17 October, 2024
Ryan Breslow's $450M Bolt deal said to involve a restraining order now
Ryan Breslow’s plan to get himself reinstalled as CEO of fintech company Bolt — and push through a $450 million fundraising deal that would value the startup at a staggering $14 billion — has apparently stalled.
According to Forbes, Breslow sent an email to shareholders thanking them for signing off on the deal. The problem is that many of those investors, including Montauk Ventures and Ash Pournouri, claim they didn’t sign off on anything. Montauk’s founder, Philip Krim, told Forbes he does not support the financing, and Breslow didn’t have his permission to be included in a list of investors that had approved the deal.
Meanwhile, BlackRock, along with Hedosophia and Untitled Ventures, reportedly applied for a restraining order in an attempt to “halt” Bolt’s Series F round. The trio claimed through an attorney that Bolt was “coercing its investors by forcing them to choose between paying millions of dollars for new stock or losing most of their existing investment.”
Bolt declined TechCrunch’s request for comment.
Maximize your deal flow at TechCrunch Disrupt 2024
Investors, you know you need to keep your pipelines primed, and one of the best places to find early-stage startups with promising portfolio potential is, you guessed it, TechCrunch Disrupt.
TechCrunch is here to help. Let’s take a look at all the ways you can pump up your pipeline at Disrupt and keep the deals flowing long after the conference ends.
Investor opportunities at TechCrunch Disrupt 2024
Start here: Buy an Investor Pass, and you’ll save $600. It not only gets you in the door, but it’s also your ticket to invitation-only receptions — and you get a list of all the Startup Battlefield 200 companies for easy follow-up.
If you’re not familiar with the Startup Battlefield 200, it’s our meticulously vetted, hand-picked cohort of early-stage startups on the fast track to making a huge impact in the world. You’ll find them exhibiting on the expo floor, and of those 200, the top 20 will go head-to-head in the Startup Battlefield competition. They’ll pitch on the Disrupt Stage to TechCrunch editors, top-tier VCs and entrepreneurs for an equity-free $100,000 prize.
This is an unparalleled opportunity for investors eager to fund early-stage startups with the TechCrunch stamp of approval. Startup Battlefield alumni include more than 1,300 companies with over $29 billion raised.
Network with VCs and founders
Whether you’re looking for early-stage startup founders to expand your portfolio or other investors to expand your network, you’ll find plenty of ways to connect at Disrupt.
Head on over to the Deal Flow Café, our investor-to-founder networking area, and spend some quality time prospecting at the TechCrunch+ Lounge. Over 20,000 meetings were scheduled at last year’s event.
The Investor Reception is the place to be to connect with your fellow VCs. This cocktail reception is for Investor Pass holders only and is always jam-packed with great conversations and networking.
Swing by the Startup Pavilions or the ScaleUp Exhibitors to meet with pre- and post-Series A companies from around the world demonstrating their latest technology innovations.
Braindates at Disrupt make it a snap to connect 1:1 or in small groups on the topics that matter most to you. Host your own topic or join one that piques your interest.
Learn from VC leaders
Check out all the investors speaking at Disrupt — we’ll add a lot more in the coming weeks. Here are just some of the VC leaders you’ll be hearing from at Disrupt:
Vinod Khosla, Founder and Managing Director at Khosla VenturesNavin Chaddha, Managing Director at Mayfield FundArvind Purushotham, Head of Citi Ventures Rudina Seseri, Founder and Managing Partner at Glasswing VenturesSanteen Seb, Partner at Google Ventures
TechCrunch Disrupt 2024 takes place on October 28-30 in San Francisco. Feed your deal flow, pump up your pipeline and expand your network. Buy your Investor Pass now and save up to $600. Prices increase soon.
Google just backed a $250M deal with California to support journalism — here's what it means
This week, Google joined a $250 million deal with the state of California to support California newsrooms. While the deal offers a much-needed cash infusion for an industry that’s seen crippling layoffs this year, the deal’s been criticized by some as a half-measure — and a cop-out.
By agreeing to this deal, Google averts bills that would have forced it and other tech companies to pay news providers when they run ads alongside news content on their platforms.
