Welcome to Startups Weekly! We’ve been drowning in AI news this week, with Google’s I/O setting the pace. And Elon Musk rages against the machine.
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Welcome to Startups Weekly — Haje‘s weekly recap of everything you can’t miss from the world of startups. Sign up here to get it in your inbox every Friday. Look, I know this is our startups weekly newsletter, and as the most valuable company in the world, Apple is kind of the ultimate “not a […]
© 2024 TechCrunch. All rights reserved. For personal use only.
Welcome to Startups Weekly — Haje’s weekly recap of everything you can’t miss from the world of startups. Sign up here to get it in your inbox every Friday.
Musk’s 10-month-old baby, xAI, is closing in on a whoppin’ $6 billion funding round. The social network X, née Twitter — also part of Elon’s tech family — is already a shareholder. The deal was initially supposed to raise just $3 billion, but then everybody wanted in and the price tag bumped. Investors include Musk’s BFFs from Sequoia Capital, Future Ventures and some other chums who may also be joining this AI party — it’s all very Mean Girls “You can’t sit with us” at this point. The thing that really frustrates me, though, is how smug Musk probably is about all of this. It’s fine, I’m just bitter that none of my startups ever raised $6 million — never mind three orders of magnitude more.
Sure, it may be on the eve of getting banished from the U.S. altogether (although, I hasten to add, the previous administration tried that, too, and TikTok’s still here, going strong), but TikTok may be sneaky in more ways than one. Word on the street (or should we say web?) is that TikTok is playing a bit of hide-and-seek with Apple. Instead of giving Apple its 30% cut for in-app purchases, it appears they’re trying to guide users into buying their digital tipping coins directly from their website. But shh … it’s a secret! The feature is apparently only visible to certain users (lookin’ at you, high spenders). Will Apple give them the boot like they did Fortnite? Only time will tell.
Your founding team sucks: In a brutally honest chat with me at TechCrunch Early Stage, Tom Blomfield, ex-Monzo Bank founder and current Y Combinator partner, spilled the tea on venture capitalist decision-making. He says investors are looking for unicorns that can deliver 1,000x returns — anything less is an epic fail. They’re not just judging your business model or product. No, they’re eyeing YOU up to see if you have what it takes to make their cash multiply like rabbits.
Hello? Is that iPhone? Why are you so quiet today? Image Credits: Vectorian / Getty Images
Oh, EyeEm, you sly dog! The once “Insta-challenger” Berlin-based photo-sharing app that nearly went belly-up last year has found a new way to milk its users — by training future AI overlords! Yup, they’re selling your snaps to train machine-learning models. Users were graciously given 30 days to pack up their digital photo albums and scram or forever hold their peace (and surrender their photos). Are you opting out, though? Not as easy as swiping left on Tinder — you need to manually delete your pictures. But wait for it … the real kicker is if you decide in a fit of rage to delete your account altogether, no more payouts for you. Womp-womp, sad trombone.
It’s like “Game of Thrones” but in the tech world. Welcome to Techstars’ latest season, where CEO Maëlle Gavet is fighting battles on all fronts within her kingdom! She’s got a bank collapse, an international accelerator program shutdown, and dodgy LinkedIn posts. And that’s just for starters. Throw in the Swedish labor law conundrums and you’ve got more drama than an episode of The Real Housefounders. As if that wasn’t enough, she’s also dealing with a company-wide revolt against her reign, as well as her cost-cutting measures leading to a toxic work culture, and hiring folks with as much startup experience as my pet goldfish. (It died back in 2007. RIP, Knee-mo.) Stay tuned for this gripping saga of power struggles, corporate drama, questionable financials and strategizing — I can’t guarantee dragons or White Walkers but there will be plenty of fire-breathing and icy glares!
