Without AI, are startups crawling?

Plus: Earnings watch and Coinbase wins

Welcome to Cautious Optimism, a newsletter on tech, business, and power.

I am flying back to the home office today. Expect CO to return to its regular cadence shortly! — Alex

• 📈 Trending Up: Unnatural acts with goats … the Deep DOGE State … Amy Gleason … Jewell Loyd … mineral deals … investing in content … browser competition … open-source AI … Framework, one of the coolest startups in the world … 18+ xAI ..

  • Data center spend? After Microsoft started to hedge some of its bets, Meta is reportedly doing the opposite.

• 📉 Trending Down: AI prices … press freedom … the free market … startup focus? … being prompt with product upgrades … government pressure on how business should run …

AI rocket ships

Startups with an AI focus and a small team continue to kick butt. The most recent datapoint thereof is that Lovable — the EU-based AI-powered app builder — has reached $17 million ARR, about a month after it reached $10 million ARR (the full $17 million came together in just three months). That’s insane.

• Lovable just raised $15 million, saying in a thread that it was “extremely selective in [its] fundraising process because [it] truly believe[s] in [its] mission, and [knows] hundreds of millions in investments is not necessary to reach it.”

• Shade!

More to the point, what do you do if you are a startup that would have been impressive in the SaaS era, but is not growing anything like as quickly as some of the AI zoomers? I don’t know, but the old ‘triple, triple, double, double, double’ ramp to reach $100 million worth of recurring revenue and thus IPO-candidate status now seems incredibly dated.

• The best-in-class startups are growing faster than ever, and that means that the curve against which all startups are judged against has shifted much higher.

To wit, friend of the blog Ron Miller (read his blog here!) sent over a news item the other day that Egnyte has sold a majority of its shares to private equity. Egnyte’s CEO Vineet Jain, long one of my favorite people in the Valley, took a slow(er) growth, high profit approach to building his enterprise SaaS company before it was fashionable.

• Ron and I wrote a long piece about Egnyte’s performance in 2023, noting at the time that “it’s a $200 million company growing at around 25% a year.” That’s super solid, though we lack more recent data.

• It’s nice to see Egnyte find an exit of sorts, though I had long hoped that Jain would manage the IPO he worked ~16 years towards. But when Loveable is stacking ARR from a zero-base state at a pace of what, ~$50 million per year, the winners of yesterday appear more bovine than carnivorous in the present moment.

Earnings update

• Tuesday’s reporters: Lemonade is off 7% this morning (earnings, analysis), Couchbase is up 9% this morning (earnings, analysis), Instacart is off 10% this morning (earnings, analysis), Lucid is off 9% this morning (earnings, analysis)

• Wednesday look-ahead: After the bell today expect numbers from Nvidia, Snowflake, and Salesforce.

  • Nvidia expectations are smoking hot. The street expects $38.25 billion worth of top line and adjusted EPS worth $0.84 per Insider. The same source notes that for Q1 2025 investors expect Nvidia revenues of $42.26 billion. What did Nvidia manage in Q1 2024 (calendar)? $26.0 billion.

  • Snowflake is off 27% in the last year, while Salesforce has notched a modest yet positive 4% gain. More on the big numbers in the morning.

Wait, government is that cheap?

Photo credit: New York Magazine

• Remember the other day when Coinbase announced that the SEC had dropped its case against it? The decision wasn’t a shock given the newly prevailing regulatory winds in Washington, but what I failed to understand was the extent to which Coinbase went to buy court the Trump administration. Popular Information has a great rundown here, but the following section stood out to me as crossing my line of be smart with politicians to avoid unnecessary static into the realm of buying government favor through financial windfall:

  • “Coinbase also helped personally enrich Trump, quickly listing his official meme coin, $TRUMP, on its platform. The Coinbase listing made it much easier for the average investor to purchase $TRUMP, driving up its value. Most $TRUMP coins are owned by Trump himself.”

• The whole piece is worth reading, but I, for one, do not celebrate the nation becoming a place where you can buy regulatory decisions so long as you help ship a few billion of consumer cash to the incumbent.

  • You can’t argue with the results, however.

Memestock watch

• Tesla, buoyed by Trump’s win and Elon’s proximity to the President, is worth ~$305 today, down from a 52 week high of $488.54 (-38%). The company’s off around 20% this year. Has the bloom come off the rose?

  • Sales data indicates that Tesla’s brand could be taking blows, leading to falling sales in certain markets. And Tesla stripped its pledge to grow 20% to 30% this year to merely a return to growth.

  • Yeah, but: Tesla shares are still up just under 50% in the last year’s trading.

• Palantir is worth $89.50 this morning, down from a recent 52 week high of $125.41 (-28%). Like Tesla, having friends in high places is part of the trade here. Palantir’s results have also been very impressive. The company’s stock, however, did have a bit of enthusiasm in it, so seeing the downdraft is hardly a shock.

• MicroStrategy is worth $254.60 this morning, down from a 52 week high of $542.99 (-53%). The company’s valuation appreciation on the back of its aggressive bitcoin buying scheme and rising digital asset prices seem to have run into falling digital asset prices. As CO noted recently, bitcoin’s selloff back under the $90,000 mark has been notable.

Reports we’re reading on the plane

• U.S. Workers Are More Worried Than Hopeful About Future AI Use in the Workplace

• Patreon’s State of Create, via Posting Nexus

• The future of the internet is likely smaller communities, with a focus on curated experiences