Maybe it's a good thing that we're not seeing too many AI unicorns

In this Friday’s episode of TechCrunch’s Equity podcast, Kirsten Korosec, Mary Ann Azevedo and Becca Szkutak kick off the show dissecting a bill which aims to regulate AI at the model level. Naturally, some VCs and founders as well as students and professors are in an uproar about it. But we have to ask, is regulation in the name of safety such a bad thing? Short answer: It depends. Then the trio got into the deals of the week, including OpenAI’s potential new investment in webcam maker Opal. We also discussed some major changes at the executive level within OpenAI and what that could mean about what’s going on internally. Becca then wanted to talk about a new startup called why?!, which was founded by ex-Clubhouse employees and aims to be a networking, messaging and dating app all in one. And Kirsten wanted to drill down on electric vehicle maker Lucid’s new $1.5 billion capital infusion from the Saudi wealth fund. We then shifted gears to talk about just how many new unicorns were born in the U. S. this year so far and the surprising diversity of sectors they were in. And lastly, we dug into a couple of notable M&A deals in the fintech space, including one this week in which Payoneer scooped up a five-year-old Singaporean startup called Skuad for $61 million in cash as well as Stripe’s latest buy. We had a blast this episode, so give it a listen! Equity is TechCrunch’s flagship podcast, produced by Theresa Loconsolo, and posts every Wednesday and Friday. Subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts. You also can follow Equity on X and Threads, at @EquityPod. For the full episode transcript, for those who prefer reading over listening, check out our full archive of episodes over at Simplecast. Credits: Equity is produced by Theresa Loconsolo with editing by Kell. Bryce Durbin is our Illustrator. We'd also like to thank the audience development team and Henry Pickavet, who manages TechCrunch audio products. 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.

• 0:11Speaker 00

  Hello and welcome back to Equity TechCrunch's flagship podcast about the business of startups. Today is Friday, August 9. I'm Mary Ann Azevedo and joining me today is TechCrunch Senior Reporter and Editor Kirsten Korosec. Kirsten, how are you?

• 0:26Kirsten Korosec?

  I am great. I'm actually in California right now, helping out family, watching small children. So as almost as exciting as the deals we cover week to week, but slightly spicier, slightly spicier.

• 0:40Speaker 00

  Such a good auntie. Well, we're also joined by TC Senior Reporter on the Venture Beat and co-host of our sister show, Found, Becca Scootac. Becca, how have you been?

• 0:49Speaker 02

  I've been good. It's not 95 and humid in New York this week. I wore a jacket last night, so I'm feeling incredible.

• 0:57Speaker 00

  Oh, wow. A jacket in August. I can't even imagine.

• 1:00Speaker 02

  Yeah, so mood is definitely better.

• 1:03Speaker 00

  Oh, good, good. Well, we've got a lot going on today. We're going to be talking about OpenAI and Opal, one new startup founded by ex-Clubhouse employees, and Lucid. And then into our themes, we'll take a look at 2024 unicorns and some fintech M&A. Before we start, though...

• 1:22Kirsten Korosec?

  Yeah, I just have to talk about like, so Slack was super busy yesterday. Everyone here was chatting about, and I think the rest of the tech world has been sort of buzzing about this AI regulation bill that's winding its way through the California state legislature. So this is Bill 1047, California Senate passed it back in May, and now this month it's slated to go to the California Assembly. And we know that, you know, as these things go, it's going to take a while. But basically, this bill is aiming to regulate AI at the model level and mandates that companies spending more than $100 million on training, a quote unquote like frontier model in AI do safety testing. And if they don't, they would be liable.

• 2:07Kirsten Korosec?

  So a group of University of California students and faculty from seven campuses, along with a bunch of researchers, they released this open letter. So like, everyone here, of course, was talking about it. And while it's not a deal, I feel like we have to open the show with it because it affects so many companies that we do write about. Becca and Mary Ann, have you been following this at all?

