Equity Monday: PayPal punts on Pinterest as Facebook's hell month continues

This is Equity Monday, our weekly kickoff that tracks the latest private market news, talks about the coming week, digs into some recent funding rounds and mulls over a larger theme or narrative from the private markets. You can follow the show on Twitter here. I also tweet. Taking a look around the world, stocks were largely higher in Asia and Europe and are looking somewhat mixed in the United States. There are a host of technology earnings coming this week, mind. Facebook is taking all sorts of incoming fire from media reporting on a trove of documents that a whistleblower leaked. The company is not having a good month, let along quarter from a PR perspective. It reports earnings later today. Here's the NYTimes piece we noted, the Bloomberg article, the CNN piece, and the Verge entry. The PayPal-Pinterest deals is done for now. PayPal said so this morning. Its shares are up, while Pinterest shares are sharply lower. And from startup-land: Routine is a new app that looks slick, Billie raised $100 million, Tier raised a huge bloc of cash, and Groww just tripled its valuation. It's going to be a busy one, so strap in and get hype because it is earnings week. 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

• 0:11Speaker 00

  Good morning, everybody. Welcome to Equity Monday. This is Alex. It is October 25th of the fine year 2021. Of course, we are here for your Monday morning wake up. We're here to get off on the right foot, both you and I. So let's talk about the markets a little bit. Riff on the biggest technology news, of which there is quite a lot this morning, and of course, check up on startup land. So hello from the cold, wet and rainy East Coast of America. It is dismal today. It is wet. It is cold. It is sad. It is miserable. And it is a reminder that summer is behind us, which reminds me a little bit of Facebook, because that company is also enjoying a kind of dismal down cycle and probably misses brighter and sunnier times. So in case you're behind, a bunch of Facebook docs were released by

• 0:53Speaker 00

  a whistleblower from the company, who actually, I believe, testifies in the UK today. And look, we can't spend the whole show on what's kind of come out in the last couple of days. So I prepared a short digest, if you will, of headlines from around the web that I was reading this morning. So here is your Facebook news roundup. The New York Times reports that Facebook has had a struggle to control misinformation and political manipulation in India, a key market for the company. Of course, WhatsApp is very popular there and other Facebook products. CNN, it's a headline that I just can't improve on, which reads, "Facebook has known it has a human trafficking problem for years. It still hasn't fully fixed it." And Bloomberg has a great head deck combo that I quite enjoyed. "Facebook faulted by staff over January 6th insurrection. Employees in the company's own research highlight ways that Facebook failed to police its platforms ahead of the siege on the Capitol."

• 1:36Speaker 00

  And then just to cap it off, The Verge has a report on falling youth usage of Facebook products themselves. So the result of all this, well, let's talk about money. That's what matters, really, right? So Facebook was off 5% last Friday and is off another 1% in pre-market trading. There's a lot more to come about this. The staff at Facebook apparently has been raising internal alarms for some time. So really, what we're talking about is a failure of leadership versus a failure of the staff to do their jobs. And I'll just note that Facebook's earnings this week. So that's going to be really spicy.

• 2:06Speaker 00

  All right now, on the subject of the markets, here is your market minute. The Chinese and Korean stock markets are having a generally good day with shares rising. Japanese stocks are down and European shares broadly are up this morning. It's a big week for technology earnings here in the United States where shares are mixed, but tech shares are looking kind of good. Facebook will report earnings later today. We're going to also have Google, Microsoft, Robinhood, Twitter and AMD tomorrow. And of course, later on in the week, Spotify, Twilio, Apple, Amazon and Shopify. If you work at one of those companies, welcome to earnings week. If you own some of those companies, good luck. And if you're just watching like I am, well, we'll see what happens. Also, apparently it's not Google. It's been called Alphabet now, I'm being told. Yes, Alphabet earnings are coming tomorrow because yes, everyone talks about Alphabet, not Google.

• 2:51Speaker 00

  The biggest news out this morning is that after much reporting that PayPal was deep into the work of buying social networking website with an e-commerce twist, Pinterest, the deal is apparently at a minimum, no longer close. So if you're excited about this sad news, it's kind of kaput. This morning PayPal wrote over on its investor relations website, the following. In response to market rumors regarding the potential acquisition of Pinterest by PayPal, PayPal stated that it is not pursuing an acquisition of Pinterest at this time. Now, in response to this, shares of PayPal are up 5.4% in pre-market trading for a company of PayPal's worth. That's quite a lot of value added onto its market cap in one move. And shares of Pinterest this morning are doing the exact opposite. They are off 14% in pre-market trading. So PayPal investors stoked that the deal is not going through. Pinterest investors very, very sad.

