Equity Monday: Are we at the start of a new crypto bull cycle?

Here’s what we got into on this very cold November morning: Crypto’s melt-up is continuing, with rising trading volumes following in the wake of the price gains. For web3 believers, it’s great news. The FT has a great interview with Sam Altman about how AI training is going to stay expensive for a long while; Microsoft is probably not worried about the costs, however. Didi’s earnings dropped, kicking off a busy week for Chinese tech companies including Alibaba, NetEase, and Tencent Music. The Block is getting its cap table into shape. And Shekel Mobility raised an interesting round that we just had to talk about. Don’t forget that next week is a holiday week here in the United States! 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 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. This is Alex. Good morning. Welcome to our Monday show where we get you caught up and catch ourselves up at the same time. Today is November 13th, 2023, which means I can tell you this morning that next week is a holiday week here in the US. So expect all news from this particular part of the world to slow as we all eat too much, sit back and fall asleep on the couch. But this morning on the show, we have markets, including even more positive crypto data, a very busy earnings week, AI needing even more money, Chinese tech results, micro cap tech concerns that are looking for a little bit more respect,

• 0:52Speaker 00

  a neat startup round out of Africa, and a crypto media story. It's a grab bag this morning. Let's go. Kicking off with the world of money, what's going on in equities markets? Well, stocks are mixed in Asia this morning. They are up in Europe and slightly down in pre-market trading here in the US. But that's what's happening today. We care a lot more about what we're going to learn this week, and that means earnings. On Monday, we should hear from NewBank, Monday.com, Rumble, and Grindr. Tuesday will bring us C, Tencent Music, Vipshop, and Wachme, and then Wednesday is Cisco, Palo Alto Networks, JD.com, Xping, and Sonos. And Thursday will bring us Alibaba, NetEase,

• 1:36Speaker 00

  and U-Dow. The stock market might be a little bit boring these days, but you know what isn't? Crypto, where a recent rally has held. Bitcoin is up 5% more in the last seven days to just under $37,000, and Ethereum's token is up 8% in the last week to just over $2,000. However, the big winner is Solana, whose token has risen 42% in the last seven days to just under $58 per. Trading volumes are also rallying, even if they are still below levels set in early 2023. And elsewhere in the good news bucket, NFT trading volume is still up from recent lows. Overall, November feels like a pretty positive month for Web3. Let's see what December will bring.

• 2:23Speaker 00

  Next up, my favorite part of the show, what I call big news that matters. And today, the biggest news that matters is the fact that AI somehow requires even more money. Now, the Financial Times sat down with OpenAI's Sam Altman to talk more about his partnership with Microsoft and what the company actually needs. On the Microsoft front, Altman said that the relationship is working, quote, "really well", and that he expects to raise more money from tech giants over time. Why does he need more cash? Well, the FT says it's to, quote, "keep up with the punishing costs of building more sophisticated AI models." Now, will that more capital come from Microsoft itself? Altman said, and I quote, "He'd hope so, and that's because, quote, 'there's a long way to go

• 3:06Speaker 00

  and a lot of compute to build up between here and AGI. Training expenses are just huge.'" A very good get from the FT, who also got Altman to say that, quote, "revenue growth has been good this year at OpenAI, but certainly it does go to show that AI is not done and more capital will be required." Now, the context here is that we are looking at an open source versus closed source AI conversation. Who is going to actually build the future? Will it be OpenAI and its commercially closed models? Or perhaps something more like Meta's Llama 2, which has a much more open source vibe to it? But can you build an LLM that can compete with commercially closed models that are backed by oceans of capital? I don't know, but a lot of people hope that the answer is yes.

• 3:49Speaker 00

  Now, on the Microsoft front, how much more will the Redman-based software giants spend? I wonder if there's actually a limit at all. Copilots, which is currently a Microsoft software product that uses OpenAI's technology, are potentially big business for the company, so it has a reason to keep betting big on OpenAI through investment. After all, if Microsoft can dramatically juice the value of its productivity products, it can net far greater revenues for decades, and that's worth nearly any amount of money today. And don't forget, Microsoft is a little bit cash-rich, as all tech giants are, so why not spend some of your hoard to buy a much bigger future? Sounds like more checks for Sam Altman are probably already in the mail.

