Tech Brew Ride Home - Fri. 07/15 – The “Vibe Shift” At Amazon

Episode Date: July 15, 2022

Now the haircuts have come for Stripe, but they took theirs voluntarily. Who’s responsible for the big hole on Celsius’ balance sheet? Twitter wants to let devs make their own timelines. Will Amazon voluntarily exit the white label business. And, of course, the Weekend Longreads Suggestions. Sponsors: Manscaped.com code RIDE for 20% off Kolide.com/ride Links: Stripe Cuts Internal Valuation by 28% (WSJ) Celsius Discloses $1.19 Billion Deficit in Bankruptcy Filing (Bloomberg) Twitter is testing custom timelines, and first one is about The Bachelorette (TechCrunch) Amazon Has Been Slashing Private-Label Selection Amid Weak Sales (WSJ) Weekend Longreads Suggestions: How Three Arrows Capital Blew Up and Set Off a Crypto Contagion (Bloomberg) The Standards Innovation Paradox (Michael Mignano Medium) Siberia or Japan? Expert Google Maps Players Can Tell at a Glimpse. (NYTimes) Advanced E.V. Batteries Move From Labs to Mass Production (NYTimes) How the Webb sends its hundred-megapixel images a million miles back to Earth (TechCrunch) The Webb Space Telescope’s Profound Data Challenges (iee Spectrum) 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, July 15th, 2022. I'm Brian McCullough today. Now the haircuts have come for stripe, but they took theirs voluntarily. Who's responsible for the big hole on Celsius's balance sheet? Twitter wants to let devs make their own timelines.

Will Amazon voluntarily exit the white label business? And of course, the weekend long-rate suggestions. Here's what you miss today in the world of tech. Everything everywhere all at wants. NFT marketplace OpenC CEO Devin Finser says his company laid off around 20% of its employees. OpenC didn't disclose the number impacted, but said that 230 people remain on staff. Not surprising, I guess. Even the leaders in any bubble can get arrows in them when the bubble bursts, and that's not even taking into account the long-term viability of the NFT market. But here's another example. Stripe has basically been the closest thing to the the king of the unicorns in this particular hype cycle. But sources say Stripe, which was last

valued by private investors at $95 billion, recently told staff it cut its internal share price by 28%, lowering those shares implied valuation to $74 billion. Quoting the Wall Street Journal. San Francisco-based Stripe said in the email that the board approved the lower share price effective June 30th, the people said the payments processor to startups and fast-growing internet companies didn't explain the decision to lower its internal valuation, the people said. The shares of publicly traded fintech companies have plummeted in the past few months, making Stripe look overvalued. Payments processor PayPal Holdings, which investors often compare to Stripe, has seen its stock declined by over 60% since January 1st.

In March 2021, Stripe raised $600 million from a group of investors that included Ireland's National Treasury Management Agency and Fidelity Investments. Stripe was valued at $95 billion in that round, more than $2,000. and a half times its valuation in a 2019 fundraising round. A 409A valuation is an independent estimate of a startup's fair market value, often used to price stock options to employees. Private companies often update their 409A valuation to more appropriately assess the best price to issue new stock options. The metric is separate from the valuations. Investors assigned as startup shares, which are usually based on the price of the last financing

round, but can change based on changes in a company's performance or external market shifts. Stripe isn't the first high-profile startup to lower its 409A valuation. Earlier this year, Instacart marked down its internal valuation to $24 billion from $39 billion, a decision the company said it made to help with retention and recruiting by giving employees more potential upside with their options, end quote. And Groundhog Day. Filinges indicate that Celsius still has a $1.19 billion deficit on its balance sheet. Celsius is able to tally around $4.3 billion in assets against around $5.5 billion in liabilities, thus the whole.

