Alibaba shakes up its leadership, OpenAI lobbies EU regulators, and the late-stage market is a mess

This time 'round we are here on a Tuesday due to an American holiday! Here's the rundown from Alex: Stocks are mixed the world around as central banks tinker with interest rates to try and tune their domestic economies. The crypto world remains muted. Alibaba's shakeup: The CEO of the Chinese tech conglomerate is leaving that role to run its cloud business, which is one of the pieces of the company that will be spun out. Intel managed to extract a handsome package from Germany in exchange for building a plant in the country. OpenAI is working to limit the impact of EU AI regulation on its products and services. No one wants to buy Tiger's startup stakes en masse, so it is reduced to selling loosies to anyone who wants them. Go-Ventures is now Argor Capital, and it has a new $240 million fund. And funding rounds from Yellow and ElevenLabs as Byju's cuts more staff. Don't forget, all the cool kids are taking our listener survey. Head here to make your voice heard! We are back bright and early tomorrow. Talk soon! For episode transcripts and more, head to Equity’s Simplecast website. Equity drops at 7 a.m. PT every Monday, Wednesday and Friday, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts. TechCrunch also has a great show on crypto, a show that interviews founders, one that details how our stories come together and more! 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

• 0:10Speaker 00

  Hello and welcome back to Equity, the TechCrunch podcast where we unpack the numbers and the nuance behind the headlines. We are back from break. It is great to be back. We missed you all oh so very much. So on this fine June 20th of 2023, let's get back to work. This is Equity Tuesday, not Monday due to an American holiday. Please look up Juneteenth if you aren't familiar. Before we actually get started, though, do not forget that we are still running our Equity listener survey. We want to hear from you about what we're doing well, what we're not doing well, what you want more of, what you want less of. So if you want to make your voice heard for the show for the next year, go to bit.ly/EquityPodSurvey, capital E, capital P, capital S, and tell us what's on your mind. All right. On the show

• 0:53Speaker 00

  today, a leadership shakeup at Alibaba. Germany is paying up for an Intel manufacturing facility. OpenAI is lobbying EU regulations. The late-stage startup market is still incredibly broken. Go Ventures has a new fund, and there are funding rounds for Yellow and Eleven Labs. It's a short week here in the US. Let's get to work.

• 1:13Speaker 00

  Let's start as we always do with markets, and we shall begin with stocks. Shares were mixed in Asia today. Our key news items to start the week include rate cuts in China, indicating that that country's economy is in need of a little boosting. European shares are mostly lower today, albeit not by much, and stocks are set to fall in the US at the open today. Do recall that the American Central Bank declined to raise rates recently, but it did signal more hikes to come, so investors are still sorting out what that means. Something else to keep in mind? Well, tech stocks have recovered quite a bit this year. That is showing up in key valuation metrics, which is good news for startups of all sizes. And of course, the recent and hot Cava IPO could help unlock some liquidity,

• 1:54Speaker 00

  though it remains to be seen what impact, if any, that debut will bring. But enough about the stock market. What's going on in the world of crypto? Well, after the SEC's crackdown here in the US and a slew of international setbacks for certain crypto exchanges, well, the value of major crypto assets has remained pretty stable. I'm very much shocked by that, given all the bad news. In other crypto areas, well-exchanged volume remains modest. It's on trend to fall under May levels in June, and that means that, well, in my words, the crypto winter still has claws.

• 2:29Speaker 00

  All right. So the biggest story in tech that's going on today is that Alibaba's chairman and CEO, Daniel Zhang, will be replaced by Joe Tsai, Alibaba's current executive vice chairman, as chairman. But that's not all. Eddie Wu, the current chairman of Alibaba's marketplaces, Taobao and Tmall, is going to become CEO and director of the board. So where does that put Zhang? Well, TechCrunch reports that after the transition, which will take effect in September, so a couple of months from now, Zhang will in fact focus on leading Alibaba's cloud intelligence group, which includes the firm's cloud business, large language model endeavors, and enterprise messenger Dingtalk, which is kind of like Slack. That's going to be spun out as part of the larger Alibaba reorganization to break itself into six entities, some of which will

• 3:12Speaker 00

  pursue their own IPOs. Commentary this morning, looking at the stock market, everyone seems to think that this move is going to help Zhang run Alibaba's cloud business, letting it spin out faster and also providing strong leadership. No matter what, it's a big shakeup at Alibaba, not the first one, and I think goes to show that we're not yet done seeing all the changes in China's tech sector. Other key news this morning, well, Bloomberg reports that Germany and Intel have agreed to a subsidy plan to bring a chip plant to that country. Now, the overall package is worth about $10 billion, more than expected, and a massive sum that goes to show how far nation states are willing to push to own a piece of the global silicon manufacturing market. The US, of course, is making its own related effort domestically.

• 3:54Speaker 00

  You've heard a lot about that with the CHIPS Act. And of course, all eyes remain on Taiwan, where a large chunk of global chip manufacturing is still executed, and Taiwan is a nation state that China wants to forcibly absorb into its own government. It doesn't hurt to have domestic redundancy on chips and food, which goes to tell you quite a lot about the state of the modern economy.

