Tech Brew Ride Home - Thu. 09/08 – Why Disney Also Had 2nd Thoughts About Buying Twitter

Episode Date: September 8, 2022

Disney’s former CEO throws another lifeline to Elon Musk in his Twitter suit. Crypto folks are suing the US Treasury over an important crypto precedent. Why the current YC batch is still crypto heavy. A very interesting crypto raise. And a deeper look at the iPhone 14 Pro's Dynamic Island. Sponsors: Split.io/techmeme Links: Why Disney didn’t buy Twitter (Vox) Coinbase employees and Ethereum backers sue U.S. Treasury over Tornado Cash sanctions (Fortune) Legendary China Bets Unwind as Buffett, SoftBank Sell (Bloomberg) Y Combinator is doubling down on crypto founders despite market volatility (TechCrunch) Mysten Labs, creator of the Sui blockchain, closes $300 million raise led by FTX Ventures (The Block) How the iPhone 14 Pro Transforms Blank Screen Space Into Something Actually Useful (CNET) Apple might have fixed the notch by putting it on an island (The Verge) 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 Thursday, September 8th, 2022. I'm Brian McCullough today. Disney's former CEO throws another lifeline to Elon Musk in his Twitter suit. Crypto folks are suing the U.S. Treasury over an important crypto precedent. Why the current Y Combinator Batch is still

crypto heavy, a very interesting crypto raise, and a deeper look at the iPhone 14 Pro's Dynamic Island. Here's what you miss today in the world of tech. Kara Swisher is hosting her final Code conference right now, end of an era. But while speaking at Code on stage, former Disney CEO Bob Eiger said the company found a substantial portion of Twitter users were not real when it was considering buying Twitter back in 2016, quoting Peter Kafka in Vox. Elon Musk wanted to buy Twitter, then he decided he didn't. Bob Eiger can relate. In 2016, Iger then the CEO of Disney had convinced himself that his company should own Twitter because it would be an excellent way to distribute Disney's content around the world. Then, shortly before the 2016 U.S. presidential election, he bailed out.

Eiger has told parts of this story before, but it always seemed confusing to me. In his 2019 memoir, he said the boards of both Disney and Twitter had agreed to the deal, but then he had second thoughts because of the, quote, nastiness rampant at Twitter. Really? Wasn't the nastiness readily apparent to anyone who'd ever used the service for a second? second, let alone to someone who was ready to spend billions on it. But today we got a longer version of the story relayed by Iger at the Code Conference in response to a question from the Verges Alex Heath. In this one, Iger says that Twitter would have been a phenomenal distribution platform for Disney, but that it would have come with too many headaches, among them bots. Sound familiar?

Here's Iger in his own words, quote, we were intent on going into the streaming business. We needed a technology solution. We have all this great IP. We weren't at technology company. How do we get that IP to consumers around the world? And we were kicking tires left and right. We thought about developing ourselves, five years, $500 million. It wasn't the money. It was the time because the world was changing fast. And at the same time, we heard that Twitter was contemplating a sale. We entered the process immediately looking at Twitter as the solution, a global distribution platform. It was viewed as sort of a social network. We were viewing it as something completely different. We could put news, sports, entertainment, and reach the world.

And frankly, it would have been a phenomenal solution distribution-wise. Then, after we sold the whole concept to the Disney board and the Twitter board, and we're really ready to execute, the negotiation was just about done, I went home, contemplated it for a weekend, and thought, I'm not looking at this as carefully as I need to look at it. Yes, it's a great solution from a distribution perspective, but it would come with so many other challenges and complexities that as a manager of a great global brand, I was not prepared to take on a major distraction and having to manage circumstances that weren't even close to anything that we had faced before. Interestingly enough, because I read the news these days, we did look very carefully at all of the Twitter users. I guess they're called users.

And we at that point estimated with some of Twitter's help that a substantial portion, not a majority, were not real. I don't remember the number, but we discounted the value heavily, but that was built into our economics. Actually, the deal that we had was pretty cheap, end quote. Well, obviously, this got some eyes emoji from Elon Musk who responded to the tech meme tweet about this, which thrilled the tech meme editors overnight, by the way, by saying, quote, interesting. Dot, dot, dot. Six people, including Coinbase employees and prominent crypto developers, have sued the U.S. Treasury, Janet Yellen, and officials in Texas over tornado cash sanctions. Quoting Fortune, the outcome of the case, which turns on the novel legal question of whether the U.S. government can impose sanctions on publicly available software code is likely to have implications for the crypto industry for years to come.

