Tech Brew Ride Home - Thu. 05/05 – Elon To Be Twitter CEO?

Starting point is 00:00:00 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 Thursday, May 5th, 2022. I'm Brian McCullough today. Elon gets some friends to join his Twitter deal, and does he expect to be Twitter CEO soon? A Google acquisition shows their Metaverse aspirations, Sonos to launch a voice assistant, a hiring slowdown for meta,

Starting point is 00:00:52 how can there be need for layoffs at Cameo? And is anyone other than me and the U.S. government concerned about quantum computing breaking encryption? Here's what you miss today in the world of tech. So there have been new Elon Twitter stories literally every day since we last talked about the whole Elon Twitter saga, but I've been avoiding doing those stories because they seemed incremental to me, or behind the scenes, or merely just fresh takes. And Lord knows this show could be Elon and Twitter every single day, but that would get old. However, this is clearly notable, primarily because it probably has a knock-on effect on Tesla.

Starting point is 00:01:34 According to a filing, Elon Musk has secured $7.14 billion for his Twitter bid from Larry Ellison, Binance Sequoia, Saudi Prince Al-Walide, Fidelity, and others. Ellison alone is kicking in $1 billion. This has the effect of reducing Elon's personal margin loan to make the Twitter deal happen from $12.5 billion to $6.25 billion, which means, in short, he will have to sell less of his Tesla stock just to raise cash for the deal. Quoting the Financial Times. The biggest new backing for his purchase comes from Ellison, who is contributing $1 billion. Venture capital firm Sequoia is providing $800 million, while Dubai-based tech investment firm Vi Capital is giving $700 million. Binance is providing $500 million. Saudi Prince Al-Waleed, already an investor in Twitter, will roll 35 million shares of his into the bid vehicle, which at the offer price equates to a $1.9 billion stake. Musk also revealed working to bring in additional equity investors, including billionaire Twitter co-founder Jack Dorsey,

Starting point is 00:02:38 by giving existing shareholders an option to contribute their shares to the buyout, end quote. Several notable things to point out here. Note that Jack Dorsey, at least, has not yet rolled his stake into the deal like Prince Al-Waleed is doing. And if Larry Ellison being in there is surprising to you, remember how Oracle almost acquired TikTok? Also isn't Ellison on Tesla's board, I believe. And quoting Dan Premack on Twitter, it really is, kind of a sad list in a way. No one committing more than $1 billion, no big private equity firm signed on. Qatar is an interesting choice for a free speech platform as well, end quote. And since we're here, I wanted to mention some of the other recent stories I've passed on talking about this week.

Starting point is 00:03:22 They've largely revolved around disgruntlement among Twitter's existing employees. Twitter could still be facing a mass talent exodus and soon. And the other thing that has been discussed a lot lately is the mad spinning of wheels. that Twitter's advertising folks have been doing trying to reassure advertisers that in some new looser content moderation regime that we're assuming Elon Musk is going to usher in, their brands will still be safe, safe from their ads showing up beside questionable content. I'd say that too very much remains to be seen. By the way, as I was writing this, Ben Horowitz tweeted that A16Z is joining the deal via a $400 million investment, and David Faber at CNBC was reporting that Elon Musk

Starting point is 00:04:01 himself expects to be CEO of Twitter, at least at first, after the acquisition goes through. Metaverse Watch. Google is acquiring Raxium, which makes micro-l-D displays well-suited for AR and VR headsets. Raxium says its technology is five times more energy efficient than any existing tech, quoting the verge. This adds to the evidence that Google's next big AR move is growing closer. It previously acquired the Glasses Maker North in 2020 and is reportedly hiring engineers to build an augmented reality operating system. We learned in January that Google Labs is building an AR headset called Project Iris under the same management as the Project Starline High-RES video chat demo shown during its IO event last year. When the information first reported

Starting point is 00:04:50 Google's Raxium purchased last month, it noted that micro-LEDD tech could be useful for building AR displays that are more energy efficient than other solutions, but still look colorful. In addition, Raxium is working on monolithic integration for micro LEDs, which the information reports would mean manufacturing them out of the same kind of silicon use for most processors, potentially driving the price down significantly. Other companies working on micro LED AR hardware have included AAPL, Apple, and Vuzix. According to Raxium's website, a super Amel-led screen on your phone has a pixel pitch, the distance between the center of one pixel and the center of another pixel next to it, of about 50 microns, while its micro-LED could manage around 3.5 microns.

