The DOJ is investigating a16z. What does this mean for venture capital?

Andreessen Horowitz has two partners sitting on the boards of companies that now compete with each other: Ben Horowitz at Databricks and Martin Casado at Fivetran. Nothing too scandalous on the surface, except the Department of Justice has reportedly been investigating the arrangement for almost a year, dusting off a 112-year-old antitrust law that's rarely used against VCs. Board conflicts aren't exactly new, and these companies weren't necessarily direct competitors when a16z first invested in them. But as portfolio companies expand into each other's markets, the DOJ's scrutiny raises a much bigger question for venture firms: How do you manage board seats when the boundaries between your portfolio companies keep moving? On this episode of TechCrunch's Equity podcast, Kirsten Korosec, Anthony Ha, and Sean O'Kane dig into the a16z probe, what it could mean for VCs, and more of the week’s headlines. Listen to the full episode to hear more about: Why Stripe paid $7.5 billion for AI model router OpenRouter, and why the “singularity” isn't the real reason What happens to the AI companies caught in the middle as OpenAI, Anthropic, and Nvidia pull further ahead Why Rivian spinout Also just raised $150 million to make a bigger bet on autonomous vehicles Uber’s newest delivery partnership with drone company Zipline, and what it means for the other autonomous startups betting their futures on Uber Whether we've reached peak valuation for AI dictation apps after Wispr's $280 million raise at a $2 billion valuation Subscribe to Equity on YouTube, Apple Podcasts, Overcast, Spotify and all the casts. You also can follow Equity on X and Threads, at @EquityPod. Chapters: 00:00 Intro 1:02 TechCrunch Disrupt and the Startup Battlefield 200 3:17 The DOJ is investigating a16z over board seats 14:47 Why Stripe just paid $7.5B for “the Stripe for AI” 18:18 The mid-tier AI scramble: gateways, pivots, and acquihires 23:17 Anthropic's revenue surges while OpenAI's losses deepen 27:08 Also raises $150M and drops the “micro mobility” label 32:30 Uber teams up with Zipline for drone delivery 37:19 Wispr hits a $2B valuation 38:26 Outro Learn more about your ad choices. Visit megaphone.fm/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  This episode of Equity is brought to you by Schneider Electric. Schneider Electric, advancing energy tech.

• 0:05Kirsten Korosec?

  The DOJ is investigating Andreessen Horowitz over holding board seats at competing companies. Also this week, we're seeing what's happening to AI companies that aren't named Anthropic, OpenAI, or Nvidia, and we're keeping an eye on a few deals this week, including the $7.5 billion acquisition of an AI model routing startup that calls itself the Stripe for AI. So stick around.

• 0:37Kirsten Korosec?

  Hello and welcome back to Equity, TechCrunch's flagship podcast about the business of startups. Today is Friday, August 21st. I'm Kirsten Korosec, Transportation Editor here at TechCrunch, and I'm joined, as always, by our Weekend Editor, Anthony Ha, and Senior Reporter, Special Projects, Sean O'Kane. I hope you two are great, and I'm wondering if you've seen our news about our Startup Battlefield 200 picks.

• 1:07Speaker 00

  Yeah, I saw the announcement of the 200, which we're going to have 200 companies in the Startup Battlefield. 20 of those companies will actually be competing on stage. But this is like a recent thing we've done to kind of increase the participation, you know, just get more startups involved, grow the community, which I think has gone really well, and I'm really excited to see them at Disrupt in October.

• 1:31Speaker 02

  I love this day and like this time of year. I've only done Disrupt a few times since I started working here, but it's so much fun. And it's like the complete antidote to those situations that I think we've all been in, like CES, where you go into a room, you know, full of cocktail tables, and everybody has their little brochures and stuff. But, you know, half of them have paid to be there, and, you know, what they brought is mostly dreck. And, you know, it's fine, it happens, but that is not the case here. You know, we went from thousands of startups who applied this year, an amazing crop with some really fascinating ideas, down to 200. And it's just so much fun to now get into this sprint. It goes from 200 to 20 to 1 in two months from now, so I'm excited.

• 2:15Kirsten Korosec?

  Yeah, a lot of people don't realize this. When you go to Disrupt at the Moscone Center in San Francisco, you see these 200 startups, and some might think that they paid to be there. But this is a very different process. It's an incredibly competitive application process. And then from those 200, 20 will get to go on stage, which is another like really exciting moment when we introduce those companies. I do not know who those companies are yet, just FYI, no one asked me, I don't know. But I cannot wait to find out. We should give a special shout out to Isabel Johansson, who is, aside from, you probably have seen her face and heard her voice on Build Mode,

• 3:00Kirsten Korosec?

  our other podcast, but she is working behind the scenes, leading the effort on Startup Battlefield. So thank you, Isabel. Also, if you want to go to Disrupt, and you absolutely should, we have a special deal. You can sign up for a discounted ticket using the code EQUITY. But we should maybe talk about news this week, and there's a big one.