• 2:29Speaker 02

  I haven't been following it too much, but looking further into it now, and I mean, I'm not going to share super strong opinions on it, whether it's a good idea, whether it's a bad idea. But the one thing I'll say is I have been talking about AI regulation with folks over the last couple of months. And the one thing that keeps coming up time and time again is that people want federal regulation, not state regulation, because state regulation opens the door for like a fabric of every state having their own policies, making it so much harder for companies to build. And just having to follow all these extra rules where if you had federal regulation, you would just kind of be able to have like one source to point to. So seeing all of the chatter around this, I didn't see people talking about that piece of it. And I was like, that's interesting. Because I feel like that's been a big part of the conversation.

• 3:14Kirsten Korosec?

  Yeah, you know, of course, I have to make everything circle back to autonomous vehicles, no matter what the subject is. But in this case, I swear it's relevant. We've seen the federal government really drag its feet on sort of a unified regulation around autonomous vehicles. And so as a result, we have this patchwork. So California has very specific rules. Some might say overregulated, others, you know, depending on who you're talking to, but certainly it has more requirements than, say, Arizona or Texas. And what you're seeing is a lot of the tech companies being based in California, but then doing their testing and operating in Arizona and Texas. And so basically, people want certainty regardless

• 3:58Kirsten Korosec?

  of what it is, whether it's in their minds overregulation or not. But what really kills innovation is when there's an uncertain environment, because investors might want, not want to put money into it, companies may move out of that state. And so when you have this uncertainty and sort of this patchwork of regulations, you can get into this environment where there's a lot of movement or not as much research and development or money going towards those areas as you might want. And of course, the risk is, and I think a lot of people will probably bring this up, is that other countries will jump ahead of us, right? Like, that's, that's one of the arguments against regulation. Not sure if I buy into that, but that is certainly one of the arguments.

• 4:37Speaker 00

  I kind of, I have mixed feelings. I mean, from what I read, if this did go through, and if the companies that don't do the safety testing, they would be liable if their AI system leads to like a mass casualty, what they called mass casualty event, or more than $500 million in damages in a single incident or set of closely linked incidents. I don't know. I mean, if the concern is that this could slow innovation, I feel like, yeah, but at the same time, do you want to risk something disastrous potentially happening? I mean, is it worth it for the sake of, you know, moving fast and innovation? So for me, I don't know, maybe it's just I'm too cautious, but like,

• 5:18Speaker 00

  if there could be some kind of testing that's actually really legitimate, not just there to just say, oh, we're going to require testing, you know, something that's really valid and can help prevent something terrible from happening. I'm not against that so much, right? Like, I mean, I would rather that happen than people, you know, companies move super fast and then something awful take place.

• 5:41Kirsten Korosec?

  Right. Well, I guess the question is also like, how is something validated, verified or tested? And who is setting those standards? And that starts to get complicated. But I suppose you just have to think about like, what's the greater risk right now over regulation or under regulation? And, you know, depending on who you talk to, it really is like pretty polarizing. But I don't know, like to me, like this is definitely one of the buzziest things happening this week. Not surprisingly about AI, of course, there is other AI news happening there, which gets back to our deals. And I suppose to no one's surprise, OpenAI is sort of leading the news cycle this week. Mary Ann, you have a deal.

• 6:24Speaker 00

  Yeah. So we heard that OpenAI is leading a $60 million Series B for Opal. The information reported that earlier this week. Well, this was a little surprising. I think for those of you who've never heard of Opal, it's a company that actually built a webcam or webcams for laptops. And I have to share a personal story. I guess it was about two years ago. Internally, there was some buzz about this Opal camera and how amazing it was. Oh, it's so great. And, you know, and it was in beta at the time, about $300 and 776s Alexis Ohanian. Is that how you pronounce his last name?

• 7:00Kirsten Korosec?

  Yeah.

• 7:01Speaker 00

  Yeah. Okay. Yeah. He was touting it. I think. So I ordered one and I had zero. Idea how to use it. It was just so confusing. And I don't know if it's just because I'm not like super technically savvy or what, but I just couldn't get it to work right. And I, I never did anything about it. And maybe if I had pursued it, I could have made it work right. But anyways, for whatever reason, OpenAI seems to be interested in investing in this company. And that was a surprise. I mean, it was known as Opal Camera before. Investors included Founders Fund and Kindred Ventures. I don't know. What do you think was, did this surprise you too?

• 7:39Kirsten Korosec?

  Yeah, I mean, well, I guess I'm just trying to see what the application would be is I suppose folding in sort of video and something with that. I'm not really sure what is driving it. I think that Founders Fund and Kindred Ventures previously invested in Opal. Is that right?