In a 20-page complaint filed in federal court in Texas, the users claim the decision to sanction. Tornado Cash exceeded the government's authority and violated their free speech and property rights under the U.S. Constitution, and, quote, threatens the ability of law-abiding Americans to engage freely and privately in financial transactions, end quote. In recent years, Tornado Cash has emerged as a popular tool for those wishing to hide their crypto transactions. Using smart contracts on the Ethereum blockchain, it allows users to deposit crypto in a pool alongside other users and then distribute it to third-party wallets. The process makes it highly difficult to determine who, who gave funds to a given wallet. The plaintiffs in the case include Preston Van Loon, a prominent

figure in the Ethereum community, who claims he cannot access thousands of dollars worth of Ethereum deposited with Tornado Cash and his brother Joseph, who says he intended to use the service to privately fund an Ethereum node and staking service, but can no longer do so because of the sanctions. The plaintiffs also include Tyler Almeida, a California security analyst at Coinbase, who alleges that he used Tornado Cash to make anonymous donations to support. Ukraine. Almeida claims the U.S. placing sanctions on the service impedes his right to donate, and by extension his right to express himself under the First Amendment. Almeida is one of two Coinbase employees to put their name on the lawsuit, the company whose CEO Brian Armstrong

has vocally objected to the sanctions on Tornado Cash is paying the legal bills of the employees and for other plaintiffs, end quote. Anxious about regulators, Naspers, SoftBank, Berkshire Hathaway, and other early investors in Chinese tech giants are selling some of their holdings, and by some, I mean a lot. $7.6 billion in Tencent shares could soon be sold, as an example, quoting Bloomberg. In the latest development, Tencent shares worth $7.6 billion appeared in Hong Kong's clearing and settlement system, typically a precursor to offloading stock. NASPERS, which invest via its Dutch unit Procise and V, is the most likely seller because

it's one of the few investors that can handle such a sizable transaction and has said it will cut its 10th and stake to fund buybacks. That comes a month after Japan's SoftBank group said it unloaded an enormous slug of Alibaba, the e-commerce pioneer that had long been China's most valuable company. SoftBank, under pressure from botched startup bets, raised more than $17 billion through the sale of forward contracts on the stock. Warren Buffett's Berkshire Hathaway is trimming its stake in electric vehicle maker, B.Y.D. The moves taken together represent a striking retreat from China's private sector by investors that had been fervent champions for decades. Softbank founder Masioshi Son

famously invested about $20 million in Jack Ma's Alibaba in 2000 and held through the dot-com bust in the Chinese company's IPO in 2014. Naspers invested in Tencent in 2001, while Berkshire bought shares in BYD in 2008, end quote. I'm noting all this because it shows how investors might have soured on investing in the Chinese market because, you know, the government seems to not be into Chinese tech companies getting as big as they can, but also because these were some of the biggest venture wins of all time, like world record returns. If folks who made those returns think the narrative on their investment has run its course, that's kind of a big deal.

Despite the recent downturn in the cryptocurrency market, Y Combinator's summer 2020 batch has 30 crypto startups in it, up from just 25 crypto startups in its winter 2020 batch, which matches what I've been seeing with the ride home fund. There are still a ton of crypto startups out there, and they're raising the biggest checks that I'm seeing cut, quoting TechCrunch. Doing quick math, crypto startups make up 13% of the companies in this summer's YC cohort, whereas crypto only accounted for 6% of the prior winter 22 YC batch, meaning the percentage share of crypto companies participating in the accelerators program more than doubled in just a few months.

YC's vote of confidence is welcome news for a sector experiencing volatility of its own. Data from Crunchbase and Pitchbook indicate that the total dollar value of Web3 investments could drop by half or more in the next quarter from its prior levels, which hovered around $10 billion in some recent quarters, a TechCrunch Plus analysis reports, end quote. Okay, maybe that's not exactly what I'm seeing. I'm still seeing money flood into crypto, but I could be wrong because, you know, I'm not a crypto-first investor. Speaking of interesting raise in the crypto space,

Mistin Labs, which is developing the SWI blockchain, raised a $300 million series B led by FTX at a greater than $2 billion valuation. All five founders of Mistin Labs worked at Meta's crypto unit before that was folded up, quoting the block. Mistin is the creator of SWE, a yet-to-launch proof of stake layer one blockchain that is built to mount a challenge to the likes of Ethereum and Solana. The startup's co-founder and CEO Evan Chang, who was head of research and development at Meta's CryptoWallet, Novi Financial until September last year, told the block in an interview that Mistin aims, quote, to bring about consumer adoption, mass adoption. We focus a lot on designing an architecture that is completely different that allows us to horizontally scale the capacity

of the blockchain, he said. Miston's $300 million series B round was led by FTX Ventures, the venture arm of Sam Bankman-Fried's crypto exchange. Other investors in the round include Andresen Horowitz's A16Crypto unit, which invested $36 million in Miston in December last year. All five of Miston's founders worked on META's crypto initiatives. Chief Technology Officer Sam Blackshear was a principal engineer at Novi, and is credited with creating move, the coding language used by both Sway and META's ill-fated blockchain DM, formerly known as Libra. Mistin's chief product officer is former Novi product lead Adjani Abiodun, chief cryptographer

Costas Kripos, held the same role at Meta, and Chief Scientist, George Danez, also worked on Novi and Diem. Today's announcement comes just a few months after Aptos, another blockchain devised by former meta executives that uses Move, topped up its coffers with a $150 million round, bringing its total capital raise this year to $350 million. The pair are seen as the next wave of layer one blockchains and challengers to predecessors such as Ethereum, Solana, and Avalanche. Their challenge will be to lure crypto projects and developers over to their platforms and away from incumbents. Zhang hopes that a fresh take on processing crypto transactions will be the key to sui's success.

