Tech Brew Ride Home - Fri. 04/22 – The Demise Of CNN+ Makes Quibi Look Good

Episode Date: April 22, 2022

CNN+ only made it, what, 1/8th of a Quibi? There’s blood on the streaming wars dance floor. a16z’s new crypto research lab makes me feel like I have to start covering them like a startup or a conglomerate. More bad news for Meta: they’re way behind in the payments race in India. And of course, the weekend longreads suggestions. Sponsors: discover.upland.me/techmeme Links: CNN+ Streaming Service Will Shut Down Weeks After Its Start (NYTimes) a16z Crypto is launching an academic research lab focused on web3 (The Block) How Meta Platforms Fell Behind in Indian Mobile Payments (WSJ) Weekend Longreads Suggestions: ApeCoin & the death of staking (Cobie Substack) Cutting-Edge Crypto Coins Tout Stability. Critics Call Them Dangerous. (WSJ) Rivian CEO Warns of Looming Electric-Vehicle Battery Shortage (WSJ) Video Game Junkie Quietly Builds $3 Billion Payments Powerhouse (Bloomberg) The Sidekick Was the Best Smartphone Ever (Debugger) 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 Tech meme right home for Friday, April 22nd, 2022. I'm Brian McCullough today. CNN Plus only made it what? One eighth of a quibby. There's blood on the streaming wars dance floor. A16Z's new crypto research lab makes me feel like I have to start covering them like a startup or a conglomerate. More bad news for meta. They're way behind in the payments race in India. And of course, the weekend long read suggestions. Here's what you miss today in the world of tech. Well, yes, there is a huge carcass on the Streaming Wars battlefield, as we feared. Warner Brothers Discovery announced yesterday, without much emotion, really, that it will shut

down CNN Plus on April 30th. CNN Plus only debuted on March 29th, and sources say it had only around 150,000 subscribers, quoting the New York Times. The shutdown is an ignominious end to an operation into which CNN sank tens of millions of dollars. From a nationwide marketing campaign to hundreds of newly hired employees to big contracts for big name anchors, including the former Fox News Sunday host Chris Wallace and the former NPR co-host, Audie Cornish. It collapsed just two days after Netflix reported a quarterly decline in subscriptions for the first time in a decade, a potential warning sign for major media companies joining the increasingly crowded field of streaming services. The abrupt demise

of CNN Plus, as well as Netflix's projection that it will lose two million more subscribers over the next three months, has raised questions about how many people are willing to pay for numerous streaming services, as well as how profitable these businesses can become in the next few years. CNN Plus was the brainchild of CNN's former corporate parent, Warner Media, and its former President Jeff Zucker, who envisioned a versatile digital product with big name hosts that could buttress the network amid a decline in traditional cable viewership. But the service had a powerful skeptic, David Zazlov, the chief executive of Discovery, who was on the verge of completing a merger with WarnerMedia that would put him in control of the news network.

Executives at Discovery wary of antitrust rules were constrained from advising their counterparts at CNN until the merger was done. CNN Plus had lost its champion when Mr. Zucker left in February because of an undisclosed romantic relationship with a colleague. But Jason Kallar, the Warner Media chief executive, forged ahead anyway, launching the streaming platform on March 29th to the frustration of the discovery leadership, end quote. So we're going to talk a lot about this on the bonus episode this weekend, but basically, it kind of sounds like this is exactly what it looks like. In the midst of a merger, two executive teams with different visions were meshed together. One had enough political clout

to push through an experiment that the other didn't believe in, but that only served to give the experiment enough rope to hang the other executive team with when the experiment didn't work out. Basically, CNN Plus was an idea that politically couldn't be killed. killed before it was launched, so it was pushed into the world so that it could be proven to be stillborn in the cold light of day. Quoting Axios, inside Discovery, executives were frustrated that CNN didn't hold off on the launch until after the merger. The launch felt rushed in order to stake a claim over the service and the network's future ahead of the merger, a source told Axios. Discovery wants to build one scaled subscription streaming

app based on HBO Max's branding. That includes a cheaper ad-supported tier. It will eventually combined Discovery Plus with the HBO Max app after initially offering them as a bundle. Much of the CNN Plus programming will be reallocated to other platforms. Some features like CNN's interview club will likely live on CNN's free ad-supported app. Other shows may be included in HBO Max, end quote. As I say, look to the weekend bonus episode for much, much more. And as I said on Twitter, basically all of the subway ads that are plastering New York City right now for CNN Plus, will likely still be up there months from now. So the ads will live on longer than the service

itself. It's funny. I almost have to cover A16Z as I would a startup company, a startup company that's constantly iterating new products and features, or maybe a conglomerate, a conglomerate of, I don't know, startup enterprises. For example, Andrescent Horowitz has launched A16Z Crypto Research, a lab focused on Web3 breakthroughs that can contribute to deployable code, quoting the block. The new unit will be led by Tim Ruffgarden, a prominent academic expert in game theory who has been a professor at both Stanford and Columbia. He joined A16Z as a research advisor last year and will now take the title of Head of Research. Roughgarden's goal is to create a university-like effort within the firm akin to Bell Labs or Deep Mind, the artificial intelligence research

