0:00

This episode is presented by Invest

0:02

Puerto Rico. If you believe your

0:04

business can go anywhere, Puerto Rico

0:06

is the place. Hello

0:20

and welcome back to Equity, a podcast

0:22

about the business of startups where we

0:24

unpack the numbers and nuance behind the

0:27

headlines. Today is May 10th. I'm Mary

0:29

Ann Acevedo and joining me is senior

0:31

TC reporter Alex Wilhelm. Alex,

0:34

dare I ask, how are you

0:36

today? Well, I feel like someone

0:38

has tried to kill me and then reassembled me

0:40

using old spare parts that don't fit together. I

0:43

have COVID for the first time that I know of.

0:45

So if I sound like I'm a

0:48

cadaver, accurate. But I was

0:50

not going to miss the show. I'm here. I'm

0:52

excited. Yeah, equity. What

0:54

a trooper. Alex, uh, sucks.

0:56

Yeah. Well, we're also

0:58

joined by TechCrunch senior reporter and

1:00

editor Kirsten Korosak. Kirsten, how are

1:03

you presumably better than Alex? I

1:06

am living the dream and not

1:08

with COVID. So happy, but feeling

1:10

very empathetic towards

1:12

Alex. I have

1:14

a question about that because I don't go places

1:16

much. So I haven't had COVID yet. So this

1:18

is my first time. Have you guys had COVID?

1:22

Once. Once. Okay. I have

1:24

not. And I travel all the time. So.

1:27

Well, that's not fair. I know it's not

1:29

fair. I travel a lot for work. I go

1:32

on press drives and I haven't ever had it.

1:34

And I've been checked to see if I've ever

1:36

had it and I haven't. So I'm one of

1:38

those weirdos. Genetic anomaly. You know

1:40

what? I think I would have made fun

1:43

of you before getting COVID. But now after

1:45

the last 12 hours, I would just revel

1:47

in that. Hell yeah. Go Kirsten's immune system.

1:49

Rock and roll. Right.

1:51

Yeah. Well, today we

1:53

are going to get through a lot

1:55

of topics, including up top. We've got

1:58

FTX news once again. Deals

2:00

of the week include Amay Health,

2:03

Emotional Part 2 and Lucid Bots.

2:06

And then we're going to be talking about Mercury, the

2:08

latest going on there. And we're

2:10

going to also take a look inside

2:12

a new string of acquisitions. So Kirsten,

2:14

tell us about FTX. What's the latest?

2:17

Kirsten. Yeah, before we get into

2:19

the deals, I feel like this is a happy outcome

2:21

somehow from FTX.

2:24

Crypto fraud victims are basically getting

2:26

their money back plus interest. So

2:29

in total, FTX says it's

2:31

basically me able to distribute between $14.5

2:33

to $16.3 billion in

2:37

cash. And that's going to go to debtors and

2:40

that includes interest. So this is kind of good news. Okay.

2:43

I saw this, Kirsten, and I was like, wow, look at

2:45

that. What a surprisingly

2:47

positive outcome for such a catastrophic

2:49

cluster frick of a company. And

2:52

then I discovered that they are

2:54

getting their initial dollar equivalent back

2:57

plus interest. And if they

2:59

held the crypto that FTX had had, it would

3:02

have appreciated more. So there are some folks

3:04

who are annoyed. They're not getting the full

3:06

appreciation. And I get that. But

3:09

if you didn't think you were going to get

3:11

any money back and you're getting your initial principal

3:13

plus interest, I mean, that's better than I thought.

3:16

It's better than nothing. Agreed though that

3:18

it does suck that if you had put that

3:20

money in a different exchange, it today would be

3:22

worth a lot, lot more. But yeah,

3:25

again, if you're looking at the alternative of

3:27

zero compared to at least something, it

3:30

is better and it's unexpected. I

3:32

think this is one of those not your keys,

3:34

not your coins moments kind of brought to life

3:36

if you will. Right. I

3:39

mean, it was an outcome I

3:41

didn't expect. So it's easy

3:43

to look at, you know, 2020 hindsight.

3:47

Had we put it in another investment,

3:49

it would have been X. But

3:51

the fact that I didn't think

3:53

anyone would get a dime, I feel

3:55

like, yeah, good job.

3:58

Yeah, for sure. For sure. Again,

4:01

better than nothing. Well

4:03

now let's talk about a startup called Amay

4:05

Health. It's building an in-person

4:07

approach to mental health care. Alex, tell

4:09

us about it. Okay.

