Pod Insights Equity Podcast How a browser startup is taking on Google search About this episode Here's what we got into today:
Massive earnings week ahead: Big tech companies are dropping their quarterly results in the coming days, so we'll hear from Microsoft, Apple, Alphabet and Amazon. Other companies are reporting as well, but the bigger the market cap, the bigger the splash.
Arc's new mobile app is a cool search concept: Best known for its desktop browser, The Browser Company has a new mobile app that could change how we search on the go.
Reddit could target $5 billion valuation in its IPO: The number makes a lot of sense given what we know about Reddit's revenue history. More on that here.
And in closing: Meta and Apple, what Garry said, and OpenAI vs. the EU.
We have a packed week coming up, so check your favorite podcast app soon!
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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 tech crunch podcast, all about the business of startups, where we unpack the numbers and the nuance behind the headlines. This is Alex. Good morning. Today is January 29th, 2024. Welcome to Equity Monday, our look back at the weekend and our look ahead at the week that is to come. Today's episode is going to be super busy, so strap in, we have a lot to cover. On the show this morning, we have, as always, stocks and crypto. Then it's going to be a big earnings week. Next up, how the browser company is taking on search. Then news from Reddit's IPO. And then finally, a few small items, including the latest from Baidu's and OpenAI in Europe. Let's go.
0:57 Speaker 00 All right, and we are going to start with stocks as always. Shares today are mostly higher in Asia, where the big news is that Chinese real estate giant Evergrande is finally heading for liquidation. Yes, this is the most interesting story in the world today, but it's not really a tech crunch story, so I have not fully read up on it. But oh my gosh, it finally happened. Elsewhere, stocks are mostly lower in Europe and they are mixed in pre-market trading here in the US. However, that's all looking backwards. What we care about is the data we're going to get this week about the performance of different tech sectors. Yes, I'm talking earnings and this week has the business. So on Monday, we're going to hear from Super Micro Computer, F5 and SoFi.
1:41 Speaker 00 Tuesday is going to bring us Microsoft, Alphabet, AMD, GM, the parent company of Cruise, of course, EA, Juniper, Match Group and Lending Club. Wednesday, we're going to slow down and only get numbers from Qualcomm and ADP. And then Thursday, we're going to hear from Apple, Amazon, Meta, Atlassian, Coursera and Peloton. Lots of numbers this week, lots of data, lots of learnings. I can't wait. Putting aside the traditional stock market, let's talk about what's going on in crypto. And this week I have some good news. Yes, we have seen a modest price recovery in several major tokens from their post ETF lows. What does that mean?
2:24 Speaker 00 Well, it means if you want to buy a whole Bitcoin this morning, it will cost you a little bit more than $42,000. That number fell below 40K as last week ended. So a nice little bump there if you hold Bitcoin. Elsewhere, Ether, the token associated with the Ethereum blockchain, did lose a little ground. It's down to about 2250 per. And my favorite is crypto getting more serious ticker. Dogecoin is still worth 11.6 billion by total circulating supply, and is the 10th most valuable crypto token, period. So that's great. Now, all that's interesting, but what you actually care about is how are all those new spot Bitcoin ETFs doing? Well, I went out and pulled the data for you this morning,
3:08 Speaker 00 and several are approaching the $2 billion asset under management mark. Not bad. Of course, there is a historical asset class called GBTC that is bleeding some money, but with other Bitcoin spot ETFs in the nine-figure range of assets, well, I will say that uptake is happening, albeit not as fast as some may have hoped.
3:30 Speaker 00 Next up, my favorite part of the show, what I call big news that matters. And the biggest news that mattered today, according to TechMeme, actually surprised me. Instead of being about, I don't know, Apple or Meta or one of the big tech companies, it's actually all about Arc's new iPhone browser. And TechCrunch wrote about this, and we said that Arc's new iPhone browser wants to be your search companion. Very interesting. So the backstory here is pretty simple. The browser company built a thing called Arc. It's a web browser. You can use it. And the company also launched Arc's first iPhone companion app last year. Essentially, what that did was let users save links for later consumption on their desktop, on their mobile phone.
