Microsoft‘s unusual Inflection deal may have dented the startup’s ability to recruit technical talent, according to an internal email obtained by Business Insider.
The communication also sheds light on a delicate balance VC firm Greylock and partner Reid Hoffman have had to strike in the transaction.
Calvin Lee, a former Director of Product Management at Uber, was hired as a product lead at Inflection. But upon hearing that Microsoft hired away Inflection cofounders and CEO Mustafa Suleyman as well as most of its staff, Lee had misgivings about starting in the new role, the email shows.
“Pinged him this morning, he’s spooked about Mustafa leaving,” Greylock principal Christine Kim wrote in the email on the day the Microsoft news broke.
Greylock invested in Inflection and helped Lee get the job. In addition, Greylock’s Hoffman is a cofounder and director of Inflection, as well as a board member of Microsoft.
If this wasn’t already complex enough, Lee was also “expected to get a Microsoft offer the next day,” Greylock’s Kim wrote in the same email.
“Obviously a lot to reconsider now with leadership leaving Inflection,” Kim added in the message.
This is a great example of how intertwined Silicon Valley venture capital firms, startups, and Big Tech have become. VC firms invest in these startups, help them recruit, and often sell them later to bigger companies. As a board member of both Microsoft and Inflection, Hoffman has a duty to both, as well as to Greylock and its investors.
“This agreement with Microsoft means that all of Inflection’s investors will have a good outcome today, and I anticipate good future upside,” Hoffman wrote on X at the time.
When contacted by Business Insider, Lee confirmed he had been offered a job at Inflection but declined to comment further. It’s unclear whether he will take a role at the newly reconstituted Inflection, at Microsoft, or neither.
Kim Ryu and Alexis Kim, two other employees that Greylock helped place at Inflection have since taken roles at Microsoft, according to their LinkedIn pages. Kim declined to comment and Ryu did not respond to BI’s inquiries.
Many saw Microsoft’s hiring of Suleyman and his team as a back-door acquisition of the buzzy generative AI company, which has raised more than $1.5 billion from investors including Hoffman, Bill Gates, Eric Schmidt, and Nvidia.
Microsoft reportedly paid Inflection $650 million through a licensing deal with the startup at the same time it hired away most of its staff.
Inflection has since named former Mozilla executive Sean White as CEO and says it will rebrand as an “AI studio” that will help companies train and fine-tune AI models.
