Language models (LMs) are increasingly extended with new learnable vocabulary tokens for domain-specific tasks, such as Semantic-ID tokens in generative recommendation. The standard practice initializes these new tokens as the mean of existing vocabulary embeddings, then relies on supervised fine-tuning to learn their representations. We present a systematic analysis of this strategy: through spectral and geometric diagnostics, we show that mean initialization collapses all new tokens into a degenerate subspace, erasing inter-token distinctions that subsequent fine-tuning struggles to fully recover. These findings suggest that token initialization is a key bottleneck when extending LMs with new vocabularies. Motivated by this diagnosis, we propose the **Grounded Token Initialization Hypothesis**: linguistically grounding novel tokens in the pretrained embedding space before fine-tuning better enables the model to leverage its general-purpose knowledge for novel-token domains. We operationalize this hypothesis as **GTI** (Grounded Token Initialization), a lightweight grounding stage that, prior to fine-tuning, maps new tokens to distinct, semantically meaningful locations in the pretrained embedding space using only paired linguistic supervision. Despite its simplicity, **GTI** outperforms both mean initialization and existing auxiliary-task adaptation methods in the majority of evaluation settings across multiple generative recommendation benchmarks, including industry-scale and public datasets. Further analyses show that grounded embeddings produce richer inter-token structure that persists through fine-tuning, corroborating the hypothesis that initialization quality is a key bottleneck in vocabulary extension.

Large language models (LLMs) have demonstrated remarkable performance across a wide range of industrial applications, from search and recommendation systems to generative tasks. Although scaling laws indicate that larger models generally yield better generalization and performance, their substantial computational requirements often render them impractical for many real-world scenarios at scale. In this paper, we present a comprehensive set of insights for training and deploying small language models (SLMs) that deliver high performance for a variety of industry use cases. We focus on two key techniques: (1) knowledge distillation and (2) model compression via structured pruning and quantization. These approaches enable SLMs to retain much of the quality of their larger counterparts while significantly reducing training/serving costs and latency. We detail the impact of these techniques on a variety of use cases in a large professional social network platform and share deployment lessons, including hardware optimization strategies that improve speed and throughput for both predictive and reasoning-based applications in Recommendation Systems.