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Headlines

Look ma, no hands (but more rules) 

Is the UK finally flexing their post-Brexit autonomy? 

Great Britain, self-described “world leader” in the regulation of self-driving vehicles (lol), saw its long-cooking Automated Vehicles Act become law on Monday. 

The Brits’ framing for why this legislation was a priority (it was included in the 2023 King’s Speech) is actually encouraging. They insist that establishing clear rules and expectations for players in the AV space will help to speed up rollout. 

The classic tech meme is that the USA innovates and Europe regulates - acting more as a decelerant than anything else.

This situation looks a little different. Firstly, the timing is excellent. We mentioned in Last Week's News #2 earlier this month that Wayve raised a Series C of over $1B to develop the eyes and brains of AVs. Second, at least as advertised, this effort is very much an attempt at constructive regulation. 

There has been honesty about existing legal frameworks. Current rules focus on limiting what immature companies can do as they try things out. The Automated Vehicles Act, on the other hand, concerns itself with establishing “new vocabulary, new legal actors, and regulatory schemes”, so that the UK can meet its target of having streets full of AVs by 2026. 

Liability for accidents is in the center of the legislative crosshairs. The new law is clear that corporations (not passengers) will be responsible when things go wrong.

From this article in TechCrunch: 

“Each approved self-driving vehicle will have a corresponding “authorized self-driving entity,” which will typically be the manufacturer but could also be the software developer or insurance company. And this entity will be responsible for the vehicle when self-driving mode is activated.”  

There will be an independent board that approves vehicles, investigates incidents, and communicates about ‘ongoing obligations’ to manufacturers and tech companies alike. 

There is a lot to be optimistic about. The UK is having a proper go here at establishing a global standard for companies working on AVs, guiding them towards building solutions and tools that are both useful and compliant. Down the line, this could really be a big boon for the country. 

Consider how Delaware is a center for corporate law and administration in the US. Could the UK become the Delaware of the autonomous vehicle world? A hub where firms base themselves so they can roll out and test new features in an environment with clear rules. There is potentially thousands of jobs and billions in GDP on the table here.

It is positive to see Britain taking a confident step towards building a post-Brexit identity beyond the dyspraxic charade that has been the Conservative party for the last 14 years.

Things can only get better, I suppose…

The British are coming (to regulate AI companies in SF)! The British are coming (to regulate AI companies in SF)! 

We stay with Britain for the next bit of news. The UK’s AI Safety Institute (ASI) announced that they will put boots on the ground in SF. Why? Because they want to be as close as possible to the epicenter of AI, of course.

The U.K. secretary of state for science, innovation and technology Michelle Donalan said as much in an interview:

“By having people on the ground in San Francisco, it will give them access to the headquarters of many of these AI companies. A number of them have bases here in the United Kingdom, but we think that it would be very useful to have a base there as well, and access to an additional pool of talent, and be able to work even more collaboratively and hand-in-glove with the United States.”

Not so fast!” I hear you say. “I’m feeling strong ‘you innovate we regulate’” energy.

I’m not so sure. To their credit, the rulemakers seem to want to (literally) meet the creators where they are. 

Donelan again: 

“Our evaluation process is an emerging science in itself. So with every evaluation, we will develop the process and finesse it even more.”

Similar to the UK government’s approach to AVs, this conciliatory, dare I say liberal, approach should be cheered. There is a genuine openness to learning and collaborating being shown here. It goes pretty much without saying that there should be oversight in AI. But for too long, especially on the European side, the focus has largely been on ticking boxes and meeting local goals and objectives.

If quotes from Donelan and Ian Hogarth, a long-time industry vet and leader of the AI Safety Institute, are taken at face value, this regulatory effort will be about learning at the coal face in order to attract global AI companies to the UK by establishing clear frameworks for the rollout of products.

Hopefully this is a break with the narrative. The tech industry has been repeatedly irritated by what it sees as an overly punitive and reactive regulatory regime in Europe - one that largely fails to understand or guide, and instead issues unfavorable judgements after the fact. In other words: value capture instead of value add. 

None of this really matters though

It is going to require far more than clear regulation to drive growth through innovation in the UK.

Tom Blomfield, cofounder of Monzo and GoCardless, on the British appetite for entrepreneurial risk:

“I just spent a week talking with some exceptional students from three of the UK’s top universities; Cambridge, Oxford and Imperial College. Along with UCL, these British universities represent 4 of the top 10 universities in the world. The US - a country with 5x more people and 8x higher GDP - has the same number of universities in the global top 10.

On these visits, I was struck by the world-class quality of technical talent, especially in AI and biosciences. But I was also struck by something else. After their studies, most of these smart young people wanted to go and work at companies like McKinsey, Goldman Sachs or Google.”