• 3:22Speaker 00

  Yeah, absolutely. There was this story, it was, I think, kind of started with a report in Bloomberg around the firm Andreessen Horowitz, which I assume all of our listeners, or 99% of our listeners are very familiar with, is apparently being investigated by the Department of Justice, which, I mean, I literally, we put in the headline that VCs are baffled by this. Were you guys similarly baffled?

• 3:48Kirsten Korosec?

  Yeah.

• 3:51Kirsten Korosec?

  Yes, one answer. But, you know, I think that you bring some interesting perspective to this, Anthony, because you actually worked at a VC firm, whereas Sean and I have never been inside the confines of, you know, the VC world. We've only reported on it.

• 4:08Speaker 00

  This is true. So longtime Equity listeners will know that I did spend a couple of years working at an early-stage VC firm, a much, much smaller firm than Andreessen Horowitz, did not, you know, do those kinds of giant later-stage investments. So like, kind of as different as you can be while still technically being in the same industry. But it did color my response when I was reading this article, which is essentially about these board seats that Andreessen Horowitz holds, and the idea that they're essentially have board seats in some companies that have become competitors. And, yeah, I guess the short version is just that, like, it was really surprising to me,

• 4:49Speaker 00

  as apparently it was to a number of other VCs, because there is apparently, you know, and again, I was, I'm not a lawyer, I was not on the legal team of this VC firm. But there is obviously an understanding that, and apparently laws around the idea that you should not be on boards of competing startups. But this is not something that is generally enforced very closely. It's not some, it's understood that as an ethical matter, you know, founders don't feel great if you're on the board of their biggest competitor. But also startups evolve. They, they're not always going to be, you know, and I think that was true in this case, is that you invest in a startup doing one thing, and then, you know, say the AI boom happens, and suddenly they're, you know, doing something completely different.

• 5:30Speaker 00

  And, and so the idea that you would have a year-long DOJ investigation into this, which, again, we don't really know what the results are. There's a lot of questions about this, but it just seems very strange.

• 5:41Kirsten Korosec?

  In this case, Ben Horowitz sits on the Databricks board, partner Martin Casado sits on Five Tran board. And to your point, especially in this AI-driven boom cycle, a lot of companies are changing what they're doing, and either to jump into the AI space or to take advantage of specific subcategories within it. And a company the size of Andreessen, which makes so many investments and is on a lot of board seats, you can see how this would happen. To me, what was interesting, and Sean, I wonder if you have an opinion on this,

• 6:21Kirsten Korosec?

  is of all the things that the DOJ would focus on, in terms of level of importance, why does this one rise to the top?

• 6:32Speaker 02

  I'm just excited we've got another chance for disruption here. I mean, we could create a startup that is just going to put an AI on your board, and there are no conflicts of interest, and, you know, here we go, let's do it. No, you're right. I mean, like, it's weird for a number of reasons. And it was, you know, when I first saw the headline, I, it certainly piqued my interest because I wanted to know what it was that they were looking at, especially given, we should back up just a real quick second. You know, Bloomberg reported that this has been going on for nearly a year. So this started under the Trump administration. The, you know, people who run Andreessen Horowitz are very friendly with the Trump administration, involved in the Trump administration in some ways, sitting on some councils and things like that.

• 7:15Speaker 02

  And so, you know, for as much rhetoric as the Trump administration was sort of putting out there when it was still incoming to the second administration about being antitrust forward and, you know, sort of fighting against the big forces of consolidation or whatever, that really hasn't borne out. I mean, they settled with Live Nation, they didn't break up Ticketmaster. I mean, we could spend all day talking about how like that really was not, it was a pretty hollow promise. And so it's weird in some sense. I mean, listen, the Justice Department should not be, you know, sort of a tool for the president to just direct at enemies or friends or whoever.

• 7:55Speaker 02

  But it's just interesting that this is a bridge they were willing to cross, knowing how close they are with, with this administration. And, you know, I've reported on some things that Andreessen Horowitz have done that made me wonder if that was going to be part of this. Like, you know, two years ago, they published a story about how, you know, Ben Horowitz was sort of like personally making connections between the startups that Andreessen Horowitz backs and like local police department in Las Vegas. And, you know, things that have maybe more of an anti-competitive flavor to it than this, which, like you've said, is, is maybe a bit more by chance

• 8:37Speaker 02

  because of the way that these companies evolved and wound up competing against each other. So, yeah, weird for a number of reasons. Certainly doesn't seem like it's something that Andreessen Horowitz feels like such an overreach that we have seen them complaining about it on Twitter, like they were during the Biden era, where every little policy change, especially related to crypto, generated, you know, a day's worth of posting. We haven't really seen that here. And so maybe it's all going to be copacetic in the end.