The Media Guild of the West (MGW), the local chapter of the journalism labor union the NewsGuild-CWA, denounced the deal in a post on X, calling it a shakedown.
“After two years of advocacy for strong anti-monopoly action to start turning around the decline of local newsrooms, we are left almost without words,” MGW said in a statement. “The publishers who claim to represent our industry are celebrating … minimum financial commitments to Google to return the wealth this monopoly has stolen from our newsrooms.”
Not in our names. pic.twitter.com/3pqvr3imQj
— Media Guild of the West 🧭 (@MediaGuildWest) August 22, 2024
But what would the Google agreement actually accomplish, should it be approved by California’s policymakers? And are there any reasons to be optimistic?
Five years of funds
Last year, California Assemblymember Buffy Wicks introduced a bill, AB 886, that would’ve mandated certain platforms pay publishers a percentage of their ad revenues in exchange for linking to those publishers’ articles. Senator Steve Glazer introduced a second bill, SB 1327, that would’ve levied a 7.25% tax on ad revenue to create a tax credit for newsrooms.
The $250 million Google deal leaves both proposals dead in the water.
Instead of imposing a fee structure, the deal will draw on funding from Google, taxpayers, and potentially other private sources to establish two programs: the News Transformation Fund and the National AI Innovation Accelerator.
Administered by UC Berkeley’s Graduate School of Journalism, the News Transformation Fund will support newsrooms (excluding broadcasters) based in California. Taxpayers’ contributions amount to $70 million while Google is pledging to give at least $55 million for a grand total of ~$125 million, with the funds to be doled out to news organizations based on how many reporters they employ. Funds will be distributed over a five-year period.
Twelve percent or more of the News Transformation Fund’s pool will go toward “locally focused” publishers and publications aimed at underrepresented groups, reports The New York Times. Google will pay $15 million into the News Transformation Fund in the first year and “at least” $10 million in each of the following years; California taxpayers will provide $30 million in the first year and $10 million in each of the next four years.
The National AI Innovation Accelerator has a different, more tech-driven mission. With $62.5 million from Google over five years, it’ll provide “organizations across industries and communities” with funding to experiment with AI to “assist them in their work,” according to a press release. The funds “will be administered in collaboration with a private nonprofit,” the release reads, “and will provide organizations from journalism, to the environment, to racial equity and beyond with financial resources and other support.”
Pros and cons
The initiatives, slated to go live sometime in 2025, drew praise from California governor Gavin Newsom and the California News Publishers Association (CNPA), a nonprofit trade association representing California newspapers.
“The deal not only provides funding to support hundreds of new journalists but helps rebuild a robust and dynamic California press corps for years to come, reinforcing the vital role of journalism in our democracy,” Newsom said in a statement. CNPA called the agreement “a first step toward what we hope will become a comprehensive program to sustain local news in the long term.”
Others were skeptical it’s a slam dunk.
Senate president pro tempore Mike McGuire questioned legislative support for California’s share of the deal. And Senator Glazer called it “completely inadequate,” noting that Google is the sole tech company participating. (OpenAI is contributing technology, but not any money.)
“There is a stark absence in this announcement of any support for journalism from Meta and Amazon,” Glazer said in a release. “These platforms have captured the intimate data from Californians without paying for it. Their use of that data in advertising is the harm to news outlets that this agreement should mitigate.”
Glazer also suggests Google is paying less than its fair share — and at least one study supports his argument. Researchers at Columbia, the University of Houston, and consulting firm the Brattle Group estimate that Google owes U.S. publishers 50% of the value added to their platforms by news, which they peg at between $10 billion and $12 billion in revenue sharing annually.
Declining revenue
The past six months have been brutal for the news sector.
The industry could be on track to shed 10,000 jobs this year, per Fast Company. That’d be an improvement from last year, which saw over 21,400 journalism jobs eliminated — but it’s hardly a sunshiney outlook.
California has had a particularly rough go of it. According to a 2023 Northwestern Medill School of Journalism report, the state has lost one-third of its publishers and 68% of its journalists since 2005. The Los Angeles Times, the largest metro daily newspaper in California (and the U.S.), cut more than 20% of its newsroom in January — one of the largest cuts in the paper’s 142-year history.
