Hi, and welcome to today's Bay Area Times daily newsletter. Top stories today: 1) ChatGPT launches Plugins, 2) Character.AI raises $150M, 3) TikTok CEO testimony is a flop, 4) Yellen says she's ready to help the banks, and 5) Fed adds another $94B to its balance sheet.

0. Data and calendar

1. ChatGPT announces Plugins, which integrate their AI with other websites

• Making LLMs useful beyond the chatbot. With plugins, you can use ChatGPT to execute any internet function for you, as a personal assistant would. That includes: searching online (and providing sources), buying groceries and plane tickets, and using business apps such as Salesforce -- whatever plugin makers choose to build. - The Verge, ChatGPT

You can use it to search the internet for specific answers

11 apps already have plugins for ChatGPT

But it's waitlist only

• So most users will have to wait. We expect plugins to be released publicly over the next few months.

• We see generative AI as the most underreported trend of the year. Even with some of the mainstream media noticing LLMs, we see it as the most transformative technology trend since the mobile phone -- every single app will integrate AI, no exceptions.

• In related news, Shivon Dilis, Musk associate, is leaving the OpenAI board. This might be connected with Musk's criticisms and/or his building of his own open-source LLM model. - The Information

2. Character.AI raises $150M at a $1B valuation

• Led by a16z, who might be seeing this as their main bet on the space. - NYT, a16z

• Currently only doing chatbots, but expected to expand into other areas: Character.AI was founded by 2 ex-Googlers who worked on their main LLM LaMDA, so they know what they're doing. Character.AI's current products are chatbots of different AI characters, which don't make any revenue but could become monetizable with custom B2B offerings.

• Is $1B for a pre-revenue AI startup too much? If you see this only as their current custom chatbot application, probably yes. If they can become competitors to OpenAI and build widely used LLM APIs that can be integrated into other software, probably not. We're guessing Andreessen is betting on the latter.

3. TikTok CEO testifies as China "opposes" TikTok sale

• Most of the media criticized Shou Chew's testimony, but he just repeated the talking points: they're building a data center in Texas to store all U.S. user data, 150M Americans and 5M businesses use TikTok, all social media track some user data, etc. - WSJ

• He did admit Chinese employees still have access to U.S. data: "After Project Texas is done, the answer is no. Today, there is still some data that we need to delete." - CNBC

China says that a TikTok sale would have to be approved by the Chinese government

• They claim a sale would involve "technology export" that requires approval: "Forcing the sale of TikTok will seriously damage the confidence of investors from all over the world, including from China, on investing in the United States. China firmly opposes it," said the Chinese commerce ministry. - FT

• China itself has banned TikTok! In what is a hilarious irony. China only allows ByteDance's China-censored version, Douyin.

• ByteDance is not even Chinese, but Douyin and most of their revenue are. ByteDance is a Cayman corporation 60% owned by international investors, 20% by the founders, and 20% by employees, according to the company. But their headquarters and most of their current revenue are in China, which leads to the CCP having so much power over it.

What now? TikTok ban seems more likely

• Committee Chair was open about a ban: "Chairwoman Cathy McMorris Rodgers, R-Wash. set the tone early by calling for a ban on TikTok. “Your platform should be banned,” she said. “I expect today you’ll say anything to avoid this outcome.”" - Semafor

• There are banning bills in both Chambers of Congress. The DATA Act in the House and the RESTRICT Act in the Senate. - Lawfare

• The Biden admin wanted a sale, but anything is possible at this point.

4. Yellen changes remarks to add "prepared to take additional actions if warranted"

• Reversing Wednesday's comments that sank the market. In responding to questions on Wednesday, Yellen told Senators that she had not "considered or discussed anything having to do with blanket insurance or guarantees of deposits." Before her House appearance on Thursday, she added the dovish sentence above to her remarks. - Bloomberg

• The truth is the government will probably insure all deposits. If SVB and Signature are too big to fail, aren't all banks too big to fail now? At least it's a better system than 2008, when shareholders were also bailed out. And at an estimated cost of $117B, insuring all deposits is probably the right thing to do.

