Pod Insights Equity Podcast OpenAI plans new Tokyo office as Tesla layoffs arrive About this episode It’s only Monday morning, but it already feels like Thursday given the sheer amount of news that’s flowing in.
We have two critical headlines for you today:
OpenAI is planning to open an office in Tokyo and launch a new GPT-4 model for the Japanese language. The U. S., EU, and China are all racing for leadership in AI, and OpenAI’s foray into Japan could expand the list of leading blocs and nations.
Tesla is cutting more than 10% of its total global workforce. CEO Elon Musk told employees in an internal email that the cuts were aimed at eliminating role duplications, but the company has been seeing its sales start to slow down, and some concern around waning demand for EVs could be playing a part in the decision to slash costs.
There’s lots more going on: The price ranges for Rubrik’s IPO have been leaked; ShareChat has suffered a valuation beheading haircut, and global smartphone sales are picking up again. Hit play to catch up on what’s going to be the talk of Tech Twitter this week.
We'll be back Wednesday with our mid-week startup and venture highlights!
Equity is TechCrunch’s flagship podcast and posts every Monday, Wednesday and Friday. You can subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts.
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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. Today is April 15th, 2024. Welcome to our Monday show, where we take a look back at the weekend and peek at the week that is to come. Today on the podcast for you, I have stocks and crypto, including the upcoming Bitcoin halving, an IPO update for a rubric for all you late-stage startup fans out there, OpenAI going to Japan, rising smartphone sales, layoffs at Tesla, and ShareChat's new valuation. It's a mixed bag this morning, but a great set of stories from all around the world. Let's go.
0:54 Speaker 00 Let's start with a look at the world of money, and that means the stock market. Shares are lower in Asia, largely higher in Europe, and set to rise at the open here in the United States. Now, reading the financial press this morning, the chance of war between Israel and Iran is naturally clouding sentiment, but even given those pressures, shares are rising in many places. On the earnings front, good news. There's lots of banking earnings to start the week, which we don't have to care about, but then later on, we'll hear from ASML on Wednesday and TSMC on Thursday. So if you care a lot about the state of the semiconductor industry, well, good data is coming your way. Elsewhere, Netflix and Nokia
1:38 Speaker 00 should drop their numbers later this week. Things that have been more dynamic over in crypto, where we have seen a sell-off in the last week. Bitcoin is off about 8.6% in the last seven days to $66,000, and Ethereum is off about 10.8% in the last week to $3.2,000. Both recovered a little bit in the last 24 hours, but smaller tokens took even more damage. I've seen lots of declines in the 15% plus range over the last week, so. If you are holding alts hugs, I'm sorry. I think this is a sort of market reset. So there has been speculation that tensions in the Middle East caused folks to sell in that region.
2:21 Speaker 00 But with every Bitcoin price movement, it's always hard to tell if there is a single cause. There is big news coming up, though, and that is that the next Bitcoin halving should happen in just over four days. According to Nice Hash data, this happens every couple of years and the amount of Bitcoin that is released to miners for running the Bitcoin network is cut in half. Hence the term the halving. Bloomberg reports that the upcoming halving of newly minted Bitcoin will cost miners around $10 billion in yearly revenue, which could lead to short term selling pressure, though we'll have to see. Many in the world of crypto are expecting a price bump from the halving, but that has yet to manifest precisely as expected.
3:06 Speaker 00 Next up, an IPO update, my favorite type of news. Reuters reports that Rubrik is planning to sell about 23 million shares at a price of between $28 and $31 apiece in its upcoming public offering. That means the company could raise up to $713 million in its debut. And a source told Reuters that, quote, "At the upper end of the range, Rubrik would be valued at about 5.4 billion." So we, of course, have dug into this IPO and that leads us to a question. Is that valuation a lot? Is it expensive? So the company had about $628 million in revenue in its last fiscal year, the 12 months
3:49 Speaker 00 ending this January, and that would value the company at its newly discussed IPO valuation at about 8.6 times its trailing revenues. So how does that fit into the market? It's not a complete surprise. The company did have slow total revenue growth in its most recent fiscal year, but at the same time, did do a very good job on its project to convert its business to a subscription service that always takes a couple of years. There it is doing better. Subscription ARR. At Rubrik grew forty seven percent in its most recent fiscal year. And if you cross that with subscription dollar based net retention of about one hundred and thirty three percent, you can see a faster growth path ahead for the company.
4:33 Speaker 00 However, at the same time, Rubrik is super unprofitable and posted a nearly ninety eight million dollar net loss in its most recent quarter, which I believe is the highest quarterly net loss we have seen from it. So put another way, Rubrik is going to test the waters for slower growing, unprofitable tech companies that also have a growth story to tell, subscription economics and improving gross margins. So some signals point up, some point down. It's going to be a very fun one to watch.
