Groq's average cash-out per person is 5 million USD! Huang Renxun's 20 billion acquisition surpasses Google's operations

NVIDIA acquires AI chip startup Groq for $20 billion, with 90% of the team cashing out approximately $5 million each. Shareholders receive dividends based on a $20 billion valuation, tripling the $7 billion valuation from this fall. Jensen Huang removes Cliff restrictions, allowing employees who have worked less than a year to cash out, surpassing Google’s acquisition of Windsurf where founders took half and 200 employees were abandoned.

A Silicon Valley Conscience Acquisition at a 3x Premium on $20 Billion Valuation

Axios reports that Jensen Huang states the $20 billion purchase includes not only technology licensing but also settling Groq’s employees and shareholders together. Shareholders, based on a $20 billion valuation, will receive dividends roughly three times the $7 billion valuation after a $750 million funding round this fall. About 85% paid upfront, 10% in mid-2026, and the remaining at the end of 2026. This installment plan ensures smooth transaction completion and provides liquidity for shareholders.

Employees are treated even more generously. 90% of Groq’s team is bundled out, with vested shares directly cashed out, while unvested shares are converted into NVIDIA stock at the $20 billion valuation and vested over time. The 50 “lucky” employees’ entire equity incentives will be accelerated and paid out in cash at once. Groq has about 600 employees; assuming a stock option pool of 15% of total shares, common in startups, the per-person cash-out approaches $5 million.

Most notably, the Cliff vesting restriction is eliminated. Typically, startup equity incentives have a 1-year Cliff, meaning employees must work a certain period before unlocking stock options, preventing quick cash-outs. In this large-scale liquidity event, if the Cliff were strictly enforced, employees with less than a year of work would get nothing. However, Jensen Huang directly cut the Cliff, allowing even employees with less than a year or those choosing to stay at Groq to vest early, ensuring they can access some liquidity.

The remaining 10% of employees staying at Groq are also not left out; they can cash out vested shares and participate in a package of schemes to continue benefiting from the company’s future earnings. According to the agreement, Groq founders and CEO Jonathan Ross, President Sunny Madra, and several core executives will join NVIDIA, but Groq will not disappear. The original CFO Simon Edwards will serve as CEO to continue independent operations, and the cloud platform GroqCloud will continue to provide services externally.

The Dark Side of Google’s Windsurf Acquisition Compared

Groq employees’ luck becomes even more apparent in contrast. Take Windsurf, for example: Google paid $2.4 billion in technology licensing, half of which was directly taken by the two co-founders, and the remaining half was only distributed to 40 employees, accounting for just 16% of the total staff. Worse, these employees discovered after joining Google that their stock awards were revoked, and vesting periods reset, meaning they had to wait another four years to fully receive Google stock. The rest of Windsurf’s 200+ employees are left with a shell of a company drained of technology and ideals.

Top venture capitalist Vinod Khosla publicly criticizes: “Windsurf and other founders abandoning their teams is utterly shameless. Next time, I will definitely not work with these people.” Khosla’s anger reflects some Silicon Valley idealists’ dissatisfaction with the exploitation of vulnerable employees in acquisition-driven hiring.

After Meta acquired ScaleAI, its two major clients, Google and OpenAI, immediately terminated cooperation. ScaleAI laid off 200 employees, accounting for 14% of its staff. After Microsoft and Google acquired InflectionAI and CharacterAI respectively, these startups also inevitably became “shell companies.” These cases reveal the dark side of acquisition-driven hiring: giants only want talent and technology, leaving the acquired companies to decline.

In contrast, the NVIDIA-Groq deal is considered respectable by both Jensen Huang and Groq’s founders. So far, employees generally see it as a win-win, with hardly any complaints. This difference may stem from Huang’s personal style or NVIDIA’s willingness to pay higher premiums in the talent war to build a good reputation.

Four Unspoken Rules of Acquisition-Driven Hiring

Opaque Technology Licensing Fee Distribution: Giants like Google and Meta pay billions, but founders often take most, leaving employees with only crumbs.

Vesting Period Reset Trap: Acquired employees’ stock awards may be revoked and vesting periods reset upon joining new companies, extending the actual waiting time by several years.

Left-behind Employees as Victims: Employees not taken over face technological hollowing, customer loss, and layoffs, crushing startup dreams.

Gray Operations to Evade Antitrust: Acquisition-driven hiring avoids triggering formal merger reviews but effectively achieves the same result, making regulation difficult.

LPU Accelerates GPU Performance by 100x, a Technological Revolution

NVIDIA’s large-scale acquisition of a relatively small chip company is rare. The key reason is Groq’s LPU (Language Processing Unit) technology fills NVIDIA’s gap in inference performance. GPUs store data mainly in HBM (High Bandwidth Memory), not on-chip memory close to compute cores. Generating each token requires reading from external memory, which is fine during training but exposes a shortcoming during inference: massive compute power is idle, FLOPs can’t be fully utilized, and the system waits for data transfer.

Groq’s LPU uses SRAM integrated directly on the silicon chip, with data close to compute cores, theoretically 100 times faster than GPUs. When Google successfully broke free from reliance on NVIDIA GPUs with its self-developed TPU and achieved a comeback with Google AI 2.0 Pro, NVIDIA felt threatened. The AI race shifted from training to application, where “inference time” is critical for user experience—this is GPU’s Achilles’ heel.

Renowned investor Gavin Baker points out that with Groq’s ASIC entry ticket, NVIDIA can combine the advantages of GPU and LPU to create a comprehensive solution covering both training and inference efficiency. Once NVIDIA’s “Infinity Gauntlet” is embedded with the LPU gem, new players like Cerebras may have to seek refuge with other giants to survive this joint offensive. Groq’s future remains uncertain, but at this moment, this deal can be considered a relatively satisfactory ending.