• 7:58Speaker 00

  Yes.

• 7:59Kirsten Korosec?

  To me, what's actually most interesting about this deal isn't even this deal, which is that this deal is happening and it's like, oh, OpenAI is making all these acquisitions. But in the background, there's like so much chaos going on in OpenAI still. So I guess I'm like a little bit more focused on that. OpenAI's co-founder, John Schulman, left for Anthropic. It just goes to show that like a company could be making these bold moves publicly, but like inside there's, you know,

• 8:26Speaker 00

  Turmoil.

• 8:27Kirsten Korosec?

  A lot of reshuffling and chaos. Yeah.

• 8:29Speaker 00

  Yeah, that, that took me aback a little bit. You would think that if a company like OpenAI is on this super growth trajectory, you know, it's kind of an odd signal for one of the co-founders to leave for a competitor. You know, that makes you wonder what is going on? Because if the company is like really growing and has all this huge potential, why? Why, why, why would he leave?

• 8:51Kirsten Korosec?

  Yeah. And even just thinking about the deal itself, or the alleged deal itself, it's interesting to, because we're all on here and we're like, oh, we could speculate about like why they would want to invest in this company, but the answer isn't obvious. And

• 9:05Speaker 02

  Thinking about OpenAI and how much that company is just trying to do, it seems like they're really trying to just tackle literally anything that they can that could touch AI consumer side, business side. And it just made me think I we just had Cohere on Found last week, so a large Canadian AI company. And one of the co-founders, Nick Frost, like what he said time and time again on the call about what he just didn't understand about sort of the rest of the AI landscape is he was like, why is every company like trying to do everything? He was like, we're not. And we can back up that we have customers and real like use cases and stuff like that. And he's like, but it seems like everyone's trying to do everything. So when I saw this deal, and I was like, why would they be investing

• 9:46Speaker 02

  in a company like that? And then I like that piece of information like flew back into my brain. And I was like, oh, my God, that guy was totally right. Like, literally, it seems like AI companies are trying to just trying to do whatever they can in any area.

• 10:00Speaker 00

  Yeah, I mean, but there is concern about OpenAI and how much cash it's going to need to supposedly do all the things that it wants to do. I mean, it's a lot, a lot of money, and it would have to raise a whole lot to be able to accomplish all of that. So I don't know, it just makes you wonder. And then, I mean, the OpenAI president, co-founder Greg Brockman, also was reported to be taking an extended leave through the end of this year after nine years at the company to, quote, relax and recharge. I mean, it could be coincidental. This happened the same time that Schulman decided to leave for a competitor. But I don't know, it just all feels a little fishy to me. And I just, I would love to be like, no.

• 10:38Speaker 02

  Fly on the wall?

• 10:39Speaker 00

  Yeah, fly is the word. Fly on the wall. And one of these boardrooms or, you know, and offices, they are trying to understand what's really, really going on. Because it just seems like there's, there's more than meets the eye here. And there's another person, Peter Deng, who a product manager who joined the company last year, also exited some time ago, too. So that's, I don't know, that's three fairly high profile departures.

• 11:05Kirsten Korosec?

  Well, final point before we move on because we definitely have some other deals to talk about. But you know, to Becca's point, perhaps this approach of acquiring and trying to do all the things isn't quite aligning with some of the founders of the company or some of the earliest folks on the company. And so then you're starting to see, I mean, there's always, I should say, there's always like churn at these point, these people could probably go anywhere and write their ticket. And so maybe there's just like, just too good of an offer and they, they're going to go and do that. But I do think that when you start to see, you know, the earliest employees of a company or co-founders of a company leaving, it might be because it's not aligning exactly with how the company is shifting. And maybe this trying to do all

• 11:48Kirsten Korosec?

  the things approach is creating some tension within the company, but clearly speculative, right?

