Pod Insights Equity Podcast Startups are hiring fewer workers and paying out less in equity comp About this episode This is our Wednesday episode, in which we dig into critical startup news to stay abreast of what founders and venture capitalists are working on.
Today on the podcast, we got through the following:
New data from Carta digging into startup compensation, and how it is changing;
How one startup is profiting off death, but in a way that is actually great;
Bear Robotics, and its killer new round for cute serving robots;
New stuff from BlueSky (all about moderation and choosing one’s own adventure) and Brave (getting a boost from the EU’s DMA);
And finally, some venture capital news that was a legit surprise.
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 where we unpack the numbers and the nuance behind the headlines. This is Alex and today is March 13th, 2024, and welcome to our Wednesday show. This is when we dig into critical startup and venture capital stories from the week thus far, and we have an absolutely packed show for you today. On the show, notes on startup comp for workers and how those numbers are changing, then how one startup is profiting off of death, but in a way that's actually great, I promise it will make sense, hear me out. Then Bear Robotics and its killer new round for cute robots, new stuff from Blue Sky and Brave, and then we'll wrap with some venture
0:53 Speaker 00 capital news that actually took us by surprise. Let's go.
0:59 Speaker 00 Starting somewhere a little bit different today, let's talk about startup employees before we get into all the startup news proper. Now, I have a bunch of data from KARDA that tells us quite a lot about the state of compensation for startup employees. Roll with me here, there are going to be a couple of numbers, but I promise this is going to be easy to understand. So first of all, companies that use KARDA, and that's a pretty big subset of the overall startup population, hired about 523,000 people in 2022. And notably, that was pretty much the same number as were hired in 2021, when it was 525,000. However, last
1:39 Speaker 00 year, 2023, that fell to about 268,000, a reduction of, call it half, in a single year's time. So the era of efficiency really did do a number on startup hiring. And when we see demand fall but supply stays static, well, we expect prices to come down. So did the value of labor diminish? The answer is yes. And one way that you can see that is how equity packages for startup employees have contracted. The key data point here-
2:10 Speaker 00 Is that between November of 2022 and September of 2023, equity comp declined by about 37% according to Carta. Now, since then, numbers have largely stabilized. The change from September of 2023 to January of 24 was actually an increase of 0.2% in average equity issued to new hires. But still, it's down more than a third, and that does appear to be pretty sticky. So it's more of a buyer's market for tech labor at the moment, which we kind of knew, but it's good to get the data on how that's impacting the average person out there. Now, one last data point, 32% or just about a third
2:50 Speaker 00 of 2022 era hires on Carta's data have already been out of that job. That's kind of what I expected. 2022 is a long time ago, and a lot has changed since then. But here's the number that really threw me. 23% of 2023 hires on Carta's platform are also already out of those jobs. So quits, firings, layoffs, not clear, but it does really go to show that the layoff era didn't just impact staff that had been around for a long time. Recent hires also got caught in the churn. But let's talk about something uplifting. Death, taxes, and dealing with paperwork, or what I consider the three immutable facts of life.
3:34 Speaker 00 I'm kind of kidding, but there is a startup out there today that does want to help people with the deaths of loved ones and taking care of all of their affairs. Just given the topic, I was a little skeptical of the startup called Empathy, which just put together a $47 million round. But frankly, as Ingrid London writes for TechCrunch, death's inevitability doesn't make it any less awful. It just doesn't. Not the least of which, because while loved ones are grieving, they also have to handle a dizzy number of practical tasks. I'm thinking organizing funerals and settling finances. It's a lot of stuff to do. Now, Empathy has a way to help, and it was initially a B to C company, but it has since pivoted to more of a B to B to C.
4:20 Speaker 00 Model essentially offering its services via policies from employers and insurers. And that's now more than 99% of its business today. So think of it more as a perk, if you will, versus something that you go out and buy itself. So what does empathy offer people who have lost a loved one? Well, the company's platform incorporates a mixture of AI and human guides to help people with all the different aspects of the bereavement process. And it's a pretty long list, it's pretty wide, talking about counseling services, AI to help write obituaries, shutting down all the cloud accounts from the deceased, dealing with complex financial affairs. It's a lot of stuff and some help probably isn't not welcome.
5:02 Speaker 00 I think especially for folks who are dealing with death and are alone or just don't have a lot of family support, what empathy offers could be, in fact, kind of lovely. If you've dealt with death, you know how complicated it is. So here's a company that wants to make that just a little bit less onerous. Let's change tone here a little bit and talk about cute robots. Now, LG is no longer a household name in smartphones, but it still is investing quite a lot in gadgets that humans will interact with. And in that vein, the company confirmed a $60 million investment into Bear Robotics, a California-based startup that makes artificial intelligence-powered server robots. What does that mean? Think of them as kind of autonomous tray towers on wheels
5:46 Speaker 00 that are meant to replace waiters in restaurants and other similar venues. With this large check, LG is now Bear's largest shareholder. Now, why is it called Bear if the company isn't making robotic bears? My guess is that if you look at the California state flag, you'll see what the mascot is of the state, where Bear is based, and then it kind of makes sense. Now, if you go back in time when Bear last raised in 2022, it was valued at just over $490 million post-money. So I presume that's gone up at least 60 million in this round if it was flat, or maybe more if it was an up round. Today, the SoftBank-backed startup operates its indoor delivery robots in the US.
