The CEO of GROQ said the company was nearing the fact that it had spent its money a few years ago. Founded by former Google Engineers, the semiconductor startup has cut the salaries of most employees in favor of stock. Delivery to the country.
Semiconductor startup Groq was once broken, and the CEO took inspiration from US fundraising during World War II.
Jonathan Ross, who founded the company in 2016 with a group of former Google Engineers, said it took him seven years to find the product to sell.
As cash crunch approached, the CEO told the employee, “We’re going to run out of money. We need to exchange our salary for stocks.”
He compared the interrogation of World War II bonds. Through it, the government urged its citizens to help fund military efforts amid a decline in the economy.
“We literally took a photo of the war ties and instead posted the Groq ties,” he said.
Ross said it was a “stimulating” decision as he left his career elsewhere and his family had loaned him a bank. He said he was worried that everyone would leave, but 80% of the employees participated. With cuts in cash compensation, Groq was floating before Startup lifted the first part of its $300 million funding round.
In 2021, the AI hardware and software company closed a $300 million funding round co-led by Tiger Global Management and D1 Capital.
Last week, Grok signed a $1.5 billion contract from Saudi Arabia to expand its advanced AI chips to countries in the Middle East. In August, the company was valued at $2.8 billion after raising $640 million from a round led by BlackRock, Syscoin Besties and Samsung Catalyst Fund.
Paying employees partially in shares in lieu of all cash is common in both public and private tech companies. These stocks encourage employee retention and serve as performance incentives. Employees often trade higher cash compensation in existing companies for lower cash and stock options at startups, betting that stocks could skyrocket.
Early stage startups may temporarily reduce cash compensation in favor of company equity when they are at risk of running out of money. Grok’s CEO is one of the few business leaders who have been published about the decision.
“If you lean towards that vulnerability, people will often go with you,” Ross said Monday of his employees’ sticking to Groq.
Some of the world’s biggest startups, including Openai, Stripe and SpaceX, allow employees to sell shares through bid offers, and the company does not choose to remain private or want to acquire them. No, we are allowing cash out. The tender offer gives employees of private companies the opportunity to sell a certain number of shares at a fixed price during a limited period.