What’s causing the decline? Many factors, from slow-growing ad budgets to inflation (which has harmed subscription growth). The struggle to find a sustainable business model hasn’t been helped by Big Tech, either, whose search and feed algorithm changes — and AI-generated overviews — have reduced publisher traffic.
Pundits argue that tech has also trained people to expect free content — close to half of Americans get their news from social media (despite frequent inaccuracies) — and captured an increasing share of ad dollars at the expense of publishers. Approximately 60% of global ad spend is now funneled toward Big Tech companies, including Google and Meta; one study found that broadcasters lose nearly $2 billion in ad revenue annually to Google’s and Meta’s platforms.
Tech companies have historically played hardball when faced with efforts to fund journalism through fees levied on their platforms.
In opposition to Wicks’ bill, Google said it was considering temporarily blocking news websites from some California users’ search results. Abroad, the company fought bills in Australia and Canada that would’ve forced it to compensate publishers — in 2021 threatening to leave Australia if the government’s proposed legislation went through. After France implemented an EU law to grant publishers the right to charge for aggregation of their content, Google said that it would remove snippets from Google Search. And in Spain, which passed a similar law in 2014, Google shut down Google News altogether.
Google has since made arrangements with publishers in those countries through the aforementioned Google News Showcase, its program launched in 2020 that pays selected outlets on Google’s own terms. At last count, Google had around 180 publications in the program; the company claims it’s committed over $1 billion to journalism since 2020.
Deal Dive: A Stripe secondary deal worth paying attention to
Venture capitalists and founders are hoping — praying? — for exits to pick back up in 2024. A recent TechCrunch+ survey found that there is consensus among VCs that exits will start to rebound this year, but the when and the how are still a bit fuzzy.
The consensus, though, is that fintech Stripe will go public this year. The investors surveyed clearly aren’t the only ones who are excited about a potential Stripe exit in 2024, either. According to secondary data tracker Caplight, there has been an absolute flurry of buyers looking to get shares in the company in recent months.
While bids tell us one thing, deals tell us another, and a closed transaction this week tells us a lot about what could happen to Stripe in 2024. On Tuesday, literally the day after New Year’s Day, a secondary sale closed that valued Stripe shares at $21.06 apiece; that values the startup at $53.65 billion, according to Caplight data.
Stripe declined to comment.
There are a few reasons why this deal is worth paying attention to. For one, Stripe’s $53 billion value marks an increase from the company’s most recent primary round last March, when Stripe was valued at $50 billion.
Sure, you could say what’s a $3 billion valuation increase between friends, regarding a company that was worth nearly $100 billion at the beginning of 2022? I get it, but that increase is a bigger deal than its direct value.
For one, this secondary sale shows that investors think Stripe is growing its valuation again, which is a good sign for Stripe — obviously — but it’s also an anomaly compared to many other startups at that stage that aren’t AI companies or SpaceX, of course.
Back in December, I surveyed multiple secondary investors about the state of secondaries and where they were finding attractive opportunities. The thing they all agreed on is that the majority of high-flying startups from the peak of the market frenzy in 2021 still needed to lower their valuation to be attractive.
More than 40 investors share their top predictions for 2024
So a startup like Stripe — which did slash its valuation 52% in 2023 — getting a flurry of activity shows that investors likely think it is properly valued and ready to start growing again.
Investors looking to buy shares at this growing valuation is also a good sign of a potential IPO to come. Back in March, I spoke with a handful of secondaries investors — yeah, I’m pretty much always talking to these folks — on how we could use secondary deal information to track and predict when companies were going to go public. They told me that if any of these overvalued late-stage startups wanted to have a successful IPO, they’d need to slash their valuation and give investors the opportunity to drum up interest — and their position in the company — before going out. Well, that’s exactly what is happening with this Stripe deal.
By looking at who’s buying the shares on the secondary market, you can often tell whether the company will go public sooner rather than later. If it’s a large crossover investor or someone who largely invests in public stocks, like T. Rowe Price or Fidelity, that’s another positive signal that an IPO is just over the horizon. We don’t have that data for Stripe, but it’s worth keeping in mind.
