Pod Insights Equity Podcast Musk’s Grok goes open-source and Reddit updates its IPO filing About this episode This is our Monday show, in which we take a look back at the weekend and what’s ahead in the week. Over the weekend, we dropped an interview with Roger Lee that is well worth your time, and here's our take on Reddit's IPO financials.
Here's what we got into today:
Crypto is taking flight, with bitcoin and ethereum notching big gains in recent days as the crypto winter fades to a fresh spring.
Reddit dropped a new IPO filing, which includes a price range target of between $31 and $34 per share. That values the company as high as $6.4 billion.
Musk intends to open-source Grok, the LLM that subscribers of X's most expensive tier have access to. The move comes after a recent debate regarding AI tech and how open it should be.
Bobby Kotick wants to buy TikTok?
Techstars' $80 million Advancing Cities Fund could be its first and last fund.
In closing, Griffin Bank's $24 million Series A extension caught our eye, and we're reading Ron Miller's interview with Slack's new CEO.
For episode transcripts and more, head to Equity’s Simplecast website.
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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 about the business of startups, where we unpack the numbers and the nuance behind the headlines. This is Alex. Good morning. Welcome to the Monday show. Today is March 11th, 2024, and you and I are going to take a look back at the weekend and a look at the week that is to come. But speaking of the weekend, if you didn't know, we dropped an awesome interview with Roger Lee of Layoffs to FYI over the weekend. Mary Ann chatted with him about why startups are shutting down so much right now and why so many more closed last year than we saw in 2022. Lee, of course, is an investor in Sunset, one of the two companies we profiled the other week that helped startups
0:54 Speaker 00 shut down. But on the show this morning, we have stocks and crypto, news on Reddit's IPO, why Grok is going, open source, new troubles at Techstars, and then a really neat new fintech round. Let's go. Let's start with a look at the world of money, and that means the stock market. Over in Asia today, stocks are down sharply, especially in Japan. They are lower in Europe, and stocks are set to fall in the US at the open. Now, on the earnings front, I only have a handful of names for you this week, so let's talk through the list. On Monday, Oracle and Asana.
1:33 Speaker 00 Wednesday is UiPath and then Sentinel One, and Thursday will bring us Adobe, Smartsheet, PagerDuty, and Weibo. So yes, it's a quieter week, but one that should still be very interesting. UiPath's report will include a healthy dose of AI. Sentinel One is amongst the fastest-growing public software companies out there, and Adobe's earnings in a post-Figma deal world are very interesting. So not that many names, but hopefully a sheaf of juicy nuggets. And then there was crypto. If you have been living under a rock, I have an update for you. Crypto prices are up dramatically in recent weeks, including a 10% gain by Bitcoin
2:16 Speaker 00 in the last seven days and a 15% gain by Ethereum's token in the last week. Elsewhere, there are now more than 100 billion Tether tokens out there, which implies that Tether is holding $100 billion in assets to back the most popular stablecoin. But it's not alone in seeing growth. USDC is back over the $30 billion mark, which is good news for the company because the number two stablecoin maker is considering an IPO of its own. And of course, when the major cryptos are up, so too are the silly ones. Dogecoin and the Shiba Inu token are worth $25 billion and $20 billion a piece by the somewhat crude
2:59 Speaker 00 crypto market cap metric, but still, that's a lot of money no matter how you slice it. Crypto winter is over, and that was determined by rising token prices. So in other words, crypto is back, but it seems to be back in roughly the same form as it was the last time.
3:18 Speaker 00 Next up, big news that matters. And the biggest news that matters the most this morning is good news because Reddit has filed a new S1 document that indicates that it's making good progress towards going public. And of course, recall that the company is still looking to list on the New York Stock Exchange under the ticker symbol RDDT. Now, if you want more on Reddit's finances, we have an equity shot that you can listen to. I will link to it in the show notes, or if you are feeling adventurous, you can scroll back through your equity feed, but we will surface that for you. So what is in the new IPO filing? Well, Reddit plans to sell about 15.3 million shares while existing shareholders are looking
4:01 Speaker 00 to offload about 6.7 million. There's also a 3.3 million share underwriter option, but really, guys, the biggest news is that Reddit is targeting a per-share price range in its IPO Thirty-one to thirty-four dollars per share. Now, that can change. It can go up, it can go down. But that first window is super critical. And Axios was up before me this morning and ran the numbers. So if you trust Dan Primax's ability to do arithmetic, and I do, Reddit is looking to raise between six-hundred-and-eighty-two and seven-hundred-and-forty-eight million dollars in its IPO at a fully diluted valuation between five-point-eight and six-point-four billion dollars.
4:42 Speaker 00 Prior reporting had indicated that Reddit was considering a valuation of around the five-billion-dollar mark. However, I can definitely see the company getting out closer to six or even seven-billion dollars because Reddit has a massive new revenue stream from licensing its data to AI companies. That fact bakes in growth to the company's future. And I would say, most critically, makes Reddit a way for public market investors to bet on the growth of new AI technology. Why is that? Well, in its filing, Reddit reported that it has racked up, quote, "contract value of two-hundred-and-three-million dollars" from, quote, "certain data licensing arrangements that it landed this year."
