Welcome to Startups Weekly — Haje’s weekly recap of everything you can’t miss from the world of startups. Sign up here to get it in your inbox every Friday.
Musk’s 10-month-old baby, xAI, is closing in on a whoppin’ $6 billion funding round. The social network X, née Twitter — also part of Elon’s tech family — is already a shareholder. The deal was initially supposed to raise just $3 billion, but then everybody wanted in and the price tag bumped. Investors include Musk’s BFFs from Sequoia Capital, Future Ventures and some other chums who may also be joining this AI party — it’s all very Mean Girls “You can’t sit with us” at this point. The thing that really frustrates me, though, is how smug Musk probably is about all of this. It’s fine, I’m just bitter that none of my startups ever raised $6 million — never mind three orders of magnitude more.
Sure, it may be on the eve of getting banished from the U.S. altogether (although, I hasten to add, the previous administration tried that, too, and TikTok’s still here, going strong), but TikTok may be sneaky in more ways than one. Word on the street (or should we say web?) is that TikTok is playing a bit of hide-and-seek with Apple. Instead of giving Apple its 30% cut for in-app purchases, it appears they’re trying to guide users into buying their digital tipping coins directly from their website. But shh … it’s a secret! The feature is apparently only visible to certain users (lookin’ at you, high spenders). Will Apple give them the boot like they did Fortnite? Only time will tell.
Your founding team sucks: In a brutally honest chat with me at TechCrunch Early Stage, Tom Blomfield, ex-Monzo Bank founder and current Y Combinator partner, spilled the tea on venture capitalist decision-making. He says investors are looking for unicorns that can deliver 1,000x returns — anything less is an epic fail. They’re not just judging your business model or product. No, they’re eyeing YOU up to see if you have what it takes to make their cash multiply like rabbits.
Most interesting startup stories from the week
Hello? Is that iPhone? Why are you so quiet today? Image Credits: Vectorian / Getty Images
Oh, EyeEm, you sly dog! The once “Insta-challenger” Berlin-based photo-sharing app that nearly went belly-up last year has found a new way to milk its users — by training future AI overlords! Yup, they’re selling your snaps to train machine-learning models. Users were graciously given 30 days to pack up their digital photo albums and scram or forever hold their peace (and surrender their photos). Are you opting out, though? Not as easy as swiping left on Tinder — you need to manually delete your pictures. But wait for it … the real kicker is if you decide in a fit of rage to delete your account altogether, no more payouts for you. Womp-womp, sad trombone.
It’s like “Game of Thrones” but in the tech world. Welcome to Techstars’ latest season, where CEO Maëlle Gavet is fighting battles on all fronts within her kingdom! She’s got a bank collapse, an international accelerator program shutdown, and dodgy LinkedIn posts. And that’s just for starters. Throw in the Swedish labor law conundrums and you’ve got more drama than an episode of The Real Housefounders. As if that wasn’t enough, she’s also dealing with a company-wide revolt against her reign, as well as her cost-cutting measures leading to a toxic work culture, and hiring folks with as much startup experience as my pet goldfish. (It died back in 2007. RIP, Knee-mo.) Stay tuned for this gripping saga of power struggles, corporate drama, questionable financials and strategizing — I can’t guarantee dragons or White Walkers but there will be plenty of fire-breathing and icy glares!
A couple of fun exits
Mark Cuban wrote a check to Truffle Shuffle. Nobody will comment on whether it was a good exit for the company. Image Credits: Christopher Willard / ABC via Getty Images
Rubrik, the cybersecurity company, decided to take a leisurely stroll onto Wall Street this week and BAM! Shares shot up 16% on their public debut. They were initially priced at $32 per share (just a smidge above their target range) and settled down to a cushy $37 by end of trading. Now, that’s one way to make an entrance! This little outing bumped their valuation from $3.5 billion in 2019 to a dizzying $6.6 billion today. Not bad for a company that’s not even turning profits yet! Their secret sauce? Subscription revenue — it went from 73% to 91% in just a year. But, hey, who needs profitability when you’ve got stickiness, right? While this may seem like the start of an IPO party parade with Reddit and Ibotta leading the conga line, potential interest rate cuts could play party pooper soon enough. No doubt, Greylock is giggling maniacally all the way to the bank.
ButcherBox, the meat-obsessed startup that bootstrapped its way to a juicy $600 million revenue, just sunk its teeth into “Shark Tank” darling Truffle Shuffle. The acquisition is less about gobbling up competition and more about helping ButcherBox’s customers stop burning their steaks. Truffle Shuffle was born out of sheer desperation when founders Jason McKinney and Tyler Vorce found themselves with $20,000 worth of truffles but no restaurants to sell them to, thanks to our dear friend COVID-19.
Most interesting fundraises this week
RevenueCat founders Miguel Carranza (L) and Jacob Eiting (R). Image Credits: RevenueCat
- Here, kitty, kitty: RevenueCat, the fairy godmother of app subscriptions, has just landed a cool $12 million to expand its magic kingdom to the web. Purr-fect. It powers 30,000 apps and is handling over $2 billion in annual subscriptions. Noice.
- Like a flip phone, but house-ier: Step right up, folks! Backflip just snagged $15 million to help real estate investors flip houses. Because why sweat it out doing old-fashioned physical labor when you can just toss some cash at the problem and watch your property’s value do the gymnastics?
- Sure, I think AI needs some more dollars: The OpenAI Startup Fund is at it again, quietly raking in $15 million from two investors who clearly enjoy their anonymity (hmmmmmm). Ian Hathaway, the fund’s manager and sole partner — because why share the fun — was named in the paperwork. Remember last year when eyebrows were raised after it came out that OpenAI CEO Sam Altman had all the say-so? They said it was “temporary,” but that stirred up some drama!
Other unmissable TechCrunch stories …
Bad news for healthcare privacy this week. UnitedHealthcare CEO says “maybe a third” of U.S. citizens were affected by their recent hack, and Kaiser pissed away a bunch of customer data as well. Gee, thanks, you clowns.
Anyway. Here’s a few other stories that are fun. Maybe. Or at least interesting. Or maybe they just got a metric crapton of traffic this week. Who knows what my selection criteria is, but … just read the stories, okay?
- The cloud is, well, making it rain: Google Cloud is rolling in the dough. The business unit just outshone Wall Street’s expectations with a whopping 28% increase, making it rain thanks to an insatiable demand for AI tools that cloud infrastructure supports.
- It’s all “go go to” … Noooo, not that way!: Welcome to another episode of “Autopilot Antics” starring Tesla and the National Highway Traffic Safety Administration (NHTSA)! After a thrilling investigation into hundreds of crashes where drivers treated Autopilot like a seasoned chauffeur instead of an assist system, the NHTSA closed the case with 13 tragic, fatal plot twists.
- I’m just padding this part of the newsletter: iPadding, that is. Just when you thought Apple might have had its fill of shiny product reveals, they’ve sneakily scheduled another event. Rumor has it we’re getting a new iPad Pro and Air, an updated Apple Pencil and keyboard case combo. I’ll be there, reporting alongside the hardware team — stay tuned.
- The soup is terrible and the portions are tiny (ahem): Meta’s new AI chatbot, Llama 3, has been let loose on the world. It’s like that party guest who regurgitates random web search results without excelling at anything particular. But hey, it’s free!
- I wish this had existed when I was learnding the engelish: Google is once again proving it’s not just for stalking your exes and settling bar trivia debates. They’re testing a new feature called “Speaking practice” that uses AI to help users get chatty in English, and no, it doesn’t involve talking about the weather or asking where the library is.