Pod Insights Equity Podcast Equity Monday: TikTok loves ecommerce and VCs think Mistral AI will be fine (potential EU regulatory overhang or not) About this episode Our Monday show covers the latest in tech news from the weekend and what’s making headlines early in the week. Here's what Alex got into:
The end of earnings: With just Adobe and Oracle from the tech world reporting this week, we have finally (mostly) wrapped up earnings season for Q4 2023, and thus the year.
Crypto’s doing things again: Recent price appreciation is driving another massive spike in trading activity.
TikTok forms joint venture: Teaming up with Tokopedia, the Bytedance company has its eyes on the Indonesian ecommerce market. But the tie-up comes at a stiff price.
EU&AI: Last Friday the EU got its regulatory plan in place for AI. Criticism followed. Then on Monday Mistral AI raised a bunch more money. So is European AI work kaput, or just getting started?
Elsewhere, don’t forget that the chip war is still raging, there are more fintech unicorns being born lately than before, and SumUp raised again.
That’s it for today! More on Wednesday and Friday!
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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.
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Transcript 0:10 Speaker 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. I have to tell you up top, I am a little bit sick. So if I sound congested or nasally, well, that's because I am both those things. Before we get into all things tech startups and money, we do have a request for you, my dear friend. We want to know how you would describe 2023 in a headline. So think about that and then send us a tweet to at EquityPod. We do this every year. We love your creativity. It's fantastic and good fun. And we will read the best ones on the show, give you credit, and also tell everyone that you are brilliant.
0:50 Speaker 00 So 2023 in a headline, tweet at us EquityPod, best ones on the show. Thank you in advance. All right. Today is December 11th, 2023, and we are going to talk about stocks and crypto, the end of earnings for the year, TikTok's e-commerce push, the latest on AI, and why fintech is not quite dead yet. Let's go.
1:14 Speaker 00 Starting off with a look at the world of money, let's start with the stock market. Shares are mostly higher in Asia today despite concerns of deflation in China. Keep your eyes on that. Stocks are mixed in Europe and they are largely flat to start the week in pre-market trading here in the US. And for everyone who is so sick of me listing out 114 different companies that are going to report earnings in the next five days, today I have a very extensive list for you. Oracle on Monday, and then Adobe on Wednesday. That's it. Crypto, once again, is more interesting than the world of equities this week. Now, many major cryptos have been actually pretty flat in price terms over the last week. Bitcoin
1:57 Speaker 00 will still cost you about $42,000. One of Ethereum's tokens will cost you about $2,200. The big news in price land, however, is that Solana's token has soared 11.5% in the last week. This has led to Lots of tweets wondering which token will go up next. I don't know. The answer could be none of them. At the same time, the overall exuberance around price movement is driving up trading volume. Trading volumes have now reached their second highest peak of the year. And according to the block data, spot trading is now worth about $40 billion in transactions per day. The question is, can this latest surge in trading activity beat March results and become the most active trading period of 2023?
2:40 Speaker 00 Why do we care about all of that? Well, more trading volume is good for crypto exchanges that often make their money off of trading. And those exchanges are often very active players in the corporate venture capital market. So more trading volume can actually mean more investment for early-stage crypto startups.
3:02 Speaker 00 Next up, my favorite part of the show, what I call big news that matters. And the first thing is all about TikTok's new joint venture. Don't forget, of course, that TikTok is part of ByteDance and is in a hurry around the world. TechCrunch reports that, quote, "TikTok wants to do more business in Indonesia." Why is that? Well, it's because it's the Southeast Asia's biggest e-commerce market. But the company ran into some roadblocks, so it came up with a plan. TechCrunch reports that TikTok is putting up $1.5 billion in a new joint venture that will bring Tokopedia, the e-commerce unit of Indonesian tech giant GoTo, together with TikTok Shop Indonesia, the local division of TikTok's e-commerce business.
3:46 Speaker 00 And because the company is putting up so much money, TikTok will have a control and stake of about 75% in the new entity. That is a lot of money to put into any joint effort. But do keep in mind that the Indonesian economy is worth about $1.42 trillion each year. For example, nearly about three times as big as Thailand's own. And so it's worth putting capital to work in the area. Even more for TikTok, the $1.5 billion won't come as a single investment, but will instead be doled out over time. And so the company doesn't have to actually write a check of that size. Finally, TikTok is working on its e-commerce business in the US and elsewhere around the world, leading me to wonder, can anyone stop the talk?