• 9:04Speaker 00

  Yeah, it's really reminds me of that whole news cycle back in 2024, when, you know, Andreessen Horowitz, like, very kind of vocally came out in support of the Trump administration, not, not then the administration, but the reelection campaign, and how, at least by everything that's public facing, you would think that if this was going to be a big deal, that this could potentially be a fracture between them. But that, at least publicly, hasn't been the case. And to, you know, Sean's other point about the DOJ, you know, without getting too deeply into the politics of it, I think, again, anyone who's been reading the news knows the DOJ is in the news a lot. There's a lot of turmoil there.

• 9:45Speaker 00

  There's a lot of questions about sort of how politicized the office has or hasn't become, which, again, just makes it very surprising and strange that, you know, that there has been this long investigation into an ostensible ally of the Trump administration. And then the last thing I wanted to say for now is also just the, that length of the investigation is very surprising. And You know, if it was just about like, well, we don't think you should be on these two board seats. I mean, there's not that much to investigate there. Like, yes, they're not. You should just tell them, don't do that. Or, you know, here's what we need you to do instead. So I think what that suggests, right, is there must be a lot that we don't know. I mean, sometimes I worry that, you know, people assume that there's more to things than meets

• 10:30Speaker 00

  the eye, and that's not the case. But in this case, it feels like there has to be, right? There has to be some other more serious allegation of something going on. Otherwise, what is there to investigate for that long?

• 10:41Kirsten Korosec?

  Well, I think that you can have two truths, meaning you can have a slow, arduous process because of an inefficient DOJ, and also you can have some sort of like smoking gun or bigger issue. And we don't want to get too speculative because and make assumptions. But I do think that their reaction and how quiet they've been, and perhaps they're listening to their lawyers, perhaps that there is something a little bit bigger here. My question is, is how does this now affect other VC firms? Are they taking notice? Or is this considered a weird outlier, and they're just going to proceed as normal and continue to take board seats and not worry too much about potential, you know, competition between boards down the line?

• 11:27Speaker 02

  I mean, I think that's a good question. Like, if this is really something that is such a concern with inside the antitrust division of the DOJ, then, you know, maybe this is a way for them to sort of, how do I best put it? Like, set the example that then those smaller firms would follow if that's what, you know, the goal is, right? Like, instead of having to try to go after, you know, if you perceive this as a sort of antitrust violation, going after all these other smaller firms for doing something like this, you go after Andreessen Horowitz, and you set the example, and then, you know, maybe that puts these other people, you know, at in more of a wary, cautious position.

• 12:10Speaker 02

  And so I could see that being the case. I think the other thing to think about here, too, is like, this administration and the agencies that sort of, you know, work for it and next to it have really backed off on public company prosecution in very explicit ways. The SEC and the DOJ have both kind of said that, like, that sort of public company investigations and things like that are just not a priority. They would rather go after individuals. Obviously, we're talking about Andreessen Horowitz as a company here. But they, you know, it just makes me wonder if this is in some ways, some sort of side effect of how the priorities have shifted, where if you're not going after corporate prosecutions,

• 12:54Speaker 02

  like, you know, you're backing off on guilty pleas that Boeing has entered. And again, like, settling with Live Nation, and really backing off some of those kind of Fortune 500-type companies, maybe one of the side effects is, is you wind up paying a bit more attention to stuff like this, you know, in the meantime.

• 13:11Speaker 00

  One thing I did want to quickly acknowledge is that I think, despite the fact that I think all of us and many of the VCs that other TechCrunch reporters have spoken to find this to be kind of strange. Like, it is a real issue in the sense that I've certainly spoken to founders about, you know, hey, like, this firm, I don't like the fact that this firm, you know, has a seat on my biggest competitor, or now it seems like they're kind of picking this competitor, and they're still on my board. I don't like that. I think in general, most of those founders would not say, oh, well, Ben, the DOJ should step in in that situation. But it's not like a totally made up issue. It's just strange. The circumstances around this are very strange.

• 13:47Kirsten Korosec?

  Well, that it would elevate to, you know, a year-long investigation and some sort of potential action from the DOJ, I think, is, is the surprising part.

• 13:56Speaker 00

  Exactly.

• 13:57Kirsten Korosec?

