Tech Brew Ride Home - Fri. 03/07 – “AI Wrappers” No Longer A Pejorative

Episode Date: March 7, 2025

Will Apple have to allow side loading in Brazil? The US Strategic Crypto Reserve becomes a reality. Larry Page has a new startup. The concept of a startup being nothing more than an “AI Wrapper” is no longer a pejorative. And, of course, the Weekend Longreads Suggestions. Sponsors: Tonal.com Promocode RIDE for $200 off Links: Brazilian court gives Apple 90 days to allow sideloading on iOS (9to5Mac) Donald Trump signs executive order for Strategic Bitcoin Reserve (CoinTelegraph) Drone Defense Startup Shield AI Lands $5.3 Billion Valuation (Bloomberg) Larry Page Has a New AI Startup (The Information) The Hottest AI Companies Right Now Are ‘Apps’ (Bloomberg) Weekend Longreads Suggestions: McDonald’s Gives Its Restaurants an AI Makeover (WSJ) YouTube at 20: How the Video Colossus Launched the Creator Economy and Turned From Hollywood Foe to Friend (Variety) Learn more about your ad choices. Visit megaphone.fm/adchoices

On April 4th, 2023, around 2 in the morning, a man was found stabbed multiple times on a sidewalk in downtown San Francisco. Hey, who did this to you? What happened next turned the story into a political firestorm. Reports have identified the victim as Bob Lee, the founder of Cash App. From Bloomberg Podcasts, this is Foundering, the Killing of Bob Lee, beginning April 16. Welcome to the TechMeme right home for Friday, March 7th, 2025. I'm Brian McCullough today. Will Apple have to allow side-loading in Brazil? The U.S. Strategic Crypto Reserve becomes a reality. Larry Page has a new startup. The concept of a startup being nothing more than an AI rapper is no longer a pejorative.

And of course, the weekend long-ring suggestions. Here's what you miss today in the world of tech. A Brazilian judge has given Apple 90 days to allow side-loading on iOS in Brazil, saying the limitation imposed by Apple on developers could deter new competition. As ever with these things, the question you have to ask is, is this a big enough market for Apple to feel compelled to comply? Quoting 9 to 5 Mac. In November, 2024, the Brazilian antitrust regulator Cade ruled that Apple can no longer prevent developers from selling content and distributing apps outside the App Store in Brazil. The company would have 20 days to comply with Brazil's antitrust legislation, otherwise it would be fined more than $40,000 a day. Unsurprisingly, Apple appealed the decision

and a judge ruled that the injunction was unnecessary, giving the company more time to discuss the case. At the time, Apple said that the request to implement changes to the app store wasn't urgent, and that it would also affect the company's business. Last month, Apple had to face a public hearing in Brazil concerning the case. But now, Judge Pablo Zwinga has ordered that Apple will have to implement the required changes in Brazil within the next three months. The judge states that despite Apple's claim, the company has already complied with similar obligations in other countries without demonstrating a significant impact or irreparable damage to its business model. The antitrust investigation against Apple began after Latin American e-commerce giant Mercado Libre

accused Apple of forcing developers offering digital goods or services in their apps to use Apple's own payment system. Other companies such as Match, which owns Tinder and Epic Games, have also filed complaints against Apple with the Brazilian regulator. An Apple spokesperson told Valor Economico that the company believes in vibrant and competitive markets in that it faces competition in all segments and jurisdictions where the company operates, reinforcing its commitment to its users. Apple believes the changes will harm the privacy and security of iOS users and says it will appeal the decision, end quote. It has happened. President Trump has signed an executive order to establish a strategic Bitcoin reserve and a digital asset stockpile using BTC and other digital assets forfeited in criminal or civil cases,

quoting Coin Telegraph. Additionally, a March 6 fact sheet from the White House said the order also establishes a U.S. digital asset stockpile, which Crypto Tsar David Sacks said would be made up of cryptocurrencies other than Bitcoin. Sacks said the Bitcoin Reserve was a digital Fort Knox for the cryptocurrency, and the U.S. wouldn't sell any Bitcoin put in the reserve. It will be kept as a store of value, he added. The White House said that Bitcoin owned by the Treasury Department would cede the reserve, and other federal agencies will evaluate their legal authority to transfer any Bitcoin they own into the reserve. It added the Treasury and Commerce Secretaries would make