4:12

So one thing I think we've all seen in

4:14

and around the world since the onset of COVID

4:16

and then it's retreat and then, you know, haha,

4:19

irony, is that people are a little bit more

4:21

anxious and a little bit more depressed. And I

4:23

think that there has been a lot of good

4:25

work done out there to build companies that are

4:28

scaling virtual therapy so more folks have access to

4:30

mental health services. Good. The

4:32

problem is if you want to focus

4:34

more on more serious mental health issues, you need

4:36

a different set of tools. And

4:38

that's why I wanted to bring up Amay Health.

4:40

They just raised a $15 million Series A led

4:43

by Quiet Capital. And TechCrunch

4:45

has the key thing here, which is why I

4:47

really like this company. So they

4:49

quote, bring resources including family

4:52

and individual therapy, social workers,

4:54

psychiatric care and medicine management

4:56

all under one physical roof.

4:59

If you have a very ill family member,

5:01

mental or physical, having a one-stop

5:04

shop for their care is amazing

5:06

because then you're not piecing together different

5:08

providers, different insurances and so forth. So

5:11

I think Amay Health is one of those companies that

5:13

I look at. I'm like, this is an awesome company.

5:15

And then I'm like, wait a minute, it's venture backed?

5:17

Well, at my exact thought, I think

5:19

it's a great concept. I think it's

5:22

needed, especially in the case of severe

5:24

mental illness. But I was struggling

5:26

a little bit to understand, I guess, where

5:28

the tech angle is. And I'm thinking it

5:30

has to do with the data that it's

5:32

collecting and using AI to go through that

5:34

data so they can help improve care. I

5:36

mean, I don't know, Kirsten, what do you

5:38

think? Well, I guess

5:41

my very first question was, why

5:43

did this not exist before? Mental

5:46

health issues are not new. And

5:49

just like putting aside the tech play for

5:51

a moment, just putting everything under one umbrella,

5:53

has this never

5:55

existed before or has it but

5:57

just not as efficiently? I

6:00

think the issue here is just money and

6:03

I don't think that people who have the

6:05

most severe mental illnesses are the ones that

6:07

have the biggest checkbooks with which to write

6:09

checks. I mean, it's a good point.

6:11

Now, there are psychiatrists, of course, that

6:13

can treat severe mental illness, but they

6:16

are very, very

6:18

expensive. And even

6:20

if you have insurance, it

6:22

may not be covered. A psychiatric

6:24

visit may not be covered. So

6:26

imagine people who either

6:28

don't have insurance or not

6:30

great insurance, getting the care they need

6:33

can be next to impossible. You know

6:35

what we should do, Marianne, is we should

6:37

stop treating teeth and brain as

6:39

if they're entirely different fields

6:41

of health. And instead,

6:44

we should have insurance that covers

6:46

you versus everything but your

6:48

face bones and your

6:50

squishy bits, you know? It sounds like another

6:53

startup idea, Alex, that you should maybe

6:55

look into. Or maybe there's one out

6:57

there that we can write about. Didn't Amazon try

6:59

that and didn't it not work? It didn't really

7:01

work. There was a question,

7:03

though, about the data platform and just to

7:05

touch on that really briefly. So

7:07

the company is using AI to go through

7:09

just reams of data that it collects at

7:12

its clinics to find ways to continue to

7:14

improve the care. So there should be an

7:16

improvement over time and some efficiencies. And I

7:19

think we're seeing that in other areas of

7:21

health care of how AI is being used. Yeah,

7:23

I know. I gotta say, of all the

7:25

AI things, we're going to use AI

7:28

on the data. Sounds to me the

7:30

most like a sprinkling of AI pixie dust on

7:32

the company. But that said, I do

7:34

not want to be rude. I think Amay is doing

7:36

cool things and I'm very hopeful that their model works

7:38

in skills and we take better care of one another.

7:41

Absolutely. Did we mention they raised

7:43

a $50 million Series A led by Quiet Capital?

7:45

I'm not sure if we mentioned that. I

7:47

thought I did, but given that right now my

7:49

brain is full of cotton candy and little bits

7:52

of rat, you know, I don't think I'm actually too confident.

7:54

Well, just in case you didn't, I had to mention

7:56

it again. But, Kirsten, there's more for

7:58

Emotional this week. What's going on there?

