Musk v. OpenAI, and how can startups compete with Apple Intelligence? | Equity Podcast

This episode is presented by invest Puerto Rico if you believe your business Can go anywhere Puerto Rico is the [Music] Place hello and welcome back to equity Tech crunches Flagship podcast about the Business of startups today is Friday June 14 I'm marann aavo and joining me Today is TC reporter haa camps how's it Going haa you know I'm just back from a Week on holiday and I definitely have Very severe holiday brain so if I speak Less fast or make less sense than usual That'd be Why well you're allowed no worries at All also joining us today is senior TC Reporter on the Venture B and co-host of Our sister podcast found Becca scac How's it going in your world how are you I am good I will admit I'm also dragging A little bit and I don't have a vacation To blame that on so we will all get Through it together well you traveled This week so even though not a vacation Travel does kind of wear you down so Anyway still glad to have you both here With us today we'll be going over a Bunch of interesting things our deals of The week include a mixed Bunch we've got Raspberry Pi inscope meow which we had Debated on how to say that name before We started I hope we got it right we'll Also be digging into into what Apple Intelligence means for startups and musk

Versus open AI so let's kick off the Show with raspberry piie now I have to Say I had never heard of this company Until December when my teenage son Requested one of these for Christmas and So I was fascinated by it when it Arrived it's tiny and cool haa talk to Us about Raspberry Pi I love the Raspberry Pi so much it is basically a Tiny little computer right which is Meant to be embeddable so originally it Started as like an idea for making an Educational computer that kids could use To learn about Computing it's kind of an Echo back from the original BBC micro Bit which is like 1981 they launched This computer made by the BBC which Makes no sense as a broadcaster but then Kids loved it and were like oh we can Learn about Computing fast forward to uh 2006 and Rasberry Pi was like wait a Minute th this would be really cool to Have a small computer that's affordable Easy to play with and accessible so they Launched a little tiny computer that Cost $25 and the idea was well you can Connect it to all sorts of things you Can build Robotics and all that kind of Thing and uh it's just been growing ever Since they've done six major revisions Of the computer and they went live on The London Stock Exchange earlier this Week yeah and it was an impressive debut

Right I think on the first day the Shares popped by like 32% yeah it was incredible they listed And did about $700 million valuation Right from out of the gate and then it Popped by about 30% and the thing that That's particularly interesting is that This is done on a London Stock Exchange And most of the time you see startups Listing elsewhere the article notes that That's because the liquidity is better Elsewhere which is kind of highlighted By the fact that in the early days at The London Stock Exchange retail Investors can't invest it's kind of only For the big guys and from the end of the Week that's when you can buy your own Raspberry Pi stock should you wish to oh Yeah I did think that was interesting as Well but I think I'm sure they were Happy about it there in the UK because So many companies do opt to go public Here in the US I was fascinated by in General first of all how tiny these Things are like unless you've seen one It's hard to visualize or really Conceive of it I mean this fit literally Into the palm of my hand for those who Are not familiar which is really really Interesting and the company is just Doing very well I mean since since They've started they've sold about 60 Million units and in 2023 alone Generated 2 $66 million in revenue and

This is the number that most caught my Eye $66 million in gross profit wow yeah It's an incredibly profitable company And the cool thing is they started out Kind of as an educational project and They got swallowed up by more and more Kind of makery type people but Eventually it became a development Platform you can now buy a little Subboard that you do your development on A Raspberry Pi but if you were to want To scale a product like if you're Building a hardware product you can Actually buy a little unit that you slot Into a device which basically means it Becomes very quick and easy to do Hardware development and that's of Course the powerful force behind Raspberry Pi now yeah a couple of other Things I thought were interesting about It Raspberry Pi is actually a subsidiary Of the Raspberry Pi Foundation which Says its mission is to make it easier For people to learn coding through this Lowcost program programmable computer I Love that mission right I think that's Anytime you're opening up accessibility For people so that they can learn to do Things like that without having to spend A fortune I think that's incredible also Interesting that other shareholders in The company are armm and Sony a Subsidiary of Sony rather so super Interesting there just overall like all

