Breaking down Stripe's biggest acquisition yet | Equity Podcast

Introduction and Upcoming TechCrunch Disrupt

• This episode is presented by Mercury, a fintech that simplifies how over 200,000 businesses operate (0s).
• The hosts, including Kirsten Korosec and Devin Way, discuss their excitement for the upcoming TechCrunch Disrupt event, where they will be recording a live show (42s).
• Devin Way is looking forward to seeing colleagues in person, as they don't often get to interact in a non-virtual environment (1m2s).
• Anthony Ha, another co-host, joins the discussion and mentions that he hasn't seen his colleagues in person for about 5 years, with the last in-person Disrupt event being in 2019 (1m37s).
• Anthony Ha will be hosting the Startup Battlefield at the upcoming Disrupt event (1m54s).
• Margot, a regular guest on the show, will be joining the hosts on stage at the Disrupt event, despite being on pre-travel at the time of recording (2m8s).

Stripe's Acquisition of Bridge and Stablecoins

• The hosts discuss Stripe's acquisition of Bridge for $1.1 billion, which seems like a significant amount of money (2m42s).
• Bridge helps companies accept stable coins, which are cryptocurrencies tied to fiat currency, such as USDC, which is tied to the US dollar (3m6s).
• Stripe's CEO, Patrick Collison, has described stable coins as "the room temperature superconductors of finance," indicating that the company sees significant potential in this area (3m41s).
• The hosts wonder if there are aspects of running a giant company like Stripe that they are not aware of, such as backend fees and banking regulations, which may be driving the acquisition (3m57s).
• Stripe's acquisition of a company related to cryptocurrency is seen as a way to avoid millions of dollars in fees and costs, and to explore new opportunities for growth, as the company has become ubiquitous and needs to be ambitious and forward-thinking to expand further (4m9s).
• The idea of using cryptocurrency, particularly stable coins, to facilitate international transactions and make purchases easier is being considered, but its success is not guaranteed (4m52s).
• Stable coins are seen as a more practical option for everyday use, as they can be used as a virtual dollar, making them more appealing for transactions (5m23s).
• The timing of Stripe's acquisition is interesting, given the upcoming election and questions around the future of cryptocurrency, which may impact the company's plans (5m50s).

Stripe's Acquisition of One and AI Fintech

• The cost of pursuing new technologies, such as cryptocurrency, can be a distraction from a company's core products and may not always pay off, as seen in the case of big tech companies chasing AI and the metaverse (6m29s).
• The acquisition of an AI fintech startup called "One" by Stripe is notable, particularly due to its founder, Dr. Amnon Shashua, who is also the founder and CEO of Mobileye, and is known for taking a long-term view of his ventures (7m11s).
• Mobileye, a company acquired by Intel and later spun out as a publicly traded company, is involved in millions of vehicles, primarily focusing on computer vision for Advanced Driver assistance systems and self-driving tech, with a near-monopoly in the industry (7m29s).
• Amnon Shashua, involved with Mobileye, is also connected to various startups in Israel, including one called One Zero (7m51s).
• One Zero aims to create a future with no physical banks and no human assistance, which is a common goal among neo-banks, but the idea of complete automation raises concerns about the need for human involvement in certain aspects of banking (8m14s).
• The concept of a fully autonomous bank is considered terrifying, as it would require handling complex tasks such as investments, regulations, and customer experience without human intervention (9m2s).
• One Zero is currently in the process of raising $1 million, but their previous attempt fell through, which may indicate a gap in understanding their goals and a potential concern for investors (9m27s).
• AI fintech startups are popular, and One Zero's idea has an interesting element, but it remains to be seen if they can secure more funding (9m49s).