The Celsius CEO also said that his company was owed $439 million by a, quote, private lending platform that sources say is specialist finance company Equities First, quoting the Financial Times. Equities First is a specialist finance company best known for lending cash to executives secured against their stock holdings. The money owed by Indianapolis-based Equities First forms a significant chunk of Celsius's assets that hundreds of thousands of its customers will be relying on to recover at least some of their savings. Machinsky in his filing to the bankruptcy court said that Celsius had liabilities of $5.5 billion, the vast majority of which is owed to users, against which it had assets of $4.3 billion. Equity's first is in ongoing conversation with our client, and both parties have agreed to extend our obligations, said Equities First.

Celsius did not respond to a request for comment. The court filing said the $439 million debt owed by Equities First, which is not named in the document, had risen initially from deals in which Celsius was the borrower. Celsius began borrowing from Equities First in 2019 on a secured basis to support its operations, according to the filing. Mishinsky said there was a, quote, lack of institutional lending available to cryptocurrency companies at the time. In July 2021, Celsius sought to repay one of its loans and retrieve the collateral it had. pledged as security, the filing said, but, quote, it was informed for the first time that the lender was unable to return the company's collateral on a timely basis, end quote. As a result, Celsius

flipped from being a borrower to being owed $409 million on an unsecured basis by equities first. Cryptocurrency secured loans are often over-collateralized, meaning a greater value of crypto is pledged as collateral than the amount that is borrowed. The debt has been slowly paid down since September of last year, current repayments are running at $5 million a month. The $439 million outstanding is made up of $361 million of cash and $3,765 Bitcoin, the filing said, end quote. Despite, you know, waves hand at everything in the background, in spite of everything, Twitter has been soldiering on with its product renaissance from the eternal file of They never thought to do something like this before.

Twitter is apparently testing custom timelines built by developers that merge content around specific themes, starting with one about The Bachelorette in the U.S. and Canada, quoting TechCrunch. Twitter said the Bachelorette timeline will be available to a small group of people in the U.S. and Canada for 10 weeks. The users included in the custom timeline test will get a prompt on the web to pin the timeline next to their home timeline. Twitter has been known over the years for its swinging set. sentiments when it comes to developers, initially being very open to third parties, building customized interfaces to use Twitter, then pulling away from that and focusing on those that are building in specific use cases. If this progresses beyond the experiment phase,

customized timelines speak to how Twitter continues to look for more ways of appealing to mass market users who may not want to go through the work themselves of curating their own content feeds around a special interest. It also opens the door to people longer term building out different streams on Twitter for different uses simultaneously. Say if you're an NFL fan, but also use Twitter to track news for work, and you don't want the distraction of one when focusing on the other. Twitter is hosting its developer conference CHRP this November after more than a decade, so we might hear more about decentralization and custom timelines at that time. The company noted that the content on this timeline will be selected and ordered based on relevance to the timeline's theme

using information like search terms, topics, handles, and manual curation. So you can't switch to the latest tweets view. Users can already build custom timelines of sorts by way of lists, which let you curate a selection of accounts, which can in turn be pinned on the mobile app and then viewed by swiping between them on the home screen. But since this is based around a stream of tweets by accounts you've included in the list, you're not able to do any more in the way of curation or filtering, end quote. continued signs of, let's call it a vibe shift over at Amazon in the post-Bezos era. There have been a bunch of rumors this week swirling that Amazon has been offering to make concessions in an effort to get out from the regulatory sin bin. The European Commission even said that Amazon offered to limit its use of marketplace

seller data and make changes to the buy box rankings to settle EU antitrust concerns. And now sources are telling the journal that Amazon, Amazon has reduced its white label product selection and even mauled exiting the business altogether amid weak sales and mounting regulatory pressure. Amazon's private label business with 243,000 products across 45 different house brands as of 2020 has been a source of controversy because it competes with other sellers on its platform. The decision to scale back the house brands resulted partly from disappointing sales for many

of the items, the people said. It also came as the retail and technology. Giant has faced criticism in recent years from lawmakers and others that it sometimes gives advantages to its own brands at the expense of products sold by other vendors on its site. Over the past six months, Amazon Leadership instructed its private label team to slash the list of items and not to reorder many of them, the people said. Executives discussed reducing its private label assortment in the U.S. by well over half, one of them said.