Sorts of things I did not know about This company that I learned but yes now It's public we will continue to watch I Guess and see how it does as a public Company yeah I was just going to say the One thing that stands out to me and I Mean we've mention it it's just that This company is not super big and I Think we especially 2020 2021 Our ecosystem got really caught on the Fact that IPOs needed to be huge like You needed to be over billion dollars You needed to have such a high valuation To go public and I think this is a good Reminder that you really don't I know I've talked to a few people about it Over the years and they've been like Well when you really think about it There's way more money in the public Markets than there are in the private Markets and while it's an exit for your Investors it's not an exit for the Company it's just a way to access more Investors a way to access more potential Ways to grow grow so I'm happy to see a Company not only go public on the London Stock Exchange but do so at a slightly Smaller valuation you usually see Because I really do think more companies Would benefit from this model than they Realize I mean I agree and also I I have To again bring up the fact I mean $66 Million in gross profit I mean so many Companies that go public are negative

Like reporting major losses still so my Humble opinion is it should be less About lofty valuations more about Metrics like this or numbers like this Because that's much more impressive to Me than some Billion Dollar Plus Valuation if you're like losing $300 Million a year that's just and it's Something that's been happening under The radar for a while now the London Stock Exchange has got a whole bunch of Smaller startups listed on it and you Know it's a way to access a bunch of Money and it means that it kind of takes Away a little bit from the multi-billion Dollar exit or bust approach you often Find here in Silicon Valley and of Course it completely shifts the Investment strategies too like small Exits are objectively bad for investors But in this particular case you know There weren't that many specific Investors in the company I think they've Been growing organically most of the way The Sony connection is particularly Interesting to me because they had a Factory in whales that started building Raspberry pies in the UK and yeah They've built the vast majority of the Of the raspberry pies done the Manufacturing in the UK still you know Arm has a strong base in in the UK and All the stuff doing over here in the US Now about building chip resilience and

Stuff it's been a lot less present in The UK as far as I can tell because of These things that have they've continued Manufacturing domestically that's really Interesting wow learned a lot learned a Lot from this story in this conversation Let's move on to the fintech space Christine Hall covered a new company That was interesting in a different way Called inscope and Lightspeed Venture Partners led a $4.3 million seed round Into this company female lead which we Always love to see I thought this was Interesting because it's one of those Topics where they're tackling an area That's considered boring but it's hugely Important and so what the this Company's Trying to do is tackle financial Reporting and auditing and basically They they're trying to build something That will automate financial reporting And you know this is a big deal I mean We've seen where if you screw up your Reporting that can be very very bad for A company like Lyft had some errors in Its Financial reports earlier this year That prompted shareholder lawsuit so This is big they are targeting midmarket And Enterprise and looks like they They're leveraging machine learning and Llms to provide these financial Reporting and auditing processes so this Was founded last year launched in beta Earlier this year to customers who use

Oracle and Nets Suite specifically they Say they're generating Revenue already They're aiming to grow 10x no I always say that these are my Favorite types of companies like you Mentioned marann companies that maybe Don't have the sexiest title or the Sexiest area but they actually make a Difference in people's jobs and that is Kind of where you want Tech to be Spending time or you want Founders to be Building I know I'm talking I have a Story coming out next week about a Company and they said that they brought Just figma like markups like they hadn't Even coded the product yet to the Customers they're trying to sell to and They got five people to sign on right Away like just showing that like people Need this kind of tech and it's it's Doesn't often get as much attention Because it isn't as flashy so it is good To see people you know building in these Spaces as well as I mean light speed Leading a seat around like that's a good Signal as well so you love to see it Yeah and also a couple of other Interesting things about this the two Co-founders they did come from Accounting backgrounds they met each Other about six years ago while leading The accounting function at flexport and Also this company went through the Better tomorrow Ventures accelerator I