8:01

Yeah, so if you remember, there

8:03

was some news that Emotional, which

8:05

is the AV startup that

8:08

was really born out of a joint venture between Hyundai

8:10

Motor Group and Aptiv, which is an

8:13

automotive supplier. And it was supposed to

8:15

be a $4 billion joint venture. Earlier

8:18

this year, Aptiv was like, yeah, mm-mm,

8:20

actually, JK, our business isn't doing awesome.

8:22

We don't really want to allocate any

8:25

more money towards this venture, which is

8:27

really more, if you think about it,

8:29

frontier tech. We're going to not only

8:32

do that, but we'd like to lessen

8:34

our holdings. So the big

8:36

question came around was, would Hyundai

8:39

step up or would emotional fold?

8:41

Would another external investor come in?

8:43

Hyundai step forward. And

8:46

really, it's about a billion dollar

8:48

investment, about $475 million going directly into emotional and

8:52

the remaining to buy not all but a

8:54

lot of the shares from Aptiv. This

8:57

week, we had a scoop that kind of

8:59

talks about the consequences of getting that money,

9:02

which is you can't just think of this as, oh,

9:04

that's a runway for a year, instead,

9:07

major restructuring. So what's

9:09

going to happen now is we got the

9:11

little inside tip and then ended up reporting

9:13

it out. But emotional is

9:15

ceasing all commercial operations. So they still

9:18

have a human safety driver behind the

9:20

wheel, but they have a ride hailing

9:22

service in partnership on the Lyft network

9:24

and on the Uber network in

9:27

Vegas. That's not happening

9:29

anymore. They had a partnership with Uber

9:31

Eats in Santa Monica. That's not happening

9:33

anymore. So think of all the commercial

9:35

operations, which really they were using as

9:37

a test bed in a way, but

9:40

getting closer to that commercial, that's done.

9:43

And they're also pushing back their

9:45

plans to launch a fully driverless service.

9:47

So no human in the loop anymore, at

9:49

least behind the wheel. That was supposed to

9:51

happen this year. Now it's pushed to 2026.

9:53

So it's all about focusing on core tech

9:56

and it's a lot of layoffs. Y'all a lot.

9:59

It seems to be. like it. I mean, I

10:01

think one question I do have though, Kirsten, why

10:04

do you think they're doing this? Why the delay? So

10:07

they internally talked about a couple of

10:09

things, but we're seeing this as a

10:11

problem throughout. First of all, there was

10:13

in the hype cycle of AVs, a lot of, well, there

10:18

was some hubris for sure, an

10:20

excitement about, and this is across

10:22

the entire industry, this isn't just

10:24

emotional, about launching by 2019 driverless,

10:26

right? Those timelines have long

10:30

since gone. And what

10:33

a lot of companies are finding

10:35

is just the cost per mile

10:37

to operate a commercial service is

10:39

incredibly expensive. And in some

10:41

cases, the tech isn't quite there, meaning

10:43

the component cost is really high, what

10:46

it takes to operate safely

10:48

in the way that they want is

10:50

just incredibly expensive. And so then companies

10:52

have to make a choice. Do we

10:55

continue on this track in which

10:57

we know we're going to burn X amount,

11:00

like about $475 million in a year? Or

11:04

do we focus just completely on

11:06

the core tech, get rid

11:08

of all that commercial operation stuff until

11:11

costs come down and the tech becomes

11:13

so good that then the cost of

11:15

operating is lower. And we're seeing this

11:18

happen across the board, actually. And we

11:20

have seen this played out over a

11:22

couple of years, companies kind of going

11:24

back and even Waymo, which is very

11:27

much commercially operating, there is

11:29

some sense that they are going to have to

11:31

probably get some outside funding as well at

11:34

some point, we continue. Isn't that

11:36

owned by alphabet? Isn't alphabet doing dividends

11:38

and buybacks? Wow, it's almost like companies

11:40

that get to be that big end

11:43

up focusing more on pleasing Wall Street

11:45

than doing innovative work. No

11:47

comment. Anyways, I just ran

11:49

the math Hyundai is worth 59

11:52

trillion Korean won. So I had to I didn't

11:54

know how to convert that it's worth like $43.3

11:56

billion Right now. And I Pulled up

11:58

the company's earnings. The to cash

12:00

flow of good as position to they can

12:02

afford this and and day to be clear.