Why are undergrads at top American colleges 5x more likely to start companies than their UK peers? Why do Britain’s best prefer to take “safe”, prestigious jobs?

Culture and mindset. Nothing new there. People have been saying this for many years. There is an appetite for risk and acceptance of failure in the States that simply does not exist in Europe. Plus, like it or not, capitalism is the state religion of the US of A. Becoming rich mostly has a positive connotation; in Europe, it is often perceived as taking more from society than you are giving. Several decades of low growth and rising house prices will do that to you.

Tom’s career is, in many ways, a study of successfully swimming against the tide: Oxford Law degree, “threw away” a job at McKinsey to  found not one but two billion dollar companies. 

He does acknowledge that the UK ecosystem has come a long way, especially in the last decade or so. The money is certainly now there, and no longer an excuse for founders. Young people need to intentionally choose to start companies, eschewing more predictable paths. 

Tom closes by saying this is the best time yet to build a company.

I couldn’t agree more.

Other bits

• Scarlett Johansson is pursuing legal action against Open AI because one of the voice avatars from GPT-4.5o sounds like her (really her character in Her) 

• The Safety Team at Open AI has been dissolved and will now have its members distributed across the company, likely being listened to less than before 

• OnlyFans is outsourcing text-chat to boiler rooms in developing countries. Reminds me of that Naval tweet:

  

• Humane, the maker of the AI wearable computer that most people hated, is trying to sell itself for around $1 billion

• xAI party Round - Elon secures $6B in fresh capital from Andreessen, Lightspeed, Sequoia and Tribe to take on OpenAI, Anthropic and co.

• Nvidia revenue continues to soar, up 262% YoY

  

• Maelle Gavet has stepped down as CEO of Techstars. There has been a lot of customer and exec churn at Techstars over the last few years as the accelerator has struggled to reinvent itself.

Fundraising

Dry Powder

The Americas - little action on the fundraising side 

• Contour Venture Partners, an early investor in Datadog and Movable Ink, has raised $42 million for its fifth fund on a target of $90 million

• Valar Ventures (yet another Lord of the Rings themed company from Peter Thiel) raised a $300m fund IX, less than half of what it raised in 2021 for vund VIII. Thiel is not actively involved in the firm.

EMEA - another fund focused on sustainability, plus another solo GP

• ETF Partners, a London based VC, raised $310 million for its fourth fund focused on companies with a positive environmental impact.

• OpenseedVC (London) which backs operators in Africa and Europe starting their companies, reached first close on a $10M fund
  

Big startup rounds

• 🇺🇸 Scale AI raised a $1 billion Series F to further develop their “data foundry” for AI. Existing investor Accel led the round with participation from YC, Founders Fund, and Thrive Capital, among others

• 🇺🇸 Vercel, a cloud platform for website development out of SF raised $250 million a Series E. Accel led the round and was joined by existing investors CRV, GV, Notable Capital, Bedrock, and others. 

• 🇺🇸 Sigma, a San Francisco-based developer of business intelligence and data analytics tools, raised $200 million in Series D funding. Spark Capital and Avenir Growth Capital co-led the round and was joined by NewView Capital and existing investors Snowflake Ventures, Sutter Hill Ventures, D1 Ventures, Xn Ventures, and Altimeter Capital.

• 🇺🇸 Yendo, a Dallas-based fintech selling vehicle secured credit cards, has raised $150 million in debt financing, led by i80 Group, along with $15 million in equity,

• 🇬🇧 KKR led the $93 million Series C of Vitesse, a London-based provider of treasury and payment solutions for insurance companies

• Dan Romero’s Farcaster, a blockchain-based social protocol, raised $150 million from Paradigm, a16z Crypto, USV, and others

Best of the Internet

Chat XiPT

Beijing has launched a chatbot trained on the thoughts of President Xi Jinping. The team in Slack had plenty to say on this one.

Garbage in garbage out

We’ve all been there

Do yourself a favour and get some exercise this weekend

Thank you for reading! If you enjoyed this hit the like, and if you didn’t please do drop us some feedback!

Written from J.M. Reidy’s in Killarney, Ireland,

MC 

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Today’s edition was written by a new guest writer, Max Cutler. Sorry we’re a couple of days late to press - it’s been a busy week!

Headlines 

“I’m afraid I can’t do that, Dave”

Once again, OpenAI has stolen the spotlight.

GPT-4o represents a leap forward in AI’s ability to reason, especially with audio and visual inputs. It can talk pretty well too, and it’s starting to feel uncannily human (creepy AF of course). The speech pattern and response times are >10x faster than previous versions, and almost indistinguishable from a real person.