Believe it's called mint last year and So it's really seems like that it's it's Got a solid base here with Founders Who've done what they're trying to fix Which I think is really important Because there are sometimes companies You see where Founders have this idea to Solve this problem but I feel like it's Different when the founders have Actually live the problem if that makes Sense yeah expert founder like founders With huge domain expertise I I feel like There's a risk there right because you Might be solving the wrong problem if You have a slightly different uh context For the market but in this case I think It's a really obvious advantage and it Means that the company can go much much Much faster so especially in the early Days that's helpful and it can represent A challenge later in the Journey of the Company that's a good point we'll see Now Becca you always have these fun fun Stories with like unique business models Meow I love saying that is a cat sting Startup and it's profitable tell us more About it yeah so this one was fun Because one of the small investors in it Cuz they've only taken they've taken Le Than 100 million Adventure capital and The company's 9 years old had reached Out to me about this was like it's kind Of funky but we think the story is Really fun and I am not I will say I

Like cats I am not a cat owner I am Allergic I can't touch them but I I Appreciate I appreciate what they're Doing and so I thought me was super Interesting especially because I'll Admit it when I went in I wasn't super Sure that cat sitting needed its own Platform because a lot of the existing Pet sitting platforms like wag and Rover Obviously are for both cats and dogs and Other types of pets as well but she kind Of laid it out to me in a way that made Sense where she was saying that a lot of Cats have chronic health issues more so Than dogs do especially in the later Parts of their life and cats are you Kind of have to give them medicine in a Specific way which did resonate to me Cuz I have watched my friends cats and Like they did have to make us a video of How to give their cat a pill whereas Like for my dog it's like you put it in Trader Joe's unexpect cheddar and she Would literally eat anything so there Are definitely unique needs for cats but It's just really interesting learning About how they were building too like One of the things that really stuck out To me is that when you join as a sitter On the app of course Securities privacy Are huge things here people are coming To your house to watch your pets like You have to make sure they're safe and Reputable people they have like a

Six-step process she the founder joked It was harder to be a sitter than it is To get into Harvard I love that they Have such a thorough vetting process Yeah and she was saying that they Actually meet on the phone or on Zoom Like every single person to vet them to Be a sitter which they're saying they're The only platform that does that so While of course doing a stu like that You know makes it a little bit harder to Scale at the same rate I definitely like As someone who's always thought about Using Rover and then just never have Pulled the trigger on it hearing her Talk about that I was like ah like I Probably would feel more comfortable if Some of those other platforms did things Like that well of giving someone keys to Your apartment like letting them into Your space and I just thought it was Super interesting and yeah they're on Their ninth year the founder was Previously a sales rep for Philip Morris She an interesting career transition she Did say she took the job during the Great financial crisis and she says I Know how crazy it sounds to go from Slinging tobacco to starting a cat Startup but I just thought I just love Love these Niche stories of people who Kind of get overlooked I do too I feel Like her passion really came through Like she's a Founder that didn't do this

Just as a way to try to make money but She seems to be very passionate about What she's doing why she's doing it how She's doing it clearly by that thorough Vedding process and it it's working even Though it's very Niche I mean there are Cat owners that obviously you know are Very concerned about what happens to Their cats when they're not around that Makes perfect sense you know many cases Pets are like children to some people The company's profitable and its gross Booking volume revenue is growing 50% Year-over-year it's doing something Right and to clarify it's raised just Under 1 million in Venture Capital right Yes so it's largely been bootstrapped we Talked a little bit about the Fundraising during the process and she Had this really funny statement that I Of course do not know if this is true or Not but she was like Venture is too dog Centric she's like I would talk to VC's And they just weren't crap people so They didn't get it but she wanted to Pursue Venture funding anyway just Because of the business model it's a Marketplace so it does take like a lot Of funding kind of just to get it off The ground so they have taken a little Bit of funding some from accelerators Some from Angels like Elizabeth Yin at Hustle fund and Jason calanis and yeah So they raised a little bit of money but