Mark Cuban wrote a check to Truffle Shuffle. Nobody will comment on whether it was a good exit for the company. Image Credits: Christopher Willard / ABC via Getty Images
Rubrik, the cybersecurity company, decided to take a leisurely stroll onto Wall Street this week and BAM! Shares shot up 16% on their public debut. They were initially priced at $32 per share (just a smidge above their target range) and settled down to a cushy $37 by end of trading. Now, that’s one way to make an entrance! This little outing bumped their valuation from $3.5 billion in 2019 to a dizzying $6.6 billion today. Not bad for a company that’s not even turning profits yet! Their secret sauce? Subscription revenue — it went from 73% to 91% in just a year. But, hey, who needs profitability when you’ve got stickiness, right? While this may seem like the start of an IPO party parade with Reddit and Ibotta leading the conga line, potential interest rate cuts could play party pooper soon enough. No doubt, Greylock is giggling maniacally all the way to the bank.
ButcherBox, the meat-obsessed startup that bootstrapped its way to a juicy $600 million revenue, just sunk its teeth into “Shark Tank” darling Truffle Shuffle. The acquisition is less about gobbling up competition and more about helping ButcherBox’s customers stop burning their steaks. Truffle Shuffle was born out of sheer desperation when founders Jason McKinney and Tyler Vorce found themselves with $20,000 worth of truffles but no restaurants to sell them to, thanks to our dear friend COVID-19.
RevenueCat founders Miguel Carranza (L) and Jacob Eiting (R). Image Credits: RevenueCat
Bad news for healthcare privacy this week. UnitedHealthcare CEO says “maybe a third” of U.S. citizens were affected by their recent hack, and Kaiser pissed away a bunch of customer data as well. Gee, thanks, you clowns.
Anyway. Here’s a few other stories that are fun. Maybe. Or at least interesting. Or maybe they just got a metric crapton of traffic this week. Who knows what my selection criteria is, but … just read the stories, okay?
Welcome to Startups Weekly — your weekly recap of everything you can’t miss from the world of startups. Sign up here to get it in your inbox every Friday.
Ticktock, TikTok: It’s been a wild week for TikTok. Even as the company starts testing its Twitter competitor in certain markets and launches its luxury secondhand shop in the U.K., it’s finding a lot of friction in the land of the free and the home of the brave: In an episode of “As the TikTok Turns,” the U.S.’s esteemed House of Representatives, in a rare show of bipartisanship, has passed a bill to give TikTok’s parent company a nine-month ultimatum: Sell or face extinction in the U.S. This is like giving your teenager an extra three months to clean their room before grounding them … forever!
The bill also comes with a magic “90-day extension” button for the president’s use only. How thoughtful! It seems this move has appeased some Senate skeptics, and even President Biden is on board. Critics argue this ban could infringe free speech rights and hurt businesses. (Who knew viral dances were so crucial to our economy?) On the flip side, as one lawmaker puts it — consider it less entertainment app ban and more spy balloon deflation.
How powerful are influencers?: The weirdest curveball we saw this week was a reminder that people don’t really understand how journalism or product reviews work. To wit: Humane Ai raised $230 million before the product even left the factory. The hype was real until the Ai Pin dropped at a hefty $699 plus monthly fees, and folks realized it’s a lot of ado about not-a-lot. Don’t shoot the messenger — in this case popular YouTuber Marques Brownlee aka MKBHD, whose crime was <checks notes> “Telling it like it is” with his review titled “The Worst Product I’ve Ever Reviewed … For Now.”
Now, this YouTuber has more subscribers than some countries have people (18 million to be exact; in fact, if his YouTube channel was a country, it would be roughly the 69th most populated country. Nice.). Apparently, being honest equates to “potentially killing someone else’s nascent project,” according to ex-AWS engineer Daniel Vassallo. Funny how an underdog worth $800 million can get its feelings hurt so easily! And by the way, this isn’t a first; MKBHD was also accused of causing Fisker’s downfall with another truth-bomb review last month: “This Is the Worst Car I’ve Ever Reviewed.” Dom and Amanda think it’s notable that a YouTuber is perceived as having the power to make or break a company.
Poetry Camera takes a photo and prints a poem. Image Credits: Poetry Camera
The next time you’re missing the good ol’ days of squinting through a tiny viewfinder and praying your shot turns out okay, remember Mood.camera. It’s an iOS app that gives you all the uncertainty of analogue photography sans trips to the photo lab. Created by developer Alex Fox, this app says “no thank you” to live previews and editing features, instead focusing on vintage filters and letting fate decide how your photos turn out. Because who doesn’t love a little mystery in their life? Just don’t forget to hold still for three minutes or so while it “develops.” For $1.99/month (or $14.99 one-time fee), you too can experience the thrill of accidentally overexposing every picture on your beach vacation like it’s 1995.
