You're reading a newsletter from The Indicator from Planet Money. Once a week, we curate our favorite stories and insights on business, finance, economics and why they matter. Subscribe here to get it in your inbox every Friday.After you win the economics Nobel, what would your first act be? Buy a Corvette? Gloat to your childhood bully? For co-winner Michael Woodford, his first act was … proctor an exam.The DAY that Columbia professor Michael Woodford found out that he and Robert Hall won the economics Nobel, he returned to his class with the pithy title "Cognitive Mechanisms and Economic Behavior" to administer an exam.
He was welcomed to the classroom with cheers and applause.He held up his arms in triumph.Coming up:What to know: Character.ai is a company that allows you to speak with a "companion" — an AI-powered fictional character, historical figure, or whatever you decide to build.
It came out just before ChatGPT and quickly went viral in part thanks to its adoption on TikTok.It hit 28 million monthly active users at its peak.Character.ai had a lot of engagement, a big customer base, lots of talent … and Google promptly picked 'em up for $2.7 billion back in 2024.
But Google didn't buy the company and absorb it! No, that traditional "acquihire" model would require all sorts of legal and regulatory approvals.Instead, they hired away the founders (and other big hitters on the team) and bought the nonexclusive license to the technology, leaving the company itself behind.
That's called a "reverse acquihire," and it's happened at least six times in the past two years with AI startups.Now this week, Character.ai is filing for Chapter 11 bankruptcy.Why it matters: A "reverse acquihire" doesn't leave a company in the greatest position.
After the Google deal, Character.ai had to change its business model away from the quite costly LLM training and toward developing AI characters.Its founders were gone.
Sure, the shrunken company had $2.7 billion in the...