Once it started kind of making money it Was kind of like what's the point of Raising more well good for her I think It's such a beautiful example of when Founders really go deep into a Particular Niche like I I can kind of Imagine a world where somebody says oh We'll do it for All Pets right cats dogs Whatever but cats and dogs are Fundamentally different right like the Cat really likes to stay if it's an Indoor cat really doesn't like to go to A kennel really doesn't like to go to a Dog hotel and most dogs are like ah this Sucks for the first day and then they're Kind of cool with it so like really Understanding the the customer or the Customer I guess um makes a massive Difference to this type of business Model and I love seeing these typ of Companies evolve and really grow into Their strengths yeah all right well that Was fun we've got to go to break now but After the break we'll be talking about The top AI features announced at WWDC 2024 what's next in Tech that's not the Right question it's where Puerto Rico Where an entrepreneurial ecosystem Pulses with connectivity capability and Possibility where the most competitive Tax incentives in the US FastTrack Success and hard work is reward boed With sunsets and turquoise Waters if you Believe your business can go anywhere

Puerto Rico is the place invest [Music] TechCrunch so yeah this week Apple had Its huge huge announcements of course That dominated the news tons of Headlines tons of stuff coming out of WWDC I have to say it felt like this was One of the more newsy Apple events that We've had as of late because I feel like The past few years they've had them There's been some things but this kind Of made the biggest splash from what I Could tell haa what do you think yeah I Mean a lot of the time we see a bunch of Hardware announcements at WWDC right and Hardware in the context of apple means Hey it's a thing I can buy this was a Lot more nebulous and and I felt it like It was kind of a return to the original WWDC days I mean WWDC is the worldwide Developer conference right it was Focused on developers and all of this Stuff they're calling it Apple Intelligence which of course AI Hilarious but they're so funny I know How did they come up with this stuff It's crazy but anyway there was a whole Bunch of updates to everything AI which You know about time Tim Cook got a bit Of a grilling at the quarterly sales Call like hey what's Apple doing about Ai and he hinted at WWDC saying okay We've got some stuff in the pipeline and I am a little bit mixed feelings they

Still feel like they've got a lot of Catching up to do do you guys get same Feeling in some ways yes in some ways no Mainly because I'm not necessarily the Best person to ask this because like yes Google has released a lot of AI features They're definitely more advanced in sort Of the products that I would use as a Consumer like email and search and Things like that but I don't like any of Them so it's like I kind of liked that Stuff like this hadn't made its way to Apple like I've never used Siri so it's Like I'm not going to have any I won't Notice the AI change with Siri but on The other hand some of the other things They have in here like the phone call Transcriptions and some of the photo Editing stuff like that's stuff I Definitely will use so that's I Especially like the photo editing stuff I was like wait I feel like I see ads For like Samsung phones talking about This like literally every day like apple Really didn't have that yes this Something yeah that's something that Okay I'm an amateur amateur amateur Photographer high is an excellent Awesome photographer but I do take a ton Of pictures it's running joke in my Family and I have often said man I wish There was a way to take this out of the Background or you know change this and There really never was cuz if you tried

To use the editing it it was very Obvious that you had done something to The photo and I think it was Google Pixel that has for a while made it very Easy to do this sort of thing so yeah I Think this is that feature in particular As an amateur photographer excited me And is way long Overdue and I think the thing that Apple Didn't really make a big deal out it They've been using Ai and machine Learning in the background for a long Time for fraud detection for like all The stuff that kind of lives uh in in The in the background like the app Review process and all that kind of Stuff rumors have been for a long time That they've been using a lot of this The consumer facing stuff have been Pretty bad I mean meca said you don't Use Siri a lot I do and it is so much Worse than any other personal assistant Out there so it's got a lot of catching Up to do and apple have some really Smart people and they're often pushing In a different direction like hey we Don't think this is how this should be Done let's do it the way it should be Done and the proof reading and the Ability to summarize context and sending Notes to emails and all the other pieces Of new functionality that they've added Is the kind of stuff that I can totally Imagine me using and that shows up in a