While of course I can’t guarantee that Stripe will be one of the first IPOs in 2024, it shows that the company is ready. And if that does happen, I think Stripe could be the perfect public listing to revive the late-stage venture market and defrost the exit environment.
A good exit from Stripe would show that there is exit hope for the startups that got overvalued in 2021 but were built on solid fundamentals. Plus, I’d imagine that any late-stage investor who is able to hold their shares after Stripe goes public wouldn’t be looking at as big of a loss as it may seem now.
And even if Stripe doesn’t go public anytime soon, this deal shows us that investors are picking their winners from 2021 and that the market may see some growth again.
Deal Dive: A Stripe secondary deal worth paying attention to
Venture capitalists and founders are hoping — praying? — for exits to pick back up in 2024. A recent TechCrunch+ survey found that there is consensus among VCs that exits will start to rebound this year, but the when and the how are still a bit fuzzy.
The consensus, though, is that fintech Stripe will go public this year. The investors surveyed clearly aren’t the only ones who are excited about a potential Stripe exit in 2024, either. According to secondary data tracker Caplight, there has been an absolute flurry of buyers looking to get shares in the company in recent months.
While bids tell us one thing, deals tell us another, and a closed transaction this week tells us a lot about what could happen to Stripe in 2024. On Tuesday, literally the day after New Year’s Day, a secondary sale closed that valued Stripe shares at $21.06 apiece; that values the startup at $53.65 billion, according to Caplight data.
Stripe declined to comment.
There are a few reasons why this deal is worth paying attention to. For one, Stripe’s $53 billion value marks an increase from the company’s most recent primary round last March, when Stripe was valued at $50 billion.
Sure, you could say what’s a $3 billion valuation increase between friends, regarding a company that was worth nearly $100 billion at the beginning of 2022? I get it, but that increase is a bigger deal than its direct value.
For one, this secondary sale shows that investors think Stripe is growing its valuation again, which is a good sign for Stripe — obviously — but it’s also an anomaly compared to many other startups at that stage that aren’t AI companies or SpaceX, of course.
Back in December, I surveyed multiple secondary investors about the state of secondaries and where they were finding attractive opportunities. The thing they all agreed on is that the majority of high-flying startups from the peak of the market frenzy in 2021 still needed to lower their valuation to be attractive.
More than 40 investors share their top predictions for 2024
So a startup like Stripe — which did slash its valuation 52% in 2023 — getting a flurry of activity shows that investors likely think it is properly valued and ready to start growing again.
Investors looking to buy shares at this growing valuation is also a good sign of a potential IPO to come. Back in March, I spoke with a handful of secondaries investors — yeah, I’m pretty much always talking to these folks — on how we could use secondary deal information to track and predict when companies were going to go public. They told me that if any of these overvalued late-stage startups wanted to have a successful IPO, they’d need to slash their valuation and give investors the opportunity to drum up interest — and their position in the company — before going out. Well, that’s exactly what is happening with this Stripe deal.
By looking at who’s buying the shares on the secondary market, you can often tell whether the company will go public sooner rather than later. If it’s a large crossover investor or someone who largely invests in public stocks, like T. Rowe Price or Fidelity, that’s another positive signal that an IPO is just over the horizon. We don’t have that data for Stripe, but it’s worth keeping in mind.
While of course I can’t guarantee that Stripe will be one of the first IPOs in 2024, it shows that the company is ready. And if that does happen, I think Stripe could be the perfect public listing to revive the late-stage venture market and defrost the exit environment.
A good exit from Stripe would show that there is exit hope for the startups that got overvalued in 2021 but were built on solid fundamentals. Plus, I’d imagine that any late-stage investor who is able to hold their shares after Stripe goes public wouldn’t be looking at as big of a loss as it may seem now.
And even if Stripe doesn’t go public anytime soon, this deal shows us that investors are picking their winners from 2021 and that the market may see some growth again.
Amazon’s iRobot deal could be blocked by European Union
It’s been 17 months since Amazon agreed to buy iRobot for $1.7 billion. The subsequent year and a half has unfolded at a glacial pace, as the deal has inched forward. Analysts anticipated that the retail giant’s purchase of the home robot pioneer would face a good bit of regulatory scrutiny, though few expected the process to drag on quite this long.