Starting point is 00:05:35 It also boasts of unprecedented efficiency. That's more than five times better than any world record, end quote. Being more battery efficient would mean smaller batteries, which would mean lighter devices. I mean, the holy grail form factor for AR is the size, weight, and general design of, you know, everyday run-of-the-mill eyeglasses. From the, they didn't already do this file, Sources say Sonos plans to launch a voice assistant for playing music in the U.S. on June 1st,

Starting point is 00:06:11 a voice assistant that will support Apple music, Amazon music, Pandora, Deezer, and Sonos radio. Quoting the Verge. It will be part of a forthcoming software update set to arrive first to customers in the U.S. on June 1st, with an international rollout to follow. Sonos voice will serve as an alternative to Amazon Alexa and Google Assistant, which Sonos already supports on its smart speakers and voice-enabled soundbars. All Sonos products that run the company, company's S2 software will support Sonos voice control. Sonos has recently posted job openings related

Starting point is 00:06:40 to the Sonos Voice experience, with the company saying its ambition is to, quote, make voice interactions fully private, more personal, and more natural. The debut of Sonos Voice will mark a pivotal moment in Sonos's expansion into services as the company seeks to augment its hardware business. Sonos Radio and the paid higher-quality Sonos Radio HD were the first such forays into services. The offering will provide core convenience. that are similar to existing competitors allowing Sonos product owners to play specific songs, artists, or playlist with voice commands among other functions. Notable that Spotify and Google's YouTube music aren't yet on board. In keeping with Sonos's interest and privacy, the feature will not

Starting point is 00:07:20 record user audio commands or relay them to the cloud for processing. Hey, Sonos will be the wake word for Sonos voice control, and the company's internal tests show it to be quicker than competing assistant services at core music tasks, end quote. Sources are two. Sources are two, telling CNBC that META plans to slow hiring amid record low revenue growth. They have apparently paused entry-level hiring already and plan to stop or slow hiring for mid-level and senior roles as well. In its earnings report last week, META forecast a potential year-over-year revenue drop in the second quarter. CFO David Wenner highlighted several issues facing the company and said expenses for the year would be between $87 billion and $92 billion down from a previous forecast of $90 to $95 billion.

Starting point is 00:08:08 $7. Meta intends to stop or slow hiring for most mid-level and senior-level roles after holding off on adding entry-level engineers in recent weeks, according to a person familiar with the company's plans. Recruiterers have started pausing their efforts to fill certain roles, said the person, we regularly re-evaluate our talent pipeline according to our business needs, and in light of the expense guidance given for this earnings period, we are slowing its growth accordingly. A meta-spokesperson told CNBC in an email on Wednesday. However, we will continue to grow our workforce to ensure we focus on long-term impact, end quote. Camio has laid off 87 staff. Sources also say that CTO Rob Post, marketing exec, Emily Boschwitz, CPO, Nundu, Jenna Chiram, and Chief People Officer Melanie Steinbach have all gone as well, quoting protocol. The team in charge of music partnerships saw big cuts, according to a LinkedIn Post

Starting point is 00:09:08 first reported by the information. Also affected by the layoffs were the company's internal operations, including much of its London office as well as a number of employees in sales and marketing, the source told protocol. Camio CEO Stephen Galanis is said to have announced the layoffs in a staff meeting, during which he told staff that the company was forced to cut costs because it hadn't met revenue projections. In a statement to the press, Galanis pointed to pandemic-fueled hiring as a reason for the cuts. We hired a lot of people quickly and market conditions have rapidly changed since then, said. Accordingly, we have right-sized the business to best reflect these new realities, end quote. Glanis went on to call the layoffs a painful but necessary course correction.

Starting point is 00:09:47 Cameo has raised a total of $165 million in funding to date, end quote. On Twitter, Casey Newton asked the question that was immediately in my head, quote, I'm sure there's a good answer for this, but how can you lose money on a business where celebrities film themselves on their own phones and send the files to paying customers? Is this not a high margin situation? End quote. But Tim Carmody responded with a plausible theory, quote. Totally guessing, but let's say, like, I don't know, substack, they guaranteed those celebrities a pretty high floor, assuming demand would eventually catch up. Then in cases where it didn't, they wound up paying out more money than they took in, and or the celebs bailed when they got less, end quote. From the shots fired cutthroat startup competition file, Stripe has launched financial connections, which lets its customers pull their users' banking data directly. This service will debut first in the U.S. for 10 cents to $1.50 per API call.