Way that's completely transparent to the User I think one thing though that Really I think is very important to Bring up for our listeners is what all This means for the startup world I was Talking to a venture capitalist Vanessa Larco from Nea the other day and she was Saying that every time an incumbent Comes out with a large AI related Announcement it's like you can you can Just hear there's just a bunch of Startups that are either like oh no They're doing what we're doing and Either they have to Pivot or in some Cases actually shut down so I'm Wondering like how much of that's going To happen as a result of this Announcement yeah it it's interesting You say that too because at the strictly VC event in DC that we held this week Lena Khan actually someone asked her About this because they were saying that Same thing you just said every time one Of these Legacy AI companies comes out With well not legacy AA companies but Legacy companies that build in these Kind of spaces like your Google and your Microsofts and apple comes out with These kind of features it's the same he Was saying the exact same thing he's Like how do you just your office and Antitrust and stuff and anti-competition And consumer protections think about the Fact that they're all these companies

Trying to make it better and then people Like Apple are like hey actually we're Doing it on our own so these companies May not have a market and she was just Saying that I mean competition is good Monopoly is bad I mean that's what it Boils down to so there's definitely She's at her office is definitely Keeping an eye on these kind of things Well yeah like cuz Apple launched a new Uh Standalone password manager right and The recording and transcription so I Mean I can see where this would impact a Lot of existing or budding companies Well the kinds of features are Particularly the ones that you know you It's been possible to Cobble it together For a long time right you mentioned Password apps one password exists L pass Exists a bunch of other ones exist too Voice transcription like behind the Scenes we use a bunch of voice Transcriptions to be journalists right But the thing is these are often kind of Crowdsourced AI features and if you're Able to replace that with a very Well-trained data set which Apple Obviously has access to these could be Far far better and Apple has additional Benefit of having an international data Set right otter for example that we use Often eternally within techch is great If you're speaking to somebody who has English as a native language if you

Speak to somebody who has a little bit Of an accent it's terrible and I've Often been incredibly surprised and Delighted by how good Apple's Transcription is even with heavily Accented voices and that kind of thing So Apple could actually be doing a bit Of a a leap prog ha mhm well it's Interesting because the term I guess in This story that one of our reporters Wrote is that is sherlocking yeah which Basically because the late '90s Apple Launched a search app named Sherlock That you could use to search the web and Files and so there was already another Company that that had this so anyway It's just been now that's the term to Use anytime Apple kind of comes up with This new feature that is same or similar As to what other apps are doing but that It's developed or doing on its own I Don't know I guess we're going to see The long-term impacts of that over time I it's tough right what can you do I Mean who talking about what the what is It one of the top three largest Companies in the world now it's hard for Startups to compete but I applaud those Who still keep forging ahead and one of The other things that came out of the Announcements this week is that Apple Announced this chat GPT integration a Deal with open AI which you know was Rumored to be happening we didn't know

For sure they made it official well this Really pissed off one person in Particular and that is Elon Musk who Essentially had a temper tantrum on Social media and elsewhere about it Saying that he was going to ban Apple Devices uh at his companies because he Felt like they couldn't be as secure or Trusted what did you think of that I Think Elon Musk just really lik Attention because I I know musk Uso Obviously of course was involved in open AI in the early days and has since left And he's literally making his own Competitor and I'm sure that over at Tesla they use many different types of Technology from many different types of Companies who have Partnerships of their Own and things like that and it's one of Those things where if it was anyone else Who said this I'd be like well there's No way they're going to do that because That would be crazy to overhaul all of The tech in your company which would be Costly privacy issues come up it'd be Such a pain but then you know musk does Do those things sometimes against the Best interests of everyone else so you Never really know with him you never Know but also one article was reading Was saying that he's and this makes Sense of course it's kind of obvious That he might just really be upset about This because this might impact his own

