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Equity

Stripe’s easy-peasy acquisition, and why is Twitch still losing money?

Equity

TechCrunch

Founders, Silicon Valley, Finance, Ipo, Vc, Technology, Business News, Startups, Business, Venture Capital, News, Stock Market, Entrepreneurship, Techcrunch

4.2365 Ratings

🗓️ 29 July 2024

⏱️ 11 minutes

🧾️ Download transcript

Summary

Rebecca Bellan is back this morning for an episode packed with M&A talk, how one YouTuber succeeded at the creator economy, why Twitch is still losing money and an autonomous vehicle company that is making a comeback. First up, Rebecca took a look at fintech giant Stripe’s acquisition of four-year-old competitor Lemon Squeezy. The buy will allow Stripe to beef up its merchant of record selling “in a big way,” according to Stripe CEO Patrick Collison. Deal terms weren’t disclosed, but Lemon Squeezy has a reputation for turning down other offers, including a $50 million Series A. The company’s founder said he was holding out for the right partner to take the business to the next level, and apparently Stripe was it. This comment led Rebecca to explore the idea of M&A as an exit strategy. Does this practice create perverse incentives in venture capital, where investors are becoming more risk-averse and looking for a surer path to regaining capital, at the long-term expense of competition? Other startups have turned down such opportunities so they can go it alone. Just look at Wiz’s decision not to get acquired by Google for $23 billion, something we discussed on last Friday’s episode. Next, Rebecca touched on MatPat, the first big YouTuber to successfully exit his company, Theorist Media. Matthew Patrick turned his successful video series, The Game Theorists, into a full-fledged media business called Theorist, with 40 million subscribers across channels. But he was getting tired of the ceaseless content uploading, and found a way to convince investors that the business could go on without him. Now, he’s in Capitol Hill educating politicians about what creators need to succeed as small businesses. Speaking of creators and acquisitions, Rebecca pulled up a Wall Street Journal report that found that after 10 years, Twitch is still losing Amazon money. Amazon bought Twitch for $1 billion in 2014, but the company still isn’t profitable. And will it ever be? Twitch in 2023 generated about $667 million in ad revenue and $1.3 billion in commerce revenue, but that accounted for less than 0.5% of Amazon’s total 2023 revenue. Amazon defended its buy, saying Twitch has a long-term path to profitability. But broader trends that seem to favor short-form videos over watching someone play an entire video game live say otherwise. Finally, while we’re on the subject of comebacks, autonomous delivery startup Nuro is gearing up for one of its own. Nuro has been quiet for the past year or so after two big rounds of layoffs. Once the darling of the AV industry with over $2 billion in funding from high-profile investors, Nuro was burning money fast as it tried to scale and commercialize all at once. Now, Nuro is back with better AI and a new vehicle, the R3, which it will be testing later this year in the Bay Area and Houston.

Transcript

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0:15.4

Hello and welcome back to Equity, Tech Crunch's flagship podcast about the business of startups. Today is July 29, 2024 and I'm Rebecca Belon, a senior reporter here at Tech Crunch.

0:21.1

This is our Monday show where we take a look at the weekend and get you ready for the week ahead.

0:25.2

But just a quick housekeeping note for our listeners, this will be our last Monday show for a while at least.

0:30.2

The Equity team is very focused on bringing you bigger interviews and Friday

0:34.2

News roundup so don't worry equity itself isn't going anywhere but if there's something

0:38.2

you do want us to do more of or less of or anything in between just give us a

0:41.8

shout at equity pod at tech crunch.com.

0:44.0

Now on today's show we have Stripes EasyPZ acquisition,

0:48.0

how youtubers can successfully exit their company,

0:51.0

Twitch reports it's still losing money and the autonomous delivery startup

0:55.1

that's making a comeback.

0:56.3

Let's get started.

0:57.3

Our first story of the day comes from our very own Marianne Asavito, who reported that FinTech Giant Stripe has acquired four-year-old

1:06.4

competitor Lemon Squeezy. Lemon Squeezy is a merchant of record, which if you don't know what that means,

1:11.3

because I didn't, it means that they calculate and pay global sales tax for digital products and handles the legal processing and fees in every country.

1:19.3

Leons Quizi's target market is mainly SAS and software businesses.

1:23.0

In a post on X, Strip's CEO Patrick Collison said that this acquisition would allow Stripe to scale

1:29.0

merchant of record selling in a big way.

1:31.3

For those who don't also know, Lemon Squeezy has been processing

1:34.0

payments on Stripes since its inception. The terms of the deal weren't

1:37.3

disclosed, but we do know that Lemon Squeezy has turned down other offers and

1:41.3

Series A term sheets from investors.

...

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