Two more videos were making the rounds on Twitter.

One showed the model walking a boy through some geometry homework and the other doing a real-time translation between Italian and English.

Impressive stuff showcasing precision, versatility and humour in equal measure. They also demonstrate the threat OpenAI may represent to the thousands of startups building “wrappers” on top of ChatGPT - perhaps it will be able to just do everything, without a need for point solutions to specific problems (a question Ben Evans raised recently).

In terms of technical improvements, in past builds, OpenAI used three different models for its voice feature:

1. one to transcribe audio into readable text;

2. the core GPT-3.5/4 to digest the text and prepare a response, and;

3. then a third model to convert the text back to an audio output.

GPT-4o bins this chained process.

It is one end-to-end model; everything is processed by the same neural network.

It is now much better at grasping context: tone of the speaker, background noise, etc. and outputs a more textured response, complete with touches of something that seems like emotion (almost but in a creepy way where you know it isn’t).

On launch day, Sam Altman tweeted “her” - a reference to that film where Joaquin Phoenix falls in love with his virtual assistant (until she dumps him for another AI).

Clearly the pursuit of AGI remains OpenAI’s primary objective. Of course, they want to develop useful tools and features too. But, at least in Altman’s mind, the goal remains to create a human analog / improvement.

I wonder if thinking in this way, rather than focusing on utility - or even harm reduction, for example - will lead to the best possible outcome for humanity. 

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Underwhelming but solid

Google’s annual developer conference on Tuesday generated more mockery than buzz online.

TechCrunch roasted them. So did a lot of other people

However, they announced some pretty nice tools: a family of LLMs designed for teaching and learning, AI-powered scam detection for incoming calls (a huge pain in the ass for folks with a US SIM), embedding Gemini in Gmail and Android OS, and new security features for the Google Play Store. 

Plus, they at least partly addressed question on everyone’s lips - AI-powered search.

Perplexity has been trying to raise a boatload of money to take down Google’s cash cow. It feels like maybe, in spite of the innovator’s dilemma at play here (Google makes all its money from ads, and prioritising AI summaries of searches will reduce ad clicks), Google is going all-in.

The market likes what they see, with share price up 6% since Monday

On r/google, there was more enthusiasm. 

Given the level of lock-in Google has with billions of users, they’re in an incredible position to add AI to people’s everyday lives and reap huge rewards. They also have a better dataset for this than probably anyone bar Meta. You can’t argue with the facts 

On the flip side, insiders at Google, including CEO Sundar Pichai, have been consistently selling off shares lately. (insider screener)​​. Hardly the moves of an exec team bullish on their company’s future prospects.

It will be interesting to see how things play out.

Other bits

• iPhone owners are seeing their deleted nudes again because of a recent iOS update

• The EU is investigating Meta for insufficiently safeguarding children's mental and physical health on Facebook and Instagram

• Kyle Chayka from The New Yorker on how the internet is warping culture through memes

• Microsoft is relocating staff from China as Washington - Beijing tensions rise. They’re also investing $4B in a number of initiatives in France- bien joué M. Macron and team.

Fundraising

Dry Powder 

The Americas - Silver Lake enters the fray with yet another mega fund 

• Silver Lake, a private equity firm invested in Stripe, Airtable and many other prominent companies, raised $20.5 billion for their seventh tech-focused fund 

• NewVale Capital, a Colorado based growth equity firm focused on life sciences, raised $167 million for their first fund

• EnCap Investments, established in Houston in 1988, raised ~$1.5 billion for their Energy Transition Fund II. They plan to focus on companies in decarbonization, low carbon fuel, and carbon management.

• Food VC PeakBridge has a new $187M fund to transform the future of food

• Accion, a global nonprofit, announced a $152m financial inclusion fund

• OpenAI deployed another $5m via an SPV

EMEA - sustainability and purpose, plus a big name reloads

• Accel announced a new $650 million fund to back European and Israeli startups

• Norwegian PE firm FSN Capital raised €400 million for its Compass Fund focused on purpose-driven companies in Northern Europe

• Norrsken from Stockholm raised €320 million for its oversubscribed Fund II focused on companies in the climate tech, energy, biotech AI, and health tech sectors.

• UK-based Ocean 14 Capital Fund I closes on €200M to support the blue economy. Some big corporate backers including Nestle

• Zero Carbon Capital (UK) announced their £20m fund I

• Blisce (France) is launching a €150m climate fund

• Portuguese firm Shilling announced the launch of €50m opportunity fund (generalist)

• Pitchdrive (Netherlands) announced the first close of its €40m fund III (seed, generalist)

• Investcorp, a Manama, Bahrain-based private equity firm, raised $570 million for their Fund V. They will look at B2B companies in the software, data/analytics, cybersecurity and fintech spaces.