subsidiary of Google's parent company Alphabet. It is clear that Web3 is a new scientific breakthrough that brings together ideas from computer science, finance, economics, and the humanities, noted Ali Yahya, a general partner at Andreessen Horowitz in an interview with the block. The new lab will aim to pinpoint and address the fundamental research problems facing the pursuit of mainstream crypto adoption. In some instances, the group may develop new tools that can help A16Z portfolio companies grow their business. The investment firm Paradigm has pursued a similar strategy. For instance, Paradigm recently worked with Rick and Morty co-creator Justin Royland on a new mechanism for non-fundable token sales. A16Z aspires to contribute to research breakthroughs that can contribute to deployable

code and technology as well as have an impact on the broader academic research field. The group may not simply focus on topics within the computer science or engineering fields and could also explore topics like how NFTs should be thought of in the context of art history or the impact of decentralized autonomous organizations on political science. Capital R research, said Roughgarden, adding that he wants members of the team to nab relevant research awards and contribute to peer-reviewed journals. The main pitch is that there is an opportunity to do fundamental work right now that will be taught to undergrads in 2030, he said, end quote. Not to pile on meta, overly, but everything seems to be coming up

millhouse for them all the sudden all at once. Among all the other worries that have sent META's stock plunging, remember that they were also making a big investment in India to attempt to take over the payment space in that country. Welp, Indian government data has revealed that Walmart-backed phone pay and Google Pay have a combined 80% plus share of India's mobile payments market, while WhatsApp, which would be META's play, of course, has a 0.02% share, quoting the Wall Street Journal. The National Payments Corporation of India, or NPCI, the governing body that oversees the widely popular Unified Payment Interface or UPI instrument, gave approval to WhatsApp last week to extend

its payment service to 100 million users. That may sound like a lot, but it's only a fourth of WhatsApp's user base in India. The development is still an improvement from where WhatsApp has been for the past few years. It was only in late 2020 when WhatsApp was allowed to expand the rollout of payments to 20 million users. The Indian government has stalled WhatsApp payments rollout for years now, at first because of Mehta's refusal to store financial data in India, and then over concerns about privacy and cybersecurity. WhatsApp's decision to sue the Indian government last year over its rules to weaken encryption hasn't helped matters. The messaging app is also under antitrust investigation for its

new privacy policy. The government has even restricted WhatsApp from sharing transaction data with meta. During this time, WhatsApp rivals Google Pay and Walmart-backed phone pay. And have taken over the market. Combined, they control over 80% of the UPI market share, according to official figures published by the NPCI. In comparison, WhatsApp payment share stands at an abysmal 0.02% by value. UPI transactions crossed $1 trillion in value in the financial year that ended in March. To be sure, no one can make money off of UPI, but it acts as a high transaction feature to attract users to an app, and they can use it for shopping and bill payments. NPCI's latest mandate, which has yet to be enforced, will likely restrict Walmart and Google's

hold on the UPI market. So this has likely thrown WhatsApp a lifeline. According to the new rules, no third-party payment provider can exceed a 30% market share. This is expected to encourage more companies to challenge Google and Walmart's duopoly in the market, so meta has an opening to catch up, but to take full advantage, it may need to patch up relations with Indian regulators, end quote. Time for the weekend long read suggestions. First up, I'm not sure I grok all of this, but this substack post from Kobe has gotten a lot of chatter in the cryptosphere. It's titled ApeCoin and the Death of Staking.

And well, it's not shy about the point it is making. Somehow, over time, the word staking has been repurposed and redefined. Instead of receiving rewards for contributing to chain security with collateral at stake, Modern staking just seems to mean, I don't know, we'll give you more coins as a reward if you don't sell your current coins, L.O.L. These modern staking mechanisms do not have any function in the ecosystem to which they belong. They don't do anything in any practical or technical sense. They don't make an ecosystem more robust. They are a shell game using the name of a different thing to obfuscate their actual purpose, which is to encourage less selling. When proof of stake protocols issue rewards to stakers, they are buying chain security. It's a worthwhile use of equity. When DeFi projects offer liquidity mining programs, they are buying growth and TVL. Depending on how the program is designed, it can also be a worthwhile use of equity. Spending equity for things that makes the protocol more sustainable, larger, or more secure, seems worthwhile. But these staking mechanisms that do not do anything at all except pay

users more coins for staking are giving away equity for nothing, except to reduce potential seller's liquidity. If you don't stake, your share of the network or protocol is inflated away by new emissions. Plus, staking has no risk. You can't lose coin because staking doesn't do anything. So lock up your coins. Secure them off market today. In fact, we'll pay you to do it. Simply paying users for not selling, payment received in the same asset that they are not selling, seems like a pretty late stage in the games of Ponzi creation, end quote. Then my continued attempts to educate myself about stablecoins led me to this piece in the Wall Street Journal. Basically, my assumption with crypto all along has been that if crypto was a bubble, and if it ever burst, it wouldn't affect the overall economy.

