📉 Intel’s new CEO is shaking it up


January 25, 2021

PLUS: Clubhouse eyes $1B valuation.

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Hank Aaron (MLB’s legendary home run king) and Larry King (CNN’s legendary talk show host) both died over the weekend. RIP.

The Big Idea
chip

Intel has fallen behind in the semiconductors war. Can a new CEO turn it around?

In 2015, the combined market value of the world’s semiconductor firms was $1T+. Today, the total value is $4T+, according to The Economist.

Unfortunately for Intel — the $230B American semiconductor giant founded in 1968 — much of this value has accrued to other industry players.

Intel powered the PC revolution in the ’80s and ’90s…

… by creating industry-leading chips.

However, Intel’s integrated approach (design + manufacturing) floundered in recent decades as the industry moved toward fabless production, in which companies specialize in design and outsource the manufacturing.

Taiwan Semiconductor Manufacturing Co. (TSMC) capitalized on this opportunity and is widely used as the 3rd-party parts manufacturer of choice, including for 2 trends that Intel missed:

  • Mobile: Intel passed on Apple’s iPhone business.
  • Artificial Intelligence: Nvidia created graphics processing units (GPUs) in the 1990s, which provide the brute computing power for AI computing. Now, Facebook, Google, and Amazon are all designing their own AI chips.

So Intel shook things up…

… by hiring Pat Gelsinger, a 3-decade Intel vet who is currently CEO of software firm VMWare. He will take the reins at Intel on Feb. 15.

During an earnings call last week, Gelsinger said Intel will start having “other chip companies make more of its products,” per the Wall Street Journal.

That “other” chip company is almost certainly TSMC, which announced it would spend $28B on CAPEX in 2021 and is already in talks with Intel to manufacture GPU chips.

Meanwhile, competitors are nipping at Intel’s core business

Nvidia (which acquired design firm Arm for $40B) and AMD (which acquired Xilinx for $35B) are encroaching on Intel’s server and PC turf.

All this is happening against the backdrop of a US-China tech war. The security of chip manufacturing — notably, in Taiwan (TSMC) and South Korea (Samsung) — is comparable to oil security in the Middle East from decades past.

Gelsinger describes Intel as a “national asset,” and — in a move that would help Intel capture more value moving forward — Congress is considering major incentives for domestic chip manufacturing.

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Snippets
  • Google says it will leave Australia if the government “goes ahead with plans to make tech giants pay for content.”
  • Oh, Snap! The social app Snap has launched 15 augmented reality products for businesses (e.g., one enabling users to virtually try on shoes or nail polish). AR tools could be worth $4B over the next few years for Snap, double its entire revenue in 2019, per WSJ.
  • Sexual wellness and health startup Hims went public via a SPAC ($HIMS). Congrats to co-founder and CEO Andrew Dudum, the subject of one of our first Trends profiles.
  • Big bet that business travel will be back. TripAction — a corporate travel software platform — raised $155m at a $5B valuation.
  • Hot takes coming: Apple, Facebook, Microsoft, and Tesla (as well as 100 of the S&P 500 companies) will report earnings this week.
  • LuxBux: UK-based luxury e-comm firm Mytheresa was valued at $3B after its first day of trading last week. Next: plans to conquer China.
  • So Long: By the end of 2021, NBCUniversal will shutter its sports network, NBCSN (which features NHL, NASCAR, and Premier League action). Some sports content may end up on USA Network or the new streaming service Peacock.
  • So Loon-g: One of Google’s wilder moonshots was floating balloons around the world to provide the internet to far-flung places. After 8 years — and failure to find a viable business model — Project Loon is closing down.
 
Q&A

SoleSavy co-founders Justin Dusanj (left) and Dejan Pralica (right)

SoleSavy raised $2m to help consumers fight back against sneaker resellers

Sneakers are big business.

Investment bank Cowen pegs the industry at $100B; within that, the reseller market is worth $8B and forecast to grow to $30B by 2030.

A number of sneaker marketplaces (e.g., StockX, GOAT) are trying to capitalize on the opportunity.

But, according to Dejan Pralica — the co-founder and CEO of SoleSavy (a subscription-based sneaker community) — these reseller markets operate on a bad premise: “How can I make the consumer pay as much as possible above retail?”

With an annual run rate of $1.8m, SoleSavy just raised $2m to shake up the market. Pralica tells The Hustle about the startup’s different approach:

How SoleSavy works

Users pay a subscription for access to:

  • A private Slack community
  • Exclusive weekly giveaways, coupons, and sales
  • Sneaker monitors that send alerts on new sneaker drops with add-to-cart (ATC) links for instant purchases

“Our value prop is how can we save people money?” Pralica says. “We want the membership to be as free as possible.”

A unique approach to community

To keep users engaged, SoleSavy has a defined check-in schedule with all new members: Day 14, Day 40, and Day 70.