Big startup rounds

• 🇺🇸 Wiz (cloud security) has netted a $1.1B mega-round co-led by Andreessen Horowitz, Lightspeed Venture Partners, and Thrive Capital.

• 🇺🇸 Restaurant365, an enterprise management platform for restaurants based in Irvine, California, has raised $175 million. ICONIQ Growth was the lead in the funding round, with additional support from existing backers KKR and L Catterton.

• 🇦🇺 Hysata, an Australian green hydrogen startup, has raised a $111m Series B.

• 🇮🇳 Indian insurtech firm Go Digit has secured US$141 million in pre-IPO funding.

• 🇺🇸 Alkira, out in San Jose, secured $100 million in Series C funding for its on-demand network infrastructure services. The funding round was led by Tiger Global, with participation from Dallas Venture Capital, Geodesic Capital, NextEquity Partners, and others.

• 🇺🇸 Cover Genius, a New York City-based company specializing in embedded insurance technology for e-commerce customers, raised $80 million in Series E funding. The round was led by Spark Capital and included contributions from existing investors Dawn Capital, King River Capital, and G Squared.

• 🇪🇸 Gerard Piqué’s Kings League, a football competition based in Barcelona, Spain, secured €60 million in investment from Left Lane Capital.

• 🇺🇸 Voyage Foods, located in Oakland, California, which produces cocoa-free chocolate and bean-free coffee, raised $52 million. The funding was led by Level One Fund and Horizon Ventures, with participation from SOSV, Collaborative Fund, and Nimble Partners.

Best of the Internet

The rise of ‘fancy chains’ and what they mean for American urban areas

Meghan McCaron examines how newer fast-food chains are shaping the social dynamics and cultural landscape of their surroundings.

In many cases, new chains like Sweetgreen, Erewhon and Philz Coffee had their growth financed by venture capital. Investors recognized that these vendors understood what consumers now want, but also what they desire in the future. And blitz scaling with VC could establish these concepts long-term at a scale that delivers a juicy return-on-capital. 

They’re kind of just hipster versions of Starbucks and McDonald’s really, aren’t they?Rapid expansion of these brands has flattened out the world - ‘trendy’ neighborhoods in Austin, Chicago, and LA are increasingly looking the same while simultaneously seeing their local food shops closing up due to rising rents and pressure from venture-backed competitors, who have different profit making requirements. 

It’s interesting to think about how the nature of authenticity continues to evolve, both in relation to itself and the wider culture around it. What does it mean for a restaurant, or a store, to “fit” with a locale? How is the internet modifying our physical world too?   

Great piece that puts forward more questions than answers. Nonetheless, highly recommend 👍

Cool statues

How do you say bumble in Hindi?

I reckon this isn’t reserved for just Indian moms :D 

Thank you for reading! If you enjoyed this hit the like, and if you didn’t please do drop us some feedback!

AC

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Last Week’s News is our weekly newsletter - the lazy way to find out what's happening in tech & venture, with enough analysis thrown in to sound smart at dinner parties.

Headlines

WWJD?

I don’t think it’s contentious to say that Siri is shit.

So it is interesting to see that Apple is once more in discussions with OpenAI about using their tech to power some of the AI features in the next iOS update (iOS 18). They’ve also been chatting with Google about using Gemini.

Apple has been conspicuously quiet in the AI frenzy. As reported last week, we know they are poaching talent from Google, but they are yet to release anything interesting product-wise. As the dominant player in consumer hardware in the Western world (>50% mobile phone market share in North America and Europe), with one of the strongest globally recognised consumer brands, one might reasonably argue Apple has an unprecedented opportunity to ship something that fundamentally reimagines the way we interact with technology, and instantly put it in the hands of over a billion people worldwide. Plus, the closest competition was recently declared the worst product ever made.

However, it seems like Apple are really struggling to do AI in-house, due to a combination of lack of experience, talent, and training data. Outsourcing this to OpenAI or Google derisks things, but so far the whole approach doesn’t feel very Apple. Apparently the new iOS will include a mixture of Siri-type features built on Apple’s in-house LLMs and other “chatbot” functionality built on GPT4 or a similar product. Hardly game changing stuff.

I feel like the first Steve Jobs AI release from Apple would have rocked our world.
At the moment that doesn’t look to be the case.

In fact, their whole innovation track record really sucks at the moment. iPhone sales are stagnating too.

Is Apple out of ideas? Maybe.