• 4:16Speaker 00

  All right. So here's our first on equity. Time Magazine reports, I bet you didn't expect that. When's the last time we brought up Time on the show? Well, it's still around, and it's time to give them their due. All right. They report, and I quote, "OpenAI has lobbied for significant elements of the most comprehensive AI legislation in the world, the EU's AI Act, to be watered down in ways that would reduce the regulatory burden on the company." To which I'm gonna go ahead and say, yeah, duh, that's what companies do. But no matter how unsurprising this news item is, it's good to know that it is happening as expected, and it will alarm and annoy AI skeptics. The gist here is that regulation is moving very, very quickly. And so Sam Altman and the OpenAI team are out there trying to stay ahead of it.

• 4:59Speaker 00

  If it feels like this AI cycle is accelerated even for tech, I think I can tell you why. Here's what's going on. The difference between this work and some other recent booms like crypto is that consumer adoption has been so rapid and so all encompassing that there's really no choice but for governments to take quick action. So essentially, market demand is driving a regulatory wave, and OpenAI is saying, hey, what if we were nicer to me? And you know what? That's how it works.

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  So I break up the show into like little chunks, and this is Block C, and I just called it Tough Times Out There, really because of this one story. Now, this comes from PitchBook, a platform that we use here at TechCrunch and TechCrust plus a lot for data. But they also have a pretty crack reporting team. And PitchBook's reporting team broke some news that is very important and has been kind of the talk of tech Twitter for some days now. So I'm gonna go ahead and do them the honor of just quoting them directly. So I quote, "Tiger Global has told secondary investors that they can bid on any private companies in its portfolio after a lead buyer didn't emerge for a portfolio of assets packaged in a strip sale, according to several people with direct knowledge of the sale." Now, PitchBook reports that the late-stage startup baskets of shares are not finding bidders. In other words, no one wants to buy a stake

• 6:14Speaker 00

  in a lot of late-stage startups at once at a discount that sellers can stomach. So that means that the late-stage market is broken right now for a bunch of operating startups. And my read, and I could be wrong here, is that investors expect a lot of these companies to die. Or if not, someone would have actually bought these assets that are up for sale. It is not good that Tiger wanted to sell a bunch of its stakes as a group and is now willing to sell them individually and is struggling to find a buyer for them. I think that is a clear picture of where the late-stage market is today and what's gonna happen to a lot of these companies that raised big rounds in 2021, are short on cash and are now really, really scared. Next up, TechCrunch reports that Go Ventures,

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  which is backed by Indonesia's Go2, announced that it has raised a second fund worth $240 million and critically rebranded as Argor Capital. Why did it rebrand? Well, it's independent and wants you to know it. So, Argor Capital started back in 2018 with Go2's backing to invest in startups in Southeast Asia. And although Go2 will remain one of the investors in Argor's latest fund, the company now does have other LPs, which means it is standing on its own two feet. And there is a bunch more startup news over on TechCrunch that is worth your time. And if you want more on any of these small items, there are links in the show notes over on the site. First up, Yellow, an asset financier for solar energy and digital devices in Africa,

• 7:39Speaker 00

  has raised $14 million in a Series B round led by convergence partners with participation from the Energy Entrepreneurs Growth Fund, in addition to a follow-on investment from Platform Investment Partners. I think this is a cool round and a cool company on a cool continent at a cool time. I dig it. Scooting forward, Baidu is cutting 500 to 1,000 more jobs at the firm, this time eliminating several non-sales roles as well, as the Indian edtech giant pushes to improve its finances, according to a person familiar with the matter. Now, the Bengaluru headquarters startup has cut over 3,000 jobs in the past year and did not want to talk about it with TechCrunch. Why is it cutting staff? Well, this new wave of layoffs is aimed,

• 8:22Speaker 00

  unsurprisingly enough, at improving its finances. Essentially, it wants to become profitable, and so it's reducing its cost basis. That's the same story we are hearing all over the world. And then finally, Eleven Labs, the viral AI powered platform for creating synthetic voices, has raised a new round of cash. Today, the company announced the closure of a $19 million Series A, co-led by entrepreneurs Nat Friedman and Daniel Gross, alongside Andreessen Horowitz, the well-known venture capital firm. A source familiar with the matter tells TechCrunch that the trench values Eleven Labs at $99 million post-money, so 80 million pre, a respectable figure, especially considering that the startup was launched just over a year ago. In other words, it's still hot out there if you're an AI company. If you're not, well, even Tiger can't sell your ass.

• 9:09Speaker 00

  That is our show for this fine Tuesday morning. Before we do leave you, don't forget that we want to hear your voice. So go to bit.ly/EquityPodSurvey, capital E, capital P, capital S, and tell us what you want more, which one less of, what we're doing well, and what you think sucks. Equity is on Twitter. We tweet under the handle EquityPod. My name is Alex. I tweet under the handle Alex. We are back several times this week. Lots of good stuff coming. We'll talk to you then. Goodbye. Equity is hosted by myself, editor in chief of TechCrunch Plus, Alex Wilhelm, and TechCrunch senior reporter, Mary Ann Azvedo. We are produced by Teresa Locan Solo with editing by Kel. Bryce Durbin is our illustrator and a big thank you to the audience development team and Henry Pickavet, who manages TechCrunch Audio Products.

• 9:53Speaker 00

  Thank you so much for listening and we'll talk to you next time.