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This episode is presented by Invest

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Puerto Rico. If you believe your

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business can go anywhere, Puerto Rico

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is the place. Hello

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and welcome back to Equity the

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TechCrunch podcast about the business of

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startups where we unpack the numbers

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and the nuance behind the headlines.

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This is Alex. Good morning. Today

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is March 25th, 2024, which means

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this is the very last equity

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Monday of Q1. I

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am in awe of how fast this

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quarter went, but no time to look

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backwards. Let's talk about what happened this

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weekend and what is coming up on

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this week. So on the show today

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for you, I have stocks and crypto,

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more AI personnel moves because apparently we

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are never going to get away from

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that theme. New

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regulatory issues for Apple and Alphabet,

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Spotify, getting into e-learning of all

1:00

things, China wanting to get away

1:02

from U.S. chips and why liquid

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death is super cool. It's going

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to be a packed show. Let's

1:09

go. Let's

1:13

start with a look at the world of

1:15

money and you know it. That means the

1:17

stock market shares are largely lower in Asia

1:19

today. The same over in Europe and are

1:22

set to open once again lower here in

1:24

the U.S. Now do keep in mind that

1:26

U.S. trading days are shorter this week due

1:29

to a religious holiday. So just four trading

1:31

days here in the States on the earnings

1:33

front. My gosh, my friends, we are at

1:35

the very end of Q1. So I only

1:38

have six names for you on Tuesday. We'll

1:40

hear from Encino, which is built on the

1:42

Salesforce platform. Then Wednesday brings us Braze,

1:44

Sprinkler and Rumble. And then Friday is

1:47

SK Telecom. So very few names, some

1:49

of which are SAS. And then there's

1:51

Rumble, which is online video and hosting,

1:54

which should have a very interesting upcoming

1:56

report. The stock

1:58

market is cooling down. and we're

2:00

seeing the same thing over in the

2:03

world of crypto. Yes, crypto prices took

2:05

a breather in the last week with

2:07

some rapid gains coming back down to

2:09

earth. Bitcoin is off just over

2:12

2% in the last week to around

2:14

$67,000 per. Ethereum is off just under 5% to

2:16

about $3,400. And Solana's token, which

2:22

recently ripped higher, is off about 9% in the

2:24

last week to $188. Don't worry though my friends,

2:29

Dogecoin is up 15% in the last

2:31

week and spot trading volume is coming

2:33

down modestly from recent peaks but remains

2:36

massively up from the prior norms we've

2:38

seen in the last year. So a

2:40

little bit of profit taking as we

2:42

would say in the world of stocks

2:44

but nothing to worry about. Alright,

2:49

let's talk big news that matters

2:51

and personnel shake-ups in AI I

2:53

think are the biggest news. As

2:56

we got started with the weekend, Stability

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AI founder and chief executive, Ahmad

3:01

Mustak stepped down from his role

3:03

atop the unicorn startup and its

3:05

board. Now, Stability AI has been

3:07

backed by a number of investors

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including Life Speed Venture Partners and

3:11

CoA2 Management and does appear to

3:13

have been taken by surprise by

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the news. How do we know

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that? Well, it didn't have an

3:20

immediate permanent replacement for the CEO

3:22

role. So the startup did

3:24

what it could and made its

3:26

COO and CTO its interim co-CEOs.

3:29

Now, Stability AI has lost quite

3:31

a lot of talent in recent

3:33

quarters and Mustak stepping down is

3:35

more bad news for it. So

3:37

why would the CEO leave? Well,

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he told us his argument on

3:42

Twitter. I'm going to quote here

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with some very very like changes

3:46

for the sake of readability. Quote,

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we should have more transparent and

3:50

distributed governance in AI as it

3:52

becomes more and more important. It's a

3:54

hard problem, but I think we can fix

3:56

it. He also went on to say

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quote, the concentration of power in AI

4:01

is bad for us all, I decided

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to step down and fix this at

4:05

stability and elsewhere." Eh,

4:08

okay, very altruistic, but at the

4:10

same time, stability is reported to

4:12

be burning lots of cash and

4:14

not driving enough revenue to allow

4:17

it to raise more capital. For

4:19

example, Sima4 reported last April that,

4:21

quote, "...name recognition and early traction

4:23

have not translated into enough revenue

4:25

to counter sky-high server costs and

4:28

the rapid recruitment of employees around

4:30

the world at the company to pick

4:32

one example." So is this

4:34

the case of a CEO going rogue

4:36

to save the world, or more of

4:39

a self-led shakeup of management at a

4:41

company that is struggling to raise more

4:43

capital? Well, we'll find out in time.

4:46

Next up, what is our regulatory

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news today? Why? It

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comes from the EU, and on top

4:53

of that shocking news, it involves the

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Digital Markets Act, or DMA. Now,

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the FT reports that the EU is

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probing both Apple and Alphabet, and also

5:03

Meta. There are two

5:05

different beefs here. On the

5:07

side of Apple and Alphabet, the

5:09

inquiries deal with app stores, and

5:11

whether or not the two American

5:13

tech giants are favoring their own

5:16

application marketplaces. Here's a pro tip.