4:32 Speaker 00 All right, we can't not talk about AI because it is still 2023. And so for you this morning, I have two things on the AI front. First of all, back on Friday, the EU got its AI regulatory model into place. What is it? Well, TechCrunch called it a "risk-based framework for regulating AI." Now, we will not know the full rundown for a bit, but we do know a couple of things that have been banned. So for example, there will be no biometric categorization systems that use sensitive characteristics, for example, religion or sexual orientation, no untargeted scraping of facial images from the internet or CCTV footage to create facial recognition
5:14 Speaker 00 databases, no emotion recognition in the workplace or educational institutions, no social scoring, no AI systems that manipulate human behavior to circumvent their free will, very interesting, and no AI used to exploit the vulnerabilities of people due to age, disability, et cetera. Now, that list doesn't sound that bad, but commentary from some folks has been sharply negative. While the EU hailed its accomplishment as "historic," Mike Maples, a partner at Floodgate, said on Twitter that the deal was "prehistoric" instead of historic, which is a pretty good burn, actually. Lots of other jokes from tech folks who often dismissed all EU AI development thanks to this regulatory structure, but you know, differences do exist
5:58 Speaker 00 out there in opinion. Of course, saying that AI systems should not be abusive to individual rights doesn't sound that bad, but it may preclude some business models or data collection methods and could have unintended consequences in terms of development pace. Now, I don't know who is right here, but a lot of Americans are pretty unimpressed by what the EU has come up with. Then, in a moment of "yeah, but," TechCrunch reports this morning that French startup Mistral AI has officially closed its much anticipated Series A funding round. It raised about $415 million at today's exchange rates, and according to Bloomberg, is valued at about $2 billion. As a reminder, of course...
6:41 Speaker 00 Mistral AI raised $112 million in a seed round less than a half year ago. And notably, Andreessen Horowitz is leading the most recent funding event along with Lightspeed Venture Partners. So I guess that some Americans or American-based firms think that Mistral is going to be fine, potential regulatory overhang or not. For the EU, it's not a small point. Mistral has very, very big and local ambitions. Mistral AI co-founder and CEO Arthur Minch said regarding the round that, quote, "Since the creation of Mistral AI in May, we have been pursuing a clear trajectory, that of creating a European champion with a global vocation in generative artificial intelligence
7:25 Speaker 00 based on an open, responsible, and decentralized approach to technology." I love it. We're now seeing three major AI hubs then, one in China, one in the US, and now whatever the EU can pull together. On one hand, regulation. On the other, Mistral. We'll see.
7:44 Speaker 00 Next up, chips. Now briefly, while we spend so much time talking about AI, it's critical to remind ourselves that the chip wars are still going on. Lots of news out lately, but the thing that really did catch my eye was that New York State is joining University of Albany and IBM, amongst others, to create a $10 billion semiconductor research facility in the state. Now, when you do think about advanced silicon, New York State is not exactly the first place that comes to mind, but with enough effort and capital, perhaps that can be changed. Now, yes, all your social feeds are just AI hacks, but just don't forget about chips. They're perhaps even more important than what they are used to calculate.
8:27 Speaker 00 And I want to close out with fintech. There were a couple of new fintech unicorns in Q4 of note. We'll talk a little bit more about that when we look back at the year fully. But elsewhere in fintech land, there's more news that's positive. And that good news takes the form of SumUp, a fintech company that provides payments and related services to some 4 million small businesses in Europe, the Americas, and Australia. What's going on? Well, the company just raised 285 million euro. And Hermione McKee, who was appointed SumUp's CFO earlier this year, described the round as mostly equity, although she did decline to tell us exactly what the valuation was,
9:07 Speaker 00 simply saying that it's higher than the 8.5 billion dollar figure that SumUp reached back in 2022. So how did a fintech company raise nine figures in 2023 at an up valuation? Well, according to McKee, SumUp has positive EBITDA and has been on that basis since Q4 2022 and is growing by more than 30% lately. That's not bad. Those look like pre-IPO numbers. And for a company of this size, well, we have to ask, when is that going to happen?
9:40 Speaker 00 Oh, and that is all the time we have for this fine Monday morning. But the good news is we still have lots and lots planned for you. We have a really killer end of year equity slate. So don't forget us when you're hanging out with family and eating too much food over the next couple of weeks. If you need even more equity, we are Equity Pod over on X and Threads. And if you need more from me, well, I am Alex over on X. We also have two sister podcasts here at the TechCrunch Podcast Network, Chain Reaction, All Things Crypto, and Found, How Founders Built the Companies They Did. All right, we'll talk to you soon. We're back on Wednesday. We're back on Friday. Bye.
10:17 Speaker 00 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. Thank you so much for listening and we'll talk to you next time.
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