• 11:54Speaker 00

  Yeah, we may never know, but it is interesting nonetheless. Anyway, speaking of, it's interesting to see companies making deals when you know it's chaotic behind the scenes. And a case in point is Clubhouse. Now, Clubhouse was all the rage during the pandemic. Everybody, oh my goodness, I remember. Everyone was clamoring for an invite. Can I get an invite to Clubhouse? Can I get an invite to Clubhouse? And people getting on at all hours of the night. And then as the pandemic kind of, you know, started to calm down and people were getting out in public and doing things again, we just didn't hear nearly as much about Clubhouse. And so now this week, we heard about a new startup that was founded

• 12:33Speaker 00

  by ex-Clubhouse employees and it's a social networking site called Y. And it's not just Y, but it's Y lowercase with a question mark and exclamation point at the end.

• 12:48Kirsten Korosec?

  Yeah. So this one stood out to me. And I will start by saying, Marianne, I think you're being very generous to Clubhouse. I think Clubhouse truly, everyone only used that app for less than a month and then moved on.

• 12:58Speaker 02

  But looking at Y, Y was started by two folks who were at Clubhouse and they both were employees hired within the first 20 people. I think it was like, one was the 13th employee, one was the 20th, if I'm remembering correctly. And so they're building this app called Y, which is a conversation app that's part messaging, part networking, part dating app. And they're saying it's meant to help tackle loneliness by helping people connect. And they've, the co-founders have worked with therapists and psychologists to kind of help understand some of the key factors of how people do get close to each other in these kinds of forums, and are trying to sort of build around that. The company raised 1.65 million in a pre-seed round led by Charles Hudson, who many of our listeners probably know as the managing partner

• 13:41Speaker 02

  and founder of Precursor Ventures. But I think this is so interesting because I feel like every week, there's a new app or a new technology piece that's trying to combat loneliness. And while there is a ton of research that digital tools and sort of those kind of solutions can actually help in these things, it's not like completely out of left field. This doesn't work. There's research that proves that this stuff works. But in my mind, and I don't know, I definitely want to hear what you guys think, that is a huge behavioral change. Like if you're lonely, to turn to say, an app and try to just meet new people on an app to combat loneliness. Like, I just don't know how that works. Like, what if you go on the app and no one wants to

• 14:25Speaker 02

  talk to you? That's not going to help you.

• 14:28Speaker 00

  Yeah, but I, okay, here's my thing. I think that this might appeal to the younger generation, honestly, who have just kind of, that's pretty much all they've known is all this, a lot of digital interaction. So I'm thinking more like Gen Z age group. What struck me about this is kind of different or interesting. I'm certainly no expert on social media apps or social networking apps, but the fact that this one is not just It's not just a messaging app. It's not just a networking app. It's not just a dating app. It's trying to kind of combine all three. And, you know, I've, I've heard of people who get online and they, they meet others through like Discord or X or, you know, there's Bumble, but this is, you know, it's an ambitious goal.

• 15:12Speaker 00

  It's kind of trying to be a little bit of all three, I guess. But I think if done right, I mean, it could work. I did think it was interesting. One of the things they're trying to do when they release in beta mode this fall, they'll have like question card games that can be played by users in private chats. A daily question. There's a FaceTime like feature, weekly prompt that asks people what they're currently up to. It sounds like a casual way to kind of get people out there without, you know, putting themselves out there too much and, and fear of rejection, to your point, Becca.

• 15:46Speaker 02

  Yeah, I do like the prompt idea.

• 15:48Kirsten Korosec?

  Yeah, I have a question, which I'm not sure if you have an answer to. But do you know if the way they connect people is localized so that there is a chance to meet in real life? Or is this meant to be purely an online experience in which you might be interacting with people like globally?

• 16:05Speaker 02

  That's a great idea, a great question. I'm actually not sure because like with thinking about the tech that's been designed to help combat loneliness, so much of it has been like an AI companion or like some kind of companion where it's like, you're going to get like essentially direct positive feedback from something that's talking to you like essentially right away. And with this, yeah, I just don't exactly know how it all works in the backend of like who you would be talking to. And because like, do you use this with people you already know? Or is this a way to meet new people? I mean, obviously the dating app and networking part of it would imply it is. Yeah, I don't know about the in real life piece because I feel like that would be a big part of it. If I were, say, looking to use this because to your point, Mary Ann,

• 16:47Speaker 02

  I have a, know a bunch of people who have made friends entirely online. But the thing with having online friends is you want to see them in person after you make them.

• 16:56Kirsten Korosec?