5:18

They certainly want to. The only question

5:20

is if they are doing so in

5:22

a manner that breaks European law. And

5:25

Meta is in trouble, of course, for

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advertising data. What else? The

5:29

FT puts this all into good

5:32

perspective, and I quote, "...the probes

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fall under the Digital Markets Act,

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which is designed to tackle the

5:38

dominance of so-called digital gatekeepers, or

5:40

the biggest online platforms." This

5:42

is the push and pull of massive

5:45

platform companies in the tech sphere, and

5:47

a massive governing bloc of wealthy

5:49

nations trying to keep those same

5:51

platforms as open as possible. Now,

5:53

from the American perspective, this may

5:55

seem like too much meddling. TechCrunch

5:57

has, after all, covered the EU

6:00

domestic tech companies battle for what feels like

6:02

17 decades now. However,

6:05

flip it around, from the European

6:07

perspective, when the two major mobile

6:09

platforms are both American companies, well,

6:11

you can imagine why the EU

6:13

might want to ensure that those

6:15

same companies are not taking undue

6:17

advantage of their citizenry. Moving

6:20

right along, Spotify is getting into

6:22

learning, and my first take on

6:24

this was, oh god, why? Here's

6:26

what TechCrunch has to say. Spotify

6:28

has carved out a business for

6:30

itself in the world of music

6:32

streaming, sure, but more recently it

6:34

has spent time and money building

6:36

out its podcast and audiobook business.

6:38

By now, this should be no

6:40

surprise. However, the company is something

6:42

new up its sleeve as part

6:44

of its ongoing efforts to get

6:46

its 600 million plus users to

6:48

spend more time and money on its

6:50

platform. So the company is going to spin

6:53

up a new line of content, e-learning.

6:55

This means that starting with a rollout

6:58

in the UK, Spotify is going to

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test the waters for an online education

7:02

offering of 3BM video courses.

7:04

Now, these are produced in partnership

7:07

with third parties like the BBC

7:09

and Skillshare. The first two lessons

7:11

are free, but the total cost

7:13

for a course will range between

7:16

£20 and £80 on average, and if

7:18

you are a premium subscriber, you

7:20

don't get a discount. Why

7:23

is it doing this? Well, Spotify, for

7:25

example, works with music companies and makes

7:28

a lot of money streaming music to

7:30

users. However, when it does that, it

7:32

pays most of its revenue back to

7:34

rights holders. That means that Spotify's overall

7:37

revenue mix is not that impressive on

7:39

a gross margin basis. So what does

7:41

it do? Well, it tries to have

7:43

more stuff on its platform to give

7:46

it pricing leverage so it can have

7:48

stronger margin revenue. This means podcasts spend

7:50

a lot of money on that. Audiobooks,

7:53

they're trying that and now e-learning anything to

7:55

get you to spend more inside of Spotify.

7:58

That way it can keep more money. more

8:00

of those dollars. It has to grow

8:02

and it needs better margins. Now, I

8:04

don't know if digital learning via free-meeting

8:07

courses is the way to go, but

8:09

I think we're going to see more

8:11

experiments from Spotify until investors are happy.

8:17

Now, let's go across the sea the

8:19

other direction and talk about China. Chinese

8:22

state media reports that Apple CEO Tim

8:24

Cook said that his company will bring

8:26

its Vision Pro headset to the country

8:29

this year. Reuters is the one that

8:31

brought us the news from Chinese state media

8:33

and this should make China the second country

8:35

to get the Apple headset. Given

8:37

that China is going to be just the

8:39

second nation, this is in fact very big

8:42

news. Now, elsewhere in China,

8:44

the FT reports that the country

8:46

has quote, new guidelines that will

8:48

boot Intel and AMD silicon from

8:50

government computers. The context here is

8:52

that the US and China are

8:54

decoupling from one another in chips,

8:56

with the US looking to ensure

8:59

that Chinese tech doesn't find its

9:01

way into core infra and also

9:03

limiting the expert of high-end silicon

9:05

to the rival nation. At

9:07

the very same time, China wants to

9:09

build more of its own chips and

9:11

get US tech out of its digital

9:14

life. And it closes

9:16

out a little startup news for

9:18

your palette. Techwrenches Rebecca Scutek and

9:20

Christine Hall, two names and voices

9:22

that regular equity listeners have heard

9:24

on this very show, report that

9:26

the beverage startup world is getting

9:28

fizzy indeed, but with some real

9:30

results to back up the hype.

9:33

For example, Liquid Death reached $263 million in

9:35

sales last year

9:38

and don't worry, only half of that

9:41

came from me. Still though, with the

9:43

margins I anticipate that water has, that's

9:45

a lot of revenue for a company

9:47

that isn't that old and has only

9:50

raised so much. But Liquid Death is

9:52

not alone in trying to take on

9:54

the world of drinkables. There's also Poppy

9:56

and Ollie Pop amongst other names like

9:58

Odyssey, many companies. out there with

10:01

venture dollars are trying to take on

10:03

the growing non-alcoholic beverage sector and Well

10:06

as a recovering loser, I'm totally in

10:08

favor of it. But more importantly for

10:10

startups It's fun to see a return

10:12

of CPG and perhaps even DTC

10:15

amidst all the AI hype that we can't

10:17

stop talking about who would have thought that

10:19

the most basic of goods drinks is Venture

10:21

backable, but here we are liquid death is

10:24

proving the haters wrong That's

10:28

our show for this ever so lovely Monday morning

10:30

And we are equity pod over on

10:32

X and threads if you want even

10:34

more from the podcast crew I am

10:36

Alex over on X and equity comes

10:38

out three times a week Mondays Wednesdays

10:40

and Fridays except for weeks when we

10:42

have an extra interview and this is

10:45

one of those weeks Look for a

10:47

special episode in your podcast speed sometime

10:49

in the next seven days in the

10:51

meantime Of course, we have two sister

10:53

shows chain reaction and found. We'll talk

10:55

to you soon hugs. Happy Monday Equity

10:59

is hosted by myself Alex Wilhelm and

11:01

TechCrunch senior reporter Mary Ann as a

11:03

vet out We are produced by Teresa

11:05

Loken solo with editing by Kel Bryce

11:07

Durbin is our illustrator and a big

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Thank you to the audience development team

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and Henry pic of that who manages

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TechCrunch audio products Thank you so much

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for listening and we'll talk to you

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next time You