Microsoft's supercomputer 💻 // YC layoff ✂️ // HSBC saves SVB UK 👼

Update 2023-03-14

• Microsoft Invested Hundreds of Millions in OpenAI Supercomputer

• Meta Platforms Inc. Explores Divestiture Options for Kustomer Acquisition

• ZoomInfo Announces $100 Million Share Repurchase Program

• The First Open-Source Alternative to ChatGPT, OpenChatKit, Has Been Released.

• Y Combinator Shifts Focus to Early-Stage Investing, Layoff of 20% of Staff

• Qualtrics Accepts $12.5 Billion Acquisition Offer from Silver Lake and CPP Investments

• HSBC Saves SVB's U.K. Branch

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Big Tech

Microsoft Invested Hundreds of Millions in OpenAI Supercomputer

Microsoft Investing Billions in OpenAI to Support Cloud-Based AI Model Training

Microsoft invested hundreds of millions of dollars in a supercomputer to power OpenAI's ChatGPT chatbot.

• The project linked together thousands of Nvidia GPUs on the Azure cloud-computing platform, enabling OpenAI to train more powerful models.

• Microsoft is extending its multi-year, multi-billion dollar investment in OpenAI by launching new virtual machines with H100 and A100 Tensor Core GPUs and Quantum-2 InfiniBand networking.

• This should allow OpenAI and other companies that rely on Azure to train larger and more complex AI models.

Meta Platforms Inc. Explores Divestiture Options for Kustomer Acquisition

Meta Platforms Inc., the parent company of Facebook, is exploring different divestiture options for Kustomer, the customer service software company it acquired for $1 billion in 2020, as part of a broader cost-cut plan.

• Options include spinning off or selling the business.

• The acquisition was seen as central to Meta’s efforts to monetize its messaging apps.

• The Federal Trade Commission sued Meta over the acquisition, but regulatory issues were resolved in early 2022.

☁️

SaaS and Cloud

ZoomInfo Announces $100 Million Share Repurchase Program

ZoomInfo announced the approval of a $100 million share repurchase program. The program will be funded from available working capital and cash provided by operating activities.

• The timing and number of shares to be repurchased will depend on market price, economic conditions, liquidity, and legal requirements.

• The program may be suspended, modified, or discontinued at any time without prior notice.

• This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities.

📝 Cloudly: ZoomInfo is one of the few listed SaaS companies that are profitable, with high growth and strong liquidity. The share repurchase... Read the full comment.

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AI

The First Open-Source Alternative to ChatGPT, OpenChatKit, Has Been Released.

OpenChatKit is an open-source base to create specialized and general-purpose chatbots, released by the team at Together under an Apache-2.0 license with source code and model weights.

• It consists of a large language model (GPT-NeoXT-Chat-Base-20B), customization recipes, an extensible retrieval system, and a moderation model.

• The model performs well on multi-turn dialogue, question answering, classification, extraction, and summarization tasks.

• OpenChatKit excels at summarizing documents into single sentences, extracting structured information from unstructured documents like emails, classifying sentiment into Positive/Neutral/Negative categories, using few shot prompts for text classification/information extraction, and supporting live updates with the extensible retrieval system.

• Weaknesses of the model include knowledge-based closed question answering, coding tasks, repetition, etc., which require feedback or additional dataset contributions from community members to improve accuracy.

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Funding, Venture Capital and M&A

Y Combinator Shifts Focus to Early-Stage Investing, Layoff of 20% of Staff

Y Combinator announced a shift away from late-stage investments, resulting in the layoff of 17 employees, or 20% of the accelerator's staff.

• YC CEO Gary Tan mentioned this shift was "well before" Silicon Valley Bank's collapse and unrelated to it.

• Tan has proactively addressed concerns related to SVB since the bank run occurred, such as advising startups not to expose themselves to more than $250k of exposure with SVB this year.

• Tan is also leading a petition asking Congress to support the entrepreneurial community in light of the banking crisis.

• Y Combinator will demonstrate how its refocusing on early-stage investing impacts its startup ecosystem at its next biannual Demo Day.

📝 Cloudly: As stated by YC, this decision is not due to the SVB collapse but instead an adoption for VC's and startups in the current environment. VC funding volumes in the U.S. decreased by 57.8% in January 2023 compared to January 2022. The collapse of SVB is instead a direct effect of the poor tech/startup environment, which has led to lower than-projected deposits for the bank, creating the duration issue between their assets and deposits.

Qualtrics Accepts $12.5 Billion Acquisition Offer from Silver Lake and CPP Investments

Qualtrics has accepted the earlier acquisition offer of $12.5 billion in an all-cash acquisition offer from private equity firm Silver Lake and Canada Pension Plan Investment Board (CPP Investments).

• The deal is financed with "equity commitments" from Silver Lake and “co-investors”, with CPP Investments contributing $1.75 billion in equity and $1 billion in debt.

• No other shareholder approval will be required due to SAP’s ownership of Qualtrics’ Class A common stock.

• It is expected to close in the second half of 2023, and Zig Serafin will continue to head up Qualtrics with its dual headquarters staying in Utah and Washington.

HSBC Saves SVB's U.K. Branch

Following all-night talks, HSBC announced a £1 deal to acquire SVB U.K., the U.K. subsidiary of collapsed U.S. tech startup lender Silicon Valley Bank.

• The sale, facilitated by the Bank of England in consultation with the U.K. Treasury, will protect deposits of SVB U.K. clients; no taxpayer support was required.

• The acquisition strengthens commercial banking franchises and enhances the ability to help innovative and fast-growing firms in the U.K. and internationally, including the technology and life science sectors.

• As of Friday, SVC U.K. had loans of around £5.5 billion and deposits of around £6.7 billion, with £88 million of full-year profit before tax in 2022..

• The Bank of England confirmed that no other U.K. banks are “directly materially affected by these actions,” The wider British banking system remains “safe, sound, and well-capitalized.”