6:30 Speaker 00 And Japan today, and these serving robots, which are designed, of course, to help deliver food to restaurant customers, have also been deployed in other settings successfully. Kind of cool. I have seen similar robots before, and I have to say, as you can tell from my tone, I pretty much love them. I don't know if the Butler robotic Butler is still around, but I got to play with it back in 2014, and it ruled. Here's to more cute robots, and here's to more robots taking over the tasks that humans didn't want to do anyways.
7:01 Speaker 00 Put down the hardware, pick up some software. Let's talk about Blue Sky. Twitter alt Blue Sky is sticking with having the best brand names in the game with its latest move to open source ozone, its tool that allows individuals and teams collaboratively to review and label content on the network. So what does that mean? What teams? What individuals? Well, recall that Blue Sky is a distributed or decentralized social network, so you can kind of choose your own adventure over there, similar to how Mastodon works, if I am grokking it correctly. Now, Blue Sky says this change will give users, quote, unprecedented control over their social media experience.
7:42 Speaker 00 Techbench writes that the company's vision for moderation is a kind of stackable ecosystem of services, which is why it's going to start allowing users to install filters from independent moderation services on top of what Blue Sky itself already requires. And so as a result, users will be able to create a customized experience tailored to their own preferences. I think this is pretty cool, frankly, and honestly, probably the best way for free speech to remain as free as possible online without allowing trolls to run the place. What do I mean by that? Well, Blue Sky can set a very low bar for moderation, and then allow individual users to raise that bar if they want. You can have as much or as little control as you'd like.
8:27 Speaker 00 Unlike centralized platforms, it really does feel like the user is in the hot seat here, and that's great because it moves the onus of responsibility a little bit off of Blue Sky to make every single call about content, and instead says, hey, what do you want? Build that.
8:43 Speaker 00 Sticking to the theme of smaller upstart companies taking on the giants, let's talk about Brave. It's a browser company that is competing for market share against variously Apple and Alphabet and Microsoft. That's not an easy task. However, the company just got a boost thanks to changes that Apple made to its iOS operating system in response to the European Digital Markets Act, or DMA. Now, Bleeping Computer reports that a new screen that's part of this new version of iOS that asks users to choose their default browser from a list of options has sent daily installs of the Brave browser from 7,500 to 8,000 a day to more than 11,000
9:26 Speaker 00 per day very, very quickly. For a startup, that is a big set of gains, and if it proves sticky for Brave, could really grow its market share. Hey, it turns out that defaults matter. Who would have thought?
9:42 Speaker 00 To close out, a little venture capital news, and that is that Social Capital has booted some key staff. Now, Social Capital is the venture capital firm led by Chamath Poliopedia, and it has fired two partners. And over on X, the firm wrote that it has, quote, "terminated the employment of two of its employees due to employee-specific circumstances," and that it had, quote, "no further comments at this time." Now, that's a bold comms strategy, but hey, at least the firm was upfront about its actions. Now, Bloomberg reports that Social Capital has hired an external law firm to dig into the matter, whatever it is, so that sounds reasonably serious. Now, Bloomberg also reports
10:27 Speaker 00 that it appears that Grok is at the center of this issue. Grok is a hardware and cloud company for AI models using what it calls an "LPU inference engine," with "LPU" standing for "language processing unit." But wait, you say, "Grok, isn't that that thing that Elon Musk made for Twitter?" Well, kind of, but we're talking about Grok with a Q, whereas Elon Musk's company is called Grok with a K, so they're different, although they are pronounced the same. We will learn more about this in time, but big changes over at Social Capital.
11:03 Speaker 00 All right, that's all the time we have, but before you go, please join me in wishing Mary Anne, our longtime co-host, our dear friend, and one of my favorite humans alive, a happy birthday tomorrow. We don't have a show coming out on Thursday, so I'm saying it today. She is off this week, but we wish her the best because she is tremendous. Now, if you need more from Equity between now and when we are back on Friday morning, we are EquityPod over on X and Threads and TechCrunchPods on TikTok, at least until that gets banned. I'm Alex, this is Equity. We'll talk to you soon. Bye.
11:37 Speaker 00 Equity is hosted by myself, Alex Wilhelm, and TechCrunch Senior Reporter, Mary Anne 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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