The move was initiated after a review of the business by Dave Clark, a longtime Amazon executive who took over as head of its global consumer business in January 2021, the people said, Mr. Clark left the company last month. As a result of that review, Mr. Clark pushed the team to focus on best-selling commodity goods along the lines of targets up and up or Walmart's great value brands rather than offer the extensive range of items Amazon currently does, the people said. Regulatory scrutiny has prompted Amazon executives over the past year to consider fully exiting private brands and how the company might go about that, the people said. The executives decided not to take any action until necessary, potentially as a concession they could

offer if the FTC or another regulatory agency were to threaten or file litigation. Some of the people said. Mr. Bezos, who stepped down as CEO last year to be executive chairman, has long been a backer of the private label business. In the past, he has bristled at its relatively small sales, said some of the people. A few years ago, Mr. Bezos gave the private label team a goal to reach 10% of Amazon sales by 2022, the journal has reported. The team responded by rapid adding thousands of items to try to juice sales, the people involved said. Many items ended up sitting in warehouses or needing to be marked down, end quote. Time for the weekend long read suggestions. First up, Bloomberg has a big in-depth look at the rise and fall of crypto hedge fund

Three Arrows Capital, who was, of course, at the center of a lot of the crypto crash over the last few weeks and whose founders Suu and Kyle Davies seemingly bet everything on prices only. going up, Arrow only go up, quote. More than that, Zhu and Davies were an integral part of the crypto market's densely woven web. Their fund was a venture investor in some of the best-known crypto startups and, in some cases, manager of their corporate treasuries. It was both an aggressive borrower from large lenders and a shareholder in some of those lenders. It was a corporate parent for other fledging funds. The duo were influencers with a combined 610,000 Twitter followers, as well as brokers of deals and introductions. Juve first made his

name in late 2018 by rightly calling the end of the last crypto winter, which saw the price of Bitcoin fall some 80%. So when Bitcoin fell from its peak of more than $68,000 this year, buffeted by rising interest rates that sent investors fleeing from risky assets, he remained sanguine. With borrowed cash, three arrows place big bets that the cryptocurrency would rebound. Instead, the market kept sinking, one domino falling after another, until the fund became the biggest domino of all. It started missing margin calls from the companies funding its trades in mid-June and declared bankruptcy on July 1st as Bitcoin traded below $20,000, end quote. Next, a follow-up on a recent Twitter space, Mike Magnano, founder of Anchor, finally wrote up some of the things he was noodling over when he spoke

to Chris and I last month in a piece called the Standards Paradox. He writes, quote, technical standards are awesome. Standards help teams save time and money by giving them a common language for how their products can interact with other products, eliminating the need to build each component within a market or redefine how systems communicate with each other. For example, a team building a new email client doesn't need to reinvent the format for how email is transmitted between sender and recipient.

Instead, they can just adopt SMTP, simple mail transfer protocol, the standard that defines how email transmission works, and then focus on crafting a great experience for their users. This means the wheel doesn't get reinvented when someone wants to do something that's been done before. They can just adopt the state. and accelerate their product development, reaching their audience, and oftentimes product market

fit much faster than by building completely proprietary products. Despite the benefit of standards-based products being able to reach an audience faster, the trade-off is that a lower barrier to entry means more products get created in a category causing market fragmentation and ultimately a slow pace of innovation. I call this trade-off the standards innovation paradox, and I'll explain it in more detail below, end quote. The New York Times has an odd story about a game called Geo-guessor, where competitors try to pinpoint where in the world a Google Street View image has been taken. It's a scary, weird talent. This is going to be South Philippines, somewhere on this road down here.