  I do want to shift gears a little bit. And, you know, on this show, we talk a ton about Anthropic and OpenAI and Nvidia. You've heard about those companies, right? But there are other AI companies out there. And today, I thought it'd be interesting to talk about, because we've had so many interesting deals, like, what is happening with these kind of next level down, you know, not necessarily a performance thing, I'm not rating these companies, but in terms of, you know, their valuation size, capacity to, to, you know, buy up companies and stuff like that. What are these kind of mid-tier companies doing right now? And there's some interesting movements and shuffling around that is happening,

• 14:40Kirsten Korosec?

  and some consolidation. Anthony, the deal that comes to mind that sort of got me thinking about this was this OpenRouter acquisition. So what happened here?

• 14:54Speaker 00

  Every company today is looking for an edge. Better insights, faster decisions, greater resilience. But as AI drives new growth, it also creates new demands on energy and infrastructure. Schneider Electric is connecting energy, automation, and digital technologies to help organizations make smarter decisions and operate more efficiently. Because the future won't be shaped by AI alone, it will be shaped by energy and industrial intelligence. Schneider Electric, advancing energy tech. So this is Stripe acquiring OpenRouter, which is kind of the best known of the AI gateway companies. Essentially, the idea that, you know, instead of kind of just using one model, that potentially you can sort of use the right model for your task, the

• 15:37Speaker 00

  right model for your budget. And this is something that's, I guess, been reported to be in the works for a while now. I mean, the Journal, I think, and the Wall Street Journal in July had a story about this. But now, over the weekend, Bloomberg reported that the deal was finalized with an acquisition price of more than $7 billion, and the news became official this week. And yeah, there's some broader, like, maybe ideas that we can draw from it. And also, there's some maybe just kind of eyebrow-raising things about this announcement. I mean, I think the big one was, you know, the founders of Stripe essentially saying, oh, yeah, the price.

• 16:10Kirsten Korosec?

  The price?

• 16:12Speaker 00

  Yeah. So the price, again, is more than $7 billion, which, you know, again, by the sort of stratospheric heights of OpenAI or Anthropic is nothing. But it's a lot of money. It's also a significant, you know, increase from their valuation earlier this year. I think the founders are going to do very well in this. And then the other thing that was very striking was also just the founders of Stripe saying, well, we're, we're doing this deal because the singularity is approaching.

• 16:38Speaker 02

  The singularity is already here, right? Isn't that what they said?

• 16:41Speaker 00

  Oh, sorry, misquote. Thank you for that correction.

• 16:44Speaker 02

  The next round of is this AGI. Like, the singularity is here, and it happened a few months ago. Don't you all notice how everything has changed?

• 16:53Kirsten Korosec?

  Yeah. And I have to say that our venture editor, Julie Bort, had a great, a great story that was really more of an analysis and really poked fun at this idea of the singularity, and was like, hey, this is actually, there's a real business reason for this. And, you know, the sort of the money graphs that she has here is that for Stripe buying sort of the granddaddy of popular AI gateways for developers gives it insight into how coders are using AI. But it also, at the same time, gains a lever on AI demand itself. And so there's real power there when you have a payments plus token expense management

• 17:35Kirsten Korosec?

  and a model router. That, I think, is a little bit better reason for Stripe to pay $7.5 billion. By the way, their valuation back in May was a fraction of that. So just to put the size of the idea in perspective here. But, but I think that is really the reason why Stripe bought OpenRouter, not because the singularity is here.

• 18:00Speaker 00

  Not, not to, yeah, throw shade on whether or not the Colson Brothers do believe that the singularity is here. Maybe, maybe they do. But I would say also, zooming out a bit in terms of some of these other deals that I think we're going to talk about as well is, my takeaway is, to some extent, just that, like, the AI market is behaving like any kind of tech and startup market, that we're now kind of starting to move a little bit beyond the kind of initial exuberance, and you're starting to have just kind of the natural maturation of, like, for the bigger companies, like, oh, crap, like, how do we, like, are we making, you know, what's our business model? Are we profitable, et cetera? And then for the smaller companies, there's some, like, natural consolidation. Some of them are going to shut down, some of them are going to get acquired. And so,

• 18:43Speaker 00

  I mean, the numbers involved, you know, the dollar values involved are maybe larger than than what we see with with past cycles. But it feels kind of familiar in that way.

• 18:51Kirsten Korosec?

  Yeah, I'd also want to mention that, you know, outside of Anthropic, Nvidia, and OpenAI, which, again, you know, we talk a lot about, there seems to be this trend of, like, a lot of companies developing their own AI gateways. So Databricks, Rippling launched one focused on employee AI spend and ROI. Ramp just launched one. So there's the consolidation piece that we're seeing with, like, OpenRouter. But we're also seeing this, like, trend of AI gateways that are also happening in these, what I would call, like, mid-tier AI companies.

