Tech Brew Ride Home - Tue. 02/04 – Uncle Sam As A VC?

Episode Date: February 4, 2025

Is the US government about to get into, or at least, heavily impact the VC investing business? Apparently, the trade war with China is still on. The resurrection of Twitterific. And how Spotify has quietly stopped investing, and started getting real about profitability. Sponsors: LinkedIn.com/ride Links: Trump Signs Executive Action to Create Sovereign Wealth Fund (Bloomberg) China Hits Back Against Trump’s Tariffs With Targeted Actions (Bloomberg) China targets Google, Nvidia and Intel as Trump tariffs bite (Financial Times) Twitterrific team launches new ‘Tapestry’ iPhone app for Bluesky, Mastodon, RSS, more (9to5Mac) Opera’s new browser might save you from doomscrolling (The Verge) Spotify Reports First Full-Year Profit (WSJ) 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 Tuesday, February 4th, 2025. I'm Brian McCullough. Today is the U.S. government about to get into or at least heavily impact the VC investing business. Apparently the trade war with China is still on, the resurrection of TwitterRific, and how Spotify has quietly stopped investing and started getting real about profitability. Here's what you missed today in the world of tech. Donald Trump has signed an executive action to direct officials to create a U.S. sovereign wealth fund and says that it could be used to facilitate a sale of TikTok US. Also, we've been waiting for the announcement of some sort of crypto or Bitcoin Reserve 2. This is not that, I believe, but this could be part of that, I guess.

Quoting Bloomberg, we have tremendous potential. Trump told reporters in the Oval Office on Monday as he announced the move, the president said the action would charge Treasury Secretary Scott Besant and Howard Lutnik, the nominee for Commerce Secretary with spearheading the effort. Bessonet, who joined Trump at the Oval Office, said the fund would be created in the next 12 months, calling it an issue of great strategic importance. Trump suggested the fund could be used to facilitate the sale of TikTok, which is currently operating in the U.S. thanks to an extension he signed, prolonging the deadline for a forced sale or shutdown. Lutnik said the U.S. government could leverage its size and scale, given the business it does with companies, citing drug makers as an example.

If we are going to buy two billion COVID vaccines, maybe we should have some warrants and some equity in these companies, he said. The action calls for officials to submit a plan to Trump within 90 days, including recommendations for funding, investment strategies, fund structure, and governance. And it asked for an evaluation of the legal considerations for setting up and running a fund, including whether legislation is required. Trump advisors have previously discussed plans to use the U.S. International Development Finance Corporation to partner with major institutional players to leverage U.S. economic powers. Among those driving the conversation about using the DFC, both more like a sovereign fund. And as a tool to radically change America's approach to foreign aid are Elon Musk and

Stefan Feinberg, the billionaire co-founder of Ceribus Capital Management, who Trump has nominated as Deputy Defense Secretary, according to people familiar, who were close to the president's transition team before taking office. Trump on Friday said he was nominating Ben Black, the son of Apollo Global Management co-founder Leon Black, to head the DFC. Trump floated the idea of a sovereign wealth fund during an address at the Economic Club of New York during the campaign in September, where he proposed funneling money from tariffs into a wealth fund that could invest in manufacturing hubs, defense, and medical research. We will create America's own sovereign wealth fund to invest in great national endeavors for the benefit of all the American people, Trump said at the time,

and suggested that the Wall Street and corporate leaders at that event could have a role to play, helping to advise and recommend investments. Sarban wealth funds generally exist in countries that either have large foreign exchange reserves, such as China, or revenue from the sale of oil or other commodities like Norway and Saudi Arabia. The money is then invested in everything from stocks and bonds to infrastructure and technology. Among the biggest are Norway's $1.8 trillion Norges Bank Investment Management, the $1.3 trillion China Investment Corp, and the $1.1 trillion Abu Dhabi Investment Authority, end quote. The existence of Sarban wealth funds, especially from the Middle East, has completely transformed the higher end of the venture capital business in recent years. There was a time when only Masasan could throw

around tens of billions of dollars at a time, but now there are several massacized players out there, and they've been flexing their investment muscles, especially in this AI era. I did not know this, but 20 U.S. states have state-level sovereign funds, Alaska, famously. But most recently, North Dakota launched a $11.5 billion fund in 2010. I don't follow economic news closely enough, but I believe those tariffs for Mexico and Canada are off the table. for a while anyway. But as far as I know, no such reprieve has been brought down for China, as I mentioned yesterday vis-a-vis the likes of Sheehan and Temu. And so I guess the trade war will continue a pace there. China's state administration for market regulation says it will probe Google for antitrust violations

