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transcript
Alex Wilhelm 0:10
Hello. Welcome to Equity, the TechCrunch podcast about startup business. There, we unpack the numbers and nuances behind the headlines. This is a Monday show where we look back at the weekend and the week ahead, but yesterday was a holiday in the United States, so today is Tuesday. good morning. I'm Alex. Today he is February 20, 2024. We have a great show for you today.
Pods include stocks and crypto, a super cool Series C, struggling TikTok, Walmart's acquisition of Vizio, the big ransomware story, the future of MariaDB, and AI talent and San Francisco. Alright, let's go!
0:50
Let's start with the world of money, or the world of stocks. Stock prices are mixed in Asia, but stocks are rising in China after key lending rates were lowered more than expected in an effort to strengthen the economy. This could be the trigger for global interest rate changes. Stocks are up significantly in Europe today, and stocks are expected to start lower here in the U.S. this week as the short week begins. In terms of revenue, there are fewer names than last week. No, you're welcome. Today we hear from Palo Alto Networks, Workiva, and Sprout Social. Wednesday brings numbers from Nvidia, Etsy, Wix, Five9, DigitalOcean, Olo, and Vimeo. And on Thursday, we'll hear from Intuit, Block, aka Square, Nubank, Grab, Carvana, and Fiver. I'm looking at Sprout Social for SaaS, Nvidia for AI chips, and Digital Ocean for cloud storage. And of course, his Nubank in fintech.
1:49
Next up is cryptocurrencies. Again, good news for the second week in a row. This time, Bitcoin rose nearly 5% last week to just over $52,000, while Ethereum's token rose nearly 10% last week to just under $3,000. Spot trading volume is on a recovery trend after a significant drop at the beginning of the year. And if we rewind the clock a little bit, Coinbase's returns last week were astounding, leading some to say the crypto winter is over.
2:24
To kick off my favorite part of the show, the big news, I want to talk about a French startup called Planity. He just raised $48 million in Series C. So it's a very expensive round. It was also led by InfraVia Capital Partners, with participation from existing investors Crédit Mutuel Innovation, Revaia and Bpifrance's Digital Venture Fund. What does the company do? Well, we build a vertical SaaS for hair salons, barbershops, and other similar personal grooming businesses. I love vertical SaaS trading. Because what we're going to do is find industries that are using old technology and build a ton of software into those industries and bring them back out of the Stone Age. And with over 40,000 companies now using his Planity software, it turns out Planity was really on to something. That translates to a lot of nice recurring revenue. But Planity has another approach: payments. Stripe, the vendor that Planity currently uses for payments, has published a little white paper about the company. So we got some more stats. Stripe claimed that at the time Planity had 35,000 business customers, it had 8 million monthly users across its services. Now he has over 40,000, and that number is likely to rise even more, with more monthly users meaning bigger payments and more revenue for startups. . Toast, which has a somewhat similar model, albeit with more emphasis on restaurants than hair, of course, is worth about $12 billion today, as an example. Basically, vertical SaaS and payments are just a great business model. If you need more data to prove it, contact Shopify.
4:03
Flip the page and let's talk about TikTok. The company is in trouble again, this time with the European Union formally investigating its compliance with the Digital Services Act (DSA). The TikTok investigation looks at issues such as protection of minors, advertising transparency, access to data for researchers, and risk management of addictive designs and potentially harmful content. That's what TechCrunch says. So what is DSA? It's the EU's online governance and content moderation rulebook, which has been widely applied across thousands of platforms and services since Saturday. But since last summer, large platforms like TikTok have faced additional requirements in areas such as transparency and risk, so scale here matters. And it is based on these rules that video sharing platforms are currently being investigated. Why do we care that TikTok is in trouble around the world? Fines for DSA violations can reach up to 6% of global revenue. So TikTok is going to run into trouble here. It will be very, very expensive. Of course, TikTok faces regulatory pressures around the world, including concerns about possible parent company and government influence? Add new DSA items to that list.