• 19:28Speaker 02

  I think the way I like to think about it is, you have these, you know, the largest AI companies, like, you know, Anthropic and OpenAI, plowing all this space, you know, and really just creating of, you know, now I'm mixing my metaphors, a vacuum. And, and so there's just naturally going to be a sort of scramble amongst this kind of, like, mid-tier size-wise and valuation-wise of companies that are maybe deciding to acquire something else to grow and get, you know, sort of similarly big, or maybe they're going to pivot completely like we saw Grok do earlier this year. Not Elon Musk's Grok, but Grok with a Q, where

• 20:12Speaker 02

  they went from wanting to develop, you know, inference chips, but then having one of these kind of weird aqua hire situations where they lost a lot of their talent and decided to pivot to being a NeoCloud. There's just this kind of churn that's happening right now, where, you know, there's still clearly a lot of money flowing into this ecosystem. And so that gives some flexibility to some of these companies, even if they're doing it sort of under duress in some situations, to try and figure out, what are we best at? What is there a need for? And frankly, I think the You know, how much, how deeply some of these technologies have, you know, become attached to the enterprise world. I think that took a lot of people by surprise. And I think

• 20:55Speaker 02

  we're seeing just kind of, you know, sort of more ripples coming from that of, okay, well, if this is really going to take off in the business world and change, you know, X, Y, and Z about how Fortune 500s or whoever does, does work and how their employees do work, then, you know, there's just naturally going to be a lot of, you know, sort of pivoting in the meantime, as, as people realize, oh, shoot, if that's the case, we, we don't have whatever this piece is that's missing. And so we should go and try and do that instead.

• 21:25Speaker 00

  Yeah. And speaking of the churn, I think one of the other headlines that we wanted to mention was also this company Relay, which was also an AI automation startup. And that one's actually shutting down and the team is joining the Google Chrome team. So in a sense, you sort of get in these three, like a pretty broad spectrum of like the different kinds of outcomes. You can see you get the, the shutdown aqua hire, you get the, the funding to keep open, keep going after, after pivot, or, or a kind of a more traditional acquisition. And, and I think, you know, you're also talking about this idea of, again, with like Grok, Grok with a Q. I guess everyone will just visualize that in their head for this discussion, um, you know, finding this new business model. And I think part of, this also maybe goes back to that, the, the AI router

• 22:09Speaker 00

  discussion or AI gateway discussion of, I think for these mid-tier companies or smaller is where, you know, where is the sort of long-term value going to be? Where are the moats going to be? What, what is just going to become commoditized? And I don't think we also have clear answers on that yet. And maybe it's fine, right? If you're like a, you know, a startup that, that does not have the ambition to become the next OpenAI, like if you want to just, you know, sell like Neo Cloud infrastructure and, you know, not necessarily reach the ubiquity of some of these bigger companies, but you're going to make a lot of money for a couple of years. Like, maybe that's good enough.

• 22:44Kirsten Korosec?

  To use another terrible metaphor, I've been thinking about this because Sean, Sean mentioned churn, and it just reminds me of sort of like churn or like choppy seas. It's like very unpredictable. A lot of these companies, they can't just tread water, right? You know, here I am with the water metaphor still, but they can't just tread water. They have to make moves, but the seas are a little bit confusing right now. And so they're all trying to carve out these different niches, which is driving consolidation, which is driving these sort of acqui-hire situations, which is driving these shifts, um, you know, to Neo Clouds. And we're seeing these like little mini trends as all of these companies try to carve out these niches.

• 23:26Kirsten Korosec?

  Against that backdrop, you have Anthropic annualized revenue surging to $65 billion. So it's like, it's important to compare what is happening at like the mid-tier level where there's a lot of action, activity and change. And then with the OpenAI's and the Anthropics of the world, there's like this whole other level that is happening.

• 23:50Speaker 02

  Yeah. And we should say, as Anthropic's revenue is going up, OpenAI's losses appear to be deepening, uh, according to another report from the Wall Street Journal this week, which, you know, there, that was in the second quarter. Seems like things may have adjusted more in their favor so far in the third quarter. But, you know, it, it, we've talked a lot on this show over the last few months of this idea of, you know, Anthropic kind of building something a bit more purposeful. And I think we're just continuing to see that company reap the rewards of that approach versus like, you know, Anthony, you just talked about, like, if one of these smaller companies wants to become an OpenAI, how do you even define that? Right? Like, okay, I want to be

• 24:31Speaker 02

  like OpenAI. I want to make one of the most popular products anybody has ever created when it comes to the world of software, but also we own a podcast and we have, you know, a video generator that we've abandoned and we do X, you know, there's just, we're building data centers, but we're kind of not, you know, there's so much that that company has to kind of keep on the table. And, you know, I think it, it just seems from the reporting that they're continuing to struggle from that. And, you know, to that point, like, we've continued to see some shakeups there. They've had more executives churn out in the last couple of weeks again. And, and so, you know, there's, they're trying to find that focus, it seems. Um, but it, that's got to, it's

• 25:15Speaker 02

  just got to be hard because, you know.

