Netflix is showing Hollywood what happens when a startup grows up

Hello and welcome back to Equity Tech Wrench's flagship podcast about the business of startups. Today is Friday, December 12th. I'm Kirsten Corusc,

December 12th. I'm Kirsten Corusc, transportation editor and I'm joined by my co-host Anthony Ha, weekend editor.

Hi Anthony.

>> Hello. I want to talk about Whimos and babies and I'm wondering if you saw what happened actually on Monday in which a

baby was a woman delivered a baby while her Whimo was in route to a hospital in San Francisco.

>> I did see about that. Uh it seems like you know everything went well as far as I can tell. And I think what was kind of striking to me about it was, you know, in the midst of all this excitement, people were pointing out this isn't even

the first baby that's been born in a Whimo. There was another that was born

Whimo. There was another that was born in Phoenix. I guess maybe it didn't get

in Phoenix. I guess maybe it didn't get sort of the same amount of press coverage, but Whimo did point out this isn't actually the first time.

>> Yeah. One of the things that was pointed out is that there have been incidents as new technology comes and intersects with like normal human daily life that these

types of things happen. And and there was a time when there were babies. It

was news when babies were being born in Ubers. And you know, there was a kid

Ubers. And you know, there was a kid walking around today apparently with the name Uber because of that. I I'm I'm kind of wondering if this child is going to be named Whimo. I really hope not.

Don't name your kid Whimo. The line that got me was that a spokesperson said that the vehicle was like thoroughly cleaned right afterwards, which I was like, "Oh, good. Thanks. Thanks for that." you

good. Thanks. Thanks for that." you

know, you read the story and you're like that, you feel warm and fuzzy and then you probably think, well, I may not want to be the one in the car immediately after. So, it's it's good they clarified

after. So, it's it's good they clarified that.

>> I can't wait for the interview.

Hopefully, there will be of of this mother because she made a choice to like hail the way robo taxi and I would love to get, you know, just to hear from her

about why that over an Uber or, you know, let's say a traditional taxi. So,

you know, why are people making these decisions to choose a robo taxi over a human-driven vehicle? You know, I want

human-driven vehicle? You know, I want to mention uh before we move on to the deals, by the way, that speaking of robo taxis, Sean Oca, um one of our senior reporters here at Techrunch is on the

ground at the Rivian event, their autonomy and AI event. And this was we expected it to be all about how they're going to, you know, do hands off or expand their hands-off driving and add

this AI assistant, which I had a scoop on earlier this week, but they hinted at eventually ride share, which is like autonomous ride share, meaning robo

taxis. So, I don't they have provided

taxis. So, I don't they have provided zero detail on that. He's on the ground like going to be hopefully getting more info. But, you know, in the future it

info. But, you know, in the future it will be more than Whimo certainly. We

know Zuks is out there. I'm sure there will be a Zuks baby at some point. Um,

and who knows, maybe a Rivian one too if you know they they meet their lofty plans. But I should get into our deals

plans. But I should get into our deals and themes for today. Today we're going to talk about Hinge. We're going to talk about fertility startup Anido. We're

going to talk about Boom Supersonic. And

then we're going to get into this fight over Warner Brothers with an interesting hostile bid situation and circular AI deals.

So Anthony, Hinge, this was an interesting one.

>> I was also like surprised about this. So

it's it's the CEO of Hinge, Justin McClod, I think is how you pronounce his name. Apologies if I got that slightly

name. Apologies if I got that slightly wrong, but he is departing Hinge to uh lead a new AI dating startup called Overtone. It's one of those startup

Overtone. It's one of those startup announcements where, you know, there's not a lot of detail about the product yet, but it does seem like it's something that's sort of done with the

blessing of the parent company. this

isn't something where he's kind of being, you know, kind of like leaving in a huff and and competing, but rather within the company, it seems like there's interest in kind of exploring this outside of Hinge itself. And I and

I think that, you know, part of what's interesting to me as somebody who has been happily married for a few years, I'm not trying to gloat or anything, but just to be kind of cards on the table,

uh, I hear a lot of horror stories about what, you know, dating on the apps is like right now. And I think it it feels like this period where no one's very happy with the experience, but but

people don't necessarily know how to solve it. And and this isn't just sort

solve it. And and this isn't just sort of anecdotal. It seems like in general a

of anecdotal. It seems like in general a lot of the kind of business metrics for a lot of these big apps like Hinge and Tinder are kind of trending in the wrong direction. And so there is this question

direction. And so there is this question of, you know, how broken is it? How do we fix it? So I don't know. Yeah, Kirsten,

fix it? So I don't know. Yeah, Kirsten,

what did you make of this? Well, you're

right in that we've seen industrywide some, you know, falling numbers with all of these dating apps and it seems like all of them are going towards AI as the

solution. So, to me, what was

solution. So, to me, what was interesting is there are Hinge already is adding AI into its app. So, are

others. So, why a separate company?