5:20
Next, Walmart acquires Vizio. And I know you're thinking, why is this in the stock market? But don't worry, I'll explain. The deal begins with American retail giant Wal-Mart planning to sell Vizio, a well-known television maker, for about $2.3 billion, a deal that would see Wal-Mart earn more profits from consumer hardware sales. It is not designed to be obtained. No, instead, it's all about advertising. And yes, you can sigh now. I pulled data from Walmart's latest earnings report and it's down this morning. And I can put all this into perspective for you. The company grew 5.7% last quarter. Not bad, but not great. Given the state of the world economy, that's okay to some extent. However, Walmart's global advertising business grew 33% in the quarter, even faster than the reported 23% growth in e-commerce. So why does it matter? Not only is advertising driving significant growth for Walmart, it's actually more profitable than its advertising business, improving the company's overall gross margin. Therefore, it makes sense to invest more in advertising efforts. But why do we care about TV trading on stocks? Simply put, one of the things we've realized in recent years is how important advertising-based revenue and profits are to big technology companies. The question is whether there is. No matter where you start in the field, as long as you're interacting with consumers, you'll eventually become an advertising company. Microsoft puts advertising in Windows, and Amazon makes a lot of money from advertising. Instacart makes a lot of money from advertising, Uber makes a lot of money from advertising, and the list goes on. And Walmart doesn't seem to be any different. They are simply reaching the same conclusion from different disciplinary starting points. Perhaps companies that provide some types of screens may need to update their thinking to the point where they end up cramming the screen with ads, further cluttering the user experience. And the reason is simple. Who wouldn't want more profit?
7:14
And what about the good news? There is good news from the ransomware front. This is probably a sentence you've never heard before. But please listen. A coalition of international law enforcement agencies, including the United States' FBI and the United Kingdom's National Crime Agency, disrupted a massive ransomware game called LockBit. The good news is that in an announcement on Tuesday, Europol confirmed that a months-long operation compromised Rockbit, key platforms and other critical information, enabling criminal activity. It actually ran on dozens of servers across Europe, the UK, and the US. And importantly, I think over 200 crypto wallets were seized. Why do we care? According to TechCrunch, LockBit has become one of the world's most prolific cybercrime organizations since it first appeared as a ransomware service in late 2019. It is written that it has become. And according to the U.S. Department of Justice, LockBit has been used in approximately 2,000 ransomware attacks against victim systems in the United States and around the world, resulting in more than $120 million in ransom payments. That's a lot of money and a big incentive to misbehave. I think LockBit and other forms of ransomware are one of the reasons cybersecurity software companies have seen so much growth in recent years. And so much money was raised that the venture failed. I'm always kind of curious about cause and effect here, but let's say LockBit goes down and gets completely destroyed. Does that mean there is a smaller market for cybersecurity products, or is there a larger market given the long-term threats?
8:54
So enough about regulation and cybercrime, let's get back to trading. MariaDB is a company he built on a fork of MySQL, raised $230 million while private, and ultimately took public via a SPAC in late 2022. And since then, like many of his SPAC companies, he has seen MariaDB's value evaporate. why? Well, the company's financial results still leave a lot to be desired. And currently, it's worth too little to remain a publicly traded company on the New York Stock Exchange. To do that, you need a market capitalization of $50 million. That's not the case with MariaDB, but a potential buyer is on the horizon. California-based K1 Investment Management has filed an unsolicited, non-binding indicative proposal valuing the company at approximately $37 million. I mean, this was a mess and not the way we thought the public life of this company was going to go, and sure the SPAC was bad, but oh well, poor MariaDB. You feel sick, don't you? But I think there's something really important here. I think this agreement may indicate that more investors will try to take a shot at cheap assets before they potentially become more expensive later this year when interest rates fall. There is. As an aside, this may be good news for volumes in the second half of the year, as MariaDB, its backers, and employees are struggling this much.
10:20
Finally, I'd like to talk about a Wall Street Journal report that came out over the weekend and caused quite a stir on Twitter. In short, AI is bringing talent and investors back to San Francisco. The pandemic has shaken up the places where tech people live and work. But now the founders and their supporters are returning to the city by the bay. why? Customers, talent, and simply proximity to the AI capital of the United States, and perhaps the world, are just a few reasons. Well, I lived in San Francisco for most of the last tech cycle. And I have to admit that I have a very strong interest in this city and the Bay Area in general. But what I learned during my stay, and what people forget, is that San Francisco is a city of economic development. The economy rises and falls, people flock there and then leave, over and over again in waves. At this point. But today, as the venture market itself shrinks around the world, it is returning to its concentrated roots. So Northern California in 2024 is like NorCal from years past all over again, only this time with a focus on AI.
11:38
That's the show to start this lovely week. But if you want more assets before we get back to you guys, check out the X and Threads asset pod. And if you want to know more about me, I'm Alex from X. The show has two of his sister shows, including “Found,” which focuses on founder stories, and “Chain Reaction,” which delves into the future of the crypto economy. We will contact you immediately. Stocks rebounded on Wednesday. And then I came back on Friday.
Equity is hosted by me, Alex Wilhelm, and TechCrunch Senior Reporter Mary Ann Azevedo. Produced by Teresa Loconsolo and edited by Kel. Bryce Durbin is an illustrator. Many thanks to Henry Pickavet, who manages the Audience Development team and the TechCrunch audio products. Thank you for your attention. I will talk to you again next time.