5:08 Speaker 00 Hop on a jet. We're going to Japan where OpenAI is expanding with the opening of a new Tokyo office and plans for a GPT four model optimized specifically for the Japanese language. This is all according to TechRunch. The move here is significant for a few reasons. One, it underscores the opportunity that OpenAI sees in Japan. And it also highlights how AI models will likely need to localize on different languages as they expand. Now, OpenAI does bring a lot of name recognition, so the fact that it is going to Japan is a big deal. But it will also face local competition.
5:49 Speaker 00 SoftBank is of course also hoping to build and capitalize on the current enterprise race for AI. It's built a thing called SB Intuitions, which wants to build large language models or LLMs and generative AI services natively in Japanese. Now, why is Japan a possibly big market for AI? Well, Japan is a large, wealthy, tech-friendly nation, but also it's a place where manufacturing and robotics in particular are a big deal. Robots plus AI could be a natural fit, and that makes this news even more important. Now, the EU, the US, and China are kind of the big AI groups at the moment from where I sit.
6:31 Speaker 00 But that doesn't mean that other wealthy and high-tech nations don't want to get into the mix. So this is not the last time we're going to see news of this sort.
6:43 Speaker 00 Recent price cuts at Tesla are hardly the only thing getting slashed at the US electric car company. So after dropping the prices of unsold Model Y SUVs in the US by thousands of dollars earlier this month, in an attempt to clear out a backlog, the company is now also looking to get smaller itself. According to an email that Elon Musk sent out to the Electrek reported on this morning, Tesla is cutting, quote, "its headcount by more than 10% globally." And the move comes due to, quote, "duplication of roles and job functions in certain areas," and that's according to the letter which was signed by Elon Musk.
7:23 Speaker 00 Shares of Tesla are off 1.5% in pre-market trading this morning in the wake of the news. Tesla is an electric car company that has defied the odds. It managed to pull off its amazing strategy of building consistently cheaper and more EVs over time. It helped develop critical charging infra for consumer EVs. However, despite a place at the tip of the spear, it is currently seeing increasingly sophisticated competition, which is in turn dinging its growth story and thus endangering its valuation, which still towers over the worth of its rivals. It'll be interesting to see how the market takes this growth hiccup
8:05 Speaker 00 at Tesla, which appears to be set to last longer than just a few quarters.
8:12 Speaker 00 Now, is it possible for there to be good news for smartphone makers in the current economy? Yep, it's possible in 2024. According to IDC data, quote, "global smartphone shipments increased 7.8% year over year to 289.4 million units in the first quarter of 2024." That is very, very interesting and is a faster growth rate than I expected to see or hear to start the year. However, I know what you care about a lot more than the total numbers is who is leading inside of the figures. So market share leaders for you. Samsung, 20.8%.
8:52 Speaker 00 In the first quarter, Apple 17.3%, Xiaomi 14.1%, Transion 9.9%, and then Oppo 8.7. Now Xiaomi and Transion gained the most share in the last year, while Samsung and Apple saw their market share and shipments fall compared to Q1 of last year. And if you just listened to all that and you're like Samsung, yeah, Apple, yeah, Xiaomi, yeah, Transion, who the hell is that? Well, I had the same response. It turns out Transion is a Chinese smartphone company that does a lot of business in Africa and has multiple sub-brands. There you go. They have 10% global market share. We should know more about them.
9:37 Speaker 00 Moving towards a close, Sharechat's valuation has fallen to around $2 billion from nearly $5 billion following a new funding round, a source familiar with the situation told TechCrunch. That is a very steep decline in value for the nine-year-old Indian startup that boasts over 400 million users in the South Asian market. What does it do? It operates a popular social network that supports a dozen Indian languages as well as a short-form video app. It just raised $49 million in a convertible round, did not disclose the valuation, and strongly denied that its new price was below $2 billion, asserting that there was, quote, "no valuation
10:21 Speaker 00 attached to the round." So what gives here? Is it worth $2 billion now or is there no valuation? Well, what we know is that this debt round will convert to equity at a valuation below $2 billion when the company raises next. So yes, technically it's not price, but also we know that the capital going in is buying future shares at a roughly $2 billion valuation. So everyone here is right, and this is also a lesson in how you deny the news, even if it is accurate. What matters is that a social media company is showing us the new valuation climate for startups in that space and also showing how a unicorn can raise more capital and keep operating even if it has to take a price haircut.
11:06 Speaker 00 Won't be the last company this year to make that move.
11:11 Speaker 00 All right, that is our show for this lovely Monday morning. But don't forget, we also put out a video each and every Monday going over one of the stories from the show. If you want to catch that, make sure to follow us over on X and Threads where we tweet and thread under the handle @EquityPod. If you want more from me, I am Alex over on X. Don't forget as well, we have a sister show called Found, digging into all of those founder stories about how people built what they did. We're back on Wednesday with our startup update. I'm Alex, goodbye.
11:41 Speaker 00 Equity is hosted by myself, Alex Wilhelm, and TechCrunch Senior Reporter, Mary Ann Azvedo. We are produced by Teresa Loconsolo 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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