budget-neutral strategies for buying more Bitcoin for the reserve provided that those strategies impose no incremental costs on American taxpayers. As for the digital asset stockpile, SACS said, its purpose is the responsible stewardship of the government's digital assets under the Treasury Department. Notably, he added that the government wouldn't buy additional cryptocurrencies for the stockpile beyond those obtained through forfeiture proceedings, and the Treasury Secretary may determine strategies for responsible stewardship, including potential sales from the stockpile. Arkham Intelligence data shows the U.S. government doesn't hold any XRP, Seoul, or ADA among the $18.28 billion worth of crypto under its control. Its largest holding is $198,109 Bitcoin worth $17.87 billion. Its ETH holdings are worth $119 million, the third largest holding behind $122 million worth of the stable coin tether, end quote. Interesting raise because it continues to highlight how defense startups are all the rage.

San Diego-based Shield AI raised $240 million from L3 Harris, A16Z, and others at a $5.3 billion valuation to develop its hive-mined autonomous vehicle platform. Quoting Bloomberg, variations of Shield AI's hive-mine software can pilot autonomous vehicles as well as help companies build their own autonomous drones, robots, and other systems. Shield AI is most famous for its drone called V-BAT, capable of vertical takeoff and landing. One is prominently displayed in its San Diego offices. But going forward, the company wants to be known for its software. This next phase is really about working with the small and medium businesses that want to operate autonomous hardware across air, land, or sea.

Shield AI co-founder Brandon Seng said, we spent a decade and $1 billion plus building this. Shield AI was founded by Seng, a former Navy SEAL and his brother Ryan Seng, an engine and former technical lead at Qualcomm, who is now the startup's chief executive officer. Shield AI is one of dozens of defense startups to emerge in recent years with enthusiastic backing from venture capitalists. Investors have poured record amounts into AI, space weapons, and other defense technologies hoping the Pentagon will increase its tech spending as modern warfare evolves. Shield AI's hive-mine software aims to make it easier for more developers and businesses to create autonomous hardware. The company's tools can also help pilot autonomous vehicles ranging from

one-way attack drones to F-16s and support swarming operations. Shield says its software can allow vehicles to execute complex missions autonomously, including when GPS and communications are jammed. Brandon Sang said, interest from investors, including defense contractors and VCs, has recently surged, adding that the company turned down massive checks and that the current round was oversubscribed. Physical AI is the next thing, and we are mobilized against it, he said. Shield AI aspires to service the autonomous needs for the defense. defense sector like Palantir services its intelligence needs, end quote. This is technically not an interesting raise because he doesn't really need outside money,

but sources say Google founder Larry Page has formed a new company, Dinatomics, to use LLMs to create highly optimized designs for various objects and then have a factory build them. Quote, the stealth company is run by Chris Anderson. These people said Anderson was previously the chief technology officer of another pageback company kitty hawk, an ambitious project to build small electric airplanes, potentially revolutionizing how people get around cities. The company shut down in 2022 amid failed prototypes and regulatory concerns. Anderson did not respond to a request for comment, and Page could not be reached for comment. Page has remained largely outside day-to-day operations at Google's parent alphabet,

where he is still on the board and the most powerful shareholder. His Google co-founder, Sergey Brin, on the other hand, has been going into the office to work on the development of Gemini, Google's large language models. Silicon Valley entrepreneurs are, increasingly interested in using AI models to build physical things. Arcade is one such company using AI to design jewelry, end quote. And confirmation of what Chris and I discussed on the 2000th episode spectacular. Yes, a lot of the hot AI startups right now fit what we called our AI varietals thesis. Quoting Bloomberg, not long ago, Silicon Valley was dismissive of startups like Harvey, while OpenAI developed cutting-edge artificial intelligence models with the potential to shake up