The Chip Wars heat up

As the FT reports, “the Biden administration has revoked export licences that allow Intel and Qualcomm to supply Huawei with semiconductors as Washington increases the pressure on the Chinese telecoms equipment company.”

The US are particularly worried about Huawei, China’s flagship tech company. There have been ongoing spying allegations, and you may remember that there was a lot of debate about whether or not to roll out their 5G infrastructure in a number of western countries (including the UK) for this reason.

In 2020 the Trump administration blocked Huawei’s ability to fabricate the chips it designs with TSMC, the world’s leading chipmaker. Huawei made a bold move and struck a deal with China’s state-backed SMIC (Semiconductor Manufacturing International Corporation), which is one of the Chinese government’s key bets sin reducing reliance on US-controlled firms like TSMC. SMIC had a mammoth task ahead of it:

“To build Charlotte, SMIC would have to grapple with an advanced process it was not familiar with and new restrictions on acquiring and managing complex equipment. One chip company executive close to SMIC likened it to “measuring an elephant in the dark.”

But in late 2023, Huawei unveiled a brand new phone with cutting edge SMIC-manufactured chips that rival anything you’ll find in an Apple or Samsung device. Security advisors in the US are baffled as to how they are managing this. If they can make great mobile phone chips, the concern is that they will also be able to make advanced AI GPUs, with or without the latest lithography technology from the Dutch firm ASML.

The Chinese government have rifled money into these two companies in the last few years, and will likely to continue to do so.

The plot thickens.

For more on the background to the Chip Wars, see last week’s post.

Other bits

• Layoffs in big tech continue, with similar trends in both China and the USA / Europe. Investors seem pretty happy about this.

  

• The Chinese self-driving firm Momenta, which is backed by General Motors, is reportedly planning an IPO in the USA.

• Jack Dorsey has left Bluesky, the decentralised Twitter competitor he founded. Network Effects are hard to fight with.

• Global Founders Capital, the $1B german venture firm spun out of Rocket Internet, will no longer raise external LP capital and will simply invest from Rocket Internet’s balance sheet. It seems like a tricky fundraising environment plus plenty of balance sheet capital have made this an easy decision.

Fundraising

Dry Powder

🌎 The Americas - more mega-funds and some smaller vehicles

• ICONIQ, the growth firm that span out of a family office serving the elite of Silicon Valley and Hollywood, has raised a $5.75B fund VII. We shared a great piece by Akash Bajwa on Iconiq a couple of years ago - check it out here. Fascinating firm.

• Norwest Venture Partners, a 65-year-old manager backed solely by Wells Fargo, has raised its 17th fund of $3 billion, just 2.5 years after raising a similarly sized fund. It is global and multi-strategy with a focus on North America, India and Israel.

• Not a fund announcement but there are rumours that the VC equivalent of the Avengers / Traveling Wilburys (depending on your preferred pop culture reference) is forming, with former partners from a16z, Bessemer and Index involved.

• Chicago-based Hyde Park Ventures closed fund IV ($98m, seed)

• OpenAI’s startup fund quietly deployed $15m via an SPV recently. No news on what it was.

• The Department of XYZ, founded by a former employee of the US Department of Finance, has raised $5.1m for a regulation-focused crypto fund.

🌍 Europe & Africa - nothing huge but some cool smaller stuff

• Semiconductor & nanotech specialist 🇧🇪 Imec Xpand (Belgium) have raised a second fund of €300m.

• In Germany, 🇩🇪 Armira Growth Fund I was announced, a €200m vehicle for tech and tech-enabled scaleups.

• Hugo Amsellem and Etienne Boutan announced 🇫🇷 Intuition, a €15M early-stage fund backing founders focused on consumer & culture. I had a really interesting chat with Hugo a while back - you can check out the conversation here.

• Ex-Monzo commercial director Gideon Valkin is launching 🇬🇧 Andrena Ventures, a $12m seed fund

🌏 Middle East & Asia: big Singapore climate fund, lots of activity in India

• 🇸🇬 Temasek (Singapore sovereign wealth fund) closed a joint venture with Blackrock on a $1.4B clean energy vehicle called Decarbonization Partners.

• 🇮🇳 India has had a raft of announcements this week, with a mix of closes and announcements of planned funds from Ivy Capital Fund III ($250m, generalist early stage), Stride Ventures Fund III ($165m, venture debt), Eternal Capital Fund I ($14.5M, seed), Oister Global Pinnacle Fund ($52M, generalist multi-stage) and VC Grid Fund ($107M).

• 🇨🇳 I’m not currently covering China, but plan to soon!

