A historic moment for a European startup, an easy-to-use crypto wallet, Apple's revolutionary interface and more understanding of Nvidia.
It was a historic round of investment: never before has a European company raised so much money in a first round of investment. Just four weeks (not years) young Mistral AI, not to be confused with the 1980s Swiss surf brand of the same name, raised €105 million this week from a group of investors from Europe and the US. After this investment, Mistral.ai is worth as much as €260 million, although the former investor in me thinks that with over 40% of the company, the founders have actually already sold too much of their shares in this first round.
The co-founder and CEO of Mistral.ai is named Arthur Mensch, has 3 years of work experience and, always fun to check out, 0 photos and 64 followers on Instagram. The other founders are Timothée Lacroix (CTO) and Guillaume Lample (Chief Scientist). The gentlemen are all early thirty-somethings and knew each other from college. Mensch worked at Google Deepmind and Lacroix and Lample are ex-Meta employees.
Up front: people with names like that I begrudge everything. This is the level of Athos, Porthos, Aramis and D'Artagnan - the four musketeers, for the culture barbarians among us. I must confess that some sense of envy came over me when I read that these noble European knights entering the AI battlefield against the foul-mouthed Americans of Open AI, Google and Microsoft, raised over 100 million with a website with no more than 40 words. This is even more remarkable than Worldcoin, which raised $100 million with a 1-page website.
Even in the wonderful world of crypto, in the good old days of say two years ago, for that kind of money you had to publish at least an eight-sheet white paper. But how can these modern-day Asterix, Obelix and Panoramix raise that kind of money without having a working product? Because the first working model is not expected until next year.
One of the gamblers, excuse investors in Mistral AI seem mostly concerned with convincing themselves that this is not a blind 'all on red' guess was:
"There is a pool of 80 to 100 people worldwide who have the level of experience that they have. Right now, for better or worse, the capital requirements in compute and top talent make [launching an AI startup] a pretty capital-intensive game."
Time will tell if this small group of high potentials has sufficient business acumen and leadership qualities.
British Prime Minister Sunak proved again this week that he couples a big mouth with a limited sense of reality, always a cozy combination. He referred to the United Kingdom as the Unicorn Kingdom, the land of billion-dollar tech companies. That's like the prime minister of Belgium declaring that Disney World is a far cry from Bobbejaanland.
French President Macron, of course, was already on a stage with Mistral-CEO Mensch, and the Financial Times cooed "Europe's Got Talent. I've never worried about the talent in Europe, but I do worry about the lack of corresponding doekoe. Somehow I'm glad that European countries are calling out this kind of silliness and finally daring to invest serious sums of money in key early-stage companies.
But let's compare with the US for a moment. There, $25 billion has already been invested in AI companies this year, compared to $4 billion in Europe. Earlier I wrote that it is often forgotten that OpenAI alone has $11 billion in investment money.
The Register says it well: there is panic in Europe, there is a feeling that something must be done and this kind of buck-passing is the result. But it now feels like too little and too late. Because €105 million is Keuken Kampioen Divisie level in the AI sector, and OpenAI is playing Champions League. Still, our French friends deserve all the support they can get, because Mistral AI has announced that it is embracing open source, which would make their technology many times more accessible to developers than OpenAI, which is not closed in name only.
Meanwhile in blockchain
In all the AI violence, you would almost forget that there are some very interesting developments taking place in crypto in relative silence. Co-founder of Twitter Jack Dorsey and his company Block (formerly Square) have announced BitKey, an app that allows people to manage their own Bitcoin, in partnership with Coinbase and Cash App (a kind of expanded Tikkie). BitKey users will be able to transfer Bitcoin directly to each other on all six continents this year, without the need for a bank. This could become the model for crypto use, management and payments worldwide. You can sign up for the beta test here.
Meanwhile, the Biden administration is trying to stop the spread of crypto. The key question is whether crypto, or some of its crypto variants, are actually securities. In the famous 1946 Howey case, the court ruled that "an investment of money in a common enterprise with profits derived solely from the efforts of others," is a type of security called an investment contract.
