Inflection AI Plans Pivot After Microsoft Hirings

Shirin Ghaffary
2 min read
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(Bloomberg) -- Artificial intelligence startup Inflection AI said it’s planning to license its technology to Microsoft Corp., part of a shift for the startup toward working with business customers — a move that follows the departure of most of its staff for Microsoft.

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On Tuesday, Bloomberg first reported that Microsoft had hired Inflection Chief Executive Officer and co-founder Mustafa Suleyman, as well as Chief Scientist and co-founder Karén Simonyan, along with most of the startup’s employees.

Investors in Inflection, which has raised more than $1.5 billion, will be made whole, according to a person familiar with the situation who asked to remain anonymous because the information is private. The person declined to describe how or when investors would be paid. Inflection’s backers include Microsoft, Nvidia Corp., Bill Gates and Reid Hoffman, who is also a co-founder.

As the startup plots a new course, Hoffman, a VC and a Microsoft board member, will stay on at Inflection as a director and co-founder. The new CEO will be Sean White, who previously served as the chief research and development officer at Mozilla.

In a LinkedIn post Tuesday, Hoffman said it was a “good day for everyone involved in Inflection.” He added, “This agreement with Microsoft means that all of Inflection’s investors will have a good outcome today, and I anticipate good future upside.”

Last year, when investor interest in chatbots surged, Inflection debuted a bot named Pi — positioned as a kind of personal assistant that was nicer and more reliable than competitors. But after the launch, Suleyman told Bloomberg that Inflection had not succeeded in finding an effective business model.

Going forward, Inflection will retain its proprietary technology as it shifts to an enterprise business model. In a blog post on Tuesday, Inflection said it was well positioned to serve companies including Microsoft. “Our success at training, tailoring and improving the performance of large AI models makes us uniquely well placed to be the AI platform for businesses around the world,” it said.

A person familiar with the matter said that existing investors will remain equity holders in Inflection and retain potential for any future upside in the startup. Inflection would not disclose terms of the deal or how many of its 70 employees would remain.

--With assistance from Rachel Metz and Lizette Chapman.

(Corrects Sean White’s title in the fourth paragraph. White is not on the board of Inflection.)

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