Ever snap a pic of a tree and wish it was poetry? Well, Joyce Kilmer didn’t either. But in the age of AI tech, Kelin Carolyn Zhang and Ryan Mather have decided to bless us with their intriguing spawn — the Poetry Camera! This ain’t your average Insta click-creator; instead of capturing duck faces and dinner plates, it generates thought-provoking (or as thought-provoking as AI can manage) poetry based on its visual encounters. A Raspberry Pi serves as its brain while OpenAI’s GPT-4 spins out verses worthy of Wordsworth (or maybe not). And here’s the kicker: This camera prints out your poetic masterpiece on paper — yes, paper. No digital saving for that extra touch of nostalgia or is it just an easy way to avoid privacy concerns? The jury’s still out. But hey, if you’ve been yearning for a physical memento from your digital existence … snap away!
Image Credits: Betty Laura Zapata/Bloomberg / Getty Images
Breaking news in the world of bling: Pascal, the lab-grown diamond startup, is making it rain with nearly $10 million in VC funding and a hefty revenue forecast. Who needs Drake’s $400,000 diamond-encrusted iPhone case when you can have affordable ice? These cultured gems are so shiny they’ll make your TikTok videos sparkle like a disco ball. Even Andreessen Horowitz couldn’t resist throwing some money at this gem of an idea!
Well, well, well! Last week we got wind that Rippling was about to close a $200 million funding round at a jaw-dropping $13.4 billion valuation. Now founder Parker Conrad has confirmed the news and spilled some juicy details. They were looking for a way to give early employees some liquidity (read: cash money), but investor interest was so high they had to expand their plans. As for going public? That’s somewhere over the rainbow, suggests Conrad.
Oh, Tesla. With profits dropping faster than a Cybertruck with a stuck accelerator and EV sales feeling the pressure, it seems the automaker is in a bit of a pickle. A 55% dip in profits? Ouch! It appears that slashing EV prices like they’re Black Friday deals hasn’t worked out quite so well for them. Between wars, arson attacks on factories, high-profile layoffs, and new models rolling off the assembly line slower than LA traffic, it seems Tesla has a long list of challenges. Let’s just hope Musk’s plans work out better than the Tesla semi-truck production timeline.
Here’s another handful of stories you might otherwise have missed:
Welcome to Startups Weekly — your weekly recap of everything you can’t miss from the world of startups. Sign up here to get it in your inbox every Friday.
After years of booming growth, the AI industry is now experiencing a significant slowdown in investment, as detailed in a recent report from Stanford’s Institute for Human-Centered Artificial Intelligence (HAI). The report highlights a notable decrease in both private and corporate investments in the AI sector for the second consecutive year, with overall investments dropping by 20% in 2023 compared to the previous year, Kyle reports. Despite this general downturn, certain segments like generative AI continue to attract significant funding, indicating a selective yet substantial interest in specific AI applications.
AI investment is slowing down for a few reasons, like the crowded market and the steep costs of building big AI models. According to Gartner analyst John-David Lovelock, the money is now flowing more toward big, established companies that are strengthening their positions, while it’s getting tougher for new players to get a piece of the pie. Investors are getting pickier and want to see real, solid returns instead of just throwing money at hopeful growth. (That isn’t stopping them from raising billion-dollar funds focusing on AI, of course.)
Despite these hurdles, there’s still a strong belief in the future of AI, especially in ways it can boost efficiency and spark innovation across different sectors. Right now, the market is just going through a bit of a cleanup, shifting from the wild spending of the past to a more thoughtful and sustainable way of funding. This change is key to creating AI solutions that actually work in the real world and can truly change industries, and worm its way into our battle-weary hearts.
Oh, and before we pile into the rest of the startup news this week … Do you have a pitch deck that might be a good fit for my Pitch Deck Teardown series? You can submit yours here — I’d love to take a closer look and potentially share it with TechCrunch’s readers, along with an in-depth review!