12:05

Not. Alphabet So I think in this case he

12:07

makes law the sample. That the interesting thing

12:09

here is that we saw what happened to

12:12

our go which was backed. By Ford in

12:14

v W in which in that case

12:16

for it and V W look. That's

12:18

how much more money that they're going to

12:20

have to invest to bring this to commercial

12:22

status. And they bloomed and they pulled

12:24

out. And then Argo died

12:27

and. Then instead they decided oh

12:29

we're going to focus on automated

12:31

driving and like advance driver assistance

12:33

as stands and also have a

12:35

very small. Sort of team focused on

12:37

that higher levels of automation what we would

12:39

consider like robert taxi stuff so it could

12:41

have been a lot worse. For most know

12:44

that could have happened. And. I'm not

12:46

saying it won't be looking at Sunday's This

12:48

is a company that is very interest Robotics

12:50

in a I've they own Boston Dynamics. Don't

12:52

forget. So. They are interested

12:55

in some of this frontier attack and

12:57

they seem committed. but let's just say

12:59

in more realistic terms must not like

13:01

all the cash on. Fire. Let's be

13:03

a little bit more pragmatic about it.

13:06

Speaking. Of Robotics. My

13:09

deal of the week is a fun

13:11

one. It's a company called. Lucid

13:14

Bots Christine read about it and this

13:16

really caught my attention for a couple

13:18

of reasons. One is based of North

13:20

Carolina. My. Home State, which I

13:22

love. There's not very many companies that

13:24

we talk about that are out of

13:26

North Carolina. But. More importantly, what

13:28

it does. So it started out

13:30

by having developed these drones to

13:32

clean windows and like really high

13:34

rise buildings and things. Like. That with

13:36

as you know is scary scary scary. my heart

13:39

for would drop any time I would see that

13:41

when I just work in a highrise building I'd.

13:43

See a person like on the side they're

13:45

trying to clean the windows of is just

13:47

terrified that something's gonna happen in there were

13:50

gonna fall so lucid bots they years ago

13:52

actually came up with this line of drones

13:54

to clean windows and tall places and they

13:57

were even and. y combinator two thousand

13:59

and nineteen cohort, but over

14:01

time they started getting asked by customers,

14:04

can your drones do things like clean

14:06

sidewalks, driveways, you know, roofs, building facades,

14:08

stuff like that. And at first they

14:11

were kind of like, you

14:13

know, a drone on a flat surface, we don't see

14:15

how that would work. So they built

14:17

a robot to do it, which I think

14:19

was a great way to meet customer

14:21

demand and grow the

14:23

business. So they built a Lava

14:25

bot, a pressure washing robot.

14:28

All right. And if you want to know

14:30

what these look like, the Lava bot looks

14:32

like a mix between one of those robots

14:34

they used to disarm bombs and a lawnmower.

14:37

And then the other one looks like a DJI

14:39

drone that has a bit of a thing for

14:42

water. But they're really, really cool. And I love

14:44

this because I think we often

14:46

think about what is it, Kirsten, level five self-driving

14:48

is like the goal for robots and stuff. But

14:51

mostly robots are for industrial applications.

14:53

And as someone who has done a

14:56

lot of pressure washing on concrete, let

14:59

me tell you, it's boring. So bring on

15:01

the robots. I think this is so

15:03

cool. And if they can do this with just a

15:05

$9 million Series A, bro, someone get them an

15:07

extra zero, you know, I'm really curious what they can do with

15:09

a lot of money because this is a lot of work with

15:11

not much. Oh, be careful about giving

15:13

any startup too much money because sometimes that's

15:16

not a good thing. They can become less

15:18

efficient. So let's not do that. To

15:21

me, what's really interesting is watching sort

15:23

of how autonomous driving and also

15:25

robotics has evolved in the

15:28

past, let's say five or six years. And

15:31

a lot of autonomous vehicle startups

15:34

that went bust kind

15:36

of reimagined, maybe the founders went and

15:38

started a new startup all focused on

15:40

industrial applications. And it's the

15:42

boring stuff, but it's the make money now

15:44

stuff, which I think is really interesting. Plus

15:47

some I think component costs have come down

15:49

in robotics. There's been

15:51

certainly progression in

15:54

compute That now makes these things

15:56

more possible than ever before. And I Think

15:58

you're right. Like Having. Industrial robotics make

16:01

so much more sense than.

16:03

Some. Of the Gee Whiz Tack. That's more

16:06

consumer facing. And as a lot,

16:08

riskier. Yeah, I mean the company did just

16:10

over three and a half million in revenue.