5:26 Speaker 00 In other words, licensing Reddit data to AI companies is big business. So if you think AI is going to be big, well, maybe Reddit will too. Next up, Elon Musk says that X, formerly known as Twitter, will open-source Grok, the LLM that it offers subscribers of its most expensive subscription tier at some point this week. The move is notable in that it will bring yet another modern AI model to open-source circles. And because in the background, there's Musk's suit against OpenAI itself, which competes with Grok with its own well-known ChatGPT service. That lawsuit kicked off a lot of debate in the technosphere, with OpenAI backer Vinod Khosla calling the suit "a massive distraction"
6:11 Speaker 00 from the goals of getting to AGI. Now, Musk has a lot of backers in the tech world of his own, and some of them were critical of Khosla's own take, arguing that open-source AI dev is the way to And that OpenAI's more recent, more closed model is perhaps less salubrious for global technology. Now, Kozla, of course, wants OpenAI to be worth as much as possible, period, because he owns a piece of it. But I do think that the open source versus closed source AI debate is good for tech in general, because competing methods of building new technology means more competition, period, which will lead to better products at a lower price. Now, by open sourcing Grok, Musk is adding a little bit more weight to
6:54 Speaker 00 one side of the debate and making it seem a little bit more likely that there are principles and not just pettiness behind his own suit against OpenAI.
7:04 Speaker 00 Next up, let's talk about TikTok, and we have to because there's a bill advancing in Congress to force its parent company ByteDance to divest it or suffer a ban of the short-form video app in the United States. Now, this bill passed the House Energy and Commerce Committee by a vote of 50 to 0, which The Wall Street Journal reports took TikTok by surprise. When's the last time anything passed in Congress by a vote of 50 to 0? That's crazy. Well, there's even more at play. The Journal writes that, quote, "Bobby Kotick, the former chief executive of video game publisher Activision, has expressed interest to ByteDance co-founder Zhang Yiming," according to a person familiar with the situation. Now, he's thinking about taking
7:48 Speaker 00 over TikTok with a big deal, and that would require a whole lot of money. TikTok is worth more than 100 billion, everyone thinks. If it's 100 or 200 billion, I don't know. But Bobby Kotick's idea here would be a potentially massive transaction. Here, we are watching history actually being written, so keep an eye on Congress to understand what might happen. But if TikTok does have to be sold by ByteDance, a lot of people are going to want to make a chunk of money on that deal and perhaps even become its brand-new, shiny, American CEO.
8:22 Speaker 00 Scooting along, TechCrunch reports that Techstars' $80 million Advancing Cities Fund, which was raised through JP Morgan's private bank platform, may not make it to a second fund. Techstars has been investing from the vehicle since 2022 with a goal to back more than 400 companies founded by underrepresented founders, and that led to the creation of Techstars programs in at least eight cities, including Oakland, Atlanta, and Miami. But by late 2023, JP Morgan was a little bit less engaged than before. Why is that? Well, TechCrunch reports that the diversity-focused investing effort didn't hit its target investing goals, at least according to
9:06 Speaker 00 one definition of diversity. The background to all of this is that capital raised by black founders is incredibly small compared to the larger investing flows that startups tap. So if the Advancing Cities Fund fails to make it to its sophomore investing vehicle, that could limit those capital flows even more. Techstars, of course, has been rebuilding its org in recent months after missing its revenue goals last year, leading to layoffs.
9:34 Speaker 00 Moving on across the pond, UK-based Griffin Bank, an API-driven banking-as-a-service, or BaaS, platform, just obtained a banking license roughly one year after starting the application process, which is pretty quick. Now, the goal here is not to open accounts for individuals, but instead to let Griffin customers offer their own users that ability, essentially making Griffin Bank's overall service more feature-rich. The good news on the banking license front led to Griffin closing a $24 million Series A extension, which is good news for fintech, which has seen its own luster dim in the eyes of investors in recent years.
10:15 Speaker 00 And over on the site, my dear friend Ron Miller interviewed Denise Dresser, Slack's new CEO, about what she plans to do as the head of the well-known corporate chat product that sold to Salesforce years ago. TechCrunch reports that Slack's growth has slowed in recent quarters, giving Dresser a double challenge: one, running a big business inside of a far larger corporate home, and two, getting growth back on track in a more challenging software as sales market than Slack enjoyed back in its early days.
10:49 Speaker 00 And that is our show for this fine Monday morning. Of course, we are Equity Pod over on X and Threads. And if you want even more from me, well, I'm Alex over on X. Equity has two sister shows, Chain Reaction on all things crypto and Found, talking to founders about how they built what they did. We'll talk to you soon, no later than Wednesday morning. Bye.
11:12 Speaker 00 Equity is hosted by myself, 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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