  Well, and also oftentimes when you make those connections, like I definitely have friends who've made a ton of connections through gaming or other things. Like there's this common theme that brings them together. This is like, I am going to this app because I'm combating loneliness. So I just wonder. How successful they'll be and who it will end up attracting and how they will connect people through common interests. So I guess it's to be used. We should test it and figure it out.

• 17:29Speaker 02

  Yeah, I think my one other comment about this too, it'd just be over the last couple of years, we've just seen social media site after social media site after social media site get launched. And of course, all of them are a little bit different. All of them are trying to do different things, different flavors, but like literally none of them have stuck. And it's just like every time something comes out in this category, do I think we'll never be able to get a new social media site or a new messaging app or something to work? No, I'm sure someone will. It just has proven to be an exceptionally challenging area to build in.

• 18:03Kirsten Korosec?

  You know what's also exceptionally challenging? Building and selling EVs.

• 18:09Kirsten Korosec?

  That's like the perfect segue to this next deal. I want to talk about Lucid. So a few years ago, a number of EV startups all kind of came up and many of them went public via mergers or reverse mergers with blank check companies or SPACs and all trying to sort of chase the Tesla dream. Many of them have failed. Lucid is hanging on and they're a luxury EV maker for now, although they do pretend that they're going to be much more than that. But they are publicly traded. They have one luxury vehicle, the Air. They're trying to get this second luxury SUV, the Gravity out. And so, you know, one product,

• 18:49Kirsten Korosec?

  right? This deal is a pretty big one. So Saudi Arabia's Sovereign Wealth Fund, which has already invested heavily in Lucid as a publicly traded company, announced that an affiliate of the wealth fund is committing another $1.5 billion to Lucid. So a little bit bigger than those seed rounds that we've been talking about. And basically about half of it is through purchasing about 750 million of convertible preferred stock. And then 750 million in unsecured loan. And at this point, Saudi Arabian Kingdom grew the wealth fund and its various affiliates own about 60% of Lucid. So I don't think that they want this thing to fail.

• 19:31Kirsten Korosec?

  The question that is sort of looming over this, not just this deal, but how long will they go to prop up this company? How important is it to the sovereign wealth fund's vision 2030, which is all about, you know, moving away from oil and gas and spring the economy away from an oil-based economy, even though it's very much that. So huge deal in part because it gives Lucid the money it needs to continue that gravity SUV, get it into production. And the claim is well beyond that. But that's, you know, they're basically beholden to the Saudi government as a result of the deal.

• 20:08Speaker 00

  Yeah, I mean, the Saudi wealth fund owns about 60% of the company now, right?

• 20:12Kirsten Korosec?

  Exactly. Peter Rollinson, the CEO and CTO also on the board, has said, you know, hey, like, we're partners in this, but it's not an equal partnership. And so if Saudi Arabia says, hey, we want to do this, I mean, I don't know how much pushback Peter and others at Lucid can give. And, and because we're not behind the scenes, we don't totally know. They do have a kind of like an assembly kit factory currently in Saudi. So like everything's made here and then it's assembled there. We've seen them beat on revenue year over year, but they do provide a regional breakdown, which I really appreciate. And you are seeing, when you look at six months, the first six months of this year,

• 20:57Kirsten Korosec?

  compared to the first six months of 2023, a greater share of revenue coming from Saudi Arabia and actually a shrinking in a six-month timeframe revenue in the US. So the question right now, the bulk of sales is the US for sure. But when will that shift happen and how important will the Saudi Arabia sales component be in Lucid Survival is kind of, you know, remains to be seen.

• 21:24Speaker 00

  It's really interesting because you're right. When you you think about Saudi Arabia, you know, one of the first things you think about is oil and gas. So it is a very interesting phenomenon that they are investing so heavily into an electric vehicle company. We're gonna have to take a break now, but when we get back, we're gonna take a look at 2024 unicorns. Stay tuned.

• 21:48Speaker 00

  All right. So Dominique Midori Davis took a look at how many unicorns have been birthed in the US so far this year, and the total number is 38. So I was curious how that compared to last year. 2023 as a whole saw 71 new unicorns. So that was, let's see, I think that was actually global, but it was a seven-year low and down 73% from 2022. So 38 in the US alone is actually not too bad so far. What is also interesting to me is the makeup in terms of industries of all these new unicorns. And you would have thought that AI would dominate.