Big Startup Rounds

• 🇺🇸 Cloud GPU scaleup CoreWeave has raised $1.1B at a $19.1B valuation in a round led by Coatue, with participation from existing investor Magnetar, along with Altimeter Capital, Fidelity Management & Research Company, and Lykos Global Management. We’ve seen a number of similar companies growing very quickly and raising significant funds via our platform lately. Essentially these platforms allow developers to quickly and easily access the high quality, in-demand chips needed to handle AI computation via the cloud. Picks and shovels for the AI goldrush.

• 🇬🇧 Autonomous driving startup Wayve AI closed a $1.05B Series-C led by Softbank, with participation from Microsoft and Nvidia.

• 🇪🇪 Estonian mobility firm Bolt has secured a €220M debt facility from a ton of investment banks as it revs its engines for IPO

• 🇺🇸 The aforementioned ICONIQ led wealth management platform Altruist’s $169m Series E.

Best of the Internet

Are foundation models this innovation wave’s telecomms infrastructure?

Funding companies like OpenAI, Elon’s xAI, Anthropic, Aleph Alpha, Mistral, etc. is incredibly expensive. Billion dollar rounds are now table stakes. But are any of these companies going to turn a profit? Or will they end up simply being a low margin commodity layer that valuable companies get built on?

At the moment, most are struggling to generate revenues, as the New York times reports. One is reminded of telecomms infra in the 90s - a lot of capex with very poor ROI, but a ton of great software companies built that wouldn’t have existed without it.

I thoroughly enjoyed this piece from Benedict Evans, which points towards something similar: Currently there don’t seem to be any killer apps for LLMs themselves “while at the same time there’s a ‘Cambrian Explosion’ of startups using OpenAI or Anthropic APIs to build single-purpose dedicated apps that aim at one problem and wrap it in hand-built UI, tooling and enterprise sales, much as a previous generation did with SQL.”

I guess the question is whether everyone ends up building on one platform (like OpenAI), turning it into an iPhone equivalent, with high lock-in and high rents, or whether there are lots of competing platforms vying for market share and making low margins (like telecomms providers). There doesn’t seem to be very strong evidence for network effects in foundation models at the moment, so perhaps the latter case is actually quite likely.

Porcelain Thrones

A two century old Japanese pottery manufacturer is the picks and shovels AI play you’ve never heard of - they produce the best ceramics to cool data centres apparently.

Lonely and worried

People get married way less and they’re mostly concerned rather than excited about AI. 16 fascinating findings from the Pew Research Centre’s 2023 surveys.

Build more houses

The cost of housing relative to wages has increased 1,500% in London, 800% in Dublin, 480% in Sydney and 362% in New York in the last ~40 years. It’s basically the only thing not getting cheaper, and it is the main reason Western economies are stagnating. Not only does this lack of housing reduce productivity and innovation, it also drives inequality, climate change, obesity, and even explains falling fertility rates, argue John Myers, Sam Bowman & Ben Southwood.

This is an older piece, but I enjoyed it so much I felt compelled to share! If the solution to our problems is this simple, LFG. I hope the Labour party are taking notes.

The world is magical

Go seize the day

Thank you for reading! If you enjoyed this hit the like, and if you didn’t please do drop me some feedback.

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I’ve decided to try something new. I’m calling it “Last Week’s News” (working title).

Think of it as the lazy way to find out what’s happening in tech… with enough analysis thrown in to ensure you sound smart at dinner parties.

I’ll continue to publish longer-form pieces periodically, but I’m aiming to make this a regular weekly piece.

Headlines

Raiding the sweetie jar

Apple appears to be poaching top AI talent from Google at quite some pace (the FT). Of the big tech companies, it has been quietest on the AI front.

This approach to hiring is unsurprising on the one hand, and the way the data is presented can be misread.

I’d imagine Google have waaaay more AI talent than Amazon, Microsoft, Netflix, etc - they’ve been investing in this sector for far longer than other big tech firms (via the acquisition of DeepMind, plus internal teams like Google Brain) - so it isn’t surprising that they’re a top source of AI talent for Apple.

At the same time, it is interesting to see, especially given Googles’s recent blunders in AI (racially diverse nazis etc.). It’s not like OpenAI, Anthropic, Mistral, etc. are bleeding talent.

Winds of change

Google does, nonetheless, appear to be quietly making moves the market likes.

They recently announced record profits, their first dividend, plus a share buyback, all of which saw their share price jump 10% in a day.