16:12

And Twenty twenty three. Apparently executive say

16:14

they've been on an exponential. Clip for

16:16

the last three years are stressing that

16:18

they actually shared a revenue numbers well

16:21

during a half million. Yeah.

16:23

Stupid Mondale Company. The be worth seven

16:25

trillion dollar. Success. Success that there's

16:27

a lesson that, ah my goodness

16:30

right as they actually do. Have

16:32

a I driven software but yeah the

16:34

distance between dang it I should is

16:36

presumed. Now that everything isn't a i

16:39

start up everything. Has a little ai

16:41

pixie dust. Everything does except for

16:43

equity are to the know have made

16:45

no a I podcasting just for you

16:48

to. Add an ethic, we

16:50

all agree it's a cool company. I'll be curious

16:52

to see where it goes in the future and

16:54

see what else there can be doing and a

16:57

couple of years when now is gonna move on

16:59

to break. but after the break will be talking

17:01

about start ups and Mercury and what it's branching

17:03

out into next. What's.

17:09

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slush and such. Grants.

17:40

Even writing a lot about start

17:42

up Neil Bank Mercury. So what's

17:44

the latest update on them? So

17:46

a few weeks ago they'd say

17:48

announced that they were amazing interpersonal

17:50

thinking south what that means as

17:52

the they started actually about. five

17:54

years ago as mainly a start up

17:56

think digital bank for start ups rather

17:59

often be services for these startups. Now,

18:01

let's be clear, I have to always

18:03

point this out. When we talk about

18:06

these neobanks, they're not actually banks,

18:08

they're partnered with banks,

18:10

but they're digital banks. Now, did

18:12

I confuse you enough there? The way that

18:15

I think about this is that they're a

18:17

digital wrapper around someone else's old school trad

18:19

bank. Yeah, right. That's why I

18:21

have to just be clear that I call them a

18:23

neobank, not a bank. Yeah. Anyway, so

18:25

a few weeks ago, they said, Hey, we're getting

18:27

into personal banking. And what they were doing with

18:30

that is similar to like what another company

18:32

we talked about recently was doing

18:34

until it pivoted. But they were like,

18:36

Okay, our business customers, they could be

18:38

personal clients. So it's looking to cater

18:41

to, you know, a premium sort

18:43

of demographic. Then this week, it

18:45

said, Okay, well, now, we're

18:47

going to be launching software to layer on

18:49

top of our business banking accounts so

18:52

that we can offer our banking customers, bill

18:54

pay, spend management, invoicing.

18:57

So what that means is effectively

18:59

going head to head with the

19:01

likes of Brex and ramp and

19:03

numerous others in this space in

19:06

the expense management category as if we

19:08

needed another player. But anyway, Mercury said

19:11

that this has kind of been its

19:13

plan all along was to build the

19:15

digital bank and then layer on the

19:18

software on top of it. So I

19:20

think it's fine to have competition. But

19:22

let's see how many of these can

19:24

actually exist in this space. So if

19:26

I get this straight, then most of

19:29

their clientele are other startup founders. And

19:31

now they're looking to sort of

19:33

some stickiness to what their services

19:35

are and have these same folks

19:38

use numerous services. Is that the idea?