The deal’s latest hurdle is the European Commission, which has set a February 14 deadline to reach a final decision. According to a new report, the EU regulatory body is set to vote against acquisition, citing the perceived anti-competitive nature of deal. Last week, Amazon missed a deadline for submitting concessions to the European Commission.
The Wall Street Journal notes that Amazon was made aware of the Commission’s intentions in a recent meeting. The deal has already made it through a series of regulatory hurdles, including the equivalent U.K. body.
Since announcing the deal, Amazon has insisted that it won’t adversely impact the robot vacuum market, while assuring regulators that it will not prioritize iRobot products over the competition through its massive retail presence.
The protracted review period has tested iRobot’s fortitude. In July, Amazon announced that it was lowering its asking price from $61 to $51.75 per share. The news arrived as the Roomba maker raised $200 million in debt, in order to keep things moving at the company while waiting for the deal to close. If the acquisition eventually goes through, that debt will be transferred to the new parent company.
The day the initial deal was announced, iRobot cut its headcount by 10% — around 140 people – as part of a restructure. The company laid off another 85 people in February. iRobot’s stock price also continues to reel from the delays. As of this writing, share prices have dipped below $20 — one-third of where things were when the deal was announced.
Amazon’s $1.4B iRobot deal is dead. Now what?
A year and a half after announcing its intention to acquire iRobot, Amazon’s deal is officially dead. All parties involved anticipated some level of regulatory scrutiny, but after a few decades of tech company consolidation, few expected this much friction. The deal had already passed through select international regulatory bodies, including the U.K. Ultimately, however the European Union’s recent clamping down on perceived anti-competitive M&As proved to be the final nail in the coffin. This morning’s news also finds iRobot laying off 350 people — amounting to nearly one-third of its total headcount — as longtime CEO Colin Angle steps down.
“iRobot is an innovation pioneer with a clear vision to make consumer robots a reality,” Angle said in a release. “The termination of the agreement with Amazon is disappointing, but iRobot now turns toward the future with a focus and commitment to continue building thoughtful robots and intelligent home innovations that make life better, and that our customers around the world love.”
The deal has already taken some toll on the firm, including two rounds of layoffs. Last July, Amazon lowered its purchase price 15%, from $1.7 billion to $1.4 billion. The news came as iRobot announced that it was raising $200 million to continue operations after the initial deal was expected to close.
“iRobot is taking on new financing that we believe is sufficient to support our operations in a hyper competitive environment and meet our liquidity needs as well as pay off iRobot’s existing debt,” Angle said at the time.
The phrase “hyper competitive environment” is a telling one. It effectively does two things. It explains the need for fresh cash, in the midst of financial struggles that pre-dated the acquisition announcement. It also speak to the broader regulatory scrutiny around the deal. When it was first announced, there were two key sticking points among critics.
The first and less discussed was privacy. Roombas have mapping capabilities and Amazon has often faced criticism over its decisions to offer Ring cam security footage to law enforcement. The idea of letting the company into private residences in this way has understandably given many advocates pause.
The second and ultimately larger sticking point is competition. Amazon has the biggest retail billboard on the internet. The company could have, in theory, promoted Roombas in way that shut out the “hyper” competition.
“Our in-depth investigation preliminarily showed that the acquisition of iRobot would have enabled Amazon to foreclose iRobot’s rivals by restricting or degrading access to the Amazon Stores,” the European Commission noted in a statement issued this morning. “For example, Amazon would have been in a position to (i) delist or not list rival robot vacuum cleaners; (ii) reduce visibility of rival robot vacuum cleaners displayed in Amazon’s marketplace; (iii) limit access to certain widgets or certain commercially attractive product labels; or (iv) raise the costs of iRobot’s rivals to advertise and sell their robot vacuum cleaners on Amazon’s marketplace. We also preliminarily found that Amazon would have had the incentive to foreclose iRobot’s rivals because it would have been economically profitable to do so. All such foreclosure strategies could have restricted competition in the market for robot vacuum cleaners, leading to higher prices, lower quality, and less innovation for consumers.”
