than having a passion for the product they will promote or develop in their new roles.

“If there are real synergies and the new group is genuinely excited to roll up their sleeves and help co-create, then I’m sure an acquisition can be magical in theory,” said Gudish Krieger. “But that’s easier said than done.”

3 things about the markets

1. Oh my God! They killed Novo Nordisk! South Park’s final Ozempic storyline could be bad news for obesity drug makers and their investors. Publicly traded U.S. companies that feature prominently on the comedy show continued to underperform the S&P 500.
2. The stock market and the economy are separating. Corporate profits show continued growth despite a slowdown in GDP. Although rare, the divergence of the two generally means an ideal environment for investors. The S&P 500 has historically generated average quarterly returns of 3.6% when this happens.
3. Don’t expect stocks to slow down in June, according to Fundstrat. Tom Lee, ever the optimist, sees the stock market rising 4% next month. Continued disinflation, coupled with plenty of liquidity sitting on the sidelines, means the market has more room to run, even if it hits record highs. Here’s what makes him so optimistic.

3 things in technology

1. Summer Fit Check: Technical Edition. In a crazy turn of events, tech executives are getting (good) attention for their style. Fashion experts explained how techies can upgrade their often monotonous wardrobe.
2. Gmail is stuck in the Stone Age. When Google introduced the tabbed inbox in 2013, it was a game changer. There was finally a way to separate important emails from clutter. But in the decade that followed, Gmail failed to keep up.
3. Apple is under pressure. A group of French business associations implored CEO Tim Cook to stop the deployment of a new “web eraser” feature, fearing it would have a catastrophic impact on the online advertising industry. The tool would allow Safari users to remove unwanted content such as ads, text and images from web pages.

3 things in business

1. A bizarre government rule prevents young men from finding jobs. Young American men are not working. Recessions and low wages could be the cause, but our broken unemployment system could ultimately make employers reluctant to hire them.
2. Your boss probably thinks you’re boring too. Even if your boss annoys you, chances are you are not completely innocent. From complaining to asking too many questions, career experts shared with BI the employee behaviors that drive bosses crazy.
3. Elon Musk in the White House? Donald Trump and Tesla CEO discussed a potential advisory role if the ex-president wins the November presidential election, the Wall Street Journal reported. Trump could give Musk his opinions on border security and economic policies, according to the outlet.

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The Insider Today team: Dan DeFrancesco, associate editor and presenter, in New York. Jordan Parker Erb, editor-in-chief, in New York. Hallam Bullock, editor, in London. George Glover, journalist, in London. Grace Lett, associate editor, in Chicago.