• 25:17Kirsten Korosec?

  Sean, I, I have a quick question for you. I'm sorry to jump in, but like, as you're describing OpenAI, the way you laid it out, it really reminded me of what Meta turned out to be.

• 25:29Speaker 02

  Oh, I think.

• 25:29Kirsten Korosec?

  They created one of the most, it, it like, um, popular products. And yet, all this other stuff that they're doing is like so hard to define. And they seem to be like, have their hands in everything. I mean, is that a fair comparison?

• 25:43Speaker 02

  I think that's a good way to think about it in like the broadest strokes where, yeah, they are, you know, they've, they've made some pretty big acquisitions and they've done, you know, they clearly made one of the most popular products, you know, that is now continuing to, you can only attach so many hundreds of millions of people to a certain product. And similar to how we're seeing the kind of the quote unquote blue app with Facebook, start to drip users out quarter over quarter over quarter. So yeah, I think that's the right way to think about it.

• 26:11Speaker 00

  Right. Although of course, I mean, Meta is much further along in that process in that they've gone through like multiple cycles of, are we still relevant? We are still relevant. We're going to bet on this thing.

• 26:19Kirsten Korosec?

  Oh, yeah.

• 26:20Speaker 00

  But I, I think, yeah, the other thing I'm kind of wrestling with as I, as I've been reading these stories about OpenAI and Anthropic is also like, that I think there are some ways in which they do seem to be diverging, that like Anthropic seems to have become, that at least right now, Anthropic has been more successful at turning this, you know, in their incredible popularity and usage into, uh, you know, a, a real business. But at the same time, I think both of them also face similar challenges of, yes, they're, they're, they're bringing in a lot of money, but costs are also very, very high. And in order to justify the, you know, stratospheric unprecedented valuations that they've, that they already have and to, you know,

• 27:02Speaker 00

  meet expectations for these IPOs, that trajectory has to continue, right? If they can't just be like, great, we're at like $65 billion run rate. That's fine. It's like, the, the point is that that is seven X, I think what they were a year ago. And that needs to, that it needs to keep moving on that line, um, or they're in trouble.

• 27:19Speaker 02

  Well, you know, if they're willing to sacrifice a little bit of the, the revenue run rate or a little bit of the valuation, maybe they should think about spinning some of those businesses off instead of just killing them outright or taking on too many. Uh, and that brings us to our first deal of the week, which is also, still hate that name.

• 27:34Kirsten Korosec?

  Yeah.

• 27:35Speaker 02

  Also, the, the micromobility company that was spun out of Rivian last year.

• 27:40Kirsten Korosec?

  But is it a micromobility company?

• 27:42Speaker 02

  Well, we should get to that, but you know, it has raised $150 million in its Series D. So moving quickly here, we only got spun out a year ago and some change. And we're already on a Series D funding round. That brings it to about $455 million raised, um, since then, which is a lot for a micromobility company. But again, maybe, maybe there's something more than that. So yeah, tell me why you, why you say that, Kirsten, because when we first talked to the folks behind Also, uh, you know, a year and a half or so ago, we were, we were really only talking about like wheels and seats and pedals and things. And, and now they're, they're using different words, which, as you know, I always like to pay attention to the words.

• 28:20Kirsten Korosec?

  Yeah. So I wish I had it right in front of me. I'm going to try and multitask and do this at the exact same time. But they used to describe themselves as a micromobility company, a Silicon Valley-based micromobility company. And they were creating two products, right? A two-wheeler pedal assist bike for consumers and something more on the commercial side, which was like a quad cargo. They struck a deal with Amazon. This was going to be used for delivery. And now they are calling or describing themselves as an autonomy-ready, uh, vehicle

• 28:59Kirsten Korosec?

  technology platform builder. So a little bit different than micromobility. And basically, um, I think that this is where this funding is going, based on my conversations with folks over there. And really what this is also tied to is this deal that they struck earlier this year, when they raised their last batch of money, um, or closed on that, which was a deal with DoorDash. And so to me, the question is, when Also spun out of Rivian, and this is a question I don't have an answer for, so maybe one of you two will know the answer, is they talked a lot about how Also is going to be able to leverage the technology of Rivian. And what I don't understand is, why

• 29:44Kirsten Korosec?

  aren't they using Rivian's autonomy stack, which has been in development? And instead, seem to be maybe developing their own tech, which is prompting the need to raise more capital. At least that's how it appears. So I'm a little bit puzzled by that. But also is now an autonomous vehicle technology development platform company?