Like, what does that offer? And I'm sure we'll learn more, but to me that was a little bit of a puzzle as to what the

difference is between it. And I guess my like personal feeling is like I'm not sure if AI is going to solve like the dating out problem, but maybe maybe I'm just being I don't know pessimistic

about it.

>> No, I completely agree. Um, and and I yeah, it's hard hard to talk about this without just sounding like an old fart, but my sense is is that part of the problem why these experiences are bad is

that a lot of people just sort of don't know how to be normal people on dates anymore. And I don't think AI is going

anymore. And I don't think AI is going to help with that. I think like, you know, there's this whole idea that, you know, you can get like coached on like normal interactions from like a chatbot

and that just doesn't seem to me like that's actually going to lead to good outcomes. is going to lead to people who

outcomes. is going to lead to people who are just much less experienced with normal human interaction and that's going to lead to weirder worse dates. I

could be totally wrong, but my my gut is that's not going to be the solution or at least on its own. And and it seems like in terms of why this isn't within Hinge itself is probably there's like an

on-ramp of gradually adding AI features to Hinge, but they don't necessarily want to blow up the experience entirely.

and overtone is maybe a way to do something that's that's more aggressive, more comprehensive as far as AI. I think

the one other thing to point out is that I sort of alluded to before is that this is also going to be sort of under the umbrella of Match Group, um which obviously also owns Match, it owns

Tinder. Um it really just seems like an

Tinder. Um it really just seems like an industry where so many of the popular apps are owned by one company and if Overtone is a success, it'll be sort of another company in the portfolio. And

you know, nothing against the company overall, but it it seems like a weird market to have so much of it, like sort of just a bunch of different products that are kind of part of the same

corporate umbrella. Like that doesn't

corporate umbrella. Like that doesn't seem like a super healthy market to me.

>> You kind of got me thinking about an interesting point, which it it does allow them to be more aggressive and try some things on a totally different audience even though they're also, you know, rolling out AI products within

Hinge itself. So, you know, maybe I

Hinge itself. So, you know, maybe I should change my earlier statement, which is I didn't understand. I I think they might be on to something there because it allows them to experiment a little bit. The funny other thing is is

little bit. The funny other thing is is that I'm just wondering I can just sort of picture like future romcoms being based on, you know, someone listening to the AI in their ear say, "And this is

how you socialize during this date."

And, you know, crazy shenanigans ensue.

But we have to move on to another deal because we have a couple more. And this

one is Boom Supersonic, which I don't know if you remember, but earlier this year, actually early this year, the company Boom Supersonic, which is going

for supersonic flight, broke the sound barrier, and now they're selling their gas turbines to data centers.

>> Yeah. I mean, it it was very because so many uh companies, especially startups, have names that are maybe more dramatic than what they actually do. It took me a little while to sort of put two and two

together and realize, oh no, these are the engines from the planes and that's actually what they're going to be using in these data centers. So, it is actually a supersonic jet startup, or at

least that's the goal. And then it's doing this completely different thing.

Yeah, it was just one of those things you I had to read it a couple times to understand how it all fit together. I

think the as I understand it there's also this comparison to to SpaceX and Starlink and this idea that the you know CEO is saying I've been looking for something that can essentially be a good

business that can bankroll the jets that the you know the jets are maybe not going to be making a lot of money for the next few years but if we sell these engines that can sort of the same way Starlink I guess basically bankrolled

the uh the rockets that SpaceX is building. Uh did that comparison like

building. Uh did that comparison like make sense to you? Do you feel like this is a these are two businesses that make sense together?

>> I mean, at first I was like really puzzled when I saw it because I was like, what are they doing, but the the basic foundation of the idea makes sense, which is and and you've seen this

like with autonomous vehicle companies, for instance, not to the same degree, but going, okay, well, we need near-term revenue. we're not going to be able to

revenue. we're not going to be able to do like say commercial driverless yet.

So, let's do off-road, you know, with mining companies or let's do a defense contract. This is a much more uh, you

contract. This is a much more uh, you know, stark kind of decision, but it does answer the, you know, nearterm revenue

problem that Boom certainly must have.

