Welcome to Startups Weekly, an in-depth look at this week’s startup news and trends. To get this in your inbox, Subscribe here.
Hi friends. it’s a Kyle, to fill in that number for Natasha, who is taking a much-needed break from the news cycle (and the scene that has become Twitter). Although it’s my first Startups Weekly column, you’ve probably seen me on TC here and there, covering mainly projects, AI, and enterprise related items. It’s really gratifying to collect this week’s startup news — in part because it’s not all about musk hoaxes.
But before we collectively wrap up the weekend, let’s recap the week, which has been marked by the US midterm elections
As obnoxious and sad the election cycle in the United States has become, the outcome always has major implications for the tech industry. US-based chip manufacturers holding on to hope Relief as the United States increasingly separates from China. Crypto companies are waiting Regulations to create protective barriers for so-called stablecoins and settle court cases. The biggest tech giants are bracing for a possible last-ditch effort by the White House to pass antitrust legislation — pending, of course, the post-midterm political climate.
Needless to say, the stakes are high. Sanctions, combined with supply chain restrictions and inflation, threaten to derail the US chip industry – one chip machine company, Lam Research, has already Expect losses Its revenue will reach $2.5 billion next year due to newly imposed trade rules. Antitrust bills, if passed, could too restrictive The ability of Amazon, Meta, Microsoft, and other technology companies to acquire and punish competitors to enhance their products and services.
Unsurprisingly, the industry was in effect in the mid-term of 2022, according to a judgment by major donors. Google, Amazon, Meta and their trade groups Molding Nearly $100 million to lobby as they seek to derail antitrust legislation — and its supporters. Meanwhile, according to a Analytics By The Washington Post, FTX CEO Sam Bankman Fried, Larry Ellison and Peter Thiel gave tens of millions of dollars to their favorite campaigns, making a stark technical impact on the staunch field.
Whether the industry has managed to secure a bright two-year future for itself is up for debate.
With the exception of those in sectors with bipartisan support, such as defense, startups can suffer the most in this politically divided expanse — especially those in the chip industry, green businesses, and cryptocurrencies. At least one study has found that congressional gridlock contributes to income inequality, while else This means that political inertia has a greater negative impact than hostile government policies on a company’s ability to innovate.
Consider how a recession can happen. Assuming Congress is slow to act (as is often the case in divided branches), there could be less federal government spending on social safety net programs, resulting in a long-term recovery. There is the potential for debt ceiling battles as well, which can be harmful on the other hand. Remember that as a result of debt ceiling wrangling during President Barack Obama’s first term, the US lost its perfect AAA credit rating from Standard & Poor in August 2011, sending the stock market down more than 5%.
In a note to investors, Morgan Stanley Expect That the current split in Congress means that fiscal expansion will be reactive rather than proactive over the next two years, and will only come “as a response to deteriorating economic conditions or an external shock to the economy.”
Of course, partisan inertia doesn’t have to be an entire problem with the economy — or startups. According to data from Edelman Financial Engines cited by CNN Business, the S&P 500 has had an annual return of 16.9% since 1948 during the nine years that a Democrat has been in the White House and Republicans have had a majority in both houses of Congress. That compares to 15.1% during periods of full democratic control and 15.9% in years when there was a unitary republican government.
It’s a silver lining, but relatively weak, admittedly.
In the rest of this newsletter – which is below, I promise! We’ll talk about the fleeing Twitter user base, the emergence of generative AI and the ever-present appeal of e-commerce venture capital. For more content along these lines, give me a follow – I’m at Tweet embed On Twitter (Mastodon relay pending).
Twitter’s losses are competitors’ gains
Nari An hour passes without news of the rocky transition of Twitter under a new management. Last weekend, the network began banning some parody accounts following a rule change led by Musk, including those of prominent comedians. Then came Tuesday Report From Casey Newton of Platformer that Musk is considering putting all of Twitter behind the paywall. Yikes.
The unpredictable policymaking process is starting to terrify users, with some leaving for what they see as greener pastures. This is in favor of startups like Mastodon, a Germany-based platform that offers an experience in many ways similar to Twitter. (For a primer on the history of mastodon, how it works and how to join it, read my colleague Amanda Seberling’s book Piecewhich does a thorough job of smashing everything.)
Here’s why it’s important: Mastodon has seen rapid growth since Elon Musk’s takeover of Twitter, with nearly Half a million users Joining the network since October 27. While the company is not for profit, its expansion could boost its Twitter competitors’ emergence from the rubble — and the venture capital support of those competitors. Former Google 120 District Administrator, Gabor Chile, is among the opportunists, announcing On Monday, he took the interest (and promises of capital) from investors and a former Twitter CEO to build a Twitter alternative.
Let artificial intelligence generate it
Generative AI is the hot new thing in the tech world. Well, maybe it’s not new, but it recently got into the VC lexicon thanks to high-level text-to-image AI systems like OpenAI. DALL-E 2 and artificial intelligence stability stable spread. Recent AI stability Starch $101 million at a valuation of more than $1 billion, and OpenAI is said to be in talks to acquire capital from Microsoft and other backers at a valuation close to $20 billion.
Deepfaked porn And the generation of artificial intelligence Art competition entries It may dominate the headlines. But investors see huge potential in generative AI designed for the enterprise. Covered by TechCrunch’s Rita Liao this week he moved, a two-year-old startup that leverages generative AI along with other AI frameworks to create videos featuring human avatars. Earlier in the fall, I wrote about it jasperIt is an AI content marketing platform that has raised $125 million with a valuation of $1.5 billion.
Here’s why it’s important: Venture capital is increasingly optimistic about generative AI. In a recent article on its website, venture capital firm Sequoia Think This generative AI – referring to any artificial intelligence that can create text, images, audio or video – has the potential to “generate trillions of dollars in economic value”. Trillions of people may sound optimistic, but what is certain is LP’s desire to write checks that is fueling an explosion of new projects in the emerging space.
From home workouts to home decor
What has Peloton co-founder John Foley been up to since he left the company in September? Becoming a bit of a rug seller, it seems. truly. My colleague Rebecca Szkutak gives a glimpse into Foley’s latest project for TC+, called Ernesta. With a goal of launching in the spring of 2023, Ernesta — backed by a $25 million investment capital — will sell custom rugs through a direct-to-consumer (DTC) strategy.
Here’s why it’s important: Carpets on the Internet may seem random. But the fact that Ernsta has acquired such a large slice so quickly indicates that investors will continue to be excited about e-commerce – despite tension Views on DTCs. The pandemic has boosted online shipping, driving digital sales of goods to $815.4 billion in 2020 from $671.2 billion in 2019, according to the U.S. Census Bureau’s annual retail survey. When it comes to DTC, notable volatility like Casper, Brandless and Outdoor Voices have given some bold capitalists pause to be sure. But as Ernsta’s success shows, the funding hasn’t run out yet. The carpet company joins Rad Power Bikes, Madison Reed, and Glossier among the DTC brands that have real estate Tens of millions of equity in significant increases in valuation.
- If you missed last week’s newsletter, read it here: Twitter Tweep.
- TechCrunch is going to Miami next week to deliver a crypto conference. Some of my absolutely favorites will be attending including the stellar coding team, so be sure to head over to DM me for a cute and cool discount code. Buy tickets and see our class here.
- Missing Natasha? Don’t worry, you’ll be back next week to write the next issue of Startups Weekly. Stay informed!
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