{"id":1396,"date":"2024-03-16T19:40:23","date_gmt":"2024-03-16T19:40:23","guid":{"rendered":"https:\/\/news.talkwithrattan.com\/index.php\/2024\/03\/16\/social-capital-ai-startup-deal-led-chamath-palihapitiya-to-fire-partners\/"},"modified":"2024-03-16T19:40:23","modified_gmt":"2024-03-16T19:40:23","slug":"social-capital-ai-startup-deal-led-chamath-palihapitiya-to-fire-partners","status":"publish","type":"post","link":"https:\/\/news.talkwithrattan.com\/index.php\/2024\/03\/16\/social-capital-ai-startup-deal-led-chamath-palihapitiya-to-fire-partners\/","title":{"rendered":"Social Capital AI startup deal led Chamath Palihapitiya to fire partners"},"content":{"rendered":"
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Venture capital firm<\/a> Social Capital suddenly fired two of its partners after they tried to raise outside money for an artificial intelligence startup \u2014 an endeavor that provoked the ire of the firm\u2019s leader, high-profile investor Chamath Palihapitiya<\/a>. <\/p>\n

After it fired Jay Zaveri and Ravi Tanuku on Sunday, the firm offered no details other than that high-wattage law firm Wachtell, Lipton, Rosen & Katz had been hired just days earlier to investigate a \u201csituation,\u201d Bloomberg first reported. <\/p>\n

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Social Capital\u2019s shocking decision to fire the two partners, and the mystery surrounding the circumstances, has transfixed Silicon Valley this week. Palihapitiya is one of tech\u2019s most visible investors, and a host of the popular and controversial podcast All In. An early Facebook executive who\u2019s made lucrative bets on Bitcoin and San Francisco\u2019s pro basketball team, he earned the nickname the \u201cSPAC king\u201d for his leading role in the recent boom for special purpose acquisition companies. Though many of those deals turned sour shortly after their debut \u2013 resulting in disaster for investors.<\/p>\n

The core of the dispute at Social Capital, according to multiple people familiar with the matter, was an investment in fast-growing startup Groq AI<\/a>. Social Capital<\/a> was an early investor in the company. Palihapitiya left Groq\u2019s board in 2021 and Zaveri joined, according to company releases and LinkedIn. Around the same time, Grok notched a more than $1 billion valuation in a fresh funding round. <\/p>\n

Recently, Zaveri moved to raise outside money for a follow-up deal for Groq in the form of a special purpose vehicle, two of the people said. The check, part of a larger financing, would ensure that Social Capital retained its stake. Zaveri sought cash from outside Social Capital because there was no remaining liquidity in the years-old Social Capital fund that would have made the investment, some of the people said. Social Capital declined to comment.<\/p>\n

The financing was relatively tiny \u2013 about $2 million. Palihapitiya was aware of its formation, one person said. While Zaveri did not invest in it directly, it had the backing of some of the firm\u2019s leadership. For example, Social Capital\u2019s general counsel Robert Goldstein was participating in the deal, said one of the people, all of whom asked not to be identified discussing private information. <\/p>\n

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But the move rankled Palihapitiya, who felt that Zaveri and Tanuku went behind his back while putting together the deal, one person said.A Social Capital spokesman reiterated its statement that the investors were fired \u201cdue to employee-specific circumstances\u201d and declined further comment. The firm declined to release the findings of the Wachtell investigation<\/a>. <\/p>\n

Representatives for Zaveri and Tanuku have said they were unjustly terminated. And both have now hired their own lawyers: Zaveri is working with Gibson Dunn\u2019s Orin Snyder and Tanuku tapped Wilk Auslander\u2019s Scott Watnik.<\/p>\n

A representative for Groq said that the situation was internal to Social Capital and it had no further comment.<\/p>\n

Social Capital has been bolstered by Palihapitiya\u2019s own fortune, fueled by highly lucrative bets on Bitcoin, Amazon.com Inc. and Tesla Inc. Palihapitiya also made a successful investment in the Golden State Warriors basketball team, which he sold at a significant profit.<\/p>\n

The blowup over the special purpose vehicle for Groq highlights the unusual structure of the firm. Rather than raise outside money, Social Capital has acted as a kind of family office for Palihapitiya. Its evolution started in 2017, when the firm saw a staff exodus that included both of its other co-founders \u2014 an unexpected change that spooked some firm backers who decided not to reinvest. <\/p>\n

In 2018, Palihapitiya said the firm was closed to outside investors, and would instead manage his personal funds and those of ultra-wealthy individuals including Mark Zuckerberg and Hong Kong billionnaire Li Ka-shing \u2014 men he considers his mentors and \u201ccore\u201d investors. At the time, Palihapitiya said Social Capital would adopt a highly data-driven approach to investing, and that the decision not to raise outside funds would help the firm focus on technology rather than administrative work. <\/p>\n

The firm started to open up again in 2022 as Social Capital tried to raise a new fund from traditional investors. But the funding didn\u2019t come together as the wider startup market fell apart. The firm reduced the initial target from billions, to $1 billion in 2023 \u2014 before completely scrapping the effort earlier this year, according to people familiar with the matter. Axios previously reported some details of the abandoned fundraising. <\/p>\n

More recently Social Capital has been looking to sell stakes in some of its less significant startups in order to bet more heavily on the ones it expects to out-perform in the coming years, two people said.<\/p>\n

On Tuesday, in the aftermath of the firings, Palihapitiya mentioned Groq in a post on X, saying he would take part in an on-stage conversation alongside Groq Chief Executive Officer Jonathan Ross. He wrote that together they\u2019d \u201cexplore the vision, innovation, and impact of Groq\u2019s journey and what it means for the future of AI and technology.\u201d<\/p>\n<\/div>\n

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Venture capital firm Social Capital suddenly fired two of its partners after they tried to raise outside money for an artificial intelligence startup \u2014 an endeavor that provoked the ire of the firm\u2019s leader, high-profile investor Chamath Palihapitiya. After it fired Jay Zaveri and Ravi Tanuku on Sunday, the firm offered no details other than […]<\/p>\n","protected":false},"author":2,"featured_media":1397,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"tdm_status":"","tdm_grid_status":"","fifu_image_url":"https:\/\/img.etimg.com\/photo\/88591548.cms","fifu_image_alt":"","footnotes":""},"categories":[607],"tags":[2286,2292,2296,2284,2294,80,2287,2295,2297,2298,2291,2289,2293,2285,2290,2288],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/posts\/1396"}],"collection":[{"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/comments?post=1396"}],"version-history":[{"count":1,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/posts\/1396\/revisions"}],"predecessor-version":[{"id":1398,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/posts\/1396\/revisions\/1398"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/media\/1397"}],"wp:attachment":[{"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/media?parent=1396"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/categories?post=1396"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/tags?post=1396"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}