And, perhaps more interestingly, they may have “finally grown a spine”, in the words of Mike Solana at Pirate Wires:

“Earlier this month, after a dozen employees locked themselves inside a manager’s office and refused to leave until their company ended the war in Gaza, Google called the cops and had them all arrested. Then, along with dozens of their friends, who also considered it perfectly acceptable to perform various acts of “civil disobedience” within the halls of the actual company where they “worked,” the degenerates were fired. But the real surprise came last week, at the end of another one of CEO Sundar Pichai’s nothing-statements on AI, in which he introduced the company’s new “mission-first” philosophy. Google, he wrote, “is a business, and not a place to act in a way that disrupts coworkers or makes them feel unsafe, to attempt to use the company as a personal platform, or to fight over disruptive issues or debate politics.” While a relatively benign statement to the untrained eye, this was in fact a stunning departure for the House That Built Crazy, and so we arrive, some seven years after its clownish incarnation, at the conclusion of tech’s “bring your activism to work arc,” in which a silent majority of kind, hardworking idealists were bullied into submission by a minority of actual psychopaths clawing for workplace power behind a cloak of virtue.”

This is part of a broader trend that has been underway for a couple of years, famously initiated by Coinbase’s Brian Armstrong. Tech leaders are increasingly asking employees to leave their politics at home, and focus on the company’s mission at work.

It seems to be a change most employees are welcoming. Nature is healing.

Chip Wars

US chipmaker Micron has secured $13.6 billion in government funding and loans to build memory chip factories in New York and Idaho. This is all part of the US government’s plans to reduce dependency on Asian chipmakers and slow China’s progress on AI, introduced with the 2022 CHIPS Act. The Act provides capital for domestic chip manufacturing, R&D, workforce development and supply chain security.

The global microchip industry and supply chain is dangerously, insanely concentrated. It revolves around less than ten companies. This tweet pretty much sums it up:

For the uninformed, here’s a quick primer:

• OpenAI runs on Nvidia chips (as does every other AI company raising billions right now).

• All Nvidia AI chips are made by Taiwan’s TSMC, which fabricates about 61% of the world’s microchips and as much as 90% of the high-end ones. They’re often designed by other firms (alongside Nvidia there are firms like Intel, AMD, Qualcomm, Samsung and Apple), but they’re mostly made by TSMC.

• In turn, TSMC is extremely reliant on ASML, a Dutch company, who are the only producer in the world of the machines TSMC uses to fabricate its chips. These machines use light to print on silicon wavers atom by atom through a process called photolithography, and cost about $380 million a pop. Unsurprisingly, the US government is restricting ASML’s ability to supply new machines to Chinese chipmakers, and also wants to prevent it from servicing broken machines.

• ASML are in turn extremely reliant on a number of suppliers for specific parts, including a German high-end lens manufacturer called Zeiss (they actually own a significant equity stake in its tech subsidiary).

• And, to bring things full circle, the entire industry is reliant on rare earth metals, the mining and refinement of which is largely controlled by China (60% of mining, 85% of refinement).

The key risk in this house of cards is TSMC. China has been sizing up Taiwan, which sits 100 miles off its coast, for invasion for many years. TSMC is an increasingly significant factor in whether an invasion will happen. As the AI race heats up, things are certainly going to get interesting. The US government has been making overtures to TSMC about building a plant on US soil, but the Taiwanese company has found it far easier to build in Japan than the US.

If you want to dig deeper, I strongly recommend this book on the subject. The Chip Wars seem likely to be one of the defining political and technological battlegrounds of this century.

Compound Companies

Workforce management unicorn Rippling has agreed to facilitate $590m in employee and early investor secondaries, as well as raising a further $200m in new shares. The fresh capital and secondaries value the company, founded only 8 years ago, at $13.4B. The company turned over an estimated $350m in 2023

Rippling are an interesting case study. CEO Parker Conrad’s company-building philosophy is as attractive as it is challenging to execute on. It all revolves around the concept of intentionally building horizontally rather than vertically, shallow rather than deep.

Conrad calls this a “compound company” - you ship B2B software across multiple verticals, bundle your services, charge much less than competitors, and gradually create very strong customer lock-in and excellent gross margins. So rather than just building payroll and other HR-related services, you also build out spend management & corporate cards, IT and security tools, etc. Every new product area compounds your ability to attract new users and cross-sell them services, and so your growth and competitive advantage accelerates over time. He is also a strong believer in building new products in-house rather than acquiring companies, since it is so much easier to integrate services you’ve built yourself, and so fast to ship new software nowadays. This interview is good if you want to dig deeper.

It runs directly against the wisdom you’ll often hear of “doing one thing very well”. Instead, Rippling aims to do lots of things quite well.

Microsoft is the classic example of this strategy in action - they’ve been doing it for years, and continue to nail it. Think about the adoption Microsoft Teams (meh product sold via bundling) vs. Slack (good product sold on its own).

