Ads on Discord, AT&T passcode resets, and podcast changes for Android users

Hello, and welcome back to Equity, a podcast about the business of startups, where we unpack the numbers and nuance behind the headlines. This is our Monday show, where we dig into the weekend and take a peek at the week that is to come. We’ll talk more about Wednesday, but this is Y Combinator Demo Day week, so expect a deluge of startup news. On the podcast today we dug into the latest news from Discord that indicates it is moving towards opening its gates for advertisements. As I wrote back in 2022, this is the standard practice for tech companies that get big, even if we don’t love it as consumers. (Just look at YouTube’s ad load, for example.) We also got into this super-neat startup round concerning trucking, TechCrunch’s latest cybersecurity scoop which is big news for AT&T customers, and even upcoming changes to the Android podcasting ecosystem that will see YouTube Music gain even more prominence inside of Alphabet’s consumer empire. Hit play, and let’s have some fun! Equity is TechCrunch’s flagship podcast and posts every Monday, Wednesday and Friday, and you can 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 interview transcript, for those who prefer reading over listening, read on, or 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

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  Hello and welcome back to Equity, the TechCrunch podcast about the business of startups, where we unpack the numbers and the nuance behind the headlines. This is Alex. Good morning. Today is April 1st, 2024, and that means, yes, it is April Fool's Day. So believe nothing you read online today that seems too good to be true, because it probably is. Now, keep in mind that April 1st was a cool holiday about 15 years ago. It was quirky. It was wild. And now it is kind of corporate and kind of sucks. So ignore it, but then also, you know, stay safe. Now, today is our Monday show and on the pod this morning for you, I have stocks and crypto, a massive password reset at AT&T based off of a TechCrunch investigation, Discord's new

• 0:54Speaker 00

  revenue plan that I kind of hate, podcasting news that you can use. And then to close us out, one very neat venture round. Let's go.

• 1:04Speaker 00

  Let's talk about money, and that means the stock market. If you look over in Asia, shares are largely higher today, though sharply lower in Japan. Over in Europe, stocks are mostly higher today, and they are set to rise here in the US at the open. And then we have the earnings front. This being the first day of the first week of the first month of the second quarter, we have nothing. No earnings this week that matter. Congratulations, everybody. This is the one week we have off. But you know what never stops? Oh, it's crypto. Yep. But things happen much quieter over in Web 3 land in the last week. Price movements have slowed. For example, Bitcoin is up just 4% in the last seven days to under $70,000, while Ethereum's token is up just 3% in the last

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  week. Dogecoin amongst the most valuable crypto tokens is the fastest gainer in price terms in the last seven days, but things are just slowing down a little bit. We can see that elsewhere in crypto data. For example, trading volume is falling dramatically from recent peaks. I'm not sure where spot trading is going to level out, but activity is certainly easing rather rapidly.

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  Next up, big news that matters and today's top story is, well, enormous. It impacts quite a lot of people, so let's talk about it. Phone giant AT&T has reset millions of customer account passcodes after a huge cache of data containing customer records was dumped online earlier this month. And by that, I do mean earlier in March. This story came out over the weekend. Now, the US telco giant initiated the passcode mass reset after TechCrunch told them last Monday that the leaked data contained encrypted passcodes that could be used to access AT&T customer accounts. Now, a security researcher who analyzed the leaked data told TechCrunch that the encrypted

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  account passcodes are actually easy to decipher, so we alerted AT&T to that researcher's findings. What does the company have to say? Well, in a comment, AT&T said, "Based on our preliminary analysis, the dataset appears to be from 2019 or earlier, impacting approximately 7.6 million current AT&T account holders and approximately 65.4 million former account holders." Now, TechCrunch held the publication of this story until AT&T could begin resetting customer account passcodes. That's standard cybersecurity reporting practices, but important to note that we are trying to keep you safe.

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  And then finally, this is the first time that AT&T has actually acknowledged that the leaked data does belong to its customers. This comes some three years after a hacker claimed the theft of 73 million AT&T customer records. The company has denied a breach of its own systems, so the source of the leak remains inconclusive. All I can say here is that the TechCrunch cybersecurity desk has been on fire lately, and I cannot say enough good things about their impactful reporting. Next up, in the end, everything is just an advertising platform, and that's not my favorite thing in the entire world. Maybe freemium is doomed to fail to make good consumer software services. What am I talking about? Well, roll with me.

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  The Wall Street Journal reports that, and I quote, "Discord plans to start showing advertisements on its free platform in the coming week after long dismissing them." And the paper goes on to note that these paid promos are from video game manufacturers, the gaming companies that we all probably know and love. The company is also hiring to sell advertisements, and all I can say is, ah, I guess we are always heading to this point. I mean, look, advertisements matter, but you kind of hope that software would be free of this sort of distraction. I don't think anyone looks at the way the internet has evolved and thought to themselves, oh, this is great. This ad load is very reasonable. But at least when it comes to Discord, no such luck.