• 3:36Speaker 00

  The deal would have been a huge transaction, taking a public company out of the markets and into the hands of American fintech giant PayPal. And I'm just going to be straight with you. TechCrunch was broadly skeptical of the deal. It just didn't feel like it had enough synergies. You know, the Legos didn't quite fit together and they were going to be very expensive Legos. Now, we did get some feedback after our podcast on the subject that we were being too negative on Pinterest and that we weren't giving it quite enough credit for its e-commerce story. And frankly, fair, totally. We always want to comment on the news and we always do it with the information we have that we can gather. We will occasionally miss things and so I'm glad that people push back on that a little bit. But apparently we weren't too far off the mark, just to be kind of, you know, fair to us in return because the deal is on ice. For now, and you know, perhaps forever. And if the e-commerce story really was that strong, PayPal would have gone through with it because why would it stop and change its mind?

• 4:21Speaker 00

  You know, anyways, this was not a regulatory kill. The market appears to kind of rejected this one on its own. And I'll just throw in kind of one more quarter into this particular well, but there was some news last week that could have impacted the transaction. Snap reported Q3 earnings. Q3 was kind of okay from the company, but Q4 was a huge miss in terms of guidance versus expectations. And that bad sentiment, if you will, kind of riffing off of what Snap said about privacy and Apple's iOS and advertiser demand and all that really did bring down the value of social media stocks more generally. And it may be that in the wake of that PayPal just wasn't quite as excited about paying what it was going to pay for Pinterest. And that may have led to, let me say, I don't know, pricing discrepancies. And when you have a price discrepancy, well, you can kill a deal pretty quickly. Regardless, this is done and

• 5:05Speaker 00

  we'll have more if it comes up. But for now, you can stick a fork into PayPal and Pinterest.

• 5:13Speaker 00

  All right, let's talk about startups this morning. We have quite a lot to get through, but we're not going to start with the funding round because we do a lot of those because there's a lot of money flowing around. But we're going to start off this morning with instead an application. Now, our own Romaine Dillet wrote about an app called Routine, and I think this is kind of cool. According to his reporting, the company is quote, "working on a productivity tool that should help you manage your workday more efficiently." It's a brand new take on to-do lists as it combines both tasks, non-actionable notes, and a daily planner. As someone who has many discrete tasks throughout the week, I take part in this podcast. I write for the site. I'm also on our Sassy Vins team, and I write the Daily Crunch and you know, blah, blah, blah, blah. I am always juggling little tasks. And so I love that people are focused on tasks, to-do lists, and notes.

• 5:55Speaker 00

  That's kind of where I live. And also, it's just kind of fun to think about a new application. We often get kind of stuck in the unicorn stuff and the big tech news and regulations and governments and all that. But don't forget kind of the basic unit of technology in the startup world that we talk about is an app. And here's a new one. It's called Routine. Woo. And from BNPL land, let's talk about Berlin-based Billy. That's Billy spelled like Billie Eilish, in case you were trying to figure out how to put that into your search engine. Anyways, the company has put together a $100 million round for its Business to business focused buy now pay later solution or BNPL. So this is B to B BNPL in case you love acronyms this early in the morning. Just thinking aloud, my guess is that the economics for B to B BNPL are probably better than B to C BNPL.

• 6:38Speaker 00

  Probably, I don't know, larger transaction sizes, probably simpler credit ratings, probably lower loss ratios, frankly. Regardless, the company is now worth $640 million, according to our own Ingrid London. Okay, so scooting along, it turns out there's still more money out there for scooters. No, Lime and Bird did not ruin that market. Berlin-based Tier is raising big bucks, something in the nine-figure range, though we're not entirely sure if they've raised the first tranche of a $200 million round or if the $200 million round is the first tranche of their new round. But the news is regardless, there is still capital out there that's going into micro mobility and in particular scooters. And frankly, cool. I think anything we can do to limit our need for cars in cities is good because cars have taken over cities for the last forever.

• 7:22Speaker 00

  And essentially, it's crazy to me that we drive right through residential and commercial districts where we want to walk and do stuff. And from India, we have Gro, that's G R O W W, a millennial targeted investing service. This company just put together a $251 million Series E financing. And according to Manish Singh over at techmunch.com, you may have heard of it. The company tripled its valuation to $3 billion in just six months. Now, if this round sounds familiar, good remembering. It's because Techmunch broke the news some time ago that the company had multiple term sheets for this particular Series E at around the $250 million mark. That tells us that there is quite a lot of capital available for fintech in India and that the Indian startup scene is just as crazy bonkers as it has been in recent quarters.

• 8:09Speaker 00

  And that is our show, my dear and fine friends. You can, of course, follow Equity on Twitter under the handle EquityPod. Or if you want to hang out with me and say hello, I tweet under the handle at Alex. We'll talk to you soon, but just before we let you go, don't forget that you are tremendous and you are going to crush this week. You got it. We believe in you. You can do it. Yes, it's Monday, but soon it shall be the weekend and you will be happy again. Okay, bye.