The Humane Ai Pin. Image Credits: Brian Heater / TechCrunch
Oh hey! Look! It’s the triumphant return of TechCrunch old-timer Anthony Ha, who writes that Airchat, the latest brainchild of Naval Ravikant and Brian Norgard, is here to revolutionize social media with its groundbreaking concept: people talking to each other — shocking, right? This app, which is essentially a high-tech walkie-talkie, lets you follow others, scroll through a feed, and interact with audio posts that are also conveniently transcribed for those who can’t stand the sound of human voices. It’s currently climbing the social ladder on the App Store, all while being invite-only because nothing screams exclusivity like needing a golden ticket to listen to strangers ramble. Whether this will genuinely reduce online squabbles or just make them more melodious remains to be seen.
Airchat is like a tech-centric coffee shop where everyone’s buzzing about the latest in Silicon Valley, complete with a transcription feature that even gets Pokémon names right — because priorities. But don’t get too excited; it’s invite-only, making it another Silicon Valley whisper network. And while it’s all fun and audio games, the platform’s laid-back approach to content moderation could make it the Wild West of voice chats, where the only sheriff in town is the mute button.
Image Credits: Ramp / Ramp co-founders Karim Atiyeh, Eric Glyman and Gene Lee
Rippling, the HR tech darling that’s been vacuuming up venture capital like it’s going out of style, is at it again. This time, they’re passing around the Silicon Valley collection plate to the tune of $200 million in fresh capital, while also letting current shareholders cash out a cool $670 million. This latest fundraising fiesta, dubbed Series F, could puff up Rippling’s valuation to a breezy $13.4 billion. Not too shabby for a company that, just last year during the Silicon Valley Bank meltdown, had its CEO Parker Conrad frantically tweeting and dialing for dollars to make payroll. Now, with everyone writing record-breaking checks (and Coatue leading the round), it seems Rippling is less about the ripples and more about making waves.
Every week, there’s always a few stories I want to share with you that somehow don’t fit into the categories above. It’d be a shame if you missed ’em, so here’s a random grab bag of goodies for ya:
Welcome to Startups Weekly — your weekly recap of everything you can’t miss from the world of startups. Sign up here to receive the Startups Weekly newsletter in your inboxes.
It’s the most wonderful tiiiiiiime of the yeaaaaaaar … That’s right, we’re back with all the you-can’t-miss companies from the current batch of Y Combinator startups. AI was, not shockingly, the biggest theme, with 86 out of 247 companies calling themselves an AI startup, but we’re reaching bubble territory given that 187 mention AI in their pitches. We have a couple of roundups for you, including the 18 most interesting, and the TechCrunch staff favorites.
Meanwhile, I wrote up an in-depth interview with the founder of Ember, the hot-mug company, about (among other things) how he split his company in half to be able to woo MedTech and life sciences investors.
Image Credits: PM Images (opens in a new window) / Getty Images
Startups losing money is nothing new, but this week, Devin summarizes why Trump’s Truth Social is different in a few key ways. In a nutshell, the whole thing is playing out like a bad reality TV show, where the plot revolves around hemorrhaging money and the suspense is whether it’ll run out of cash before viewers change the channel. With a debut on Nasdaq as $DJT, thanks to a merger with the desperation darling of the finance world, a SPAC, Trump Media & Technology Group’s (TMTG) financial lifting of the veil reveals a $58 million loss on a meager $4 million in revenue. This isn’t your typical Silicon Valley “burn cash now, profit later” saga; it’s more of a “burn cash now, and that’s it” kind of story. Unlike startups that thrive on VC life support while disrupting industries, TMTG’s lifelines are fraying, with no explosive user growth, no VC sugar daddies, and the unenviable position of being publicly accountable while trying to juggle a business model that seems to repel advertisers like it’s made of antimatter. As the stock flops around lacklusterly, the reality sets in that TMTG’s story might be less about pioneering digital media and more about how to lose friends and alienate advertisers, all while the credits roll on what could be the most expensive episode of “The Apprentice” ever produced.
Tesla’s cybertruck exists now. That’s about the best thing your friendly correspondent can say about this design monstrosity. Image Credits: Darrell Etherington / Getty
Stormy weather continues to be the theme for the movers and shakers of the startup world: Transportation.
