Welcome to Cautious Optimism, a newsletter on tech, business, and power.
Happy Thursday! Today the breaking news is the crash of a Boeing 787-8 Dreamliner after taking off from the Indian city of Ahmedabad. The Air India flight had 242 passengers, including 169 of Indian citizenship. The plane was heading for the United Kingdom, with dozens of its citizens on board. Per the AP, there are no known survivors. Boeing shares are off on the news, but what we need to care about more is whether or not there was an issue with the plane’s design, or something less potentially dangerous on a systemic level. — Alex
📈 Trending Up: Well that’s one way to do it … enshitification … Stripe’s crypto push … bloc economics … recycled upstream pollution … Oracle, after earnings … robotic inspections … stablecoin momentum … corruption … Chinese exports …
Wait, I thought we were opposed to intellectual property? What’s this?
📉 Trending Down: He’s just not that into you … cybersecurity … the UK economy … soft power … good management … DoD support for Ukraine … the labor market …
🤖 Startup of the Day: Outset, which just raised a Series A and doubled its revenue in the last four months.
Dollar dollar bill, y’all
Last night after the bell, American neobank Chime priced it IPO at $27 per share, above its target range of $24 to $26 per share. While the above-interval pricing was welcome for all technology exit watchers, the company’s fully-diluted market cap is $11.4 billion, just under half its peak private-market worth of around $25 billion.
Read our rundown of the Chime S-1 here
We are not here to bemoan the death of peak-ZIRP revenue multiples. Instead, we’re here to celebrate a decacorn IPO with ample venture backing. Yesterday during a venture capital roundtable I hosted for TWiST, the assembled investors bemoaned the failure of the Figma exit to Adobe a few years back. Why? Because all that cash it would have generated, and returned to VC and their own backers, would have greatly greased the larger venture market.
Cash returns are, lately, the White Whale of the venture world. Which is why the Chime IPO matters as much as it does. Crunchbase counts six lead investors into Chime’s various venture rounds, and 36 total backers. That means a great host of investors and their LPs are about to enjoy a truly venture-normal exit. While the CoreWeave and eToro and Circle IPOs were welcome, they were often backed by non-traditional money from a venture perspective. Chime was, so the above-range pricing is great news. If the company trades up, even better.
Update: Chime opened hot, good job to everyone involved! Especially Hunter!
While I am still not that broken up about Figma, I am somewhat sympathetic to venture complaints thereof.
Speaking of heavily venture-backed companies, Databricks dropped new performance metrics today. The data lakehouse and AI concern expects to reach $3.7 billion worth of “annualized revenue by July, with year-over-year growth of 50%,” CNBC reports.
Against a $62 billion valuation, Databricks is currently worth around 17x its annualized revenue come next month. That’s a perfectly defensible multiple for the company, as there are no public cloud companies growing at similar speeds, and you can find even richer valuation multiples at top-tier public cloud companies.
That growth rate, though. On one hand, expanding revenue by what, $1.2 billion in a year is insane. Comically impressive on a historical basis. Just super good. On the other hand, the fastest-growing AI companies are scaling even faster. Anthropic and OpenAI in particular — while xAI’s social media arm, in contrast, is threatening lawsuits to drum up couch-change ad buys.
I think here we need to avoid comparing Databricks — a generationally great company — with leading foundation AI model companies, whose growth if kept up will make them some of the best-performing companies of all time. You can be amazing and still not be the best.
Going public, Databricks, would vault you into the highest echelon of my good graces, but I think Ali is tired of my asking when.
Not all investors want to trade dilution for bitcoin
There’s an interesting trade afoot amongst some public companies. It goes like this: Borrow money at a very low interest rate, using that capital to buy bitcoin. The debt in question is often set up as convertible notes, allowing the borrower to repay buyers of the liabilities in shares, set to the share price at the time of the loan.
Gamestop announced a plan to do just that yesterday:
Gamestop will issue $1.75 billion worth of “0.00% Convertible Senior Notes due 2032” that it can repay with “cash, shares of GameStop’s Class A common stock […] or a combination of cash and shares of Class A common stock, at its election.”
The “initial conversion rate” of the notes is expected to be set by “the U.S. composite volume weighted average price of Class A common stock from 1:00 p.m. through 4:00 p.m. Eastern Daylight Time on the date of pricing.”
In short, folks who buy up the debt are betting that the value of Gamestop shares will rice appreciably between now and 2032, at which point they can earn $1.75 billion worth of Gamestop stock at a mid-2025 price.
Notably Gamestop did something similar in March after updating its “investment policy to add bitcoin as a Treasury Reserve Agent” in the first quarter.
Why would investors take the wager? Limited downside, as deals of this sort tend to have early break clauses that protect the loaned principal. And if the value of bitcoin rises sharply, so too may the value of Gamestop equity, which will hold some fraction of a bitcoin per share, in theory.
Microstrategy, now merely called Strategy is all in on the idea. Other companies are adding bitcoin to their accounts, hoping to either hedge the future or catch the sentiment wave that saying ‘bitcoin’ in official releases can still bring.
Either way, Gamestop investors are pissed. They do not want their holdings to get so heavily diluted — Gamestop is worth around $12.8 billion this morning — it appears, as shares of Gamestop are off 17% in pre-market trading. All the above comes after an earnings report that showed a shrinking company in revenue terms stretched over a lot more shares.
You may feel for Gamestop shareholders, who were betting in some sense that the games selling company would try to do that. Its core business. Instead of levering up to buy bitcoin at all-time highs.
The bitcoin bulls won’t fault Gamestop for its non-operating gumption, but the public markets sure as hell are.
YC Demo Day
I have yet to comb through the full list of Spring 2025 Y Combinator startups that showed their wares yesterday at Demo Day, but a few datapoints are useful for our minds all the same:
Of the 144 companies, 70 use the word ‘agent’ in their description, while 129 mentioned AI.
109 came from ‘America / Canada,' another 17 are remote, and five teams are from Europe. To find a known company from a different region, we have to go back to the Fall 2024 YC batch that, per Y Combinator’s own data, hailed from Southeast Asia.
102 of the 144 are tagged with B2B as their ur-designation, which isn’t a surprise per Theory Ventures’ data.
None are stablecoin focused, per a search.
21 made mention of open-source.
To sum, it’s the agentic AI batch of Y Combinator companies hailing from the States. If that is your jam — and it appears very much to be the bullseye of domestic venture interest today — happy hunting. I intend to add the five or so most exciting to the TWiST500 as soon as I am able.