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  And I can kind of explain to you why. Recall that the company nearly sold itself to Microsoft for around $10 billion and then later raised at a $15 billion valuation. That means that Discord has a simply giant price tag it needs to grow into, and thus it needs all the revenue growth that it can get its hands on. And that means, well, more ways to make money, and that means ads. So back in 2022, I noticed a trend amongst large tech companies and the importance of their ads business. And I'm going to read you this little quote, and I think you'll see what I mean. So quoting myself ironically, "It is common to watch software companies add revenue lines over time,

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  vertical SaaS adding payments, software vendors buying related companies to extend their offerings, that sort of thing. But perhaps the real deciding line between big tech and the rest of the technology industry is the point at which advertising incomes become a material part of their revenues. This has happened to Amazon, it's happening a little bit over at Apple. Of course, it's always been the case with Meta and Alphabet. Now Discord wants into that club. Sadly for you and I, I can't recall a piece of consumer software that has been made better for users by this move, but it does seem to be the place at which all things end up. Anyways, Discord needs to go public and of course, having a new rapidly growing revenue

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  line would be a great way for it to get the public market investors excited about its shares, at least in theory. Speaking of collections of people that gather around one theme or concept, let's talk about podcasts. Here is some news that you can use. Google is shutting down its podcast app in the US in a matter of days. Now, the company has begun to warn the app's users, which does of course include Equity listeners, that they will need to migrate their subscriptions to YouTube Music by April 2nd, that's tomorrow, to make sure that they can still follow and stream their favorite shows going forward. If you do not do this, you will still have

• 7:15Speaker 00

  time to migrate, but inside the Google Podcast app, you're not going to be able to stream after that date. So they are putting a really hard cap on Google Podcasts. Now, if you are an Equity listener, you can go find us over on YouTube Music or literally any other podcast service. We are ubiquitous, we are everywhere, but we will drop a link to our YouTube Music profile in the show notes. The weird thing here is that Google Podcasts was popular. TechCrunch wrote that it saw over 500 million downloads on the Android OS, but however, YouTube does want to become the only source of audio from Google and so all other brands must become subsidiary to it. Now, this is not new news. The tech giant actually said last September it was going

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  to slowly kill off the podcast app and this is all under the umbrella of Google centralizing all things audio under the YouTube brand. I can kind of see it, but it is sad to see Google kill off yet another successful brand and item and podcast service. Anyways, elsewhere, Apple is using slots in the top of its podcast app carousel to incentivize shows to take part in the Apple Podcast subscription service, according to Semaphore. This is not the worst news, but I do think it shows that the free and somewhat democratic days of podcasting will eventually come to an end.

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  Let's take a hard pivot and talk about manufacturing. The Wall Street Journal reports that some big US companies that work in AI are asking, and I quote, "their Taiwanese manufacturing partners to step up production of AI-related hardware in Mexico." Why is that? Well, they want to diminish their reliance on China. So this is a nearshoring story and does seem to be predicated on a free trade deal between Mexico, the US, and Canada. Still, no matter where these factories land in amongst those three nations, they would lessen the world's dependence on both Taiwan and China during a period of heightened tensions between the two nations.

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  And yes, this is one more example of how you cannot think about tech today without considering politics at least somewhat.

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  And to take us out today, a very neat startup deal. Now, initially, I picked this company because I'm obsessed with its name, but then it turned out to actually be a pretty cool startup. So hear me out. Iron Sheepdog recently announced a $10 million Series B led by S J F Ventures with participation from Grand Ventures. Now, Mike Van Sickle, love that name, Iron Sheepdog's co-founder and CEO, told TechCrunch that the company spent its first few years making sure it could get customer adoption and then reach profitability. So essentially, what it did was get product market fit and then cash flow breakeven. Now the company is looking to scale. So what does Iron Sheepdog do?

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  Well, iron is metal and sheepdogs move things about, so it shouldn't be a huge shock that the company wants to make short haul trucking simpler for buyers and providers of that service. A little dull, I know, but it's a good example of how much of the economy we have left to digitize before that effort is complete. And that means there's many, many places out there for startups to build software and attack legacy systems. Now, digital transformation is a phrase that is very, very, very long in the tooth lately, but for many industries, it absolutely remains the reality.

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  All right, that is our show for this ever so lovely Monday morning, the first day of the first week of the first month of the second quarter. You can follow Equity Pod over on X and Threads. You can also follow me over on X where I tweet under the handle Alex. We have two sister shows, Chain Reaction and Found. Chain Reaction about all things crypto and Found digging into those founder stories about how people built what they did. We'll talk to you soon. We're back on Wednesday. We're back on Friday at the very minimum. See you then. Bye.

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  Equity is hosted by myself, Alex Wilhelm, and TechCrunch Senior Reporter, Mary Ann Azvedo. We are produced by Teresa Loconsolo with editing by Kell. Bryce Durbin is our illustrator, and a big thank you to the audience development team and Henry Pickavet, who manages TechCrunch Audio Products. Thank you so much for listening, and we'll talk to you next time.