Canoo’s 2023 earnings report reads like a tragicomedy. The star of the show? CEO Tony Aquila’s private jet, which cost the company double its entire revenue for the year. In a year where Canoo managed to rake in a meager $890,000 by delivering just 22 vehicles, it simultaneously shelled out $1.7 million to ensure Aquila could jet-set in style. I guess in the fast-paced world of electric vehicles, nothing says “fiscal responsibility” quite like a private jet tab that overshadows your sales, even as the company picks clean the bones of its failed competitors.
Meanwhile, in the land of Fisker, the company momentarily misplaced millions in customer payments amid a frantic scramble to restructure its business model. This financial game of hide-and-seek, which diverted crucial resources from sales to sleuthing, highlights the company’s rather casual approach to tracking transactions, including, in some instances, handing over vehicles on the honor system. Fisker’s attempt to play catch-up with paperwork not only strained its relationship with PwC during annual report preparations but also left the company clueless about its actual revenue, all while teetering on the edge of bankruptcy. So, if you’ve ever felt bad about losing your car keys, at least take solace knowing you didn’t misplace the equivalent of a whole SUV stuffed full of dollar bills, or get yourself into an investigation about why the doors on the cars you manufacture won’t open.
Kidsy’s catalog drew investor interest. Image Credits: Kidsy
Kidsy is the latest brainchild to emerge from the startup nursery. The company is essentially the T.J. Maxx of baby gear, swooping in to save parents from the financial black hole that is raising children by offering discounted, overstocked, and gently used items that were once destined for the landfill. Founded by a former business journalist and a software engineer, Kidsy has quickly become the superhero of the circular economy for baby products, managing to charm investors into an “oversubscribed” pre-seed funding round faster than a toddler can throw a tantrum.
Every week, there’s always a few stories I want to share with you that somehow don’t fit into the categories above. It’d be a shame if you missed ’em, so here’s a random grab bag of goodies for ya:
Welcome to Startups Weekly — your weekly recap of everything you can’t miss from the world of startups. Sign up here to get it in your inbox every Friday.
In the corporate tug-of-war over remote work, CEOs like Andy Jassy and Elon Musk are the old-school gym teachers insisting everyone get back on the field, despite the bleachers being perfectly fine. They argue that remote work is akin to slacking off, yet studies and employee sentiments suggest otherwise, highlighting that flexibility might just be the secret sauce to productivity and satisfaction.
Meanwhile, the rest of us are watching this unfold like a tennis match, wondering if these executives will ever match their strategies with the reality of modern work preferences. Ron has been working from home as a writer for almost as long as I’ve been alive. No wonder we call him Daddy Ron (we don’t, honestly, although that would be hilarious). In any case, Ron argues that working from home ain’t going away, and I can’t say that I disagree in any way — even as I’m writing this from my local pizza parlor. Working from home. Working from pizza parlor. Whatever, as long as it ain’t the office, amirite?
Very checkr. Much security. Image Credits: Checkr
Mahbod Moghadam, whose roller-coaster career ranged from legal eagle to rap lyric annotator to blockchain enthusiast, died in March at the age of 41. He leaves behind a legacy as colorful and controversial as a graffiti-splashed back alley. Known for his edgy antics and brainchild projects like Genius and Wikipedia-but-on-blockchain Everipedia, Moghadam was a maverick who tried to shake up the digital content payment scene with ventures like HellaDoge, and even in his final acts, remained a thorn in the side of the establishment he helped create. As tributes roll in, the tech community reflects on a figure who was as much a provocateur as he was a pioneer, proving that in the startup world, being unforgettable is sometimes more impactful than being unimpeachable.
Image Credits: Faraday Future
Look, I’m trying my best to have a balance of everything here on Startups Weekly. It ain’t my fault that the transportation team keeps punching way above its weight. Just read all of their stuff, okay, it’s all good.
In a twist that’s less surprising and more “Muskian,” Elon Musk refuted claims about Tesla ditching a budget EV for a robotaxi, only to turn around and hype an upcoming robotaxi reveal (even as Tesla throws in the towel for its entry-level-price car). Critics replied that he’s been promising that since 2016, but Full Self-Driving (FSD) continues to be a thorn in Tesla’s side.