Free Form's 3D Metal Printing Technology

• A startup called Free Form, founded by ex-SpaceX engineers, has raised $4 million to develop a new method of 3D printing metal, which is a more challenging process than traditional 3D printing with thermoplastic (10m6s).
• Free Form's technology, known as additive manufacturing, allows for the creation of complex geometries and easy manufacturing of various items, but the specifics of their metal 3D printing method are not detailed (10m26s).
• The co-founder and CEO of a company, who previously worked at SpaceX, was involved in 3D printing using metal but found it to be slow, expensive, and complicated due to the process of dealing with powdered aluminum and multiple lasers (11m5s).
• The CEO had disagreements with Elon Musk about the cost and usefulness of 3D printing with metal, leading to the decision to leave and invent a new solution (11m49s).
• The new solution involves a control mechanism, described as a machine learning model, that closely monitors the molten metal and adjusts the process thousands of times a second (12m2s).
• The technology to monitor and execute the process in real-time did not exist, so the company had to build it from scratch, including creating the necessary infrastructure to run the model (12m42s).
• The company has been working on this technology for a long time and has faced significant challenges, but they have made progress and are now building products using this technology (13m11s).
• The company has raised $14 million in funding and already has clients in the space and industry, oil, and gas sectors, which could indicate that they will be successful and make money (13m48s).
• The relatively small amount of funding raised may be a strategic decision to maintain control of the company and not give away too much equity (14m3s).
• A company with a strong pedigree has raised $14 million in funding, which is considered a big round for an early-stage company, especially when compared to AI startups that often raise $100 million or more (14m20s).
• The company is working on 3D printing metal using lasers and has to build its machines from scratch, which is a complex and challenging process (14m41s).
• The company has a wide variety of potential customers, including those in the aerospace, automotive, and energy sectors, which could make its product appealing to a broad range of industries (15m4s).
• The company's technology could also be used to support the US manufacturing industry by providing a more efficient and flexible way to produce parts (15m31s).
• The company uses real-time monitoring by GPU FPGA, which it calls "AI on steroids," to improve its manufacturing process (16m20s).

Andreessen Horowitz's Oxygen Program and GPU Access for AI Startups

• Venture capital firm Andreessen Horowitz has launched a program called Oxygen, which allows its portfolio companies to train or operate their AI models without negotiating market rates for Nvidia GPUs (17m13s).
• This program is seen as a way for the VC firm to provide a platform for its portfolio companies and help them access the resources they need to succeed (18m1s).
• The idea of a VC firm providing this type of support is not new, but the specific program launched by Andreessen Horowitz is seen as innovative and forward-thinking (17m44s).
• Andre and Horwitz have popularized the concept of providing startups with access to a large number of GPUs, specifically the H100s, which are considered the gold standard in AI training and inference, and are very hard to get a hold of (18m7s).
• Net Freeman and Daniel Gross have a similar setup, called the Andromeda cluster, which consists of a few thousand GPUs, but it's a smaller chunk compared to the 20,000 H100s that Andre and Horwitz are offering (18m25s).
• YC also offers startups training runs through partnerships, but not on the same scale as Andre and Horwitz (19m3s).
• The ability to offer access to a large number of GPUs is highly attractive to startups, especially those in the AI industry, and can be a valuable recruitment tool or way of attracting startups to sign on with a particular VC firm (19m22s).
• Having access to GPUs is crucial for AI startups, as it allows them to do inference and train models offline, rather than relying on external APIs and paying market rates (19m45s).
• Andre and Horwitz's move to offer access to 20,000 H100s is seen as clever and timely, and may have been influenced by their experience in the crypto industry, which is also highly computational (20m19s).
• It's possible that Andre and Horwitz may have leased the GPUs, rather than owning them outright, and are now taking advantage of the growing demand for AI computing resources (20m49s).
• The move is seen as a combination of cleverness and serendipity, as Andre and Horwitz are in the right place at the right time to take advantage of the growing demand for AI computing resources (21m7s).
• There may be other companies or VCs that were betting on the crypto industry and are now pivoting to take advantage of the growing demand for AI computing resources (21m12s).
• Companies in various industries, including industrial and AI, were affected by the rapid growth of data centers and the increasing demand for computational power, leading them to invest in their own infrastructure, such as clusters of GPUs, to stay competitive (21m31s).
• The growth of data centers and the increasing demand for computational power have made investing in infrastructure a smart move, as it has become a universally valuable resource, with companies like Intel and AWS investing heavily in building and expanding their data centers (22m2s).