almost every industry, Harvey had a more modest goal, building software that makes open AI's technology more useful for lawyers. The market's perception of companies like us was that their GPT rappers, said Harvey chief executive officer Winston Weinberg, referencing a derisive term used to suggest the repackaging of OpenAI's models. If investors were going to put money into something he added, it needed to be into OpenAI or Anthropic. Today, so-called AI rappers are all the rage. step into any venture capital office in Silicon Valley, and you'll hear investors buzzing about startups that offer AI chatbots, research tools, and other software applications for coding, clinicians, and customer service all built at least in part on the backs of large language models

created by other leading AI developers. These startups are seeing revenue and valuations grow at a fast clip, often while spending a fraction of the amount that top AI model developers do on chips, data centers, and talent. Harvey, founded in 2022, surpassed $50 million in annual recurring revenue in December, Weinberg said. Likewise, any Sphere, the startup behind the popular code editing tool cursor, has hit $100 million in annual recurring revenue, according to people familiar with the matter, who spoke on condition of anonymity to discuss private information. Any Sphere did not respond to a request for comment. Michael Magnano, a partner at Lightspeed Venture Partners, likens this moment in AI to the original smartphone app, boom, nearly two decades ago. Just like after the iPhone

launch, there were millions of new mobile apps, said Mignano, an investor in the AI note-taking service granola, which uses technology from OpenAI and Anthropic. Now, with AI and LLMs, there will be millions of new AI products. Investors are eager to put their money into these services. Harvey raised a $300 million round earlier this year, led by Sequoia at a $3 billion valuation. Any sphere raised a $105 million round led by Thrive Capital and Andreessen Horowitz in January, valuing it at $2.5 billion. And VC demand is so high that founders like Varan Moan, say the conventional fundraising process isn't something we have to do. Moen's company, Codium, which also offers an AI tool for coders, is currently raising money at a valuation near $3 billion in a round led by Kleiner Perkins,

according to a person familiar with the matter. Certainly, VC appetite remains strong for OpenAI and Anthropic as evidenced by their recent mega-rounds, but backing these richly valued companies is getting too costly for some firms. Investors have also begun to question the wisdom of AI companies pouring billions into developing models in the wake of Deepseek, a Chinese upstart that claims to have built a competitive option for just $5.6 million. And several notable modelmakers have shifted away from the race to build more advanced AI systems or been partially absorbed by big tech firms, raising fears of more consolidation to come. At this point, it's very clear that the apps are definitely the best place to invest because that is where the revenue is,

that is where the customers are, said Jesse Zhang, CEO of Deca Gong, a startup that builds AI customer support agents, in part by using models from OpenAI and Anthropic. The models will get better and better and cheaper, he added, and the apps will benefit the most from these improvements. Perhaps no company embodies the promise of the AI app era like AnySphere, founded in 2022 by four friends who met at the Massachusetts Institute of Technology and had little more than intern-level job experience. AnySphere has seen soaring growth for its AI-powered code editor, cursor. AnySphere's investors claim it's the fastest-growing software startup of all time. A title previously held by Wiz, a cloud security company that reached $100 million in annual recurring revenue in only 18 months. AnySphere hit that in just 12 months,

according to people familiar with the matter. Leaning on a mix of LLMs from other providers, AnySphere has built a coding tool that developers say saves them time, and it's won a cult following of engineers and tech elites willing to pay for the service. Coinbase Global CEO Brian Armstrong wrote on X that 100% of his company's coders use cursor, end quote. That was a bit of a long read, so let's do this properly. In this week's weekend, Long Read's suggestions, first up a look at McDonald's new tech initiatives, including the use of edge computing to predict equipment breakdowns and computer vision to ensure order accuracy, quoting the journal. McDonald's tapped Google Cloud in late 2023 to bring more computing power to each of its restaurants, giving them the ability

to process and analyze data on site. The setup known as edge computing can be a faster, cheaper option than sending data to the cloud, especially in more far-flung locations with less reliable cloud connections, said Brian Rice, the Burger Giants' chief information officer. Edge computing will enable applications like predicting wind kitchen equipment, such as friars and its notorious McFlurry ice cream machines, is likely to break down, Rice said. The Burger Chain said its suppliers have begun installing sensors on kitchen equipment that will feed data to the edge computing system and give franchises a real-time view into how their

