Pre-Money: Jan 15th, 2024

KPIs

The week’s top performance indicators

Dots & Lines

The week’s top takeaways

• AI has entered the app phase: New technology platforms frequently follow a trajectory where infrastructure is built first, and then applications are created, enabling broader usage. With the opening of its GPTStore last week, OpenAI moved artificial intelligence into its app phase. Each GPT blends the underlying chat functionality with a bespoke set of training data and skills. Use AllTrails’ GPT to find a hiking trail based on your preferences, or use Canva’s to iterate on designs. And of course, you can browse the broad selection of girlfriend bots. Users need a premium subscription to utilize the custom GPTs in the store. It remains to be seen how this setup will factor into subscription and monetization growth for OpenAI.

• Carta’s challenges compound: Carta is the biggest provider of cap table tracking for startups, and a unicorn in its own right. Last week it faced immense pressure after revelations that it had used proprietary customer data to boost sales for CartaX, its secondaries marketplace. This week, Carta shuttered the service, opting to “prioritize trust.” CartaX accounted for a reported less than one percent of the company’s $370M of annual revenues, but was touted as a future growth direction that could unlock massive value. After that, it came out that the company is in a legal battle with ex-CTO Jerry Talton, likely relating to issues around his critique of the company’s much-maligned culture. The company will now have to handle multiple PR crises while fending off ambitious competitors amping up sales efforts aimed at capitalizing on the weakness.

• Founders losing leverage: Venture and tech cycles tend to alternate between investor-friendly and founder-friendly eras. The recent decade was notably founder-friendly, as a glance at the website copy of any venture firm will remind you. But the pendulum has swung back, and we are squarely in an era of investor-friendly dealing. This change is illustrated with the dismissal of Twilio ($TWLO) Founder & CEO Jeff Lawson after fifteen years at the helm, and after the company shed 80% of its 2021 market cap. A number of VC darlings like Meta, Pinterest and Lyft were structured with a “dual-class shares” enshrining voting control with founders. But these days, investors are less willing to entertain such deal terms. And in cases like Twilio, when those provisions expire, their patience can be short.

Deal Points

A few items of interest

• CES, the annual Consumer Electronics Show in Vegas, featured exciting reveals, including AR glasses, bluetooth sex toys, and a retro blackberry-style keyboard attachment for the iPhone, but Apple’s Vision Pro headset overshadowed it all in absentia

• M&A got a boost as Hewlett Packard Enterprise ($HPE) agreed to scoop up Juniper Networks ($JNPR) for $13 billion, creating a formidable player in the network and infrastructure space

• Circle, the issuer of top crypto stablecoin USDC, filed its S-1 in advance of an anticipated IPO, after its $9B SPAC plans fell through two years back

• Picnic, a Dutch online grocer serving Europe, raised $388M, led by the Gates Foundation

• Tech-enabled Medicare provider Devoted Health announced its $175M Series E

• Satellite logistics provider D-Orbit raised $110M in a series C led by Japanese conglomerate Marubeni, a year after shelving its IPO plans

• Layoffs continued into the new year, with Twitch, Discord, Duolingo, Rent the Runway and Google topping the list this week

• Keith Rabois, accomplished investor and founder and one of the industry’s truly contrarian voices, left Peter Thiel’s Founders Fund to return to Khosla Ventures, the shop he left in 2019

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