And the deal is actually worth, you know, if they sell all of these to Crusoe, which is a really interesting data center startup company, by the way.

Um, I've been following them just loosely for a while. uh they kind of started out mining Bitcoin and then the founders have this background in the oil

industry and they started using or tapping in or finding a way to to tap in to mine their Bitcoin um into the natural gas that was being flared off

basically being wasted. So instead of it being wasted it was used being used to power and then they got into data centers. So here on this like long sort

centers. So here on this like long sort of tail now they're partnering with Boom and the deal is as I was starting to get to valued at like something like 1.25

billion. So that's you know a decent

billion. So that's you know a decent chunk of change to fuel your literally fuel your boom supersonic you know big ambitions around you know supersonic

flight. So it I see the parallels a

flight. So it I see the parallels a little bit to SpaceX/ you know Starlink. you I think you know we've talked on on past episodes just

about this idea of like data center boom what's going to power it how much of that is going to be renewables maybe the more basic question I have here is have are there other data centers that have jet engines powering them is this

something that could become more widespread than just one company >> this is the first one I know of but we are seeing other companies

try to tap into the whole data center boom so Redwood Energy comes to mind the sort of energy storage division of

Redwood Materials, which is battery recycling, and they like recycle the production scrap. They have deals with

production scrap. They have deals with like Panasonic and and others, and then they process that and they strip out all like the important stuff and sell it back to these companies, and it's this

whole closed loop system. But what they found was they had all these EV old EV batteries that actually still had some use. And so they decide to create these

use. And so they decide to create these energy storage units. They can be made off-grid, meaning they can be connected to solar. And then the whole premise,

to solar. And then the whole premise, the whole idea behind this is to power data centers. So, you know, I I think

data centers. So, you know, I I think that we're going to see a lot more companies looking for ways to capitalize on the data center infrastructure

building boom, especially because things like water and energy are, you know, big public issues and make data centers very

unpopular. So, anything that would like

unpopular. So, anything that would like I don't know change that I think that a lot of startups are going to be kind of position or other companies positioning themselves around this.

>> Yeah, it'll be interesting to to see how much of that infrastructure that's built energy infrastructure that's built around data centers if it's all going to be used for data centers or 5 years from now you're seeing it used for other

things.

>> I do want to squeeze in just one more interesting story that I actually edited and it was about this fertility startup called I think it's called Anido. We've

been we debated this prior to recording it, but they've started as a fertility startup focused on sort of the athome health diagnostics, tracking your fertility, so tracking your hormone

levels and things like that. But they're

working on this AI designed antibodies.

So instead of creating antibodies in animals to then like find what they're looking for, they're using AI designed antibodies. And the whole premise around

antibodies. And the whole premise around this is to expand what they're doing beyond fertility and have like a whole host of different kind of at-ome tests.

And I have you heard of this company before?

>> I had not heard of this company. It was

interesting to read about it because uh without getting into details um that you know these ovulation strips are something that I'm somewhat become somewhat familiar with over the last few years. I mean, it it was very eye

years. I mean, it it was very eye opening because I didn't realize that they existed until a couple years ago and and they are, you know, this helpful tool if you're trying to conceive, but they can also be quite frustrating

because trying to interpret the data from uh the strips and be like, wait, does this mean X or does it mean Y? Like

should like it's not I would say not not a perfect product. And so I think there is definitely room for improvement in terms of just getting a clearer sense of like when someone is ovulating, if

they're trying to conceive. I mean the company was also interesting because they talk about I guess a lot of their initial investors were actually medical practices. They have a board of clinical

practices. They have a board of clinical adviserss who are are people you know doctors and other people with medical backgrounds. But you know it is also

backgrounds. But you know it is also it's a it's a not an American company.

It's based in in India. So, I'm curious, you know, I just think for something like this, trust is going to be really important. The regulatory landscape, um,

important. The regulatory landscape, um, I think navigating that is going to be really important, particularly as we become broader and broader and and and doing multiple things, collecting kinds of different kinds of medical data. So,

it seems like a cool idea, but I I could also imagine there being a lot of issues on that road.