Starting point is 00:10:53 In other words, Plaid. Stripe has built what Plaid does as a feature inside the overall Stripe product, quoting TechCrunch. The services features will include verifying accounts for payments and payouts, to check balances ahead of a payment being made to ensure there's enough money there, to confirm account ownership. Details like these can in turn be used to help underwrite risk for loans to track spending patterns and automatically pay bills, and more. In other words, financial data that's useful or necessary to run financial transactions

Starting point is 00:11:22 over other Stripe Services, like Stripe Connect, ACH payments, or Stripe Capital-powered loans. On the part of customers of Stripe's customers, when asked, they will input their bank account details and get specific information on how that will be used, Stripe said. Side note, it will be interesting to see whether U.S. customers will be happy with sharing that information in situations where it hasn't been previously. The service is going live first in the U.S., where Stripe said it will work with over 90% of all bank accounts. It will be charged on a pay-as-you-use basis, bank account verifications and account information,

Starting point is 00:11:56 will come at $1.50 per API call. Account balance retrieval is $0.10 per API call. Transaction pools have yet to be launched, so pricing, is TBA, and bigger customers can buy on an enterprise contract. Importantly for Stripe, it creates a tighter ecosystem of services around products that are already being used by them, a one-stop shop so they do not need to tap other parties' tools, such as those offered by others like Plaid to integrate that functionality. Stripe has been making a number of acquisitions to bring in extra functionality into its

Starting point is 00:12:25 platform to close up some of the gaps in its service offerings. For example, almost exactly a year ago, it acquired tax jar to help automatically calculate sales tax and provide related tools to its customers. But it looks like financial connections was built in-house, but powered by MX and finicity. Stripe's selling point for these tools beyond a mere seamless integration with its other products is that it helps its customers make more transactions. It claims connect customers that have already been working with the service have reduced payout failures by 75%. Early capital users are seeing 55% larger loan offers because of the extra data they're using to inform decisions. All of that means more transactions. All of that means more

Starting point is 00:13:03 transactions on Stripe's platform itself. The margins might be thin on any one digital payment. One reason why even a company that looks like it's growing and doing a lot of business might still fail. See, fast. The numbers need to be huge to work out in its profitable favor. But this is why so many payments companies work on vast scale and why building in a number of extra value-added services in hopes of them getting picked up by customers and customers' customers, as Stripe is doing here is smart business, one way that it hopes to sustain itself for the long and likely public hall, end quote. I will point out that Zach Parrott, CEO of Plaid, made some pointed accusations on Twitter about Stripe copying Plaid's products. I can't speak to the veracity of

Starting point is 00:13:48 the charges made in that back and forth, though I will quote these tweets from Christina Cordova, quote, it's clear that Stripe is working with MX and Finicity, both Plaid competitors behind the scenes for their new product. That suggests that there really was a bake-off between Plaid and their competitors. The bake-off just didn't land in Plaid's favor. There's also a big question of whether Plaid would have wanted to be a customer of Stripes anyway, given it's easy to argue that Stripe's new product would disintermediate Plaid and drive down their pricing, end quote. And finally, today, the White House has instructed federal agencies to increase preparations over the next six months for quantum computers capable of breaking public key cryptography. Quoting the record. Quoting the record.

Starting point is 00:14:34 The document, National Security Memorandum 10, calls for a whole of government and whole of society strategy for quantum information science or QIS, including the security enhancements provided by quantum-resistant cryptography. The chief concern is the expected creation of a cryptanalytically relevant quantum computer, or CRQC, the presumed goal of some QIS research by the U.S. as well as adversaries such as China. quote, current research shows that at some point in the not too distant future, when quantum information science matures and quantum computers are able to reach a sufficient size and level of sophistication, they will be capable of breaking much of the cryptography that currently secures our digital communications, a senior Biden administration official told reporters Tuesday in advance of the memorandums

Starting point is 00:15:21 release, that cryptography, in many cases, dates to work published in the late 1970s and updated in the decade since. The good news is that this is not an insurmountable problem, the official said, the National Institute of Standards and Technology, or NIST, will soon be publishing new cryptographic standards that can protect against these future attacks, end quote. Biden's memorandum mentions quantum-resistant cryptography more than 20 times as it lays out tasks for agencies such as the cybersecurity and infrastructure security agency, CISA, the National Security Agency and NIST, which has an authoritative role in setting cybersecurity standards. Those agencies will have about six months to, quote, establish

Starting point is 00:16:01 requirements for inventorying all currently deployed cryptographic systems, excluding national security systems, end quote. Now, I wanted to mention this because, of course, the government here is thinking of protecting state secrets, but I continue to wonder, shouldn't the broader tech industry be worried about this as well? What happens if, say, online commerce gets cracked wide open? Like, isn't that possible? Smarter people than me need to educate us on this, but isn't the breaking of cryptography by quantum computing a black swan event that maybe isn't a black swan event at all because it's likely inevitable. No Twitter space tonight. Chris has family engagements, as do I, because we've had birthdays in this house this last week or so, and my parents have been visiting

Starting point is 00:16:57 all week, so we're going to take the week off. Talk to you tomorrow.

Tech Brew Ride Home - Thu. 05/05 – Elon To Be Twitter CEO?

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