19:40

Yeah, I mean, Kirsten, I think I think you

19:42

hit the nail on the head. But interestingly, when

19:44

I spoke to a mod CEO and co founder,

19:46

I was curious about that because

19:48

they you know, they kind of advertise

19:50

themselves as a startup bank. But actually

19:52

startups make up less than 40% of

19:55

its customer base today, because they've kind

19:57

of diversified a little bit over the years. But

19:59

yeah, I think that that's what exactly what

20:01

they want to do just with their customers in general is

20:05

Add the stickiness and so they'll be

20:07

charging a subscription if their clients

20:09

decide to layer on the software They'll

20:11

be charging a subscription So mercury

20:13

will then now instead of just making money

20:15

off of interchange and that sort of thing

20:17

will make money through an annual Subscription fee

20:20

and that will range depending on the tier

20:22

of the paid plan from 35 to 350

20:24

dollars a month Okay,

20:27

so, you know how we joke that like every

20:29

single social networking service ends up being exactly the

20:31

same I really feel the

20:33

same way about like B2B fintech like of

20:35

course They're gonna expand into bill pay and

20:37

try to offer more accounts. What do they

20:39

want? They want more deposits and more total

20:41

money flowing through their platform So

20:43

in reality what we should do is we should

20:45

just map out each of the major players the

20:47

Brexis the ramps the mercury's and then Figure out

20:50

what the end point is and then just draw

20:52

straight lines and track their progress along the axis

20:54

because They're all gonna end up being the exact

20:56

same thing was just a different brand attached to

20:58

them How much innovation is there here really? I

21:00

mean mercury says it has over 200,000 customers Sending

21:04

four billion dollars in outgoing payments every month

21:06

of the its platform. So they're claiming There's

21:08

plenty of money movement already. They're gonna try to

21:10

make it easier for them. So

21:13

how are they Maintaining competitiveness so you

21:15

can do either do that on price. So

21:17

like lower subscription fees So it's a better

21:19

value or more services But

21:21

to Alex's point seems like they're all starting to

21:23

kind of look the same. So how

21:26

are they going to win? I

21:29

guess we'll see. I mean

21:31

that this is just an increasingly crowded space

21:33

Everyone's got an opinion about it ramp for

21:35

example entered bill pay I think it was

21:37

a year or two maybe two years ago

21:40

Seems now that that's one of its

21:42

fastest growing segments Brex And into software

21:44

to about two years ago and claimed

21:46

it was making a big push into

21:48

the enterprise So again, these are huge

21:50

categories. There's room for multiple players But

21:54

it is interesting just how many

21:56

startups are focused on this space.

21:58

So What is it

22:00

going to take to create a winner that I'm

22:03

not sure? Well, I think all these

22:06

companies are very, very cool, but they should just go

22:08

public already because my God, I'm bored of

22:10

them raising money and doing this all. Brex has been around

22:12

for like what, 7,000 years now? You

22:14

know, it ramps a little younger, but I mean, dear

22:16

God, what more do they need? It's time.

22:19

You just want more IPOs. Yeah. I

22:21

didn't mean to show up today ill and then just be

22:23

a complete cranky pain in the ass, but that it does

22:26

appear to be my mood. I'm sorry, everybody.

22:28

I will try to be fun again. It's always

22:30

fun. Anyway, let's move on. There's actually a

22:32

bunch of M&A activity this week,

22:34

which, you know, we all thought there

22:36

was going to be more of that

22:38

last year and the beginning of this

22:40

year. So M&A turned out to be

22:42

surprisingly less, what's the word, prevalent than

22:44

we... It was light. Light.

22:47

On the lighter side. You know, it was the

22:49

dinner salad of M&A activity. Right.

22:53

We were all expecting more, all

22:55

expecting more of it. But then this

22:57

week we actually had three deals. Not

23:00

one, not two, but three deals.

23:02

So one of those was DocuSign,

23:04

acquiring an AI powered contract management

23:07

firm called Lexian. And

23:09

then Samsung is going to acquire a

23:11

French AI ultrasound startup, Sonyo, for 92.7

23:13

million. And

23:15

then we had the confirmation of

23:17

a deal that Marina Temkin actually scooped

23:19

a couple of weeks back about Akamai

23:22

acquiring no names. So yeah, three separate

23:24

deals in one week. What do you

23:26

guys think about that? So the

23:28

first thing that I want to say is the

23:30

Akamai no name deal is interesting because it is

23:32

a... No name is an API

23:34

security company and they raised at around a billion dollars

23:36

in very late 2021. And

23:39

so, you know, three years later and change,

23:41

we are now seeing what they're actually worth.

23:43

And the answer is a little under half

23:45

of that. So to me,

23:48

I mean, and no shame against no name, selling

23:50

for 450, this is a big accomplishment. Well done.

23:53

So I think it goes to show just how

23:55

crazy things were there for a minute. And now

23:57

we are seeing the result of those exuberant rounds

23:59

now. The right sizing,

24:01

I guess, right? Like the right sizing of

24:03

deals. We saw so much crazy activity in

24:05

like 2020, 2021. And

24:08

now a lot of those valuations have come back down to

24:10

earth. I'm just going to see how many cliches I can

24:13

put in a single sentence. What I'm

24:15

curious about is, and I don't know if any

24:17

of you have the answer, which is I wonder

24:19

how long these deals have been in the works

24:21

for because on the venture side,

24:24

I'm finding that

24:26

yes, there are some big deals

24:28

happening like in AVs. We

24:30

just talked about emotional a minute ago and then there was

24:32

wave with a billion dollars this week. It

24:35

was hard to get across the finish line.

