Can tech still save inflation?

We need a hero

Jerome Powell warned of pain in the fight to bring down inflation during his Jackson Hole speech on Friday. Tech has historically been a savior when inflation peaks. But where is it now?

Let’s rewind to 2000, when former Federal Reserve chair Alan Greenspan gave a speech talking about how new technology was bringing the economy into untested, yet promising, waters.

• Greenspan said tech was serving as an inflation disrupter, not a driver. The growth of IT increased worker productivity while creating more jobs, leading to growth without heavy inflation.

• Economists were making the same argument well into 2020. Ed Yardeni, the president and CIO of consulting firm Yardeni Research, wrote a paper that year noting how the tech industry is “prone to deflationary pressures” because it’s so competitive.

Now fast forward to 2022, when the Fed is trying to fight inflation. And if you ask critics like FTC Chair Lina Khan, a consolidating tech sector isn’t that competitive anymore.

• Yardeni wrote in April that tech’s ability to “disrupt” is getting tested with the “four forces of inflation … deglobalization, decarbonization, demography and debt.”
• So it’s essentially unclear whether tech is still serving its deflationary role, or if it’s just overwhelmed by inflationary forces at this point.
• Historically tech has lacked pricing power because of all that competition. But Salesforce and Google are getting rid of free products, while Slack is raising prices for the first time since its launch. Streaming services are also hiking prices. The reasoning behind each change differs, but charging customers more for the same thing sure looks like inflation.
• Productivity is also higher than ever, which Yardeni has argued could help fight inflation. But for some reason the economy is still feeling pain.

Maybe tech itself is becoming an inflation driver, and the FTC’s push to fight competition could help ward that off. Maybe tech is still on the side of deflation, but it’ll take years to know for sure. These things often only become clear in hindsight. Until then, hold onto your wallets.

— Sarah Roach

The Palantir Pack

PayPal isn’t the only mafia that Peter Thiel is a part of. Thiel was one of the founders of Palantir, the data company that quietly (and sometimes controversially) built itself into a multibillion-dollar business. It’s been a shining example of the PayPal Mafia, but it’s spawned a network of its own. We’re calling it the Palantir Pack.

To be a successful “mafia” by tech standards, Keith Rabois once suggested to me that you need at least three unicorns to come out of it along with a distinct culture. Palantir meets those requirements and then some.

• The big companies include startups like defense tech platform Anduril, NFT marketplace OpenSea, developer tool Sourcegraph and wealth manager Addepar. Other companies like Amplitude and Blend went public in the billion-dollar-plus range (although they haven’t been spared in the market correction).
• There’s also waves of startups working on unicorn status, like AI startup Arena, Web3 developer tool Kurtosis and data science company Hex — all of which announced funding within the last year.

The Palantir Pack has followed a similar playbook to Palantir. The main twist is that Pack members have rethought Palantir’s trademark secrecy.

• The Palantir playbook started by going after big, ambitious, mission-driven problems, hiring the best talent out of universities to do it, building an engineering-first culture and not being afraid to work hard and do unscalable things like deploying engineers out to customers to customize the product to solve the problems.

And unlike PayPal’s “mafia,” it’s still expanding. PayPal went public but then got acquired quickly, which caused an exodus of talent. Palantir still operates much like an engineering institute or SEAL Team Six for technical talent, said 8VC’s Alex Moore.

• Former head of investor relations Luba Lesiva launched the Palantir Alumni syndicate on AngelList in late 2020. Her idea initially was that there might be a few dozen alumni companies and interest from maybe 60 LPs or so. “I was massively, massively, massively wrong,” she says now with a laugh. The Palumni VC group now stands at 700 LPs and over 200 have made an investment.
• By Lesiva’s count, there’s roughly 170 startups that have founders or executives with Palantir ties.

A version of this first appeared in our VC and startups newsletter Pipeline. For an even closer look at the Palantir Pack, read our deep dive.

— Biz Carson

Sponsored content from DataRobot

DataRobot's AI Cloud for Financial Services Unlocks the Art of the Possible: DataRobot continues to attract clients in financial services who want to de-risk their AI investments and rapidly scale AI to almost every part of their operations, resulting in improved productivity and higher customer satisfaction.

Read more from DataRobot

People are talking

Reddit's Steve Huffman wants Reddit Avatars to help bring blockchain to the site:

• “What crypto adds is the ability to own digital things. Before that, you could create digital goods, like in a game. But those goods ultimately exist at the pleasure of the company that creates them, or runs the database. And so it’s not actual ownership — I’d like to get closer to actual ownership.”

Spotify's Max Cutler, the VP of "talk," expects video and podcasts to blend much more:

• "You’re going to start seeing the crossover happen a lot more, which is going to grow the whole landscape."

Coming this week

VMware Explore 2022starts todayand runs through Thursday.

NASA is launching its Orion crew capsule into space today. The 42-day unpiloted journey around the moon will test the capsule’s heat shields.

UX Product Design Week begins tomorrow and runs until Friday. It’s hosted by the Future London Academy.

Deutsche Bank's 2022 Technology Conference starts on Wednesday and goes through Thursday. It takes place in Las Vegas.

NamesCon Global begins Wednesdayand runs until Saturday in Austin. It’s a domain investor and service provider conference.

So long, Novi. Meta’s crypto wallet, is officially shutting down on Thursday.

In other news

Meta’s Vivek Sharma is leaving. Sharma played a huge role in the company’s metaverse push, most recently serving as VP of Horizon.

Self-driving Teslas may arrive by the end of the year. Elon Musk wants them ready in the U.S. and possibly Europe, depending on regulatory approval.

Meta settled its 4-year-old privacy lawsuit over the Cambridge Analytica scandal, avoiding the deposition of Mark Zuckerberg and Sheryl Sandberg.

WhatsApp is getting into grocery shopping. It partnered with India’s Reliance Retail and Jio Platforms to launch a grocery service on the platform.

MoviePass’ second act is going well so far: 463,000 people have signed up for the waitlist within its first 24 hours.

Back to the office, and back to COVID? Google employees say they’ve been hit with several COVID exposure messages from management upon returning to the office.

Microsoft and ByteDance are partnering on a project called KubeRay, a software initiative aimed at helping companies efficiently run AI apps.

Hackers stole some of the source code from LastPass, but the company says that users’ passwords were unaffected.

Netflix is considering charging between $7 and $9for its ad-supported tier, around half the current cost of its monthly plan, Bloomberg reported.

Mario Kart turns 30

Nobody knew when Mario Kart first came out that it would spawn dozens of spinoffs, decades of fun and open gamers up to a whole new category of racing game. To celebrate Mario Kart’s anniversary, don’t miss this fun story from GameSpot on the game’s most hated item: the dreaded blue shell.

Sponsored content from DataRobot

DataRobot's AI Cloud for Financial Services Unlocks the Art of the Possible: Banks need to secure a competitive advantage in an increasingly tight race to harness best-in-breed technology. Decision makers need to not just plan a future-ready strategy, but also recognize the value of AI that could boost not just their performance in-house but also their reputation among their global customers.

Read more from DataRobot