That narrow definition of securities would make a large portion of all crypto-currencies securities and thus all crypto exchanges, such as Binance, Coinbase and Kraken, would be subject to the same laws as regular exchanges. The lawsuits against Binance and Coinbase will take years, just as the SEC's case against Ripple has dragged on for years.
The renowned American investment company Andreessen Horowitz (among others, Facebook, Airbnb, Pinterest, Slack, Instacart, Robinhood and Coinbase) is not waiting and is opening its first international branch in ... London. The main argument of this top vc is that the UK government will introduce legislation allowing decentralization. Jack Dorsey's BitKey, mentioned earlier, is an example of such a decentralized product (digital assets held in-house, rather than at a bank), as well as decentralized crypto exchanges where traders transfer directly to each other rather than through an intermediary, as is currently the case on mainstream exchanges.
Apple talks about Spatial Computing
I had started writing about why Apple never uses the words AI and virtual reality, because I hadn't read anything about them. And then yesterday, Marques Brownlee came out with this excellent video in which he explains, razor thin and better than I can, why Apple never uses words over which it has no control.
Point being, the new Apple Vision Pro is interesting not so much as a product that breaks open a whole new category, like the iPhone or the Apple Watch, but that it represents a whole new form of interacting with the computer. Users of the Apple Vision Pro can select something with their eyes and snap their fingers to "click" on it.
Sensors on the front of the glasses register what your fingers are doing. This interface is revolutionary, similar to the transition from MS-Dos and those awful text commands with green letters on a black screen, to mouse scrolling and clicking like Apple Macintosh and Microsoft Windows later made commonplace.
Former journalist, now investor, Om Malik says of this handling of a computer:
'Just as the "mobile computing" initiated by the iPhone eventually turned out to be just "computing," what Apple calls "spatial computing" will turn out to be the natural evolution of computing.'
Legendary investor Fred Wilson (Twitter, Kickstarter, Etsy) sees a combination of AI, blockchain and spatial computing emerging:
"The combination of advances in computer science in machine learning (MF: AI), decentralized systems (blockchains) and new forms of interaction with computers (chat interfaces, heads-up displays, voice, etc.) represents the most powerful cocktail of innovation I have ever seen.
Not entirely coincidentally, AI, blockchain and spatial computing are the three topics in this newsletter today. I am a big fan of Wilson's irregularly published newsletter and hereby recommend it again.
Notable links
- The business model of television is broken When I lived in San Francisco 20 years ago and was a subscriber to Netflix, for $10 a month I was sent home a DVD that Netflix chose from a list of 10 movies I wanted to see. As soon as I returned that DVD, I was sent another one. That DVD service, remarkably, only just closed, but it's unimaginable how the Netflix streaming model is destroying the entire television world. Because it's not just Netflix that has financial problems, but all streaming services *and* the traditional TV world.
- 7 Chat GPT plug ins you need to know, or not? I looked at them but I don't get excited about them. What am I missing? And which Chat GPT plug ins are better? I'd love to hear it, email your suggestions!
- Reddit in trouble Why it can be dangerous as a business to depend too much on volunteers and the much-vaunted 'community' around your platform.
- Bill Gates does tea with Xi Jinping It is good to keep an open line of communication with a rival, so now that the U.S.-China relationship has fallen below freezing, there is nothing wrong with Bill Gates having tea with his friend Xi Jinping. Notable point in the Reuters article: Among other things, Gates was praised by Xi Jinping for sending $5 million to China to help fight Covid, even though China did have enough money to spend 1.7% of GDP, a sloppy $230 billion, on the armed forces. It's just where your priorities lie.
Spotlight 9: BlackRock with Bitcoin ETF and Nvidia deserves better analysis
It was a positive but calm week in the stock markets for tech stocks.
It was a positive but calm week in the stock markets for tech stocks. It seemed surprising that Bitcoin did not fall, despite the SEC continuing to repeat that the entire crypto sector is not playing by the rules. This is arguably nonsense, as even a deaf-blind illiterate can see the difference in policy between, say, Coinbase and Binance when it comes to fighting money laundering and unregulated trading.
