Pod Insights Equity Podcast Equity Monday: Unpacking the Twitter blues About this episode Today Alex Wilhelm is talking about Twitter Blue, Lyft, a few startup rounds, and what could kick off the next crypto supercycle.
Several major tech companies are reporting earnings this week, strap in for some big news and perhaps even bigger share price movements.
The Twitter Blue saga took new turns this weekend, with Musk's personal social network staying in the news once again. If the overall result of said news for the company is good or not remains to be seen.
Alex had a few thoughts on what has happened to a number of tech-enabled companies that went public, and have since seen their value evaporate. More here.
And then it was time to check in on Super.com's big new round, and the latest from Span!
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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. It is April 24th, 2023, and this is our Monday show where we take a look back at the weekend and a look ahead at the week to come. Today, on the agenda, we have stocks and cryptos. What's going on with Twitter Blue over the weekend? Lyft and all things catastrophes. And then we're going to wrap with a couple of very interesting startup rounds. Let's go.
0:38 Speaker 00 Taking a look at the world of stocks, shares were mostly lower in Asia today. In EU, once again, mostly lower, though some indices were a little bit in the green. And here in the United States, stocks are actually up after the open despite being down in pre-market trading. But all that's in the past, what we care about is what is coming up. This is going to be a simply massive week for earnings. On Tuesday, we're going to hear from names like Alphabet, Spotify, Microsoft, Juniper Networks. On Wednesday, we're going to hear from Meta and Roku and ServiceNow. Thursday's packed, Amazon, Pinterest, Snap, Cloudflare, Activision Blizzard, and then Sony on Friday. And frankly, I may have actually missed a name or two because there are so many companies reporting this week and I'll just say it the
1:21 Speaker 00 next. So what are we looking for when we do get all the numbers and notes? Well, comments on the macro economy, what's going on with the advertising market, software buying patterns from customers, big and small, and of course, AI, AI, and AI. Turning to the world of crypto, the biggest story to me in Web 3 is that the aggregate crypto market cap is back down to 1.16 trillion this morning, where it was before the recent modest depreciation in cryptocurrency valuations. How did we get to that? Well, Bitcoin and ETH are off 7% and 10% respectively in the last week. What else is grabbing my eye? Well, I'm keeping tabs on the rapid ascent in Tethers circulating supply, while USDC, a competing stablecoin, continues to lose circulating units. And frankly, I'm really
2:06 Speaker 00 kind of curious where the next impetus or source for a crypto boom Boom is going to come from. If you go back in time, crypto booms tend to come along with, you might say, product work. So Bitcoin came out, and then we had Bitcoin similar coins like Litecoin. Later on, we had the ICO boom, and then even later than that, we had the NFT boom. What do we have today? DAOs? I mean, not really. So perhaps the next crypto supercycle won't really start until something is done in new product terms.
2:36 Speaker 00 Next up, the great Twitter Blue kerfuffle. On 4/20, while in Boston for a TechCrunch event, my blue check went missing. After some fits and starts, Elon Musk's social media company took away my verification, and the same in primature that a lot of journalists and politicians, celebrities, organizations, and companies had, that allowed folks to trust that they actually were who they claimed to be. Now, look, I presume that you're not just catching up on the Twitter Blue saga, so I'm going to give you kind of the barest of summaries for those of us still on our first coffees. Here's the background. Verification on Twitter was always a mess. It was a very imperfect system, and one that led to a lot of folks feeling slighted by the platform's decision to verify some folks and not others.
3:18 Speaker 00 That said, it did something useful by providing a centralized source of account authenticity. Now, after Musk bought Twitter, he promised a couple of changes. Musk decided to offer the same blue checkmark "verification" to users who signed up for a new, more expensive service called Twitter Blue. Essentially, folks that didn't pay for it would lose it, and folks that did pay for it would get it. This created a sort of weird reverse incentive. If the former set of verified users on Twitter did not pay, only the folks who did would have the blue check and thus be outed as wannabes, who were finally allowed into a club that was suddenly bereft of cool kids. In short, the folks who had the status symbol, such as it was, needed to keep it for it to have similar value after Musk opened it up to anyone who would pay.
4:01 Speaker 00 However, given that Musk is increasingly involved in both cultural and political discourse, and given that a great number of his most public and high-profile boosters are of the same political ilk, Twitter Blue became a sort of wedge issue between right-wing Twitter and the rest of it, with the former paying up for the service and the new verification. And often the latter group not paying to preserve their checkmark. Confused yet? Well, it gets worse. After an abortive first attempt to strip formerly verified users who did not pay to keep their checkmark on April 1st, Twitter changed what the checkmark said on profiles to indicate that the account was either verified from the old regime or paid for in the new. This eventually came to a head last week when folks like myself lost our verification. And then, my friends, there was more.