And yet, as stablecoins increasingly seem to underpin a lot of the crypto market, I'm not so sure. But I'm talking about a specific kind of stablecoin, algorithmic stable coins, which introduced the kind of systemic risk that it seems to me could create the sort of knock-on contagion effect that you would see, well, like you saw when the banks failed back in the Great Recession. Quote, issuers of conventional stablecoins say they hold cash or bonds so each of their digital coins is backed by a dollar's worth of real assets. But algorithmic stablecoins aren't necessarily backed by any assets at all. Instead, they rely on financial engineering to maintain their link to the dollar.

Some have failed, saddling investors with losses. It's a lot more dangerous than taking a T-bill and tokenizing. it, said Charles Cascarilla, chief executive of Paxos, the issuer of Binance-USD, a popular stable coin that uses the asset-backed approach. It's a recipe for something really bad to happen, he said, end quote. Then, for whatever reason, I've been seeing a lot of these sorts of stories. Remember how I've wondered if we even have the infrastructure in place to make the metaverse actually happen? Well, along a similar line, what if we don't have the infrastructure in place to make the electric car or even the overall green energy revolution happen. I read a piece recently that

said to get the infrastructure in place to have the green energy takeover we expect. We need 100x the battery capacity in place that we currently do today. And meanwhile, today, we might already be on the brink of our electric car revolution screeching to a halt again for lack of batteries, quoting the Wall Street Journal. Rivian Automotive Chief Executive RJ Scourange is warning that the auto industry could soon face a shortage of battery supplies for electric vehicles, a challenge that he says could surpass the current computer chip shortage. Car companies are trying to lock up limited supplies of raw materials such as cobalt, lithium, and nickel that are key to battery making, and many are constructing their own battery plants to put more battery powered models

in showrooms. Put very simply, all the world's cell production combined represents well under 10% of what we will need in 10 years. Mr. Scoringe said last week, while giving reporters a tour of the company's plan in normal Illinois, meaning 90 to 95 percent of the supply chain does not exist, he added. The CEO's comments are the latest alarm bell to go off across both the auto and battery sectors, with executives worried that the fast-rising demand for electric vehicle parts and a shortfall of critical materials and production could result in an acute supply crunch, end quote. This week, I also learned about the LA-based company that has quietly built a $3 billion powerhouse by enabling all of the micro-transactions that have taken over gaming.

Quoting Bloomberg. Zala, which Adjipitov founded in 2005, allows video game producers to sell in-game digital items such as skins that change a character's appearance or virtual pets in exchange for about a 5% cut of the sales. Its clients include some of the hottest companies in the industry, including Epic Games, Valve, and Roblox, whose platform is a hit with children. He owns 100% of the company, which brought in nearly $100 million last year. Two investment banks estimated last year that Zala could seek a valuation of as much as $3 billion if it were to go public, according to documents seen by Bloomberg, and quote.

And finally, from Debugger, Clive Thompson makes the case that the sidekick was the best smartphone ever, quote. The sidekick arrived like a pure blast from the future. It had a complete web browser, built-in messaging apps like AOL Instant Messenger, email and texting, and an honest-to-goodness app store. The device pioneered so many things, it's hard to list them all. It was the first phone to let you multitask several apps at once, for example, and the first to keep you abreast of what each app was doing. If you got an IAM on AOL while using another app, it would display the message scrolling across the top. Common today, but invented by the sidekick folks.

The phone stored data in the cloud. Developers released a wild array of software for the sidekick including a full-on telnet SSH client that I used to log into old school text-based BBSs like I'd stepped straight out of a goddamn hacker movie. But the absolute killer feature was that rotating screen. It flicked open with the menace of a switchblade, making a sumptuous snick. Behind it lay a keyboard so ergonomically wonderful that I could type practically as fast as I could on my laptop. It was the sweetest phone anyone had ever seen. I was an early adopter of the first model and when I opened it on the subway in 2002, heads turned. And frankly, they probably still would. When I showed my son how the screen snapped open, his eyes widened, he flicked it open

and shut. Snick, snick, snick, snick, snick, snick, snick, snick. This, he proclaimed, is incredibly cool, end quote. Two bonus episodes coming at you this weekend. First up, as mentioned, our Twitter space last night featured the great Julia Alexander talking to us about what the heck has happened to Netflix, what the heck happened with CNN Plus, and what the heck is going on with the streaming wars generally. And then on Sunday, we'll talk to another ride home fund portfolio company, Open Access, which is another one where you can get involved in the beta before anyone else.

Exciting stuff, talk to you on Monday.