Here’s some highlights from the past week:
Clicky clicky. Image Credits: Frederic Lardinois/TechCrunch
Every week, there’s always a few stories I want to share with you that somehow don’t fit into the categories above. It’d be a shame if you missed ’em, so here’s a random grab bag of goodies for ya:
Welcome to Startups Weekly — your weekly recap of everything you can’t miss from the world of startups. Sign up here to get it in your inbox every Friday.
There’s not that much news from me this week, but I’ve been doing a ton of prep for TechCrunch Early Stage taking place in Boston on April 25. It’s going to be a fantastic show, and you still have time to grab tickets at early-bird prices, if you’re quick.
Stability AI bids adieu to its founder and chief executive, Emad Mostaque, who’s decided to chase the decentralized AI dream, leaving the unicorn startup without a permanent CEO. The company, known for burning through cash faster than a teenager with their first debit card, is now in the hands of interim co-CEOs Shan Shan Wong and Christian Laforte. Mostaque, in a dramatic exit, took to X to proclaim his departure was all about fighting the “centralized AI” bogeyman because, apparently, the real problem in AI isn’t rogue robots but who gets to control them.
Microsoft has orchestrated a heist worthy of a Hollywood plot, snagging the co-founders and much of the staff of Inflection AI, along with the rights to use their tech, for a cool $650 million. The deal, which to me seems more like a ransom payment than an M&A push, includes $620 million for the privilege of using Inflection’s tech and an extra $30 million to ensure Inflection doesn’t sue for Microsoft’s bold talent grab. Reid Hoffman, Microsoft board member and Inflection co-founder, took to LinkedIn to assure everyone that Inflection’s investors would sleep well tonight, with early backers getting a 1.5x return and later ones a modest 1.1x, despite the math not quite adding up. It’s pretty bold to describe a 1.5x return as a “good upside,” by the way — most early-stage funds would be pretty displeased.
Stability AI CEO quits because you’re “not going to beat centralized AI with more centralized AI.” Image Credits: David Paul Morris / Bloomberg
The New York Stock Exchange has given EV startup Fisker the boot, citing its “abnormally low” stock prices. It seems Fisker’s financial runway is more of a tightrope, with shares plummeting over 28% in a single day, a botched deal with Nissan (or so the rumor mill suggests), and a triggered repayment clause in their loans that they can’t afford — painting a picture of a company teetering on the brink of a cliff. It won’t have helped, of course, that the EV manufacturer lost track of millions of dollars’ worth of customer payments.
Canoo delivers a Light Tactical Vehicle back in 2022. Image Credits: Canoo
Super{set} is doubling down on its bet on boring but bountiful data and AI-driven enterprise startups, having just added a cool $90 million to its war chest. This move comes hot on the heels of its $200 million exit from the marketing company Habu to LiveRamp. The company is not your average venture studio. With a lean portfolio of 16 companies and a penchant for turning venture capital investment memos from art into science, super{set} is on a mission to engineer practical applications. With their new digs on an entire floor of San Francisco’s 140 New Montgomery building, they’re not just investing in startups; they’re buying into the future of the city itself.
Tired of cramped hotel rooms and landlords with an aversion to IKEA, Alex Chatzieleftheriou decided to fill the gap himself. Fast-forward through a pandemic-induced boom in nomadic working, and Blueground is now gobbling up the competition faster than a tourist at a free breakfast buffet. With the acquisition of companies like Tabas and Travelers Haven, Blueground has expanded its empire to include over 15,000 apartments across 17 countries, proving there’s no place like a home you can book for a month. Despite the proptech sector feeling the squeeze from rising interest rates, Blueground’s recent $45 million Series D funding round and a hefty debt facility suggest that investors are still willing to bet big on Chatzieleftheriou’s vision of a world where everyone can live in a fully furnished apartment, at least temporarily.
Image Credits: Lyudinka/Getty Images (modified by TechCrunch)
Every week, there’s always a few stories I want to share with you that somehow don’t fit into the categories above. It’d be a shame if you missed ’em, so here’s a random grab bag of goodies for ya:
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