Google’s AI push and why some VCs are pulling back from Europe | Equity Podcast

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this episode is sponsored by Morgan Stanley atwork visit morganstanley.com assessment to get your free transaction Readiness assessment [Music] today hello and welcome back to equity The Tech runch podcast about the business of startups where we unpack the numbers and the Nuance behind the headlines this is Alex good morning Welcome to our Monday show today is February 26th 2024 and today we're going to take a look back at the weekend and a look ahead at the week that is to come before we do that however we did drop a short episode this Saturday on reddit's IPO so if you want to know the key numbers there and what caught our eye we have that for you just go back one episode don't miss it it's worth your time on the show today we have stocks crypto and earnings Google bringing AI everywhere American investors was pulling back from Europe how startup interview Kickstart rode the AI wave to a fascinating new round and really who is the CEO of Baus let's go let's start with my favorite thing which means money and that means the stock market over in Asia stocks are mixed today though a key Japanese index did reach an all-time high Shares are lower over in Europe and they are flat in the US in pre-market trading but we do have a very busy earnings week ahead of us including a number of SAS companies which often have an offset fiscal calendar anyways on Monday we are going to hear from workday and zoom unity and grinder of that group I think Unity is going to be the most interesting Tuesday brings us coupon Splunk eBay clavio Jam rocket lab Bumble Compass lemonade and next door clavio of course was a 2023 IPO rocket lab and involves space and lemonade inure Tech I'm always very curious there then Wednesday Salesforce snowflake Buu HP new tanic OCTA Pure Storage duo lingo Squarespace c3.ai tabula and zor so that's CRM storage identity consumer edte web hosting Ai and subscription Wednesday is going to be busy then Thursday thankfully just four names net EAS zc HP and postar from stocks to crypto let's talk about what's going on in decentralized land first of all price movements have been mixed in the last week Bitcoin is off 2.3% to just about $51,000 while ethereum's token is up 5% to just over 3K elsewhere we have seen some sharper and contrasting price movements including binance's token gaining 10% in the last week while salon on his own has been off 10% in the last week but something that I care about a whole lot more than just the ups and downs of crypto tokens prices is what's going on with stable coins and usdc the main rival to tether has seen its total units in circulation begin to rise again key ahead of that company's hoped for or anticipated IPO elsewhere spot volumes do remain higher than in most of 2023 which is bullish for coinbase and other major exchanges let's talk about big news that matters and what matters more in the news today than Ai and to talk about AI we have to talk about Google this morning now you may recall that there was criticism of Google's new Gemini AI model's image creation abilities last week but that is not slowing Google down for bringing its new AI model to a host of devices techon reports that at mwc or Mobile World Congress Google detailed a quote new set of features for phones cars and wearables using Gemini to craft messages AI generated captions for images summarizing texts through AI for Android auto along with access to passes on where now I think that what matters here is less the individual products that are going to get a dose of AI but more the fact that the list is so broad wherever tech companies have a surface that touches customers or users they seem held bent today on pushing AI into the mix why because platform shifts are rare and mobile is deep into its maturity cycle smartphone sales are flat and there was only so much more money you can rip out of mobile internet usage and apps today so new things are hot because they may ignite growth or at least allow for market share capture now we have seen similar moves by Microsoft to bring AI to its OS software and web services while other big Tech shops are bringing AI to their Hardware now we need to see what sort of consumer and customer reaction the new AI stuff that has been announced lately will in gender and if it actually changes the market landscape or simply becomes the new table Stakes that said everyone's hoping that they will be the unique winners in the AI Wars next up how do you break into Europe it turns out getting in and doing well is a little bit harder than just booking a first class international ticket a couple of years ago setting up shop in Europe was the standard move for North American VCS from Omar's to light speed to Bess Venture Partners the Spotify IPOs seem to wake up North American VCS to Europe's potential to create outsize exits and once you know there's profit somewhere well you get into it VC's wanted to make sure they didn't miss out on this next wave but the reality is turned out to be a little bit more difficult than just opening an office in London and getting to work Becca sco Tech writes that big names like coatu and om formerly pulled out of the region in recent months and Venture funds that have remained in Europe from North America are significantly less active than they were before in fact according to pitchbook data the overall value of European deals with at least one US investor declined 57% in 2023 compared to 22 while deal count was off 39% in comparison or to contrast overall deal value in Europe declined 46% last year while deal