Startups Weekly: Big shake-ups at the AI heavyweights

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Welcome to Startups Weekly — your weekly recap of everything you can’t miss from the world of startups. Sign up here to get it in your inbox every Friday.

There’s not that much news from me this week, but I’ve been doing a ton of prep for TechCrunch Early Stage taking place in Boston on April 25. It’s going to be a fantastic show, and you still have time to grab tickets at early-bird prices, if you’re quick.

Most interesting startup stories from the week

Stability AI bids adieu to its founder and chief executive, Emad Mostaque, who’s decided to chase the decentralized AI dream, leaving the unicorn startup without a permanent CEO. The company, known for burning through cash faster than a teenager with their first debit card, is now in the hands of interim co-CEOs Shan Shan Wong and Christian Laforte. Mostaque, in a dramatic exit, took to X to proclaim his departure was all about fighting the “centralized AI” bogeyman because, apparently, the real problem in AI isn’t rogue robots but who gets to control them.

Microsoft has orchestrated a heist worthy of a Hollywood plot, snagging the co-founders and much of the staff of Inflection AI, along with the rights to use their tech, for a cool $650 million. The deal, which to me seems more like a ransom payment than an M&A push, includes $620 million for the privilege of using Inflection’s tech and an extra $30 million to ensure Inflection doesn’t sue for Microsoft’s bold talent grab. Reid Hoffman, Microsoft board member and Inflection co-founder, took to LinkedIn to assure everyone that Inflection’s investors would sleep well tonight, with early backers getting a 1.5x return and later ones a modest 1.1x, despite the math not quite adding up. It’s pretty bold to describe a 1.5x return as a “good upside,” by the way — most early-stage funds would be pretty displeased.

  • They said your data would be safe: Facebook (now Meta) was caught red-handed with its digital hands in the Snapchat cookie jar. Dubbed “Project Ghostbusters,” Facebook’s covert operation aimed to snoop on Snapchat’s encrypted traffic, seeking to decode user behavior and gain a competitive edge.
  • Robinhood’s new credit card: Robinhood unveiled its Gold Card, a credit card so packed with features it might just make Apple Card users pause for a hot second. For the low, low price of being a Robinhood Gold member (because who doesn’t want to pay $5 a month for the privilege of spending more money?), you too can earn 3% to 5% cash back on everything.
  • Could Nvidia be the next AWS?: Nvidia and Amazon Web Services (AWS) might just be the tech world’s accidental heroes, stumbling upon their core businesses like a toddler finding a hidden stash of cookies. AWS discovered it could sell its in-house storage and compute services, while Nvidia found its gaming GPUs were unexpectedly perfect for AI workloads.

Stability AI CEO quits because you're 'not going to beat centralized AI with more centralized AI'

Stability AI CEO quits because you’re “not going to beat centralized AI with more centralized AI.” Image Credits: David Paul Morris / Bloomberg

Trend of the week: Transportation trouble

The New York Stock Exchange has given EV startup Fisker the boot, citing its “abnormally low” stock prices. It seems Fisker’s financial runway is more of a tightrope, with shares plummeting over 28% in a single day, a botched deal with Nissan (or so the rumor mill suggests), and a triggered repayment clause in their loans that they can’t afford — painting a picture of a company teetering on the brink of a cliff. It won’t have helped, of course, that the EV manufacturer lost track of millions of dollars’ worth of customer payments.

  • Can Arrival’s scraps save Canoo?: The bankrupt Arrival sells its leftovers to Canoo, another EV hopeful teetering on the edge of viability, in a deal that’s less about innovation and more about Canoo desperately trying to cobble together a production line with Arrival’s yard sale bargains.
  • Sowwy, folks: Steve Burns, the ousted founder, chairman and CEO of bankrupt EV startup Lordstown Motors, has settled with the U.S. Securities and Exchange Commission over misleading investors about demand for the company’s flagship all-electric Endurance pickup truck.
  • Letting the car self-drive for a month: Tesla is about to start giving every customer in the U.S. a one-month trial of its $12,000 driver-assistance system, which it calls Full Self-Driving Beta, provided they have a car with the compatible hardware.