• 22:30Speaker 00

  And if so, you were right, it did. But by not as much as you would think. Seven of the new unicorns were in AI, five in healthcare, five in cybersecurity, five in SaaS and cloud, four in Web 3, three in fintechs. So, you know, yes, dominate, but by not as much as we would have necessarily thought.

• 22:50Speaker 02

  Hmm. I think what stands out to me here is the healthcare startups and the Web 3 startups. Healthcare, because it seems like all the tourist investors, and I mean, the funding data backs this up. Of course, there are a lot of venture funds focused on healthcare, but a lot of VCs came in and they invested in that space as the pandemic was really in sort of the thick of it. And they've all sort of exited for the most part. So it's interesting to see that healthcare still stayed up there because it just, if you look at the data, that's just an area that has seen a lot less investment going into. And then Web 3, I'm just like, what?

• 23:23Speaker 00

  Yeah.

• 23:23Speaker 02

  How do we got four now?

• 23:24Kirsten Korosec?

  Web 3 surprised me. I'm like, oh, yeah, I remember Web 3.

• 23:28Speaker 02

  Yeah, I'm like, shouldn't we be on Web four now? No, I'm kidding. But like, I definitely was surprised to see it that many Web three companies, no offense, Web three companies, just surprising.

• 23:39Speaker 00

  Same, same. Would agree with that. I'm encouraged, though, that it was a fairly diverse bunch of companies and not, you know, just have so heavily into any one industry. Fintech only three, which, you know, I guess I'm not too shocked about that either. But, you know, keep in mind, we're only at the beginning of August, so we do have the rest of August. That's really almost five more months. So it looks like we're doing better than last year so far in terms of new unicorns being born. I mean, although people would argue, like, really, what do all these valuations mean? I mean, especially when it comes to AI, where there's a lot of discussion about companies raising lots of money at high valuations with very little revenue to show for it. So, I mean, you know.

• 24:22Kirsten Korosec?

  Yeah, I'm going to offer a contrarian idea, which is maybe it's a good thing that, you know, on the hype cycle of technology and, and again, here I am, bringing back autonomous vehicles again, but we've seen this time and time again, where whatever is creating the most buzz, the most hype, reaches this sort of fever pitch and you get these crazy valuations for companies that are essentially pre-revenue and are really frontier tech, meaning, you know, it will be years. So seeing not as many AI companies, strictly AI companies, reaching unicorn status, I think, isn't a bad thing.

• 24:58Speaker 00

  Oh, I agree. It's a good thing.

• 25:00Kirsten Korosec?

  And seeing SaaS, like five SaaS cloud companies, which would presumably be closer to revenue or maybe already having revenue is a good thing, because then you don't have these, what could potentially become, you know, I'm not going to go as far as to say zombie companies, but I've seen this on the transportation side where they're really getting these massive valuations based on these raises, but they're years away, years away from commercializing. And they sort of slowly end up dying off, so being sold off for assets just a few years later. I think we need a new way of valuing these companies beyond just. Funding valuation, but like what their sustainability is, like how long they will

• 25:42Kirsten Korosec?

  last and that a lot of that is how close they are to, you know, commercialization of revenue.

• 25:48Speaker 00

  No, good point, good point. Well, you know, as I mentioned, there was three new fintech unicorns this year, but one thing that's been interesting in fintech is I've been seeing an uptick in M and A activity. In the past two weeks alone, I covered two M and A deals in the space. One, I covered exclusively pioneers buying five-year-old global payroll startup, Skooad, out of Singapore this week for $61 million in cash, which, you know, that's a decent sized amount of money for a five-year-old startup that only raised about 19 million total in venture funding. And then about a week and a half ago, I covered Stripe, the payments giant, acquiring a 13-person competitor called Lemon Squeezy, which we

• 26:32Speaker 00

  had so much fun with that name on Slack. So yeah, I mean, seeing an uptick here in the fintech space, I am not shocked by this. There's, there was prediction of a lot of consolidation in fintech. It just felt like we weren't seeing as much of it before, but both of these deals were kind of notable in their own ways.

• 26:51Kirsten Korosec?