The news that the world's largest asset manager BlackRock, with just under $10 trillion (10,000 times a billion) under management, is about to apply to the SEC for a license for an investment product in Bitcoin led to a slight rise in Bitcoin and great enthusiasm among Bitcoin believers. Technically, the trust BlackRock is setting up is not an ETF, but the effect is the same: investors, if approved by the SEC, which has so far rejected all ETF applications, can buy an investment product from BlackRock that shadows the price of Bitcoin, without having to go through all the hassle of a normal purchase of Bitcoin.
So you don't have to create an account on a crypto exchange, buy hardware wallet, manage 24 passwords for your seed phrase etc, unless you are brave enough/moral enough to let someone else manage your Bitcoin. If BlackRock gets approval for this investment product, investors worldwide, from small to large (think pension funds) will buy it, which will bring a sharp rise in Bitcoin. But it is still a long way off.
According to Bloomberg's ETF specialist Eric Balchunas, at least statistically, BlackRock has a very good chance of getting approval from the SEC, as it previously saw 575 applications approved and only one rejected. Coindesk studied the application in detail and saw that BlackRock included a "surveillance-sharing agreement" between exchanges, which could avoid market manipulation, a major problem in Bitcoin trading.
Meanwhile, there is already a parody account on Twitter of the BlackRock Bitcoin ETF and whoever the creator of this account is, this person is patently an insider because extremely knowledgeable about all the regulation. Frequently repeated disclaimer: I have great appreciation for the decentralized aspect of Bitcoin and think the only eight-page Bitcoin white paper is genius, but do not own Bitcoin and think it is too technically outdated because unnecessarily carbon-producing. That said, Bitcoin's impact on the global economy is similar to the oil business: you don't have to be a fan of it to realize it's important.
Nvidia is years ahead
Ever since newsletter reader Boudewijn Jansen of iXora pointed me to Nvidia a few months ago, I started following the company more closely, and as of last week, Nvidia has even secured a permanent spot in my completely arbitrary Spotlight 9, the nine investments that determine economic sentiment in the tech world, based on market value.
At the Asian Tech Summit last week in Singapore, I had the pleasure of joining the other speakers for lunch with Nvidia's Keith Strier, responsible for AI partnerships. Annabelle Droulers of Bloomberg and I were trying to better understand why Nvidia plays such a crucial role within all AI developments and how big a lead Nvidia actually has, that the company is worth a P/E ratio of over 200 (!).
Strier explained in detail what he already briefly described here. The core lies in the fact that Nvidia makes not just the chips, but the entire infrastructure required to develop AI applications. Chip companies that want to compete effectively with Nvidia must not only build a similar AI chip, but also develop a software ecosystem around the chip that speeds up the application development process for developers.
And the components for that infrastructure are finite, which is why Nvidia is already receiving orders for deliveries 5 years from now:
'This is about compute, not just chips. AI requires a highly specialized compute infrastructure, a combination of hardware and software. Most importantly, the supply is finite. [...] NVIDIA GPUs (the chips, MF) are more than gold, they are the "rare earth elements" of AI.
Therefore, the world's most advanced AI companies are raising capital to secure the delivery of accelerated computing. Whether an enterprise or even a country, it is important to plan and budget for the computing power that will be needed to achieve and sustain leadership in AI.'
Strier is referring to the fact that Nvidia has more orders than it can deliver and that companies and even countries have been placing orders years in advance to ensure longer-term deliveries.
Meanwhile, Nvidia's lead does not seem to be limited to their "stack" of hardware (especially the GPUs) and software, but the company provides complete data center solutions, making it even more difficult for competitors to catch up.
The day before yesterday, Morgan Stanley announced it was selling shares of chipmaker AMD and raising its price target for Nvidia from $450 to $500. NVDA's closing share price Friday was $427.
It seems as if, despite all European efforts, the AI world of hardware, software and applications will be dominated by the Americans for at least the next few years.