4:14 Speaker 00 So, okay, a companion app, not that special. But now the firm has released a new Mobile app called Arc Search that is directly focused on just the search experience. Okay, so browser company Arc Browser, former companion app, now doing search. What does the search thingy do? Well, its AI-powered features allow it to browse for you, which builds you a webpage of information about the query you just searched. Now, this is powered by OpenAI and models from other companies. It goes out, reads webpages for you, and then builds you a new page with different sections of information. Okay, pretty cool. But if you don't want that, you can also just use Google or Bing or DuckDuckGo inside of the search app itself.
4:57 Speaker 00 So it has an AI-powered feature and gives you options to try out other search engines you probably already know better. This is not the first time we've been talking about the browser company lately. Last week, it actually announced that users can set perplexity.ai as their default search engine on the Arc desktop client. And I tried that and it was interesting. I need to try it more, just like I need to try this new Arc Search for iPhone, because it sounds very, very cool. So a couple of thoughts here. First, I really need to play with this. I haven't yet, I'm going to, it's going to be cool. But what really surprised me this morning was to see this little startup story at the top of TechMeme.
5:38 Speaker 00 TechCrunch covered it, The Verge covered it, everybody wrote about this and people care. Why? I think it's because we're all waiting for someone to show up and actually challenge Google Search. I really do think it's gotten a little bit lazy and a little bit cluttered and a little bit busy. And perhaps there's more ads than actual search results. A great time for a competitor to show up and shake things up. But why are we seeing a startup do this and not a big company? Well, bigger companies have larger revenue streams to defend. Arc and the browser company don't. So they can go out there and just completely blank sheet of paper search without having to worry about what it means for their existing businesses. I love it. Let's see if the browser company can build something we all want to use more than Google.
6:23 Speaker 00 And if they do, how long they can keep it good before we need someone to show up and disrupt them?
6:31 Speaker 00 IPO season, ladies and gentlemen, finally, at last, I think it may be coming. The latest on the IPO front is that, according to Bloomberg, Reddit could target a valuation of at least $5 billion when it goes public later this year. Now, for you and I, $5 billion, that's a lot of money. Is it a lot for Reddit? Well, we do know a couple of things about its financial performance. The information reported that Reddit generated $800 million worth of ad revenue last year, and that that was up 20% year-on-year, so 2023 compared to 2022. At a $5 billion valuation, along with the fact that Reddit is mostly reported to still
7:12 Speaker 00 be unprofitable, $800 million in revenue, it all kind of makes sense. Sure, $5 billion, $5 billion plus, is not the $10 billion that the company raised at back in 2021, but really, who's worth their 2021 price today? $5 billion for Reddit, given what we know, does seem to be very reasonable for the company. It has lots of brand recognition, and also underwent a lot of massive and painful changes to its business model that caused a lot of drama last year. Do you recall the API price wars over on Reddit? That probably set it up well to go public this year. No matter where you stand on this and where you think it's going to be valued, what we want is an S1, and reporting like Bloomberg's today indicates that Reddit is making real
7:57 Speaker 00 progress there. Even better, Reddit is only one of several companies we expect to be in the first IPO cohort of the year, including Shein. So, I'm excited, you're excited, let the S1 filings drop.
8:13 Speaker 00 Now, I don't think I've ever actually said the phrase "odd bedfellows" on equity in all these years, and after hundreds and hundreds of eps, but odd bedfellows, Meta and Apple. Here's what's going on. Apple's upcoming Vision Pro face computer is making Meta think of dollar signs. Now, The Wall Street Journal reports that, and I quote, "Meta Platforms is hoping Apple's launch of the Vision Pro can reinvigorate its $50 billion..." Metaverse effort which consumers have yet to widely embrace. End quote. That's a little bit more British understatement than I'm comfortable with. Which consumers have yet to widely embrace. Sure, that's true. They also haven't widely embraced arsenic, if you want to think about it that way.