It’s also why SoleSavy uses Slack instead of Discord, which is quite popular for sneakerheads. Slack’s threads and channels make it much easier to keep track of community discussions and topics.

Why SoleSavy puts subscribers into cohorts

SoleSavy onboards subscribers by cohort, capping each group at ~1.1k users. At this number, Pralica believes you can “still expand your personal reach” and not run into the “Reddit problem” of too many users.

To wit: Pralica says SoleSavy has more active members at any one time than the r/Sneakers subreddit, which has 1.8 followers but only a few thousand active users.

(Read the full Q&A here)

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Trading options is so hot right now.

Options trading is 50% above last year’s level as of December. 

(Which is a lot, considering 2019 saw $14T+ worth of contracts traded).

This explosive growth shows there’s no hotter market in the investment world right now — and that puts Gatsby in pole position to become the next big platform:

  • Their app removes the knowledge barrier by simplifying complex options trades into simple “for” or “against” bets, making it approachable for less seasoned investors
  • It taps into a new generation of investors who are bullish on options but prefer easy-to-understand platforms
  • Gatsby users have placed over $50m of trades since launch

High engagement, low acquisition costs, and a zero-commission model?

It’s no wonder why Gatsby’s SeedInvest has already raised over $3M.

Invest in Gatsby for yourself right here before their round ends on February 12th (or they reach $5M in investments) — no options knowledge needed.

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Audio Dollars

Did social app Clubhouse just become a unicorn?

When you finally get an invite to Clubhouse… (Source: Reddit)

About 8 months ago, the internet had a good chuckle when Clubhouse raised money at a $100m valuation, even though the social audio app only had 5k beta users and was not yet in the App Store.

Looks like that was just the start.

Clubhouse — which lets users create live chat rooms or listen in on top investors (Marc Andreessen) and celebrities (Meek Mill, John Mayer) — is raising a new round, potentially at a $1B valuation, per The Information.

All of these numbers are being thrown around…

… even as the app still:

  • Is making zero revenue
  • Doesn’t have an Android app
  • Remains invite-only (with 2m current registered users)

In a blog post, Clubhouse signals that the investment will be used to work on these challenges as well as provide monetization tools — subscriptions, tickets, tipping — for creators.

For its own business, Clubhouse could easily charge a fee or take a cut off of the creators.

Dealing with common social network issues

The 10-person startup is expanding its:

  • Moderation team: The Information notes that 2 of the startup’s open roles are for “trust and safety” to deal with bullying and trolling on the platform
  • Influencer program: Its “Creator Pilot Program” gives dozens of power users access to management and specialized tools

In a recent report, Andreessen Horowitz — which led the previous funding round — writes that “the audio innovation of the next decade will rival what we’ve seen in video apps over the past few years,” moving from passive podcast/audiobook listening to more interactive formats.

If that’s the case, we’ll be hearing a lot more from Clubhouse in 2021.

The new model for audio will be much more interactive. (Image via Andreessen Horowitz)

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Frothy
EV Charging

Charge me up, bruh. (Image via Ezequiel Becerra / Getty Images)

What are the most insanely overpriced electric vehicle companies?

Listen, we all know Tesla is looking expensive on fundamental investing metrics.

But the good people at the Financial Times’ Alphaville blog have compiled a spreadsheet of the entire industry, and Tesla is far from the most overpriced electric vehicle (EV) stock.

One of the key ratios they use is “enterprise value-to-sales” (EV/S), which measures how much it would cost to purchase a company’s value in terms of its sales.

The higher the number, the more expensive the stock:

  • General Motors (the traditional carmaker): 1.0x
  • Tesla (the $803B cult stock): 29x
  • Nio (Chinese “Tesla”): 50x
  • Plug Power (the hydrogen fuel cell maker): 102x
  • Blink Charging (the EV charging station network): 369x
  • Nikola (the electric fraud truck company): 47,395x (hahahaha)
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Intel fact of the day

Steve Jobs and Intel CEO Paul Otellini in 2005. (Via MacDailyNews)

Around 2005, Steve Jobs tapped Intel to make a mobile chip. Intel’s late CEO Paul Otellini recalled in 2013 why he passed on the opportunity:

“The thing you have to remember is that this was before the iPhone was introduced and no one knew what the iPhone would do… At the end of the day, there was a chip that they were interested in that they wanted to pay a certain price for and not a nickel more and that price was below our forecasted cost. I couldn’t see it.”

“It wasn’t one of these things you can make up on volume. And in hindsight, the forecasted cost was wrong and the volume was 100x what anyone thought.”

For more than a decade after that decision, the 2 tech companies continued their relationship on Apple’s laptop line.

However, as of last November, Apple has moved on and now produces its own chip for its MacBook laptops.

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