moments after Trump announced tariffs on Chinese goods. And a source is telling the financial times that China is looking at maybe launching a formal probe into Intel. Quoting Bloomberg first, China retaliated to Donald Trump's opening trade war tariffs by targeting a handful of American companies and slapping levies on some U.S. goods in a move seemingly designed to avoid escalating tensions between the world's biggest economies. Beijing imposed a 15% levy on less than $5 billion of U.S. energy imports and a moderate 10% fee on American oil and agricultural equipment on Tuesday, moments after new U.S. tariffs entered effect. China said it will also investigate Google for alleged antitrust violations. although Alphabet's search services have been unavailable in the country since 2010. In a more targeted measure, authorities put Calvin Klein owner, PVH Corp, and U.S. gene sequencing company Illumina on a so-called blacklist of entities that could affect their sizable operations in China and impose new export controls on tungsten and other critical metals used in electronic, aviation, and defense industries. President Xi Jinping's response appeared carefully calibrated to

avoid major blowback on China's economy while showing Trump an ability to inflict damage on a range of fronts, including by disrupting the key minerals supply chain and hurting U.S. companies with major operations on the mainland. That restraint, coupled with speculation that Xi may do more to bolster China's economy led to a relatively muted reaction in markets, particularly as Trump signaled a desire to speak with the Chinese leader before the tariffs took effect. The Chinese tariffs are set to kick in on February 10th, potentially leaving room for negotiation. It looks like a fairly muted retaliation from first glance, said Lin Song, chief economist for Greater China at ING Bank and Hong Kong, noting that energy accounts for a small share of China's imports from the U.S.

The measures on U.S. companies, however, can be seen as, quote, a warning shot to U.S. businesses that depend on China's market, he added, end quote. And quoting the Financial Times. China has revived antitrust investigations into Google and NVIDIA while considering a new probe against Intel as Beijing looks for leverage in talks with U.S. President Donald Trump. Chinese regulators who announced a similar antitrust investigation into Nvidia in December were also now looking at launching a formal probe of intel, said to people familiar with the situation. However, the nature of the probe into the U.S. chipmaker remained unclear, one of the people

said, adding whether it was officially launched, could be affected by the state of U.S. China relations. President Xi Jinping is expected to speak to Trump in the coming days. The tech investigations, quote, may be part of the retaliatory measures made by China in response to Trump's new tariffs against the country, said Liu Zhu, a researcher at the National Strategy Institute of Ting Shwa University. Zhu added that using antitrust investigations as a tool in trade negotiations might not be the best way to protect Chinese companies hit by U.S. tariffs. It would inevitably spark controversy, he said.

Beijing scrambled to build cases against prominent U.S. tech companies comes as they are increasingly caught in the crossfire of growing tensions between the two global powers. Sammer announced in December it was investigating claims about NVIDIA violating commitments made during its 2019 acquisition of Melanox Technologies, an Israeli company that makes computer networking equipment. Sammer approved the acquisition in 2020 with conditions to prevent anti-competitive practices and ensure supplies to China, and soon thereafter began to quietly collect complaints from industry, according to people familiar with the matter. The probe comes as a surprise to NVIDIA, the world's largest maker of advanced AI semiconductors.

Days before the Samar announcement, NVIDIA's executives met officials at China, is Ministry of Commerce to discuss the $2.9 trillion chipmakers operations in its second biggest market outside the U.S., according to two people with knowledge of the meeting. One of those people said the commerce officials advised, quote, Nvidia is welcome to continue growing its business in China. The country represented 13% of its global sales during the first three quarters of 2024, according to company filings, end quote. The Icon factory has launched an app called Tapestry on the app store, which brings Blue Sky, Mastodon, RSS, and other feed-like delivery systems into a single timeline with a $1.99 per month tier to remove ads.

The icon factory are the folks who were behind TwitterRific all those years ago. So one way to think of this is the rebirth of Twitter-Rific in a post-Twitter era. But another way to look at this is remember those apps that let you unify your chats between, like, AIM and Messenger and Yahoo and whatever Google messages were called back in the day. Yeah, this is a bit like that. Quoting 9 to 5 Mac. Here's an overview of the apps features via the App Store listing. The Web Your Way. Tapestry combines posts from your favorite social media services like Blue Sky,

Mastodon, Tumblr, along with others like RSS feeds, podcasts, YouTube channels, and more. All your content is presented in chronological order with no algorithm deciding what you should or shouldn't see. A bird's eye view, tapestry makes it easier than ever to browse content from dozens or even hundreds of sources, create custom timelines, seamlessly sync your reading position across devices, and keep track of feeds in an easy-to-read color-coded stream of content. Avoid spoilers everywhere. Quickly create powerful rules that control what you do and don't see across your feeds. Avoid potential spoilers and stay clear of unwanted topics by creating rules that muffle and mute items in everything you follow. Powerful searching.

