Why some VCs are pulling back from Europe, Google’s AI push, and who is the CEO of Byju’s?

This is our Monday show, which looks back at the weekend and ahead to the week. We are back bright and early this week, but we also had an extra episode this weekend digging into the Reddit IPO; you can find that here. On the pod this morning, here’s what we got into: Stocks are mixed around the world as crypto prices gyrate; it’s a big earnings week including data from Workday, Zoom, Unity, Coupang, Klaviyo, Salesforce, Snowflake, Okta, and Duolingo among other names. Google, and its work to bring Gemini to a host of hardware endpoints. How U. S-.based venture capitalists are taking on the European market — or not. Interview Kickstart is the latest startup to self-fund for a long time before taking on venture capital. In its case that meant a $10 million round. And to close, who is the CEO of Byju’s? For episode transcripts and more, head to Equity’s Simplecast website. Equity drops at 7 a.m. PT every Monday, Wednesday and Friday, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts. TechCrunch also has a great show on crypto, a show that interviews founders and more! 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. Learn more about your ad choices. Visit megaphone.fm/adchoices

• 0:10Speaker 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 our Monday show. Today is February 26, 2024, and today we're going to take a look back at the weekend and a look ahead at the week that is to come. Before we do that, however, we did drop a short episode this Saturday on Reddit's IPO. So if you want to know the key numbers there and what caught our eye, we have that for you. Just go back one episode. Don't miss it. It's worth your time. On the show today, we have stocks, crypto and earnings. Google bringing AI everywhere. American investors pulling back from Europe. How startup interview Kickstarter rode the AI wave to a fascinating new round.

• 0:56Speaker 00

  And really, who is the CEO of Baidu's? Let's go.

• 1:02Speaker 00

  Let's start with my favorite thing, which means money, and that means the stock market. Over in Asia, stocks are mixed today, though a key Japanese index did reach an all time high. Shares are lower over in Europe and they are flat in the US in pre-market trading. But we do have a very busy earnings week ahead of us, including a number of SaaS companies, which often have an offset fiscal calendar. Anyways, on Monday, we are going to hear from Workday and Zoom, Unity and Grindr. Of that group, I think Unity is going to be the most interesting. Tuesday brings us Coupon, Splunk, eBay, Klaviyo, Jamf, Rocket Lab, Bumble, Compass, Lemonade and Nextdoor.

• 1:46Speaker 00

  Klaviyo, of course, was a 2023 IPO. Rocket Lab involves space and Lemonade and Shure Tech. I'm always very curious there. Then Wednesday, Salesforce, Snowflake, Baidu, HP, Nutanix, Okta, Pure Storage, Duolingo, Squarespace, C3.ai, Tabula and Zora. So that's CRM, storage, identity, consumer ed tech, web hosting, AI and subscription. Wednesday is going to be busy. Then Thursday, thankfully, just four names, NetEase, Zscaler, HPE and Polestar.

• 2:23Speaker 00

  From stocks to crypto, let's talk about what's going on in decentralized land. First of all, price movements have been mixed in the last week. Bitcoin is off 2.3% to just about $51,000, while Ethereum's token is up 5% to just over 3K. Elsewhere, we have seen some sharper and contrasting price movements, including Binance's token gaining 10% in the last week, while Solana's own has been off 10% in the last week. But something that I care about a whole lot more than just the ups and downs of crypto tokens prices is what's going on with stablecoins. And USDC, the main rival to Tether, has seen its total units in circulation begin to rise again,

• 3:07Speaker 00

  key ahead of that company's hoped-for or anticipated IPO. Elsewhere, spot volumes do remain higher than in most of 2023, which is bullish for Coinbase and other major exchanges.

• 3:21Speaker 00

  Let's talk about big news that matters and what matters more in the news today than AI. And to talk about AI, we have to talk about Google this morning. Now, you may recall that there was criticism of Google's new Gemini AI model's image creation abilities last week, but that is not slowing Google down for bringing its new AI model to a host of devices. TechCrunch reports that at MWC, or Mobile World Congress, Google detailed a "new set of features for phones, cars, and wearables using Gemini to craft messages, AI-generated captions for images, summarizing texts through AI for Android Auto, along with access to passes on wear."