5. Fed adds another $94B to its balance sheet this week

Now, two-thirds of the entire QT is reversed:

6. Do Kwon arrested in Montenegro with fake documents, charged with 8 counts by U.S.

• His running with fake documents could show criminal intent. This isn't good news for Do Kwon, who is being charged by the Southern District of NY with 8 counts, including fraud, commodities fraud, and securities fraud, related to LUNA and UST. - Bloomberg, Indictment

• We expect him to fight extradition, and potentially prefer to be extradited to his home South Korea, where he is also facing charges. South Korea could be more lenient -- for example, the country has no life sentence.

7. FTC wants to make it easier for subscribers to cancel

• One-click cancel: If this proposed rule becomes finalized, companies from gyms to online subscription startups will have to give subscribers the option to cancel the same way they subscribed, usually with a click of a button. Companies would also need to ask consumers who want to cancel whether they would be open to retention offers, before the company could entice them back with special deals. - CNN

• We expect this rule to increase churn and reduce custom lifetime value (LTV). Which affect SaaS companies the most, but most of technology and the broader stock market too.

Markets didn't react to this news, with SaaS rising more than the S&P 500

8. Hindenburg accuses Block of fraud, weak KYC

• Main allegations include overstating user counts, allowing accounts to be used for illegal activities, and having a very lax KYC/compliance operation. Of note, Block owns Square, Cash App, and other related fintech companies. - Hindenburg

Hindenburg even made this compilation video of rappers promoting Cash App for criminal activity

Block had a very vague non-reply reply

The stock is down 20% from yesterday

9. Twitter to start removing legacy blue checks on April 1st

• Will this make a difference in revenue? Media estimates point to Twitter Blue having around 300K subscribers, bringing in $25M annually, less than 1% of its total annual revenue. Twitter needs to at least 10x that for it to start to make a difference. One idea is to introduce VIP plans at $1K-$10K/year that gives accounts extra reach (e.g. 1st spot in comments).

10. Other headlines

Tech

• Snap offering AR tools to its enterprise customers.

• Utah law prohibits underage use of social media without explicit parental consent, scheduled to take effect in March 2024.

• Good Eggs raises $7M at $15M, after $330M valuation in 2020.

• Tesla Wireless Charging Platform gets a raving review from The Verge.

Business

• Apple to spend $1B a year on films to break into cinemas, considering bidding for English football streaming rights.

• Big banks tell staff not to poach customers from troubled banks.

• SVB: executive pay soared after big bet on riskier assets.

• Accenture firing 19K employees, 2.5% of staff. Share is up 7%.

• Elon Musk's great plans for Texas face local opposition.

• Carl Icahn alleges Illumina directors wanted extra insurance for "disastrous" Grail deal.

Crypto

• Coinbase CEO says he's happy to go to court to get some case law developed.

• FTX 2.0 reboot: pro clients didn't like FTX's high-latency software, adored by retail.

• SEC has bulletin out alerting investors on crypto risks, proof-of-reserves.

• IRS wants to tax NFTs as collectibles, at max 28% federal tax, rather than 20%.

• Bitcoin Apes arrives to Bitcoin blockchain as Ordinals NFTs.

• Aeropostale: after reviving via TikTok virality, company turns to issue NFT collection.

Washington and more

• 1 U.S. contractor killed in Syria base, drone from "Iranian origin"; U.S. strikes back.

• Iran could produce a nuclear weapon in months if it decides to, Mark Milley says.

• Trump hush money grand jury continued Thu, but won't make a decision this week.

• Melania and parents live at Mar-a-Lago; she remains "angry" at Trump.

• U.S. strikes deal with Canada aimed at reducing undocumented immigration.

• House falls short of overriding Biden's ESG veto, 219-200.

• Anderson Cooper to lead CNN's competition to 60 Minutes.

• Florida principal fired from public school for showing "pornographic" David statue.

• George Santos claims he's "very close to cleaning my name."

11. Interesting tweets, memes, and images

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