Stripe’s Crypto Wallet, M&A Momentum, and Robots Replacing Soul-Crushing Jobs | E2138

Key Concepts

• Neo Bank: A modern, mobile-first banking service that operates as a software layer on top of traditional banking infrastructure.
• Stablecoin: A cryptocurrency designed to minimize price volatility, often pegged to a stable asset like the US dollar.
• Liquidity: The availability of cash or assets that can be easily converted into cash.
• M&A (Mergers and Acquisitions): The consolidation of companies or assets through various types of transactions.
• SPV (Special Purpose Vehicle): A subsidiary created by a parent company to isolate financial risk.
• FSD (Full Self-Driving): Tesla's advanced driver-assistance system.
• Critical Disengagement: An instance where a self-driving system requires human intervention to prevent an accident.
• RAG (Retrieval-Augmented Generation): A technique for enhancing the accuracy and reliability of generative AI models by grounding them on external knowledge sources.
• IP (Intellectual Property): Creations of the mind, such as inventions, literary and artistic works, designs, and symbols, names, and images used in commerce.

Chime's IPO and Neo Banks

• Chime's IPO: Chime, a US-based neo bank, went public at $27 a share, above its initial range, valuing the company at $11.7 billion. The stock closed its first day at $37.11, a 37% increase.
• Neo Bank Advantages: Neo banks offer user-friendly mobile interfaces, easier account setup, and better fee structures compared to traditional banks.
• Startup Playbook: Identify services with poor customer service and high fees, then create a better alternative. Examples include Uber disrupting New York City cabs and Robinhood challenging traditional brokerage services.
• Challenges: Entering the banking world involves navigating regulations and overcoming institutional resistance to change.
• Liquidity Boost: Chime's IPO provides liquidity to investors like DST Global, Cross Link, General Atlantic, Menllo Ventures, and Cath Innovation, benefiting the overall technology industry.
• IPO Tracker: Recent successful IPOs include Coreweave (AI hosting, March 28th), E Toro (May 14th), Circle (June 5th), and Chime (June 13th).

Stablecoin Initiatives and Market Trends

• Stripe's Acquisitions: Stripe acquired Bridge (stablecoin investment) and Privy (crypto wallet startup, last valued at $230 million), indicating a move towards stablecoin integration.
• Shopify's Support for USDC: Shopify now supports merchant transactions using the USDC stablecoin from Circle on the Base blockchain (Coinbase).
• Walmart and Amazon's Stablecoin Exploration: Walmart, Amazon, and other multinational giants are exploring issuing their own stablecoins in the US.
• Impact on Traditional Payment Systems: The potential expansion of stablecoins could circumvent Visa and Mastercard, leading to a decline in their stock values.
• Startup Opportunities: The stablecoin space presents opportunities for startups to build tooling and infrastructure around these digital currencies.
• Privy's Role: Privy provides technology that underpins crypto wallets, suggesting Stripe may be building wallet infrastructure rather than a consumer-facing wallet.
• Shopify's Shop App: Shopify's Shop app, ranked #21 on the US free iOS rankings, aggregates shipping updates and suggests related products, potentially indicating a move towards consumer engagement.
• YC's Lack of Stablecoin Startups: The latest Y Combinator batch did not include any stablecoin-focused startups, possibly because founders perceive the market as established with limited opportunities.
• Stablecoin as a Service: Stably offers stablecoin-as-a-service, allowing companies to create their own stablecoins without reinventing the wheel.
• One Money: Another company in the Twist 500, is building its own blockchain network specifically for stablecoins to handle high transaction volumes.

The Endgame of Stablecoins

• Consolidation: The stablecoin market is entering an "endgame" phase, characterized by consolidation and the emergence of established players.
• Acquisition Targets: Companies like Stably could be acquired by legacy players (American Express, Visa) seeking to enter the stablecoin market or by companies like Stripe wanting to enhance their stablecoin capabilities.
• Acquisition Justifications: Acquisitions can be justified defensively (protecting market share) or opportunistically (expanding customer base and revenue).
• Percentage of Market Cap: When evaluating acquisitions, consider the percentage of the buyer's market cap being spent.
• Lena Khan's Approach: Lena Khan's approach to antitrust was criticized for viewing any reduction in competition as inherently negative, without considering the broader market context.

Robotics and Job Displacement

• Coco Robots: Coco, a robotics company focused on delivery robots, recently raised $80 million.
• Figure Robotics: Figure, a company developing humanoid robots, released a video demonstrating its robot sorting packages, showcasing its dexterity.
• Job Destruction: Automation and robotics are expected to lead to significant job displacement, potentially affecting hundreds of millions of jobs globally.
• Figure Robot's Capabilities: The Figure robot can sort packages by placing the barcode face down, demonstrating its ability to understand and execute simple tasks.
• Cost Reduction: Robots are becoming more affordable, potentially costing $1 per hour compared to $15-$20 per hour for human workers.
• Vassor Robotics: Vassor Robotics created a $200 robotic arm that can be programmed using natural language to play chess, demonstrating the increasing accessibility of robotics.
• Toys Become Tools: Technologies that initially appear as toys can evolve into essential tools, as seen with Canva and Microsoft Paint.

Tesla's Full Self-Driving (FSD) and Autonomous Driving

• FSD Progress: Tesla's FSD is improving, with the latest version (Juniper) showing significant advancements.
• Critical Disengagements: Data from FSD tracker indicates that critical disengagements occur approximately every 200 miles.
• Safety Drivers: The speaker suggests that autonomous driving systems should have safety drivers for the first year of deployment in each market to ensure safety and build public trust.
• Whimo's Approach: Whimo has taken a cautious approach, deploying its autonomous vehicles with safety drivers for an extended period.
• Poly Market Bet: A Poly Market bet indicates a 28% chance that Tesla will launch a driverless robo taxi service before July.
• FSD Community Tracker: The FSD community tracker provides data on disengagements and other performance metrics.
• Tire Tracks Confusion: FSD systems can be confused by tire tracks on the road, highlighting the challenges of interpreting complex visual data.

Intellectual Property and AI

• Reddit and Disney Lawsuits: Reddit is suing Anthropic for scraping its content, and Disney is suing the company behind an AI app for IP infringement.
• IP Infringement: AI models trained on copyrighted material without permission are considered to be stealing IP.
• Disney's IP: The opportunity to create Jedi images should belong exclusively to Disney, as they own the IP and have invested heavily in it.
• Licensing Opportunities: AI companies should license IP from content owners like Disney to create officially licensed content and compensate creators.
• Toliet and AI Scraping: Toliet, a Twist 500 company, released a report on AI scraping, noting that most scrapes now come from RAG rather than model training.
• Reddit's Contributor Fund: Reddit could create a contributor fund to reward top contributors with a share of licensing revenue.
• Fair Use: AI companies should be thoughtful about fair use and ensure they are not infringing on copyrighted material.

Conclusion

The discussion covers a range of topics, from the success of Chime's IPO and the evolving landscape of neo banks to the growing importance of stablecoins and the potential for job displacement due to advancements in robotics and AI. The conversation also highlights the need for ethical considerations and fair compensation for IP holders in the age of AI. The speakers emphasize the importance of innovation, competition, and thoughtful regulation to ensure that technological advancements benefit society as a whole.