Canoo Light Tactical Vehicle for use by US Army

Canoo delivers a Light Tactical Vehicle back in 2022. Image Credits: Canoo

Most interesting fundraises this week

Super{set} is doubling down on its bet on boring but bountiful data and AI-driven enterprise startups, having just added a cool $90 million to its war chest. This move comes hot on the heels of its $200 million exit from the marketing company Habu to LiveRamp. The company is not your average venture studio. With a lean portfolio of 16 companies and a penchant for turning venture capital investment memos from art into science, super{set} is on a mission to engineer practical applications. With their new digs on an entire floor of San Francisco’s 140 New Montgomery building, they’re not just investing in startups; they’re buying into the future of the city itself.

Tired of cramped hotel rooms and landlords with an aversion to IKEA, Alex Chatzieleftheriou decided to fill the gap himself. Fast-forward through a pandemic-induced boom in nomadic working, and Blueground is now gobbling up the competition faster than a tourist at a free breakfast buffet. With the acquisition of companies like Tabas and Travelers Haven, Blueground has expanded its empire to include over 15,000 apartments across 17 countries, proving there’s no place like a home you can book for a month. Despite the proptech sector feeling the squeeze from rising interest rates, Blueground’s recent $45 million Series D funding round and a hefty debt facility suggest that investors are still willing to bet big on Chatzieleftheriou’s vision of a world where everyone can live in a fully furnished apartment, at least temporarily.

  • $10 million for the microbe party: Wase has engineered a compact system that treats the gunky by-products of breweries and food processors on-site and turns them into biogas. This isn’t your grandma’s anaerobic digester; it’s a microbial rave, complete with electrically charged fins for the bacteria to party on, producing about 30% more methane and leaving behind less residual waste.
  • More money for diversity: New Summit Investments is on the brink of a significant leap in its impact investing journey, eyeing a $100 million target for its latest fund, dwarfing its previous $40 million fund closed in 2022.
  • New battery chemistry: In the quest to coax more capacity from electric vehicle batteries, automakers are increasingly turning to silicon. Ionobell, a seed-stage startup, which recently closed a $3.9 million extension round, claims its silicon material will be cheaper than the established competition.

A red car illustration with a loading bar on the windshield.

Image Credits: Lyudinka/Getty Images (modified by TechCrunch)

Other unmissable TechCrunch stories …

Every week, there’s always a few stories I want to share with you that somehow don’t fit into the categories above. It’d be a shame if you missed ’em, so here’s a random grab bag of goodies for ya:

  • Erm, what?: Marissa Mayer’s startup, Sunshine, went from Silicon Valley’s next big thing to pioneering the groundbreaking world of … managing contacts and sharing photos, leaving the internet collectively scratching its head and wondering, “That’s it?”
  • Dude, where’s your data?: Three years after a hacker’s “coming soon” teaser, 73 million AT&T customers’ personal details hit the internet, and while AT&T plays the silent game, customers are left verifying their own data leaks like a dystopian DIY project.
  • C’mon, Apple: In a move that’s less about innovation and more about playing gatekeeper, Apple’s takedown of Beeper’s quest to bring iMessage to Android users is now a DOJ exhibit on how to stifle competition and keep the blue bubble club exclusive.
  • Who needs privacy anyway: Glassdoor, the haven for anonymous company reviews, seems to have turned into a privacy nightmare by sneakily adding users’ real names to their profiles, making “anonymous” the most ironic word in their dictionary.
  • Welcome to Spotify University: Spotify, not content with just dominating your music, podcasts, and audiobooks, is now eyeing your brain cells with its latest venture into e-learning, because apparently, we all need another reason to never leave the Spotify ecosystem.

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