>> In spite of any issues or concerns you and I might have about, you know, will people trust this, investors were interested. So they did raise in this

interested. So they did raise in this latest series B round 29 million. That I

believe brings them up to about 45 million total. They previously raised uh

million total. They previously raised uh 6 million led by fireside and nine by Y Combinator. And to me what's really

Combinator. And to me what's really interesting is they're definitely going after the US market and new international markets. So I do think

international markets. So I do think that that the trust factor is going to be there. And I'm very interested to see

be there. And I'm very interested to see how these AI engineered antibodies actually allow them to expand beyond fertility and what that is going to look

like. So, you know, that one's a little

like. So, you know, that one's a little bit on TBD, but I'll be tracking this company even though I normally kind of focus on transportation just because I'm curious to see how long it takes for

them to really, you know, offer these new athome diagnostic tests and see if anyone buys them. I want to get into one of our themes. I guess we can call it

Netflix's like growing up story. That's

like it's not the headline, but it's maybe the deck. Um, which is, you know, there's this they're bidding for Warner Brothers and now there's a hostile bid.

It is so interesting to me because I remember when Netflix was just a little baby startup and I got their CDs, you know, in the mail and here they are all grown up bidding for, you know, a legacy

company. Was did that run through your

company. Was did that run through your head when you when you saw the news about that? It's been this sort of long

about that? It's been this sort of long unfolding story that for a long time didn't necessarily seem that it was sort of tangentially related to techrunch and to the kinds of things we talk about on equity but wasn't kind of a core

technology story cuz it was about Paramount trying to buy Warner Brothers and that definitely reflect that's about you know streaming is an element of that you know consolidation in media and

entertainment is an element of that but then suddenly in the last week or so it you know you started to see these stories about how actually Paramount might not win in the bidding process and

instead Netflix was kind of pulling ahead. Um, and so there was this news

ahead. Um, and so there was this news cycle basically I guess a week ago today as of when this episode is going to go live. Netflix said, "Hey, we won the the

live. Netflix said, "Hey, we won the the bidding. We're requiring Warner

bidding. We're requiring Warner Brothers," or specifically, there's going to be this, you know, kind of drawn out process where Warner Brothers will split off from its cable networks, and they're going to become two separate

companies, and Netflix will buy the streaming and the movie studio, movie and TV studio business. Certainly

symbolically it's this moment where the you know the the upstart has you know eaten Hollywood which I think there have been all these articles even before this deal where they're saying Netflix is eating Hollywood Netflix is transforming

Hollywood and I think regardless of whether or not this deal ends up going through Netflix will have transformed Hollywood but this seems like the biggest both symbolically but also

substantively kind of one of the most dramatic things that can happen. Then

there are all these other questions about well will they get regulatory approval? Will Paramount's hostile bid

approval? Will Paramount's hostile bid succeed? But however it plays out it's

succeed? But however it plays out it's definitely a very very big deal. I mean

what jumped out to you is you were catching up on it Kirsten.

>> The first thing was I was like can there be any more consolidation in this market? I mean that was the big one for

market? I mean that was the big one for me because if memory serves Warner Brothers already went through like this consolidation with Discovery, right? So

um here we are again. And then I was reminded, oh yeah, that's right. HBO,

HBO Max, like streaming business is included in here. You know, there's been so much consolidation that I like kind of have lost track of all of that. But

the second thought was how Netflix rise and there have been these dips in the road along its way where you know the headlines have been about like how it's struggling and will it become remain

relevant and how can it do that and you know if they are successful in the actual deal it would potentially reflect like oh

they have made it but then again then they have to execute on an even bigger company than ever before and so I Guess like my third thought on this is, you

know, should they like is this what it takes for them to expand?

>> I I can see how it makes sense for for Netflix that it that it is a way to sort of take, you know, a library that is already, you know, quite large and they've, you know, obviously had some

very successful TV shows, especially less so on the movie side. And you know, that potentially, you know, they just become so much stronger on the content side. They're suddenly now involved in

side. They're suddenly now involved in all these other businesses. Although the

question is to what extent are they going to invest in things like the theatrical business, theme parks, you know, making TV shows for other streaming services and networks, which are all businesses that Warner Brothers

is in and Netflix says it will continue to support, but you know, we'll see to what extent that's true. So, it seems like something that can really benefit Netflix in some ways. But uh yeah, at the same time it does seem like the

analysts are really kind of wrestling with it and and wondering like okay like I can see that this grows your business but does it grow your business worth 82 you know an $82 billion deal and then of

course you know beyond the sort of Netflix perspective you have everybody else in Hollywood there are all these you know hyperbolic but I think maybe accurately hyperbolic headlines about is this the end of Hollywood is this the

end of the the movie theater business all the unions are basically saying either this deal should be blocked or we're very very very worried about this deal. The theater owners are saying that

deal. The theater owners are saying that it seems like the two most likely outcomes here are it gets acquired by Netflix which you know is the is the deal that's actually that Warner Brothers seems to want to do and then

there's an option where the hostile bid works and it's acquired by Paramount. So

those seem to be kind of the two options.