Growth of Data Centers, Computational Power, and Environmental Concerns

• The increasing demand for computational power has also led to the growth of services that allow companies to rent out their unused GPUs and other computing resources, making it easy for companies to monetize their idle resources (22m26s).
• The growth of new technologies, such as AI and crypto, has highlighted the importance of investing in infrastructure, as they require significant amounts of energy and computational power to operate (22m40s).
• The increasing demand for computational power has also led to concerns about the environmental impact of these technologies, including the energy consumption and e-waste generated by the disposal of outdated hardware (23m11s).
• The disposal of outdated hardware is expected to become a significant problem, with millions of tons of e-waste generated by the disposal of outdated GPUs and other computing equipment, highlighting the need for sustainable solutions (23m56s).
• The growth of new technologies has also highlighted the importance of considering the cost of infrastructure, including the energy consumption and e-waste generated by these technologies, and the need for companies to invest in sustainable solutions (23m24s).

Startup Battlefield Selection Process and Format

• The selection process for the startup Battlefield has changed over time, and now involves a long process with a large number of applicants, with 200 companies selected from around the world and 20 of those getting to pitch on stage (24m51s).
• The 20 selected companies are expected to be strong and will present for 6 minutes, including a live demo, and will be questioned by a panel of expert VC judges for 6 minutes (25m40s).
• The live demo can mean different things for different companies, but it's not just a pitch deck, and the companies are expected to show their technology and prove that it works (25m47s).
• The startup Battlefield is different from other pitch offs because of its fast-paced and intense presentation style, with a focus on delivering the message quickly (26m6s).
• There have been instances in the past where companies have struggled with their live demos, such as Dropbox, which was not prepared for the number of signups it received after its demo (26m45s).
• The event is usually packed during the 20 pitches, and it's a pressure cooker for the companies presenting (27m11s).
• Devon was particularly interested in AI and space companies during the selection process, and noted that it was hard to narrow down the selection to 20 companies (27m21s).
• The editorial team was very hands-on during the selection process, and it was hard to say no to many of the startups, but the selected companies are considered the best of the best (27m43s).

Diversity and Evolution of TechCrunch Disrupt

• The diversity of startups at TechCrunch Disrupt represents the different interests of the TechCrunch editorial team and the startup ecosystem, with a mix of space, health and biotech, Enterprise, and consumer startups, showing that it's not just about making money, but about doing something new (28m45s).
• The event has evolved from a Silicon Valley consumer internet event to a global event for startups from various sectors, creating challenges in the selection process due to the diversity of companies (29m26s).
• The judges struggle to compare companies from different sectors, but this diversity is also a strength, and the fact that judges are no longer already investing in the companies makes the process more fair (29m37s).
• The latest batch of startups at TechCrunch Disrupt includes a variety of sectors, with some interesting crossover use cases, and a good mix of startups from different regions, including Africa, showing the growth of the event over the years (30m37s).
• The event also features startups that could make the world a better place, with a focus on sustainability, Mobility, Logistics, healthtech, and biotech, and not just AI startups (29m55s).
• The selection process is challenging due to the diversity of companies, but it's also what makes the event unique and valuable (29m32s).
• The event has grown to include startups from all over the world, with some interesting ones from Africa, looking at mobility and Healthcare in a different way (30m39s).

Equity Production Credits and Acknowledgements

• Equity is produced by Teresa Lo (31m24s)
• The editing of Equity is done by Kell Bryce (31m27s)
• Durban is the illustrator for Equity (31m29s)
• The team would like to thank their audience, development team, and Henry Pick who manages TechCrunch audio products (31m33s)
• The team expresses gratitude to listeners and looks forward to the next episode (31m38s)