Search for topics and terms across all feeds simultaneously. Tapestry makes it easy to find that blog post, YouTube video, or podcast you're looking for, and easy to be. market for later. Private by design. Your privacy is a priority. Tapestry works with content stored on your device, so searching and viewing content is completely private. We never sell or share your data with third parties. Custom connectors expand tapestry's potential with third-party connectors. Import custom connectors from trusted developers or even write your own to add your favorite bit of data to the timeline. If there's an open data feed available, a connector can weave it into tapestry. This all comes with the types of features you would expect

from the team behind Twitterific. Customization tools for the app, icon, layout, and fonts, light and dark mode support, ability to save items for later and more. Tapestry is a free download on the app store with subscription options available to remove ads, unlock custom timelines, content muting,

and themed customization. Subscriptions run $1.99 per month, $1999 per year, or you can make a one-time purchase of $7999, end quote. Speaking of fun little product launches, Opera has launched Opera Air, a free browser, focused on mindfulness and mental well-being, including break reminders and ambient soundscapes

for Windows and MacOS. Quoting The Verge, The Web is beautiful, but it can be chaotic and overwhelming, says Muhammad Sala, opera's senior director of product. We decided to look at science-backed ways to help our users navigate it in a way that makes them feel and function better, end quote. Air features a semi-transparent design and a floating sidebar for its mindfulness features when you need to work. The boost feature offers music, ambient sounds, and binaural beats, where slightly different frequencies are played in each year, which creates a perceived third frequency in the brain

and is believed to help influence relaxation or focus. Soundscapes can be set to play from 15 minutes up to forever and can be paused from the sidebar at any time. The break reminder is an icon made up of three lines in the sidebar that gray out while you work. You can customize the duration, reminding you to take a break once the icon is fully faded, air can help at that point. with breathing exercises, neck stretches, full body scans, and guided meditations, which last up to 15 minutes. Air joins the default opera browser and its gaming-focused Opera GX in the lineup. Like those, it includes a built-in ad blocker and free VPN, plus access to the ChatGPT-powered ARIAAI assistant. Air is available to download for free now on MacOS or Windows.

Finally today, remember when I used to have that screener for stocks hitting all-time highs. the go-go days of 2021, it was helpful to me to keep track of companies on the rise. Like, I don't know, that's how I learned about things like a firm and Roblox becoming major players. Well, if you had checked out that screener in recent weeks, you would have seen Spotify there several times because it hit all-time highs a couple of times recently. I guess this is why. Spotify reported Q4 revenue up 16% year-on-year to 4.2 billion euros, monthly active users up 12% year-on-year to 675 million people. Subscribers up 11% year-on-year to 263 million people, and crucially, 1.14 billion euros in 2024 net income versus a 532 million euro loss in 2023. So Spotify is

very, very profitable all of the sudden. Quoting the journal, Spotify reported its first ever full year of profitability, fueled by record user growth and austerity measures after years of heavy spending on growth initiatives such as podcasts. Its fourth quarter earnings are a sign that the company has been able to wean itself off years of intense investment and transform from a music streaming service with tough margins to a full-service audio company. Shares in the company rose 10% and are up about 29% on the year. It only took 18 years for us to get here, but we're here, Chief Executive Daniel Eck said in an interview. Eck on Tuesday told investors the company aims to pick up the pace of new initiatives and ship new products faster.

He said music and offerings like a higher price premium tier, including high-fi streaming and remix tools, would be a focus this year. You should expect there to be many more versions of Spotify in the future that will adapt to the many subsections of this consumer base, including superfans, X said. Monthly active users climbed 12% to 675 million people, the strongest fourth quarter in the company's history and topping guidance by 10 million people. When Spotify went public nearly seven years ago, it told investors it would give priority to growth over profits in an effort to establish itself as the dominant audio streaming service. After spending over $1 billion on podcasting and facing pressure from investors to turn a profit, the company in 2023 shifted its

focus to cost controls and laid off about a fifth of its workforce. It raised subscription prices in many regions around the world last year, including in the U.S. for the second time, further juicing its revenue. Executives promised sustained profits last year while pushing into audiobooks. Other key highlights from Spotify's fourth quarter earnings gross margin of 32.2% stronger than its guidance and ahead of the goal it's set at a 2022 investor day of achieving 30% gross margins between 2025 and 2027. Average revenue per user for its subscription business ticked up 5% to 4 euro 85 thanks to price increases. The metric has been pressured as Spotify brings in new subscribers via discounted plans and lower prices in emerging markets. Add supported revenue,

7% to 537 million euro driven by both music and podcasts. End quote. Nothing more for you today. Talk to you tomorrow.