  Yeah, I was going to ask you, since you're like the fintech expert here on staff, if it's just part of the natural cycle that we're seeing, like through that hype cycle and then like going down into consolidation, or is there some other economic reason that's driving or prompting these companies to suddenly make these deals?

• 27:09Speaker 00

  I would say it's a little bit of both. One, I mean, 2020 and 2021, there were just so many fintechs born and a lot of them were trying to do very, very similar things. And of course, as we all know, about nine out of 10 startups end up failing. So I think the consolidation was inevitable. It's just, you know, there were some companies that just didn't move as quickly or grow as fast as others. And so you certainly expect to see consolidation. Then of course there's Stripe, which is just continuing to try to grow and amidst a ton of competition. So Stripe's been acquiring companies a lot. It's not the first time. I think this is like at least the third one over the past year or so. Also, another thing is like with, in the case of Pioneer, what's interesting about that

• 27:53Speaker 00

  deal is that Pioneer is a cross-border payments services provider. They serve about 2 million businesses around the world. And SKUAD was more of a, what they call employer record. They help companies with different things in other countries in terms of like onboarding, contract management services, that sort of thing. So what's fascinating though is they're both focused on SMBs that operate internationally, particularly in emerging markets. And also, it's just a signal of how remote work is here to stay, I think. So in this case, it's kind of a very unique response to how remote work has persisted and how companies are continuing to hire globally in other markets. So anyway, sorry,

• 28:35Speaker 00

  I don't think I explained SKUAD very well, but yeah, they offer payroll and contract management to SMBs. And then Pioneer is kind of folding that into what they do so that they can have a broader stack.

• 28:47Speaker 02

  I think what stands out to me about this is what, and while they're doing, as you mentioned, Mary Ann, slightly similar things, but of course, not exactly the same in reference to Lemon Squeezy and SKUAD.

• 29:00Speaker 00

  Yes.

• 29:01Speaker 02

  But I think it always goes back to whether you're a company or a feature. And I just have a hard time with what these two businesses are looking to do. I just have a hard time believing in the grand scheme of things, a lot of companies would be looking to hire someone just specifically for those tasks when you could hire someone who probably includes those things. So them getting acquired, even if the deals aren't, you know, Google being rumored to buy Wiz or anything like that. I think these kind of deals are a little underrated for the fact that it's like, this company built great tech. It probably would not survive on its own due to the fact of what they're building, what that ties into that other competitors offer alongside other things. And so I like seeing deals like this.

• 29:45Speaker 02

  I think like, people get a good outcome.

• 29:48Speaker 00

  No, I agree. I do too. In these cases though, I actually think both companies were not doing too badly on their own, especially SKUAD. But what you did raise an interesting point, I know we're going to have to wrap up soon, but I do think this is also another example of kind of larger companies like Pioneer's, you know, Got over 2,000 employees, Stripe obviously is huge, saying, okay, does it make more sense to try to build this tech internally and build this product internally? Or just go buy another company that's already doing it, that has a proven product that is doing pretty good and just fold it into what we're doing? So I think that's another example of this where companies are saying, you know, it's not worth the time and resources to try to build this out on our own. Let's just go buy something that's working already.

• 30:33Speaker 00

  And it feels like that's what's happening in both of these cases. So anyway, we are really about out of time, which it just amazes me how fast this went. Have so much fun always on the show with the both of you. So we'll have to leave it here, but Equity will be back next week. Until then, you can find us under the handle EquityPod on X and Threads. I'm on X under Bay Area Writer. Kirsten, where can people find you? Less and less on X, at Kirsten Porasek, as well as on Threads and LinkedIn. And Becca, how about you?

• 31:03Speaker 02

  If you're looking to read my stories, you can find me on LinkedIn, as boring as that sounds, but I'm also on X, at Rebecca underscore Scootac, but that will mainly be tweets about Real Housewives and the FBI.

• 31:16Speaker 00

  Well, thanks, everyone, for listening in. Have a good weekend. Bye bye. Bye.

• 31:23Speaker 00

  Equity is produced by Teresa Loquenzolo with editing by Kel. Bryce Durbin is our illustrator and we'd like to give a big thanks to our audience development team and Henry Pickavet, who manages TechCrunch Audio Products. Thanks so much for listening and we'll talk to you next time.