There’s no question, of course, that the environment is dramatically more competitive than the one iRobot entered 20 years ago. When iRobot finally found its groove in the robot vacuum space after years of false starts (including baby dolls and lunar rovers, to name a few), the company finally hit upon what — to date — remains the only successful home robot on a meaningful scale. Angle likes to say that he finally found success as a roboticist after becoming a vacuum salesman. It’s a cute line that gets to the heart of an industry that requires the identification of needs in other fields in which most roboticists are not well-versed.
After two decades, the robot vacuums exist on their own island. That’s certainly not for lack of trying on the part of iRobot or the competition. It seems like every year another “companion” robot comes and goes. Neither can the issue be blamed on lack of demand. Above all, it’s a technology problem. There are currently a lot of constraints on the functionality of hardware automation that is acceptably priced for consumers — and this likely won’t be changing any time soon.
Look at Amazon’s Astro robot. It’s cute, it’s compelling, it does some interesting things (the periscope security camera is a genuinely clever innovation that gets around the Roomba’s limited vantage point). But it didn’t exactly set the world on fire. At this point, it’s probably best classified as an interesting experiment. That’s not to say that Amazon is done with it or other home robots (it’s not), but presently it feels like a bit of an evolutionary dead end. I would, however, love to be proved wrong here.
Meanwhile, there are now dozens of robot vacuums. Some come from bigger names like Samsung and Dyson, while far cheaper models have flooded the market. Search for “cheap robot vacuum” on Amazon and you’ll find a ton of options under $100. iRobot’s focus, on the other hand, has been pushing the state of the art, resulting in robots that top out around 10x that amount when you factor in things like the self-cleaning bin.
iRobot has certainly felt the pinch of the category it created. Remember the gutter-cleaning Looj or pool cleaning Verro? Over the years, the company has looked to apply the Roomba’s successes to different parts of the house to an uneven record of success. The lawn mowing Terra, meanwhile, was hit hard by COVID and supply chain constraints. It was indefinitely put on ice nearly four years ago, and this morning’s news doesn’t bode well for the project’s future.
That decision, of course, will ultimately fall on the person who steps in as the second CEO in iRobot’s 34-year history. Currently, executive vice president Glen Weinstein is stepping into the interim role.
Layoffs should always be mourned for the toll they take on individuals, who are too often singled out arbitrarily. That absolutely applies to the multiple rounds iRobot has undergone in recent years. Since its founding in 1990, the company has been one of the pillars of greater-Boston’s thriving robotics ecosystem. A year or two after I started, TechCrunch held a private dinner for Boston robotics luminaries, and it seemed as though nearly every guest had been involved with iRobot one way or another over the years.
Boston robotics will ultimately be okay. Those extremely talented individuals who are no longer with the company will form the next generation of world-changing robotics startups. This is sad, hard news, but I’m not too worried about those smart and capable individuals at the end of the day. They will do great things. Nor am I particularly worried about the future of the home robot. It’s had a slow start that may stretch out even longer, but soon enough we’ll be seeing key breakthroughs in AI, navigation and mobile manipulation that will engender a new crop of capable home robots.
Hopefully, in spite of its struggles, iRobot will continue to play a key role in that world.
Deal Dive: It's time for VCs to break up with fast fashion
Fast fashion is an industry ensnared in labor issues and copyright problems, and it has an immense environmental impact due to its wastewater and carbon emissions. It also happens to have the potential to make a lot of money, fast.
But despite all these issues, VCs won’t stop loving the sector.
On Wednesday, my colleague Manish Singh wrote a scoop about a potential Accel investment into Newme, a fast-fashion startup based in India. Newme is an app-based retailer that produces 500 new items a week with an average price tag of $10. This news comes just a week after the company closed a seed round.
Accel and Newme did not respond to requests for comment.
Newme looks very much like many other VC-backed fast-fashion startups like Shein, which has raised $4 billion, and Cider, an Andreessen Horowitz–backed startup valued at $1 billion. Cider says it’s on-demand inventory makes it a more ethical fast-fashion option. That’s up for debate, though.
Accel’s potential investment into Newme stood out to me for a few reasons, the largest of which is that I’m just not really sure why VCs back these companies.