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  Now, I think that what matters here is less the individual products that are going to get a dose of AI, but more the fact that the list is so broad. Wherever tech companies have a surface that touches customers or users, they seem hell-bent today on pushing AI into the mix. Why? Because platform shifts are rare, and mobile is deep into its maturity cycle. Smartphone sales are flat, and there was only so much more money you can rip out of mobile. Internet usage and apps today. So new things are hot because they may ignite growth or at least allow for market share capture. Now, we have seen similar moves by Microsoft to bring AI

• 4:46Speaker 00

  to its OS, software and web services, while other big tech shops are bringing AI to their hardware. Now we need to see what sort of consumer and customer reaction the new AI stuff that has been announced lately will engender, and if it actually changes the market landscape or simply becomes the new table stakes. That said, everyone's hoping that they will be the unique winners in the AI wars. Next up, how do you break into Europe? It turns out getting in and doing well is a little bit harder than just booking a first-class international ticket. A couple of years ago, setting up shop in Europe was the standard move for North American VCs. From Omair's to Lightspeed to Bessemer Venture Partners,

• 5:28Speaker 00

  the Spotify IPO seemed to wake up North American VCs to Europe's potential to create outsized exits. And once you know there's profit somewhere, well, you get into it. VCs wanted to make sure they didn't miss out on this next wave. But the reality has turned out to be a little bit more difficult than just opening an office in London and getting to work. Becca Skutech writes that big names like Coatoo and Omair's formally pulled out of the region in recent months, and venture funds that have remained in Europe from North America are significantly less active than they were before. In fact, according to PitchBook data, the overall value of European deals with at least

• 6:07Speaker 00

  one US investor declined 57% in 2023 compared to 22, while deal count was off 39%. In comparison, or to contrast, overall deal value in Europe declined 46% last year, while deal volume was off 31% over the same timeframe. So why this faster pullback from US VCs? Well, when in doubt, do what you know best. And for VCs, that's always their home market. But TechCrunch reports that there's more at foot here. Investing in Europe means lots of different languages and some Sometimes even different currencies and this can make investing in say Romania and Italy a lot harder than investing in say both Texas and California.

• 6:52Speaker 00

  Becca also writes that startup networks look different in Europe, so there's quite a lot at play here. But there's even more reasons why it's not simple to just go from US to EU across the pond on a jet and do as well as you were doing at home. Stem Tammkevi, a partner at Estonian venture fund Plural, said that early-stage startups in Europe used to look to the US for funding by default, but that's not the case anymore. Quote, "Over the last decade, the early-stage investing has shifted way more toward local players. Eighty percent of capital deployed in Europe is European." That's good for local currency recycling, but not great if you're an LP in a US fund that was hoping to make big bucks over in Europe.

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  One of my favorite stories in the world of startups and private companies more generally is the company that starts life, funds itself, makes money for a long time, and then suddenly, later in its midlife, it raises a big amount of venture capital. It's always curious to know why that company made that choice and how it managed to be profitable for so long. Today, we have one such story. It involves San Francisco-based Interview Kickstart, a profitable startup that assists tech pros to acquire career-advancing skills, and it just put together $10 million in its first funding round from Bloom Ventures. Now, the company was founded back in 2014, a decade ago, but made money, so it didn't actually have to raise capital. Why raise now?

• 8:21Speaker 00

  Well, TechCrunch reports that 2023 was a pivotal year for Interview Kickstart after it found lots of adoption for its newly-launched AI vertical aimed at engineers looking to switch to advanced roles. Or the way that I would summarize that, "The AI boom is lifting more boats than just foundation model companies." More or less, it seems that developers know that having AI skills is the way to advance their careers today. So what Interview Kickstart has on offer is resonating in market. It's a great time for the company to put capital on the books with historical profits, recent growth and good in-market traction with something involving AI. I presume that Interview Kickstart got a price that it really liked in the deal.

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  What will it use the funds for? Well, the new capital will be put to use to invest in its offerings and to expand its approach at leveling and switching up curriculums to more domains, including product management and design.

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  So who is the CEO of Baiju's? It depends on who you ask. Investors, Process Ventures and Peak 15 Ventures, among others, recently held an emergency meeting and voted to remove Baiju Ravindran as CEO, among other changes to the company's governance. Ah, ah, ah, not so, says Ravindran, who told employees that the investor group lacked decorum, among other issues that could undercut the binding impact of their vote. Still, it's, uh, it's not good when a company is fighting with its investors over control and leadership. In fact, given how loath private market investors are to cause drama with their portfolio CEOs, we essentially nearly never see this. More or less, it's considered a super negative signal for other founders,

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  making it harder for the activist private market investor to get future deal flow. That's why things have to get wild for founders and backers to beef, let alone do it publicly, let alone in this sort of open war that we're seeing at the Indian ad tech giant. And that is probably why we're seeing this. Why? Because Baiju's was once worth $22 billion and may now be worth effectively zero in pre-money terms. So investors don't want to get wiped out. Ravindran wants to retain control and no one is happy. This is just one more chapter of the startup hangover from 2021.

• 10:45Speaker 00

  And that is our show for this lovely Monday morning. Of course, if you need even more equity, we are EquityPod over on X and Threads, and I am Alex over on X if you want to say hello. And I am very lucky to report that we have two sister shows here on the TechCrunch Podcast Network, including Chain Reaction on all things cryptocurrency, and Found, talking to founders about how they built what they did. We'll talk to you soon. Equity is back on Wednesday and Friday. And don't forget, we have that extra special Reddit episode just for you already in your podcast feed. Give it a listen. We'll talk to you soon. Bye.

• 11:18Speaker 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 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.