Trevor Rainbolt said, instantly, clicking on a location on a map of the world that was less than 11 miles from the spot. A road winding through woods was up next, Lake Tahoe, Siberia. It looks like we're going to be in Switzerland here unless we're in Japan. Yeah, we have to be in Japan here. Mr. Rainbolt said correctly pinpointing the country. Mr. Rainbolt has become the face of a fast-growing community of geography fanatics who play a game called Geogessor. The premise is simple. As you stare at a computer or phone, you're plop down somewhere in the world in Google Street View and must guess as quickly as you can exactly where you are. You can click to travel down roads and through cities, scanning for distinguishable landmarks, language. The closer you guess, the more points you score. To some, Mr. Rainbolt's snap answers seem like wizardry. To him, they are simply the result of countless hours of practice and an insatiable thirst for geographic knowledge. I don't think I'm some genius, said Mr. Rainbolt, a 23-year-old online video producer in Los Angeles. It's like a magician. To the magician, the trick is easy, but to everyone else, it's a lot harder, end quote. The New York Times also has a look at the

startup's racing to develop the next-gen battery technology for electric cars. CLA belongs to a group of startups that have developed materials that substantially improve the performance of existing battery designs, increasing range by 20% or more. Others include Group 14 technologies in Washington near Seattle, which has backing from Porsche, and 1D battery sciences in Palo Alto, California. All three have found ways to use silicon to store electricity inside batteries rather than the graphite that is prevalent in existing designs. Silicon can hold much more energy per pound than graphite, allowing batteries to be

lighter and cheaper and charge faster. Silicon would also ease the U.S. dependence on graphite refined in China, end quote. And finally, two stories about the James Webb Telescope, which has been giving us those great deep space pictures all this week from TechCrunch, a story of bandwidth and communications technology, quote, that main radio antenna is capable of sending about 28 megabits per second, which is comparable to home broadband speeds. If the signal from your router took about five seconds to travel through a million miles of vacuum to reach your laptop. That gives it about 57 gigabytes of download capacity per day. Interestingly, the web only has about 68 gigabytes of storage space internally, which you would think would make people nervous if it can send 57, but there

are more than enough opportunities to offload that data so it won't ever get that dreaded drive full message. But what you see in the end, even that big uncompressed 123 megabyte TIF image, isn't what the satellite sees. In fact, it doesn't even perceive color at all, at least as we understand it, end quote. Then from IEE spectrum, quote, as previous articles in this series have noted, James Webb's Space Telescope is parked at the Grange Point L2. It's a point of gravitational equilibrium located about one and a half million kilometers beyond Earth on a straight line between the planet and the sun. It's an ideal location for JWST to observe the universe without obstruction, and with minimal orbital adjustments.

Both the data collection and transmission rates of JWST dwarf those of the older Hubble Space Telescope. Compared to Hubble, which is still active and generates one to two gigabytes of data daily, JWST can produce up to 57 gigabytes each day, though that amount is dependent on what observations are scheduled. Any scientific data that JWST collects during its lifetime will need to be stored on board

because the spacecraft doesn't maintain round-the-clock contact with Earth. Data gathered from its scientific instruments once collected is stored within the spacecraft's 68-gibytes solid-state drive. 3% is reserved for engineering and telemetry data, end quote. Okay, no Twitter space this week because of COVID recovery, of course, and just, I don't know, general summer laziness on the part of Chris and I, but we already have guests booked for next week and the week after, so there's more coming. What I do have for you this weekend is a portfolio profile episode. This is actually our most recent investment. Just cut the check last week. It's a company making a simple consumer-facing hardware product that you'll get the appeal of right

away. And since it's an investment that we made just this quarter, that means if you're an investor in the fund this quarter, your money goes into this company. So if you like what you hear about this company and want to claim a piece of it yourself and you've not become an investor in the fund, you have until August 31st to invest in the fund to invest in this company. ArcX. More on that when the episode drops tomorrow. But if you want to invest in the ride home fund, more details on how to do that at ridehome fund.com.

Talk to you on Monday.