Fast-fashion companies gained rapid popularity and large followings because of their ability to bring clothes from the runway to your local department store in record time. But the fact is that often, they can only churn out clothes so quickly by cutting corners. The only way to make this strategy work is by using cheap materials and cheap — and likely underpaid — labor, and in many cases, by copying designs.
This concept is nothing new. H&M, Zara and Primark have been around for a long time and are no strangers to controversy. H&M and Primark have been sued for greenwashing — H&M had one lawsuit dismissed, but the other is ongoing, while Primark has been sued for allegedly ripping off designs from Vans. H&M has also been tied to potential labor violations.
And yet, VCs find no fault in funding the next breed of these companies. Rinse and repeat.
Shein has faced scrutiny for allegedly using forced labor to make its products, and it’s also been hit with lawsuits alleging copyright infringement for ripping off designs. Cider has also been accused of copying designs, not in court, but on social media and by designers.
Accusations like these hurt brands. And even the perception of labor and copyright malpractice can open a company up to a slew of legal battles that will be costly, regardless of whether they end up getting charged. In the worst case, if such allegations are proven true, they would result in VC money being parked in an unethical business, which isn’t really a great look. I’d love to know what LPs think if and when that happens.
Of course, there is also the environmental impact that these companies have. The fast-fashion industry generates more pollution than the aero and maritime industries combined each year. I’m not saying that every VC needs to exclusively invest in carbon credits and clean energy startups, but their money would be far better spent on startups that are not actively making the environment worse. In 2024, you could even argue that it’s tone deaf.
As environmental regulation continues to get stricter across the world, fast-fashion companies need to take a moment to reexamine their priorities. If they don’t get greener fast, they are setting themselves up to potentially being forced to change their sourcing and business practices. That would be costly and could be enough to cause a change in strategy.
Investing in these companies also bets against consumer trends. Sure, investing in the apparel and retail industry is always a bit of a gamble since it’s hard to predict where consumers will head next, but ethical consumption has been a growing movement for more than a decade. People want to know they are getting an ethically sourced and produced product, and their ranks are ballooning.
Fast fashion, of course, does make a lot of money in the short-term, so I get why VCs are swarming — that’s capitalism, baby! But in many ways, these companies seem to be more troublesome than they are worth. Plus, backing a company that isn’t 100% ethical sends a clear message about the beliefs a firm espouses.
VCs may not be able to stop the fast-fashion industry, but maybe it’s time they thought more about the consequences of funding it.
Pinterest announces a new ad deal with Google as it approaches 500M MAUs
Pinterest announced a new ad deal with Google as the company aims to ramp up its ad revenue. Google is the social platform’s second third-party ad partner after Amazon signed a multiyear deal with Pinterest last year.
The company talked about the Google partnership during the earnings call for Q4 2023, where it posted results below analyst expectations. Pinterest’s revenue for the period was $981 million with 12% year-on-year growth, while monthly active users jumped to 498 million with 11% year-on-year growth.
Pinterest’s stock dipped nearly 28% because of below-expectation revenue but recovered after CEO Bill Ready announced the Google deal. He said that the company started rolling out the new ad integration a few weeks ago, and it is already seeing positive results.
“This partnership will focus on monetizing several of our currently unmonetized international markets by enabling ads to be served on Pinterest via Google’s Ad Manager. We went live a couple of weeks ago, and this is starting to ramp up. Third-party ad demand is scaling as we anticipated,” he said.
Ready noted that Pinterest has 80% of users outside the U.S. but they only represent 20% of revenue. He said that the Google partnership will help increase the average revenue per user in international markets.
Growing audiences
The Pinterest CEO talked about leveraging AI and new formats to build up userbase and engagement. He said the company rolled out the collage feature, which allows users to use stickers and objects to create a new image, to all iOS users globally. The company said that 75% of colleges have a shoppable product pin, but it didn’t say anything about conversion figures.
Last year, the company also launched an auto-organizing feature for users, which recognizes similar pins and nudges users to create boards. The feature led to a 30% increase in boards created on the social platform.
Ready also said that the company’s generative AI-based search guides help users hone their queries and get them closer to “the point of action or purchase.”
Last November, Pinterest started experimenting with a new tool to incorporate body type ranges in search to make results more inclusive.