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- 📉 Startups Face Record Bankruptcies, AI Funding Triumphs: 2023's Mixed Outlook
📉 Startups Face Record Bankruptcies, AI Funding Triumphs: 2023's Mixed Outlook
+ Walmart Halts Ads on Musk's Platform | Spotify Cuts 17% Staff | GPT Store Launch Delayed
Kristoffer Lindström
December 04, 2023
Greetings tech aficionados!
It's December 4, 2023, and a busy day in tech awaits.
Walmart Halts Musk Ads - Ad pullout over controversies.
Spotify Slashes Staff - 17% cut amid restructuring.
Klarna's AI Revolution - AI shift reshapes workforce.
Musk's Ad Strategy - Major changes in ad tactics.
NYC Couriers' Pay Boost - Wage increase to $18/hour.
Startups' Mixed 2023 - Bankruptcies and AI funding.
Venture Capital's 2024 Focus - Eyeing profitability and deals.
GPT Store Launch Delay - OpenAI postpones release.
Meta's Translation Tech - Advancing real-time translation.
Amazon AI Privacy Concern - Confidential data leak.
Google Gemini Delayed - Launch pushed to January.
Stock Market Surge - Rally amid lower inflation.
Smartwatch Growth - Huawei and Fire-Boltt lead.
Arc vs. Chrome - New browser challenges Google.
Apple's New Journal App - Unveiling key features.
and more…
Read on for the latest in tech innovation and industry shifts.
Tech Companies
Walmart has ceased advertising on Elon Musk's social media platform, formerly known as Twitter, following Musk’s ill-advised endorsement of an anti-Semitic post. Several major companies like Disney, Apple, IBM, and Warner Bros have also pulled their ads from the platform. The controversy could potentially cost the platform up to $75 million in ad revenue by 2023.
💡 Why this matters: Walmart's withdrawal from X could trigger a domino effect, causing other advertisers to reconsider their partnership with the platform. This combined with the already existing reputation crisis, could deter new users and advertisers, disrupting market dynamics and potentially diminishing the platform's advertisement revenue significantly.
Spotify CEO Daniel Ek announces staff layoffs amounting to 17% of the company's headcount, attributing this decision to economic conditions and the need to align with future goals. Despite the growing gap between financial goals and operational costs, Ek assures that Spotify continues to drive towards becoming the world's leading audio company. Seizing the opportunity to invest in team expansion, content enhancement, and marketing in 2020 and 2021 resulted in robust growth in 2023; however, the current goal is to become relentlessly resourceful.
Sebastian Siemiatkowski, chief executive of Klarna, has paused hiring, anticipating significant job functions to be taken over by artificial intelligence (AI). This move reflects Siemiatkowski's confidence in AI's potential rather than a reflection of business fundamentals. Klarna uses AI tech like ChatGPT to streamline processes such as analyzing customer service records and resolving order disputes. The company recently reported its first quarterly profit in four years, hinting at an IPO in the future.
Following Elon Musk’s heated remarks on big brand advertisers, X is accelerating plans to attract smaller businesses to its platform to compensate for significant revenue losses. In addition to this, X plans to develop more subscription and data licensing services and has begun tying up with third parties, such as US-based JumpCrew, to target small businesses. However, ongoing controversies around Musk's comments have sparked concerns regarding X's monetary health.
New York State appeals court upheld a minimum pay rule of $17.96, compelling gig economy giants Uber, DoorDash, and Grubhub to increase their delivery workers’ payment. This is part of various measures to regulate app-based services. DoorDash warned it would necessitate significant operational changes. The new law also plans for an increment to almost $20/hour by April 2025.
Startup Scene
A tough 2023 for startups sees an estimated 19% of funding rounds accepting lower valuations, compared to only 5% in 2021, according to Carta Inc. Factors like rising interest rates have resulted in 543 startups declaring bankruptcy or closing down this year. However, AI startups have seen a surge in funding, hitting $17.9 billion. The challenging environment may force realistic valuations and frugal operation, potentially a positive reshaping of the sector.
💡 Why this matters: Trend of declining startup valuations pressures founders to operate frugally, strengthening fiscal discipline in the industry. Rising interest rates and reduced investments may hamper growth, but incidental increase in AI-oriented funding indicates potential shift in sector preference.