volume was off 31% over the same time frame so why this faster pullback from us VCS well win and doubt do what you know best and for VCS that's always their home Market but tech report said there's more at foot here investing in Europe means lots of different languages and sometimes even different currencies and this can make investing in say Romania and Italy a lot harder than investing in and say both Texas and California Becca also writes that startup networks look different in Europe so there's quite a lot at play here but there's even more reasons why it's not simple to just go from us to EU across the pond on a jet and do as well as you were doing at home stem tevi a partner at Estonian Venture fund plural said that early stage startups in Europe used to look to the US for funding by default but that's not the case anymore quote over the last decade the early stage in investing has shifted way more toward local players 80% of capital deployed in Europe is European that's good for local currency recycling but not great if you're an LP in a US fund that was hoping to make big bucks over in Europe is your company planning to go public or conduct a shareholder liquidity program within the next 18 to 24 months did you know that proactively planning for your next private company liquidity event or IPO can help you maintain greater control over timelines and and outcomes Morgan Stanley at work believes that when you have the right technology and systems in place working in harmony leading up to a transaction you can prepare and execute with more accuracy and ease visit morganstanley.com assessment to connect with their issuer strategy and Excellence team for a free assessment to find out if your company is transaction ready again that's morganstanley.com assessment to get your free assessment [Music] today one of my favorite stories in the world of startups and private companies more generally is the company that starts life funds itself makes money for a long time and then suddenly later in its midlife it raises a big amount of venture capital it's always curious to know why that company made that choice and how it managed to be profitable for so long today we have one such story it involves San Francisco based interview Kickstart a profitable startup that assists Tech Pros to acquire career advancing skills and it just put together $10 million in its first funding round from Bloom Ventures now the company was founded back in 2014 a decade ago but made money so it didn't actually have to raise Capital why raise now well Tech reports that 2023 was a pivotal year for interview Kickstart after it found lots of adoption for its newly launched AI vertical aimed at Engineers looking to switch to Advanced roles or the way that I would summarize that the AI boom is lifting more boats than just Foundation model companies more or less it seems that developers know that having AI skills is the way to advance their careers today so what interview Kickstart has on offer is resonating in market and that makes it a great time for the company to put capital on the books with historical profits recent growth and good inmark attraction with something involving AI I presume that interview Kickstart got a price that it really liked in the deal what will will it use the funds for well the new capital will be put to use to invest in its AI offerings and to expand its Approach at leveling and switching up curriculums to more domains including product management and [Music] design so who is the CEO of Pichu it depends on who you ask investors proess Ventures and Peak 15 Ventures among others recently held an emergency meeting and voted to remove Buu rinden as CEO among other changes to the company's governments not so says renan who told employees that the investor group lacked a chorum among other issues that could undercut The Binding impact of their vote still it's uh it's not good when a company is fighting with its investors over control and leadership in fact given how loath private Market investors are to cause drama with their portfolio CEOs we essentially nearly never see this more or less it's considered a super negative signal for other founders making it harder for the activist private Market investor to get future deal flow that's why things have to get wild for Founders and backers to beef let alone do it publicly let alone in this sort of open war that we're seeing at the Indian edtech Giant and that is probably why we're seeing this why because BYU was once worth $22 billion and may now be worth effectively zero in pre-money terms so investors don't want to get wiped out Renren wants to retain control and no one is happy this is just one more chapter of the startup hangover from [Music] 2021 and that is our show for this lovely Monday morning of course if you need even more Equity we are Equity Pond over on X and threads and I am Alex over on X if you want to say hello and I am very lucky to report that we have two sister shows here on the Tech runch podcast Network including chain reaction on all things cryptocurrency and found talking to Founders about how they built what they did we'll talk to you soon Equity is back on Wednesday and Friday and don't forget we have that extra special Reddit episode just for you already in your podcast feed give it a listen we'll talk to you soon bye Equity is hosted by myself Alex Wilhelm and techren Senior reporter Mary an aeto we are produced by Teresa loans solo with editing by Kell Bryce Durban is our illustrator and a big thank you to the audience development team and Henry pavet who manages Tech rench audio products thank you so much for listening and we'll talk to you next time