>> Yeah. And I should mention that there is you know actual financial risk here beyond like what happens after if if Netflix is successful if the deal is blocked. it's a $5 billion um you know

blocked. it's a $5 billion um you know essentially breakup fee. So So either way there's there's money at risk, one much larger than the other. So speaking

of deals, I think we also wanted to talk about some comments that Corw's CEO made at a Fortune conference in San Francisco recently where he was talking about the

whole idea of the AI circular economy, circular deals and this it's sort of a complicated idea but but in essence that hey like you know a company like Nvidia

or Coree is investing in other companies and then those companies become their customers and that basically the whole AI I you know boom is really a handful of companies who are just kind of

pushing money back and forth between each other. Again this is a very

each other. Again this is a very simplified version of what that argument is. But he essentially said hey this

is. But he essentially said hey this isn't you know basically this is just of course companies need to work together and particularly right now because supply and demand are so crazy in order

to kind of get supply to catch up to demand at least I think that's what he meant. Um we need to basically we need

meant. Um we need to basically we need to work together very closely. Kirstson,

did you find that to be a convincing argument?

>> I don't know how convincing it was, but it was just sort of like this is the reality and and really what he was noting is that they're in the midst of this, you know, creating a new business model for how cloud computing can be

built and run. And that I think is correct to me. The question is, do these AI circular deals sort of

create some weakness within the AI industry? When you have companies

industry? When you have companies acquiring customers or companies investing in customers and then or using their products and you have this like loop system, they're all supporting each

other and do they become stronger as a result or does it inflate the the value of the AI industry? And it's sort of the key one of the key arguments on this whole talk about an AI bubble. Does it

exist or does it not?

>> It's not so much that the those deals are inherently a bad thing, but that it's good to be to be aware that they're happening and that when we talk about,

you know, AI revenue and things like that that there is some financial handwaving going on, let's say. I mean

not necessarily that anyone's doing wrong anything wrong or trying to be misleading but that there can be maybe a slight inflation in terms of how we perceive what's going on and that particularly I think because people when

we you know it's easy to get kind of caught up in the scale of these numbers and to think wow like this is there this is just such a booming market and everybody wants this and and in some sense that's true I mean obviously

there's just a tremendous amount of capital flowing into it but to realize also that hey like there is a degree to that's really being driven by a handful of companies that are certainly

reflecting consumer and enterprise demand, but also making a bet that that demand is going to grow really astronomically in the future. Um, so all of which is to me it just reinforces

just the extent to which there's still a lot of questions and uncertainty um and maybe more than these CEOs would like to admit.

>> Yeah, absolutely. And and Cororeweave is interesting. I mean, Nvidia is a central

interesting. I mean, Nvidia is a central figure in a lot of these circular deals.

So Nvidia is uh one of its investors.

It's and Nvidia is a supplier of GPUs to Coreweave. Also, Coree has been doing a

Coreweave. Also, Coree has been doing a ton of acquisitions. They bought Weights and Biases, which is this AI developer platform. Back in March, they acquired

platform. Back in March, they acquired Openpipe, a startup that helps companies create and deploy, I'm reading this, create and deploy AI agents through reinforcement learning. I just wanted to

reinforcement learning. I just wanted to make sure I got that right. And then

they also made deals to acquire Mimo. So

what you're also seeing on sort of as as part of these like AI circular deals is also a fair amount of consolidation that's happening too. So fewer

companies, fewer players supporting this like pretty big you know AI ecosystem now. So to me that consolidation piece

now. So to me that consolidation piece coupled with the circular deal is a little bit troubling to me because you just have fewer players and less competition potentially. I know that the

competition potentially. I know that the other argument is like hey this is reflective of like supply and demand and also you know the ability of these larger companies to really uh fund and

develop like R&D and continue to mature and and scale and these startups don't have that ability but I do think that there's a little bit of a downside there.

>> I did also want to just quickly point out that I think Coree is at least the second company that we've discussed on this episode that started out in crypto and then shifted into AI infrastructure.

Um, not not saying that's a good or a bad thing, but I I do think it's it's funny that that there are multiple uh companies that made that shift.

>> We will have to make that a future theme. I think

theme. I think >> I know we probably don't have time to get into all the details of that this week, but equity itself will be back next week. You can also find us at

next week. You can also find us at equity pod on X and threads.