8:57 Speaker 00 Anyways, the idea that Meta has here, I can kind of see it, but I'm a little bit skeptical and here's why. Consumers are not going to buy tons and tons of the new Apple device because it's very expensive. Now, I do suppose that Apple could make the Metaverse cool by association. But even then, the offered devices between the two different companies are different. So I think if one does well, it's not really a slam dunk for the other. Still, if anyone can make something cool, Apple is probably still that company, more so than Meta at least. So perhaps all the money that Zuckerberg has spent on VR headsets and their resulting business will look a bit better in the coming quarters. Investors would love that, including Apple stockholders.
9:40 Speaker 00 And if you want to know more about the competitive dynamics of launching an expensive piece of hardware into a already busy and not that strong market. Well, we have an interview coming out later this week with a founder and investor who has a couple of thoughts about how to innovate and how to compete. So look for that this Thursday.
10:00 Speaker 00 I have to condense a little bit to make this all fit inside of our time limit, so small items. First up, YC President Gary Tan interpolated some famous hip hop lyrics to mock a number of local SF politicians over the weekend in a tweet that ended with, and I quote, "Die slow, motherfuckers." Clearly, the tweet didn't go over that well, and Gary Tan has since apologized. There are a couple of learnings here for us. First of all, never tweet. Second of all, never allegedly drink and tweet at the same time. I've met Gary, we've had Gary on the show, he seems to be a very nice guy. And here we end it up. I just think that social media may have not been our best choice.
10:44 Speaker 00 And I'm going to put that on Twitter right after I finish recording. And keeping up with the small items, TechCrunch reports that Baidu, the Indian ed tech giant, is now worth effectively nothing as it tries to raise emergency cash to stay afloat. This next round, if the company can raise it, will write its worth down to whatever it can raise, plus just a tiny bit more. How mighty the fallen. The question then becomes, is this an ed tech issue or a Baidu's issue? Well, maybe a little bit of both, but we're putting the onus more on Baidu's here than its sector. The company has been a mess on stilts and is a good reminder that simply getting big quickly doesn't mean that you are going to make it. Now, if you're tired of hearing about Baidu's, good news. Looks
11:27 Speaker 00 like we won't hear much from them for a while. But if you do want more on the ed tech company, we have talked about it quite a lot on the show recently. So go back through the archives. We have Baidu's for days.
11:39 Speaker 00 And our last story for the morning, I caught this just as I was putting together my notes for this for you today. It's that OpenAI has been told it's suspected of violating European Union privacy following a multi-month investigation of its chatbot, ChatGPT, you may have heard of it, by Italy's data protection authority. Now, details of the Italian authorities draft findings have not been disclosed, but the Garante said today that OpenAI has been given notification and 30 days to respond with a defense against the allegations. This is not the first time Italy has tangled with OpenAI, so we'll have to see how the company actually responds. The big question here is, how much of the internet can AI companies
12:21 Speaker 00 consume to make their models and where the privacy and IP lines should be drawn? This is going to be one of the most important stories of the entire year, not just the Italy bit, but the whole overall, like, what can these companies do? So stay close to it. Search crawling is, of course, a related issue on this matter, but we can't really use that as a panacea for what AI companies need in this context, because the value exchange is different. So OpenAI, Italy again, but really, we're talking about AI versus everybody.
12:56 Speaker 00 And that is our show for this ever so fine Monday morning. Don't forget, of course, if you want even more from the Equity Crew, we are Equity Pod over on X and Threads. And if you want more from me, well, I'm Alex over on X. This show has two sister shows, Chain Reaction, all about the world of crypto, and Found, talking to founders about how they built what they did. We'll talk to you soon. We have many shows coming out this week, so make sure Equity is subscribed in your favorite podcasting app. We'll talk to you then. Bye.
13:29 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 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.
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