24:37

Those were taking a long time. How long

24:39

were these acquisitions taking? Is it

24:41

sort of at that same trajectory where they're

24:44

happening, but they're just taking forever to

24:46

happen? The only thing I can really

24:48

say there is I don't get the vibe that

24:50

we're seeing bidding wars. So I'm

24:52

presuming that the pace of these deals

24:54

getting done is not lackadaisical, but relaxed.

24:58

I don't think anyone's in a

25:00

huge danger. I mean, there's two things that drive a deal

25:02

to go faster. One is the

25:04

company is about to die or two, everyone wants

25:07

to buy it. And so everyone gets busy with

25:09

the checkbook. These all feel much more

25:11

relaxed. So I don't think that they're moving too fast,

25:13

but also I don't get the idea that they're taking

25:15

eight years to get done. Yeah.

25:17

One of the things about DocuSign is

25:19

that it's apparently itself exploring a sale

25:22

to private equity when it made this

25:24

deal. And then something

25:26

that caught my attention is Lexian. I

25:28

hope I pronounced that correctly. They

25:30

paid $165 million for the company, which had

25:33

raised about $35 million in venture capital prior.

25:37

So I was actually kind of

25:40

surprised by that because I feel like

25:42

lately when I've been reading about M&A

25:44

activity, the acquisition price when it is

25:46

revealed is either less or

25:50

close to the amount of money that

25:52

a company raised. So in this case,

25:55

this company actually sold for a good

25:58

amount more than it raised. Yeah,

26:00

5x more or less, but I think

26:02

the reason that's the case is DocuSign

26:05

is like the best example of a

26:07

point solution that got very very big

26:09

and now needs to diversify So if

26:12

you do a signature,

26:14

why not also do a Contract

26:16

workflow automation with all those signatures you have

26:19

on your platform and if you're docuSign you

26:21

worth a couple billion Splashing out

26:23

for what is that? You know a dozen dozen

26:25

million more or less I mean, it's just not

26:27

that much money in terms of market cap terms

26:29

So I think it makes a

26:31

lot of sense The problem though is if you

26:33

just add a lot of decals to your car

26:35

You tend to have the same engine under the

26:37

hood to make a kerosene choristic analogy here zoom

26:39

zoom room room Thank you. I don't know exactly

26:41

how much this is going to help but I

26:43

like the direction of the deal It makes sense

26:45

to me that way. Yeah, docuSign is Interesting

26:48

to me. Do we know how many

26:50

other acquisitions they've made at all

26:53

over the last few years? Like is

26:55

this how they're diversifying is same engine,

26:57

but just layering They acquired

26:59

a couple of companies one in 2018

27:03

spring cm a cloud platform for sales

27:05

contract management and then seal software in

27:07

February 2020 Companies

27:10

specializing in AI driven contract

27:12

analytics AI pixie dust and some

27:14

extensions to the product line who doesn't love it

27:16

What more can you ask for in 2024 or before?