restaurants are operating. AI can then analyze that data for early signs of maintenance problems. McDonald's is also exploring the use of computer vision, the form of AI behind facial recognition in store-mounted cameras to determine whether orders are accurate before they're handed to customers, he said. If we can proactively address those issues before they occur, that's going to mean smoother operations in the future, Rice added. Additionally, the ability to tap edge computing will power voice AI at the drive-thru, a capability McDonald's is also working with Google's cloud computing arm to explore, Rice said. The company has been experimenting with voice-activated drive-thrus and robotic deep friars since 2019 and ended its partnership with IBM to test automated

order tracking at the drive-thru in 2024. Edge computing will also help McDonald's restaurant managers oversee their in-store operations. The Burger Giant is looking to create a generative AI virtual manager, Rice said, which handles administrative tasks. such as shifts scheduling on managers' behalf, fast food giant Yum brands, Pizza Hut, and Taco Bell, have also explored similar capabilities, end quote. And we mentioned it earlier this week, so from Variety, a look at YouTube's origins, its growth and its domination as the platform turns 20 years old, including an interview with CEO Neil Moen, who is nearing 10 years at the company,

quote, When YouTube was incorporated in February 2005 by three former PayPal employees, Chad Hurley, Steve Chen, and Jawad Karam, the startup was housed in Hurley's Garage in Manlo Park, California. The very first video was uploaded April 23, 2005 by Karam entitled Me at the Zoo. It was a 19-second clip he shot in front of the Elephant Exhibit at the San Diego Zoo. The founders actually launched the platform as a site for video dating, but after one week, not a single person had uploaded any videos. so they pivoted to promoting YouTube as a general-purpose video-sharing platform.

It was a long-shot idea, as it wasn't clear at the time whether the internet could support video delivery at scale, said Roliffe Botha, managing partner at Sequoia Capital, the Menlo Park-based venture capital firm that has backed some of Silicon Valley's most world-beating startups, both that led Sequoia's total investment of $8.5 million in YouTube. The three entrepreneurs were scrappy and smart, he says, explaining why he made the bet on the fledgling service. The site was usable in a way that others were not. Not. Two decades later, the platform is a massive fire hose that sprays out every kind of content

imaginable watched by an estimated 2.44 billion monthly users in 2024, according to researcher e-marketer. There are vlogs, how-to videos, comedy sketches, music videos, news segments, talks shows, product reviews, video game playthrus, life hacks, animated shows, podcasts, TV clips, full movies, and movie trailers, stunts, pranks, and challenges. More than 500 hours of video are uploaded to YouTube every minute. It's the number two most visited site in the world behind only, Google.com, and the second biggest search engine after Google. Worldwide, users watch on average more than one billion hours of YouTube content on TVs every day, according to the company. In the U.S., TVs recently surpassed phones and tablets as YouTube's number one viewing device. According to Nielsen,

for two years running, Americans have spent more time watching YouTube on their TV sets than any other streamer, including Netflix, Disney Plus, and Amazon Prime video. In 2020, YouTube generated global ad revenue of $36.15 billion up an impressive 15%. For the 12 months that ended September 2024, YouTube's subscription revenue topped $15 billion. That was generated by YouTube TV, the biggest internet delivered live TV service in the U.S. with 8 million-plus customers. YouTube Premium, which provides ad-free videos and other perks, and YouTube Music-Pres premium, a music-only streaming service. This week it announced that it now has more than 125 million subscribers for YouTube music and premium services. up from 100 million a year ago. As a standalone entity, apart from Google, YouTube would be worth

more than $400 billion. Wall Street analyst firm Moffat Nathanson has estimated more than Disney, Comcast, Warner Brothers Discovery, and Paramount Global combined, end quote. Have a good weekend, everybody. I think I'll share another taste of the weekly omnibus episode tomorrow. Remember, you can sign up to get that every week, along with ad-free versions of every episode if you go to tech.supercast.tech. Talk to you on Monday.