Other bits

• Tesla shares jumped 17% after Musk inked a deal with Baidu in China that could eventually allow Tesla’s fully autonomous driving technology to be rolled out in the world’s largest car market. They’re still down overall for the last few months, with global EV demand cooling and increased competition, not least from China’s Byd, which is backed by Warren Buffet’s Berkshire Hathaway.

• Elon was also in the news after Sequoia confirmed they are backing xAI, his OpenAI / Anthropic competitor, as part of a $6B round.

• Meta stock tanked after they announced significant investments in AI with no promises about when the increase in capex would pay off for investors. The pitch is pretty straightforward: AI image editing for Insta and “Creator AIs” -chatbots for businesses and leading influencers that allow them to speak with their customers / fans at scale. Sounds a bit like Foxy AI, which has to be my favourite company we’ve structured an SPV for recently (NSFW).

• Bytedance is exploring selling Tiktok’s US business without the algorithm. Sounds like the CCP would prefer the company go to zero than see it in US hands.

• Darktrace, the UK cybersecurity firm listed on the London Stock Exchange, has accepted a £4.3b acquisition from US tech PE firm Thoma Bravo. The new owners see an opportunity to roll up smaller cyber firms in a highly fragmented market, and to open doors for sales via their deep network in US tech. Darktrace has had a turbulent three years as a listed company, with significant volumes of short selling and its cofounder Mike Lynch on trial for fraud in the US. The UK continues to struggle to retain the value it creates in tech. In a parting shot, Darktrace announced that the UK public markets had undervalued its business.

• It will be interesting to see how Rubrik fares after their recent IPO. They listed in New York on Thursday. Operating in the same sector as Darktrace, their current share price makes the unprofitable company worth ~$6.5B, albeit with higher turnover and stronger YoY growth.

• Samsung’s profits are up 10x year over year, after a reduction in spending and AI tailwinds.

Fundraising

Dry Powder

🇺🇸 General Catalyst is close to completing on a monster $6B fund, hot on the tail of a16z’s recently announced $7.2B vehicle. According to Pitchbook, these two funds alone represent 44% of all capital raised by US VCs so far in 2024. The trend of LP “flight to safety” certainly appears to be well underway.

🇺🇸 Eniac (New York) has raised $220m across two vehicles (a $60m follow on fund and $160m of fresh capital).

🇺🇸 Palo Alto based Maven Ventures has raised a $60m fund IV to invest in “massive consumer tech trends”

Secondaries are everywhere, with 🇺🇸 Cendana raising a fresh $100m to buy LP stakes, 🇮🇳 Piyush Gupta leaving Peak XV (fka. Sequoia India) to start a secondaries fund and 🇬🇧 Isomer announcing the first close of a £100m secondaries fund

🇫🇷 Paris-based Ternel will invest €120m in 30 startups at seed and series A with their new fund, across a range of themes including climate change, biodiversity, circularity, health and education

🇬🇧 Seraphim Space has announced the first close of a new Spacetech fund (size tbd). Their last fund was £70m

🇨🇭 Swiss solo GP Edoardo Ermotti has closed a $30m fund to back B2B SaaS startups

🇳🇬🇰🇪 TLcom capital announced a $154m fund 2 to invest in startups across Africa

Big Startup Rounds

Half of Silicon Valley is betting big on AI drug discovery by backing Xaira Therapeutics, who have launched with over $1B in funding.

Tether, the issuers of the dollar-pegged stablecoin of the same name, have invested $200 million in Blackrock Neurotech, a maker of brain-computer interface technology competing with Elon Musk’s Neuralink. This investment apparently means Tether is now the majority shareholder in the company. Seems like a weird move for the corporate venture arm of a crypto firm, but ¯\_(ツ)_/¯

UK neobank Monzo are reportedly topping up their recent £340m round to £500m. The round values Monzo, who are now profitable, at £4B (~$5B). They are the UK’s seventh largest bank, and are planning an IPO some time in the next couple of years. Not bad for a company started 9 years ago by a bunch of twenty somethings in East London! It will be interesting to see where they choose to list the business…

Augment, a competitor to Github’s copilot (AI assistant for software engineers) have come out of stealth and announced a whopper $250m in funding. TechCrunch reports.

Best of the Internet

The dark side of your dinner

I recommend the full thread - it’s a great read.

Last time this happened, Earth got plants

The future is bright

According to data from Dealroom, Energy was the top sector for VC funding in Europe for the last four quarters.

Go do the thing

Never mind Van Gogh, Colonel Sanders didn’t franchise KFC until he was 62. Whatever the thing is on your list, you should go do it.

And enjoy yourself

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