• 30:07Speaker 00

  This has just been a company that's been, as somebody who doesn't follow this space as closely as, as either of you do, like a tough company to talk about when we bring it up on equity, both because of the name, uh, the sort of classic who's on first kind of, kind of name, but also because it seemed like there were easy ways to try to wrap your head around what they were doing. But they were always like, no, no, no, we're not that. We're not just an e-bike company. Okay. Now we're not just an e-bike and micromobility company. We're an autonomy-ready company. And then, you know, I'm going to do the classic journalist thing of answering your question with a question, which is just, I, what I'll, the, the related question I wonder is to, you know, some, you know, usually when somebody raises funding, especially a big funding round like this, it is a, a sign of growth and of, of strength. And, and so to what extent is this

• 30:49Speaker 00

  a sign of, hey, like we've maybe pivoted a little bit, or maybe we're just adjusting our messaging, but like we figured things out. And that's why, you know, these investors are giving us hundreds of millions of dollars? Or is it like, all right, we need hundreds of millions of dollars and let's see if this works?

• 31:04Kirsten Korosec?

  You just gave like Sean the easiest layup to deliver on. So go ahead, Sean.

• 31:10Speaker 02

  I hope I don't disappoint. I mean, my answer to that is kind of look at what they've been up to, which has been not much, you know, not to be too harsh, but micro mobility is hard. Like, selling e-bikes is hard. Making a good one and selling a lot of them is very hard. And, you know, their whole thing was, we're going to start with this e-bike that is, you know, different in a lot of ways and also kind of premium and expensive. And they have been mired in delays. They've had supply chain issues that they haven't been very specific about. And, you know, now that they are finally starting to send the first few of those out, you're seeing just a lot more general sign-up sort of blowback

• 31:50Speaker 02

  from people who are shopping for or have an eye on e-bikes, which is really not surprising, because like, it's hard to please people who are considering e-bikes. It's like a conglomeration of different types of people, and it's very hard to please all of them in one way. And so, you know, I am not surprised that they are maybe taking the foot off the pedal of being a micro mobility company a little bit to focus on the autonomy stuff. I certainly don't think that means they're going to abandon these products, especially the cargo stuff, which seems like it has real business potential. But, you know, if they can find a way to tap into the autonomy stuff and turn that into its own business, not just for themselves and their own vehicles, but for other companies,

• 32:34Speaker 02

  then I could see how that seems like a more attractive proposition now.

• 32:38Speaker 00

  Yeah, I'm also just curious about, you know, yeah, where this puts Rivian in terms of like, it seemed like it went through this kind of period of just frantically spinning out all of these companies. And luckily, the CEO of Rivian will be coming to disrupt, so we can maybe get some answers to that. In the meantime, we do have a couple of other deals we at least wanted to touch on. One is about Uber and ZipLine, and basically Uber's starting to incorporate more drones into its deliveries.

• 33:03Kirsten Korosec?

  Sean wrote this story, so I'll throw it back to him in a moment. But to me, I want to zoom out just a little bit to look at what's happening with Uber. So we know that they've made a ton of deals with a lot of different autonomous vehicle companies. Sidewalk delivery bots, you know, robotaxi companies, drone companies like ZipLine. And there seems to be a little bit of movement happening, which is in the same week or within a span of a couple of weeks of them, you know, striking this deal with ZipLine, and it seems like going a little bit heavily into that, they're pulling back on at least one sidewalk

• 33:45Kirsten Korosec?

  delivery robot company, and that's Serv Robotics. They completely divested. And they've also started using those sidewalk robots a little bit less. So I'm wondering, Sean, against, you know, that like, sort of broader backdrop of what's happening, how do you interpret the Uber-Zipline deal?