4:46 Speaker 00 After the accounts that gave blue checks their usefulness through verification, or simply status due to being held by celebrities and the like, Musk went back and gave some verification to a handful of celebrities and then later on, an even larger group of folks, you know, people with 1 million or more followers. This led to another round of tweets from users who had expected to lose their check, wound up keeping it by accident, and then tweeting that they actually hadn't paid for it and didn't want it. Even worse, the checkmark that Musk did give to celebrities who hadn't paid said that they had, which in many cases was false. Naturally, this led to yet another round of recriminating tweets between folks who think that giving Elon Musk money is the way to promote free speech and folks who don't want to support the man.
5:27 Speaker 00 Anyway, this is all what happens when you make yourself the central figure of the platform you own. It stops being a platform and instead becomes your private playground. And if folks don't want to play with you in general, that's going to cause some issues.
5:43 Speaker 00 Next up, a new recurring segment that I'm entitling "Non-tech companies cannot afford tech teams." And sure, it's a little bit hyperbolic, but hear me out. Remember Lyft? It was a venture darling of the last tech boom, the period in which money was free and interest rates were effectively zero. However, another casualty of rising rates is not just the cost of buying housing, but also the exposure of a lot of business models that seem to be venture backable that wound up being actually pretty poor deals in the long run. And by that, I mean that Lyft is worth just about $3.9 billion today, which is less than the $4.9 billion that it raised while private, according to Crunchbase data. Lyft is today worth about 0.9x its trailing revenues, according to Yahoo Finance. And my vibe is that you can't really build a venture backable business on that sort
6:28 Speaker 00 of revenue multiple. Now you can say on the current 5X to 10X range that software companies are worth today, but it was way easier when tech stocks were worth 20X or more their top line and Lyft was worth, get this, more than 10X's revenues back in 2021. In short, the market got the value of Lyft massively wrong. And so you almost want to give the private market a treat for managing to build and float a company that could at one point be valued like a high growth SaaS company. And then a few years down the line trades for around the same price sales multiple as Southwest Airlines. Allbirds is similar with a price sales multiple today of about 0.65X, which is just around where Rent the Runway currently trades. Well, there's a lesson here and the lesson is the more you get into the realm of physical goods
7:12 Speaker 00 and their movement, the less money your startup will eventually be worth, with of course, Amazon and Shippo being the exceptions.
7:21 Speaker 00 And speaking of startups, I have a couple of neat rounds before I let you go. Super.com, formerly known as Snap Commerce, has landed a new investment worth $85 million, which includes 60 million in equity funding and a $25 million credit facility. This gives the company nearly $200 million in total funding, according to its CEO. Now, what's the latest? Well, the company launched its cash back card, Supercash, last October so that card users could build credit and it amassed 5 million customers worldwide, according to the company. Now, Super.com has its site set on quote, "helping everyday Americans find deals and savings across multiple categories, including travel and shopping via its app." Essentially, Super.com is building a super app, but one with a savings focus.
8:06 Speaker 00 I think that's definitely a sign of the economic times. And then there is Span, a hardware-focused climate tech company that's trying to replace the home electrical panel, a device that people most only think about when the hair dryer causes the lights to go out, closed a $90 million Series B that valued it at about 410 million pre-money just over a year ago. And Span is back. Today, the company is announcing a $96 million Series B2 that values it at about $600 million. And why is it a B2 and not an extension? Well, because the company was able to Raised its valuation, according to TechCrunch, following the initial Series B. This round was led by Wellington and some participation from other investors that already put
8:48 Speaker 00 capital into the company, including Concorde Ventures, Capricorn Investment Group, and the Alexa Fund. And according to TechCrunch's Tim DeChant, the recent Inflation Reduction Act actually helped expand Span's market faster than expected. Here's an example of actual climate policy at the national level impacting startups in the real world.
9:10 Speaker 00 And that's our show for this fine Monday morning. Don't forget, you can follow Equity on Twitter, where we tweet under the handle EquityPod. My name is Alex. I tweet under the handle Alex because it is my name. We will talk to you soon. The show is back on Wednesday and back on Friday. We adore you. You look lovely today. Goodbye.
9:27 Speaker 00 Equity Mondays are hosted by myself, editor in chief of TechCrunch Plus, Alex Wilhelm. We're produced by Teresa Locan Solo with editing by Kel Keller. Bryce Durbin is our illustrator. Alyssa Stringer leads audience development, and Henry Pickavet manages TechCrunch Audio Products. Thanks so much for listening, and we'll be back next week.
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