27:20

Well, we're gonna put the tech news

27:22

aside for now because we do have an

27:24

announcement to make our dear Alex

27:27

When we all adore is

27:29

leaving tech crunch, which means he'll

27:32

no longer be on

27:34

equity It's an understatement to

27:36

say we're gonna miss Alex. I've worked

27:38

with Alex now almost seven years Straight

27:42

with exception of maybe a little bit less

27:44

than a year in there And you know,

27:47

he's been the heart of this show for

27:49

a long time. We're gonna miss you Alex Well

27:51

the coolest and best part of equity has been

27:54

the awesome people I've gotten to work with over

27:56

the years including this lovely crew Right

27:58

now we have Kirsten the Marianne We have

28:00

Teresa behind the dials and knobs and

28:02

also on the edit. But if you

28:04

go back to 2017, when we started,

28:07

it was Chris Gates, Katie Roof, Matt

28:09

Lindley, and myself. And then

28:11

over time, Connie Loyzus was a host for a

28:13

while. Grace helped step in with

28:15

editing. We've had Kel, we've had Maggie, and

28:17

of course now Teresa. And I'm not going

28:19

to go through every single person who's been

28:21

a co-host over the years because that would

28:23

take too long. But I can't tell you how

28:25

much I talk to the equity crew

28:28

and how much of my life it is. I'm

28:30

going to miss it immensely. Alex,

28:32

you might be leaving, but I kind

28:34

of feel like we can, you know,

28:36

bring you on the show as a

28:38

special guest when you inevitably create some

28:40

media startup. Nah, we'll see

28:42

about that. But yes, a big yes to

28:45

that. People don't know. Here's a

28:47

little bit of equity trivia. I joined

28:49

the equity crew when we started it, but I didn't

28:51

work for TechCrunch at the time. I worked for Crunchbase

28:53

News. And so I used to just kind of walk

28:55

across Soma in San Francisco to the old TC office

28:57

and record it, then run back to work. So

29:00

I have a long history of doing the show

29:02

kind of on a casual basis, if you will,

29:05

from a professional perspective. So I will not be

29:07

far. And I'm going to be listening. I'm

29:09

going to be cheering. I'm just so proud

29:11

that this project I got to help start is

29:13

going to keep on going. It's always been bigger

29:15

than any one person. And

29:17

we have so many brilliant, brilliant people that are going

29:20

to rock. I happen to know who else is joining

29:22

the show down the road a little bit. And I'm

29:24

super excited. I'm particularly going to

29:26

miss your tank tops, which

29:29

I'm seeing now. Also, I

29:31

think that the listeners should know

29:33

that he was wearing a bathrobe.

29:35

So he's already like coasting

29:38

into retirement. I

29:40

don't know what's happening, but stay

29:42

tuned on that. Let me tell you, you've

29:44

never seen me in a bathrobe before because

29:46

I've never had COVID while trying to work

29:48

before. It's quite the combination. You look

29:51

cozy. You look cozy. So just really an

29:53

example, though, of the dedication Alex has had

29:55

to equity over the years. I

29:57

mean, here he has COVID, has a baby to help.

30:00

take care of too and he's still on here.

30:02

He's still showing up

30:04

reflective of just how he's been over

30:06

the years overall. It's easy to like

30:08

to care a lot about a team

30:10

like this. I mean, think about the

30:13

people who who did that who are no longer with

30:15

us like Katie roof was instrumental in bringing on so

30:17

many venture capital guests early on Lindley set the tone

30:19

for how fast we could talk on a recording. Chris

30:22

Gates was the glue that you know held

30:24

the initial show together and then Henry Pickavet

30:26

was the one who provided a little bit

30:28

of cover internally to try this crazy idea

30:31

when it wasn't the most popular idea at

30:33

TechCrunch. So yeah, it's been such a privilege

30:35

and such a pleasure and I

30:37

the only thing I'm gonna say is I'm just bummed

30:39

that I will not be able to be at disrupt

30:41

on stage with the equity crew, but I

30:43

will be cheering from like 20 feet away. We're gonna

30:45

miss you so much. Alex, besides being brilliant,

30:47

you're just, you know, a wonderful and kind

30:49

human being and we love you. I

30:52

love you too, Marianne. We've gotten to work together so

30:54

much over the years. It's been a blast several different

30:56

jobs in a row. Yeah, and we're still gonna. Yeah,

30:58

I'm not dying. Right. And I'm depending on where you

31:00

go next. I do 100% plan on texting you every

31:05

single time an S1 drops so we can tell

31:07

the numbers because I am gonna miss

31:10

my numbers guy. I'm gonna miss

31:12

that, of course, your enthusiasm for

31:14

financials and all the wonderful analogies

31:16

and the swearing. I'm gonna have to

31:18

take that up. I will gladly take

31:21

up that baton. Someone needs to carry that forward.

31:23

And this is a team relay. You know,

31:25

I don't know how many episodes you've done

31:27

north of 700, I think total to date.

31:29

So here's to 700

31:31

more and I can't wait to watch

31:34

you guys absolutely crushed. But Marianne, even

31:36

though I am shuffling off into the

31:38

night, the show is not. No,

31:40

equity is not going anywhere. We'll be back

31:43

with a new episode for you on Monday

31:45

led by a familiar voice, Becca Scutak. Becca,

31:47

as regular listeners know, is also the host

31:49

of our sister show found. So don't forget

31:51

to check that out as well. Until next

31:54

time, you can follow equity under the handle

31:56

at equity pod on S and threads. We'll

31:58

talk to you soon. Equity

32:03

is produced by Teresa Loconcello with

32:05

editing by Cal. Bryce

32:07

Durbin is our illustrator and we'd like

32:09

to give a big thanks to our

32:11

audience development team and Henry Piccavet who

32:13

manages TechSunch audio products. Thanks so

32:16

much for listening and we'll see you next time.