General06:00 · 23m ago

Verbit Founder Tom Livne Blames Board for Company’s Collapse After ChatGPT Launch

Calcalist

Translated & summarized from Calcalist by baba

Key points

01Tom Livne blames Verbit’s board for ignoring urgent AI-driven business model changes after ChatGPT launch.
02Verbit’s valuation dropped from $2 billion in 2021 to about $300 million, with revenues falling from $100M to $40M.
03Livne proposed cutting 50% of staff immediately, but the board delayed decisions until losses mounted.
04Board members argue Verbit’s problems were operational and strategic, not solely due to AI disruption.
05Livne left as CEO in February 2024, replaced by COO Yair Amsterdam, amid tensions with investors.
06Livne is now raising $172 million for a SPAC targeting Israeli tech firms, aiming to restore his reputation.

In this story

People

Tom Livne, Rob Schwartz, Dan Loeb, Eyal Waldman, Yair Amsterdam

OrganizationsVerbit, OpenAI, Third Point Ventures, TPV, Maccabi Haifa, Iron Dome, Rafael

PlacesIsrael, Tel Aviv, Silicon Valley

The story · English

Tom Livne, founder and former CEO of Verbit, recounted the dramatic impact of OpenAI’s November 30, 2022 launch of ChatGPT on his transcription company. Livne described staying awake all night realizing that AI had rendered Verbit’s business model obsolete, prompting urgent calls to his board for drastic change. Despite his warnings to cut 50% of staff and pivot, the board resisted, delaying action until revenues and cash reserves sharply declined.

Verbit, once valued at $2 billion in 2021, now has an estimated worth of $300 million with annual revenues down from $100 million to about $40 million. Livne insists he is not a failure, highlighting his personal financial gains and successful investments, but blames the board for failing to act decisively. He criticized the board as "a bunch of cowards" who ignored his urgent calls to adapt to the AI disruption.

Founded in 2016, Verbit combined AI transcription with human editors, aiming to disrupt manual transcription markets. The company planned aggressive acquisitions but only completed six, falling short of its goal to reach $1 billion in annual revenue. By early 2023, customer demand dropped as free AI models offered similar services. Livne said the board delayed meetings and rejected his plans to downsize, effectively hamstringing his leadership.

Livne left Verbit in February 2024, replaced by COO Yair Amsterdam. He accused the board, particularly investor Rob Schwartz of Third Point Ventures, of mishandling the CEO transition and destroying shareholder value. Schwartz and other board members countered that Verbit’s problems predated AI and stemmed from operational integration failures and strategic missteps. They also said Livne was not suited for crisis leadership.

Since leaving Verbit, Livne has teamed with entrepreneur Eyal Waldman to raise $172 million for a new SPAC focused on Israeli tech companies with revenues over $100 million. He aims to rehabilitate his reputation and prove SPACs can succeed despite their controversial history. Livne also shared personal reflections on his recent religious awakening and civic engagement amid Israel’s political turmoil. He emphasized his ongoing commitment to entrepreneurship and national contribution.

Read the original at Calcalist