The Exodus From Big Tech to AI

Hi all, it’s Sarah Frier in San Francisco. The AI boom is beckoning top talent away from the tech giants. But first... Today’s must-reads:• [View in browser]( [Bloomberg]( Hi all, it’s Sarah Frier in San Francisco. The AI boom is beckoning top talent away from the tech giants. But first... Today’s must-reads: • Qualcomm's results [signaled](demand for mobile devices remains sluggish • Meta faces a [possible government ban]( on launching new social-media products without independent review • US [prosecutors won]( the first-ever insider-trading trial involving digital assets Higher risk, higher reward Imagine you work for Microsoft Corp., Google or Meta Platforms Inc. With spending tightened, only the most promising internal projects are getting resources. Your team has already been [hit]( by layoffs and rumors are swirling that more are coming. At Meta, further cuts are [confirmed]( — for the end of this month — and you don’t know who will be on the list. Internal morale is deteriorating, employees say. No wonder some, with their futures in Big Tech uncertain, are choosing to leave and join the artificial intelligence race. Though all three of those giants have invested heavily in AI and declared it a top priority, the employees are joining or founding startups, where they can get product to market faster and potentially see a bigger payout should they succeed. Vinod Khosla, the high-profile venture capitalist who [visited]( Bloomberg News on Wednesday, said he sees a lot of former Google, Meta and Microsoft talent pitching him on new companies, particularly in AI. “Bad times for big tech,” Khosla explained, “is a great time for startups that you'll hear about five years from now.” Meta and Google are limiting resources for their “most advanced projects,” he added. “That will cause people to leave. And the best ones start startups because they're much more mission-driven than paycheck-driven.” At the big tech firms, we’ve heard complaints about slowness to market for those major AI bets. Employees are also contending with an increased focus on [aligning]( what’s in production to already-successful products and business lines, like YouTube at Google and advertising at Meta. That’s a divergence from the investment in more random experimentation that their cultures allowed before all the belt-tightening. One Meta manager told me that since the first round of layoffs, employees have been encouraging each other to go pursue outside ambitions, rather than stay for the next round of job cuts. Already, some standout AI companies are associated with former Googlers. [Character AI](, which allows people to hold realistic chatbot conversations with familiar personalities, is founded by Noam Shazeer and Daniel De Freitas, who did pioneering work on the neural language model LaMDA at Google. Cohere, which makes it easier to use large language models, and Adept, a machine learning research and product lab, were also started by ex-Googlers — people who, alongside Shazeer, worked on one of the landmark AI papers out of Google research, entitled "Attention is All You Need." As my colleague Julia Love [has written](, 7 of the paper’s 8 authors are no longer at Google. It’s not a new phenomenon for key talent to leave big tech to chase the latest wave — and it’s not always a sure bet. In recent years, many high-level Meta employees decamped to start or join [crypto companies](, which didn’t turn out to be as lucrative as expected (yet). Either way, “there’s almost no example of very large innovation coming from an existing large entity,” Khosla said. “This entrepreneurial ecosystem is essential for progress.” —[Sarah Frier](mailto:sfrier1@bloomberg.net) The big story During the pandemic, Wall Street banks and private equity firms [invested billions of dollars]( in startups rolling up popular brands sold on Amazon.com Inc. The bet was that these startups would become the next Procter & Gamble. That hasn't really panned out, and now the financiers are on the hook for some $16 billion. Get fully charged The battle for AI talent in India is heating up. Some top recruits are getting their compensation doubled and one even got a BMW motorcycle as a sign-on bonus. Twitter isn’t paying]( its vendors and the lawsuits are rolling in. The next stage of the AI hype cycle is coalescing around the idea of AI agents that actually [do the work]( for you. Meta’s head of security policy Nathaniel Gleicher joined Caroline Hyde and Ed Ludlow to discuss how the company [has blocked]( more than 700 malicious links on Dropbox and Google that were using the ChatGPT brand, and what steps it is taking to counter these new AI-related threats. More from Bloomberg Get Bloomberg Tech weeklies in your inbox: - [Cyber Bulletin]( for coverage of the shadow world of hackers and cyber-espionage - [Game On]( for reporting on the video game business - [Power On]( for Apple scoops, consumer tech news and more - [Screentime]( for a front-row seat to the collision of Hollywood and Silicon Valley - [Soundbite]( for reporting on podcasting, the music industry and audio trends Follow Us Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. 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