Meta has announced a very expensive deal with a leading AI service company, Scale AI, and its CEO Mr. Alexandr Wang. The investment amount Meta is investing in this company is crazy when the fellow company’s value was almost equal to it the previous year. Then why is Meta spending a huge amount of $15 billion on a 28-year-old CEO? Let’s analyze the possibilities.
What is Mark Zuckerberg up to?
The leading AI company, Scale AI, works with many AI giants like OpenAI and Meta (of course!). Moreover, Mark Zuckerberg seems interested in the company’s recent developments and wants to use their data AI services for their benefit. It is just a theory but this deal also looks like paying CEO Alexandr Wang this amount to get his attention to the matters of Meta. In short, this amount is offered to hire Mr. Wang in Meta’s business.
Mark Zuckerberg has bought over 49% stake in Scale AI as their extended partnership and investment in the business. Meta confirmed this news later on Thursday regarding the partnership with Scale AI which will work together with Meta in the production of data AI models. Moreover, Meta also mentioned Mr. Alexandr Wang who is going to put inspirational efforts into the superintelligence models of their company.
This makes us wonder if Meta was actually behind buying most of the stakes of Space AI or buying the CEO to work in their company.
What is Acquihire? What does it have to do with this deal?
Why would you think Meta will invest such an amount in a company that has reached a $30 billion value after investment? The company satisfies the current needs of Meta, which is why it is so eager to have it under it. If we see the practical approach, Meta has attempted to buy Scale AI’s best-skilled employees including CEO Alexandr Wang. This particular process is what we call Acquihire.
In a definitive tone, Acquihire is a process by which a lower valuation company is sold to a bigger business that wants to use the company’s employees and services for its benefit. In exchange, the higher valuation company provides several opportunities and privileges to that company.
Acquihire is like an auction to raise money and clear the investment loans of the investors. Moreover, mostly after the deal ends, these companies come back to manufacturing what they initially planned rather than what the bigger companies made them do. This is clearly because this setup only lets the company access the acquired company’s employees.
Mark Zuckerberg and his Motive for this Deal
As we have got to know, the deal looks more like an Acquihire which has recently begin again after the high tags of AI investments in the US. Moreover, as per FInancial Times, Meta might be taking Mr. Wang in its matters for the promotion of the company and its tools rather than actual AI developments and research.
We should also note that Mark Zuckerberg has partnered and bought several other AI-advancing companies like Instagram and WhatsApp. However, the partners soon left Meta and its operations. One of them, the former CEO of Instagram who sold the company to Meta, has now joined another company which is now in competition with Meta. Thus, this time Zuckerberg is more careful with his deals and the expectations from them.
Most companies do not invest such a huge amount of money on a deal but Meta has thought differently. In the world of advancing AI, the more you invest is the more you gain mentality is adopted by Mark Zuckerberg in his business.
Conclusion
Many investment enthusiasts are arguing whether or not this deal is an Acquihire. The majority, on the other hand, says that Mark Zuckerberg is just making the deal to draw attention and promote his company’s product in the AI-driven market.