All the blockchains today basically processed transactions as groups, he said, a method defined as head-of-line blocking. We're the only one that takes a completely different approach. Chang likened the way blockchain's process transactions to boarding a train. In the current model, he said, you wait for everyone to get on before you get moved. On SWI, there are a greater number of cars available to transport groups bound for the same destination. The technical term for this is intra-validator sharding. In blockchain systems, the validators are the parties that verify transactions. In proof-of-stake models, they lock up tokens on the network in exchange for the chance to validate new transactions and earn rewards. Miston hopes that this and other innovations will give

sway the ability to scale throughput and storage in line with demand from developers and apps while keeping transaction costs low per the release. DM was purposely built for payments, said Chang. We want to take that a step further. How can we make asset transfer or programming of assets as easy as manipulating data, or transferring data, basically? So that requires us to take a big step forward beyond the DM Vision, end quote. Let's end today by hitting up a bunch of follow-up items from yesterday's iPhone event.

Worth noting, I think, that Apple kept iPhone 14 prices the same in the U.S., but raised them pretty much around the world, including in the UK, Japan, and Germany due to apparently a strong dollar. Lots of jokes on Twitter about where inflation is really biting. Bites out of the Apple these days. And given how much Apple talked about those new safety features yesterday, I thought it was interesting to get these details, Apple partnered with Satellite Company Global Star for its emergency SOS feature, agreeing to pay 95% of the approved capital expenditure to deploy new Global Star satellites to support the service. Global Star says it's committing 85% of its network capacity towards this new feature, and people doing back of the envelope math suggest that Apple is investing $70 to $110 million in all of this. And yes, Apple has made E-Sim the only option on iPhone 14 models in the U.S., working with T-Mobile, Verizon, and AT&T.

Outside the U.S., though, the phones will still have a SIM card tray. Something tells me the rest of the world and the rest of the industry will be following suit in terms of moving to ESIM shortly. And finally, the thing a lot of people were talking about on Twitter overnight was the iPhone 14 Pro's Dynamic Island pill-shaped notch. So, a deeper dive here from CNET, quote, The Dynamic Island is a new feature at the top of the iPhone 14 Pro models that reimagines the notch as a cutout. It shifts in shape and size to display notifications and timely information for current actions and ongoing background activities depending on what you're doing on your phone. Here are some things Apple said the dynamic island will show as a kind of notification or informational ticker at the top of the iPhone 14 Pro Max screen. Arrival time for ride share services like Lyft, turn-by-turn navigation with Apple Maps, contact information and call length for phone calls,

battery percentage when your iPhone or AirPods are charging, cover art when playing songs. from Apple Music, transit card payments, sports scores, flight information, timer length, payments with face ID, files sent with airdrop, and a mute icon. If you have two things going on in the background like a phone call and a timer, the dynamic island on the iPhone 14 Pro and Pro Max will split into two to show you information for both your activities. So for example, a timer and a phone call, end quote. And quoting from the verge, which, wow, the dynamic island has just the goofiest name, it feels like a vital new part of Apple's design language. It is kind of like notifications and the contextual phone call menu all wrapped up in one and fully seemingly beautifully integrated

with the phone's pitch black cutout containing the camera. During the video showcasing the new design, Apple said it could do away with the notch because it managed to shrink the true depth camera array. The dynamic island likely won't solve the problem the notch originally presented, but it does seem to suggest that Apple realized we want that stuff and don't want to have to zoom around the phone UI like a wizard to get it. The dynamic island, I will never stop laughing at that name, feels almost like an exaggerated notch. Instead of dancing around the black bit at the top of the phone, Apple is expanding it, morphing it on a whim to help it address problems the notch used to create, end quote. No Twitter space tonight or this week, actually, Chris is traveling.

I'm just tired. By the way, I think my dentistry yesterday didn't get in the way of yesterday. show, thankfully. But that might be because I had fillings on both sides of my mouth to do, and so they said, if they numbed both sides of my mouth at once, I would likely be unable to talk for the recording. So I had them postponed doing the second filling for another two weeks. Just kidding. They postponed doing the second filling because they said numbing my mouth on both sides could swell my tongue and present a choking hazard. But I'd like you to think that These are the sacrifices I make for you people. Anyway, yay, I get to do it all over again.

Brush your teeth, kids. Talk to you tomorrow.