Venture investors are poised for a resurgence in 2024, with 50% of 72 respondents anticipating an increase in dealmaking, up from 24% since May, according to a recent industry survey. However, potential profitability remains the forefront decision-making factor for investments. The survey reveals that while generative AI still holds promise, crypto is deemed overinvested. Expectations are high for 2024, predicted to be a strong year for fund returns.
Filmic, a highly rated video app for iPhone, may be at risk following the dismissal of its entire team by parent company Bending Spoons. Amid confirmed layoff rumors, Filmic's founder and CEO, Neill Barham, reportedly left last November, while no mention of Filmic appears on Bending Spoons' site.
Together AI, an open-source cloud AI startup, has raised $102.5 million in Series A investment led by Kleiner Perkins, which also includes NVIDIA. The funds will improve the startup's AI cloud platform, boost infrastructure, and foster open-source AI research.
CoreWeave closed a minority stake sale led by Fidelity, valuing the AI startup at $7 billion. The firm was an early adopter of Nvidia's graphics chips for AI applications.
AI Corner
OpenAI has postponed the launch of its GPT store to next year due to unexpected challenges. The delay follows significant internal upheaval, but the company continues to improve its custom GPT platform and ChatGPT.
💡 Why this matters: OpenAI's delay in launching their GPT store may shift competitive dynamics, favoring companies with similar offerings. This could prompt a faster rollout of competing AI technologies while revealing potential managerial and stability issues at OpenAI.
Meta AI has publicly launched Seamless, a universal real-time translator AI. It facilitates free-flowing communication across over 100 languages, while maintaining the speaker's linguistic nuances. The models are accessible on Hugging Face and Github.
Amazon's AI chatbot Q is allegedly disclosing confidential data and producing inaccurate responses. Despite internal concerns, Amazon denies any security issues and states commitment to improving Q.
Google has delayed the Gemini launch until January 2023 after discovering issues with handling non-English queries. The model aims to match OpenAI's GPT-4 standards.
Markets
US stocks saw their November bull run extend into December, thanks to growing investor optimism over inflation and the Federal Reserve's interest rate policy. The 10-year Treasury note yield fell to its lowest level since mid-September, kickstarting a broad rally that boosted the S&P 500 and Nasdaq Composite to their fifth consecutive weekly advances. Investors anticipate a rate cut possibly by spring 2024 despite Federal Reserve Chairman Jerome Powell calling such speculation "premature."
Uber's stock rose by 5% after the company was announced to be added to the S&P 500 Index, replacing Sealed Air Corp. The ride-hailing company has seen increased profitability due to a shift in cost structure and a rise in advertising revenue, amassing over $1 billion in profit over the past four quarters. Uber currently has a market cap of around $118 billion, well above the S&P 500's median of $31 billion.
UiPath's shares rose 26% after reporting Q3 revenue of $325.9 million and earnings per share of $0.12. The company's annual recurring revenue increased by 24% to $1.38 billion.
Apps & Gadgets
The global smartwatch market noted a 9% YoY increase in Q3 2023, driven by the Indian and Chinese circuits with strong performances by Fire-Boltt and Huawei respectively. In particular, Huawei's high-spec HLOS smartwatches saw a 122% surge, marking its highest quarterly accomplishment largely due to its smartphone resurgence and a unique bundled sales approach. Conversely, Samsung witnessed a 19% YoY drop in shipments, primarily due to a decline of legacy models.
Arc browser integrates ChatGPT to redefine browser interaction, offering a unique user experience and improving workflow efficiency. This move could help make the "Post-Google Internet" a reality, according to The Browser Company's CEO, Josh Miller. However, routing users to ChatGPT could diminish traffic for independent bloggers and hobbyists. The Arc browser emphasizes user choice and plans further innovations involving ChatGPT.
Apple's Journal app debuts in iOS 17.2, providing ease of use, safeguards via Face ID and end-to-end encryption, and prompts based on personal experiences. Despite its simplicity, it cultivates user engagement through prompts that stimulate thought and reminiscence, without requiring actual journaling.
WhatsApp is introducing a username feature in its messaging app to increase discoverability and reduce risks linked to sharing phone numbers.
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