AI company X aai and he's might maybe Doesn't like the fact that now open AI Is going to have access to Apple's you Know user base which is massive so the Implication there is that that's really What has him burned up more so even than The whole issues of privacy or security We don't know that for sure we can Speculate all day but I wouldn't be Surprised if that's a big factor and Yeah I don't know if he'd actually ban All of Apple's Apple devices at his Companies maybe that's just an empty Threat it does bring up a really Interesting thing though like if you get Deep Integrations into like for example If if open AI suddenly reads all of your Text messages because it needs to in Order to be able to do XY Z the question Becomes how safe is open ai's data set Right and so I think that's kind of an Ongoing trust thing like all my stuff Lives in Google Cloud so I trust Google And trusted Google doesn't let all of Its employees look at all of my files And and and everything I have stored Right so that's a trust thing but if Google plugs their entire system into a Third party system now a suddenly have To trust this other system too and you Know was it a massive temper tantri and Was a little bit ridiculous sure but There is a core point there that is Really important to keep in mind is like

As we plug all of our files and systems And chat messages and all that kind of Stuff into wider systems like where does It get stored does it get used for Training all these additional questions Actually become pretty important yeah I Have to admit I do kind of see some Points there you know I'm a I'm a person Who just does feel a little weirded out By the thought of potentially you know All these people having access to my Private stuff right so from that Perspective I can kind of see his point But I still don't know if that's his big Motivation here for getting all upset no I was going to say something similar Because hi you bring up a really good Point that hadn't occurred to me but is Totally true where it's like if I trust Apple with my stuff I never said that Open aai could look at it and it's like Now with these different Integrations And not just apple and open AI but kind Of across the different companies that We all interact with as consumers when They land these Partnerships it's you Don't us have a choice it'd be like if Tech crunch landed a media rights deal With open AI or the like we would have No choice but to let them train off of Our stuff cuz we wouldn't have a say and So I do think that's an interesting Thing to keep in mind because I have Never used Chach chbt I do not use any

Of those services I don't use Siri I Don't kind of let data like that of mine Touch stuff like that and while it Hasn't exactly been for like a privacy And security Reason it's going to become that at some Point if it feels like I have no choice That all of my stuff is just being fed To these different large language models Yeah it just feels a little bit like a Free-for-all which is kind of disturbing But in other Elon Musk and open AI news This week he did drop his suit against The company and Sam Altman for those who Didn't know you know he was a co-founder Of open AI for breach of contract of Fiduciary duty he said that the company Started out working on artificial Intelligence for the benefit of humanity But then it had been transformed into This for-profit entity that's largely Controlled by Microsoft which I I mean I'm sorry I had to giggle at for the Benefit of humanity because you know It's so much more than that at this Point but anyway um apparently he he did Drop the suit earlier this week and Experts had said that you know it was Kind of a shaky Foundation anyway Legally because the contract at the Heart of the suit was not this like Formal written agreement that was signed By all parties involved so maybe he just Realized that he really didn't have much

To you know really go on to actually win Something like this yeah he loves a Lawsuit but he also loves to drop a Lawsuit we've we know musk well you get The same amount of coverage for both Right so if it's the headlines he wants He's he's got them yeah I'm not sure What his point was to begin with like What he was hoping to gain out of that So I'm not also entirely shocked that he Dropped the suit but I I have a feeling These are all going to be the first of Many grievances coming from musk against Open AI or anything related to what open AI is doing and you know we'll just have To see how that goes well we're going to Have to leave it there but Equity will Be back on Monday until then you can Find us under the handle at Equity pod On X and threads have a great weekend Bye-bye Equity is produced by Teresa Lo conso With editing by Kell Bryce Durban is our Illustrator and we'd like to give a big Thanks to our audience development team And Henry pette who manages Tech crunch Audio products thanks so much for Listening and we'll talk to you next Time


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