• 4:32Speaker 00

  Next up, tech results from the Chinese market. As noted during our earnings rundown, there are a number of Chinese tech companies that will drop earnings data this week. And one company that did was Didi, the Chinese ride-hailing giant that hit trouble with its own government after listing in the US a few years ago. However, the Chinese government has since worked to show the world that its tech crackdown is a thing of the past, to which I'm pretty sure we would all look at each other and go, yeah, sure. Regardless, if you want to know how the tech sector in China is performing, which will help us understand how startups in the country may be doing, and how corporate venture capital budgets in the country will shape up over the next year, this is a very good week to pay attention.

• 5:17Speaker 00

  So how did Didi do? Well, it's growing and posted a very tiny profit in the third quarter. Not bad, is our take. So next up, a curiosity. I recently saw dave.com, a former fintech startup, promoting its earnings results on TechMeme. And if you don't know what TechMeme is, it's an aggregator of tech news. Everyone likes it. It's lovely. I've been reading it since the dawn of time, but I can't recall seeing a small-cap company reporting their own earnings in an ad on TechMeme. So why? Well, it turns out that Dave's numbers are getting better, and it appears to want to change their narrative surrounding its business. It essentially wants to get more respect for the work that it's doing. Why?

• 6:01Speaker 00

  Well, the company has lost nearly all of its value since going public, so it's waving a flag saying, hey, we are real, we are here, and we are alive. And it turns out, it's not the only company out there that has been almost left for dead by public market investors. So what should we do with former IPOs and SPACs that are now very, very cheap? I don't know, but here's a little bit of data. dave.com is now worth about 68 million. D-Wave Quantum, 105 million. Weedmaps, 150. Hippo, in the insurance tech space, about 200. Better.com, you've heard of them, about 300 million. Deezer, 300 million. Nextdoor, 550 million dollars. In short, for like 1.0

• 6:41Speaker 00

  5 to 2 billion dollar startups, you could buy a really hilarious portfolio of companies. Why not? There are probably also similar bargains out there in the private market as well, which does, I think, bode well for some very interesting 2024 deal making. But for companies that did pull the trigger and go public and want more respect, well, turns out there's tech me mads.

• 7:04Speaker 00

  I love a venture backed media story and today we have one from the world of crypto. The block, a news site in the web three world, has sold the majority of its shares to Forside Ventures in a deal that values the company at about 70 million dollars, according to Axios. Now, Sarah Fisher reports that most of this capital will be used to buy out former CEO Mike McCaffrey. Mike McCaffrey became a pariah in the tech world for taking millions of dollars from Sam Bankman Fried, the erstwhile CEO of FTX, which then led to his resignation. But what matters is this is a pretty notable media deal. Now, the CEO of the block Larry Sernak frames the deal by saying that the transaction gives the block a "fresh start ahead of the bull market and provides us with more capital to build out new exciting products

• 7:49Speaker 00

  and expand our footprint into Asia and the Middle East." End quote. I love the part there about the start of the bull market. Yes, the crypto folks are feeling themselves once again, and that it perhaps explains why Forside Ventures wanted to pull the trigger on this transaction today. And to close out, as we went to record this morning, TechCrunch dropped news that YC backed Shuckle Mobility, what we call a B2B auto dealers marketplace, has secured a $7 million funding round, broken up between 3.2 million dollars in equity funding and just over $4 million in debt. Now, why would a startup raise that much debt in an early stage round? Well, Shuckle Mobility works in Africa to provide both credit and software to car dealers.

• 8:33Speaker 00

  And the company currently has ARR of slightly over $2 million, according to our own reporting. Note, however, this is not the first time that Shuckle has raised capital. In January, the company announced a $1.95 million pre-seed round that was led by Ventures Platform with participation from YC, Voltron Capital and Zedcrest. This round, cool by itself, is also pretty important because we have seen falling venture capital volumes for Africa-focused startups. And this deal shows there's still movement in the continent and that investors have not entirely forgotten about the entire African space.

• 9:10Speaker 00

  And that is our show for this fine and frigid November morning. Don't forget, though, if you do need more equity, we are Equity Pod over on X and Threads. My name is Alex. I am Alex over on X as well. We have two sister shows, Chain Reaction and Found. They are lovely and helmed by my friends. And we will talk to you on Wednesday when we're back with our interview deep dive and then Friday, of course, for our news roundup. Talk to you soon. Bye. Equity is hosted by myself, editor in chief of TechCrunch Plus, Alex Wilhelm, and TechCrunch senior reporter, Mary Ann Azevedo. We are produced by Teresa Locan Solo 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.