• 34:05Speaker 02

  Well, I think, you know, we've, as you've described it, we've just seen like, the Expedia-ification of Uber happen at full steam over the last like, year and a half, which is, you know, not terribly surprising, given that their CEO, Darkoz Shai, used to be the CEO of Expedia. And so, I, you know, I think he sees tremendous value and growth potential. And it's hard, frankly, right, like, to, for Uber to saturate itself, you know, as a ride hail provider, more than it kind of already has in some ways. And so, this is a way to find growth if you're not going to go out and develop the technologies yourself, which, you know, Uber has had a hand on some of these balls, like robotaxi development, or even drone delivery, and eVTOL development, and has walked away from all of

• 34:49Speaker 02

  that in favor of this kind of model. And so, I think you could look at it two ways, and just really quickly, one, if you're going to build this kind of Expedia model, you're going to naturally partner up with as many people as possible, and that none of those relationships are going to be 100% durable. And so, you're going to have situations where you walk away from certain businesses or certain segments. The other thing to think about is like, if that is the case, but you are the biggest market maker, startups that are developing this technology and are looking for growth and looking for markets, have to think really carefully about like, whether they want to play that game. And there aren't a lot of other options, like DoorDash is kind of doing similar stuff here by partnering with people, but they're also developing their own technology. And so, you know, if

• 35:32Speaker 02

  I'm, if I'm the, you know, founder of a company that's doing like, drones or sidewalk robots or whatever, you know, I think ZipLine's big enough that it has, it can ease into this a little bit. Should say ease in. They're talking about doing a million deliveries per day with Uber by 2029, which is a crazy number. But, you know, I think they're a bit more insulated, any smaller than that. And I think you're, you're really in a weird position right now where you're, you're seeing tantalizing opportunity for growth, but also, you know, if Waymo's not going to stick it out with Uber for three years, boy, are we going to be able to hack it, and is it going to be worth it for us? And do we even have that option?

• 36:11Speaker 00

  Yeah, I mean, I'm curious about also just, in this, in the case of this partnership, I think the, the plan is to do deliveries, you know, in the existing ZipLine markets by the end of this year. I mean, what, I don't have a great sense of just like, how widespread is ZipLine right now? Are we going to be seeing a lot of drone deliveries, you know, in Uber Eats like, fairly quickly? Or is this still like, very much kind of an early test?

• 36:33Kirsten Korosec?

  I'll just jump in really quickly and say the ZipLine, you know, has made a ton of progress, and they are one of a handful of companies that has a very specific certification that allows them to operate beyond visual sightline. It's an important jargon-y term that basically allows these drones to operate autonomously without an operator like, being able to physically see them. And that allows them to really expand. And here's the interesting thing about ZipLine. They have a pretty diverse business. They're actually pretty heavily into like, healthcare. That's their roots is doing that and operating outside the US. So they're in a good position to scale, I think, than some other drone startups out

• 37:18Kirsten Korosec?

  there, because they've got a fairly, you know, mature-ish business. I put that in a little bit of quotes. I mean, they're still a newer company. But I think that they're, they're in a position where they can scale pretty easily with Uber Eats.

• 37:32Speaker 00

  We are almost out of time, but there is one other deal that I think we wanted to at least mention briefly, which is Whisper. It's kind of the leader of these AI dictation apps, which raised $280 million at a $2 billion valuation. I mean, I know that, you know, this, this is a space that we've been covering a lot at TechCrunch. Did anything jump out to either of you about this deal?

• 37:52Kirsten Korosec?

  I have a question. That's my, my answer is a question. Have we reached, have we reached peak, like, dictation app valuations at this point?

• 38:04Speaker 02

  I mean, it seems like it, right?

• 38:06Speaker 00

  Yes. And then, I mean, you can tell partly because part of the way they're framing this is like, hey, we're not just about dictation. We're going to start moving into other things, which is a sign that they know they can't really go past $2 billion if they're just dictation.

• 38:19Speaker 02

  Yeah, I mean, this is like, it, it was an impressive hill to get over a few years ago. And I'm not saying that to dismiss what they've accomplished in any way, but it is, you know, it is a thing that gets commoditized once these models and once the technology advances to the point that we've seen it now. And, and also a thing that I think, you know, in general, people aren't expecting or desiring to be like, 100% accurate all the time. Like, you know, you can make it better and better and better, but I feel like you see fewer returns as you try to reduce, you know, jump from 99% accurate to 100% accurate. And so, they need to look for other ways to attract new investors and find new customers.

• 38:59Speaker 00

  Yeah. Well, as I mentioned, we are pretty much out of time. If you're, if listeners are interested in this topic, we had Mina from Sandbar on to talk, again, more generally about this space and where the technology and the business are at. In the meantime, of course, Equity will be back next week, and you can follow us at EquityPod on X and Threads. Thank you so much for listening.

• 39:20Speaker 03

  Equity is hosted by TechCrunch senior reporters and produced by Teresa Locan Solo with editing by Cal. Subscribe on YouTube or wherever you get your podcasts and find out what's next at techcrunch.com/events. Thanks so much for listening, and we'll talk to you next time.