Welcome to TechCrunch AM! Today we have big news from an AI unicorn (as always), and how the EU is clamping down on some tech giants. We also have a new fund looking to invest in Ukrainian startups, Spotify’s latest non-music push, and why we’re going to keep trying to vet AI models despite the difficulties. — Alex

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TechCrunch Top 3

1. Stability AI’s CEO resigns: Big personnel shakeups at AI startups are becoming the norm. OpenAI had a lot of drama late last year (and recently), Inflection AI was definitely-not-acquired by Microsoft recently, and now the CEO of Stability AI, the makers of Stable Diffusion, is out. He’s leaving to work on open source AI. The well-financed startup has appointed its COO and CFO as interim co-CEOs as it sorts out what’s next.
2. Liquid Death is not the only startup popping corks: With more than a quarter billion in sales last year, Science Inc.-backed beverage brand, Liquid Death, is growing quickly. But the market is full of competition: Odyssey, Olipop and Poppi are each busy fighting over market share in the growing non-boozy drinks category. There’s more to their growth than fizz, though, Rebecca Szkutak and Christine Hall report.
3. 1991 Ventures launches to fund Ukrainian startups: Ukraine has been fending off an invasion by Russia for more than two years now, so there’s no question more capital for new companies would be helpful, yeah? 1991 Ventures is launching with a £15 million fund to invest in both Ukrainian and Central Eastern European startups. Someone wealthy should help them add a zero to that total, but the effort is still welcome.

Morning Must-Reads

Don’t invest in abusive spyware: An international coalition of countries and investors is budding to combat commercial spyware that can be used to target repressed groups, journalists, dissidents and others. TechCrunch has learned that one of those venture investors, Paladin Capital, had previously put capital into a spyware company, but the firm confirmed recently that it had already exited the investment. Notably, Paladin has now teamed up with other venture investors to produce a voluntary set of principles for investing in startups that “enhance the defense, national security, and foreign policy interests of free and open societies.” Good!

Does Spotify want to be a music company anymore? After a big podcast push and foraying into audiobooks, Spotify is now looking at digital learning. Starting in the United Kingdom, Spotify is bringing video courses to its platform. The move to expand into other areas makes sense for Spotify, since its music business has modest margins and isn’t growing that fast.

Reviewing AI models is hard. We’re doing it anyway: It’s really hard to tell good AI apart from the rotten eggs because of rapid update cycles that deprecate tests quickly. It also doesn’t help that many publicly competitive benchmarks aren’t very applicable to consumers. Despite those issues, TechCrunch is embarking on a review project because “a qualitative analysis of these systems has intrinsic value simply as a real-world counterweight to industry hype,” Devin Coldewey writes.

Hey look, a profitable unicorn: Valued at $3.2 billion after raising $95 million last year to go after VR and AI-enhanced tutoring, GoStudent is a very well funded and valuable startup. And it now has the financial results to back up its price tag: The company has become EBITDA profitable and is enjoying positive operating cash flow. That’s very impressive and augurs well for edtech in general.

How Protecto pitched data privacy in the era of AI: Continuing his long-running series of pitch deck teardowns, TechCrunch’s Haje Jan Kamps is taking his magnifying glass to Protecto this week. The startup recently raised a $4 million round, and if you are curious how seed deals are getting done, this one is for you.

U.S. tech giants in trouble (again) in the EU: Under the EU’s new DMA, the European Commission is investigating Google and Apple for their policies that steer users towards their own products, and Meta is under fire for making users choose between paying it monthly or getting ads.

Mallard Bay is cashing in on hunting trips: This story is definitely not going to help U.S. citizens’ reputation for being nuts about guns. Mallard Bay, a startup that offers guided hunting and fishing tours, kind of like Airbnb, is cashing in on a simply massive market, and it has raised a good $4.6 million to do so. This is a pretty good idea, frankly, and I can see it taking off.

Around the Web

1. The FT has a brilliant report about how China is looking to move away from international silicon in government computers. The decoupling continues, in other words, especially as China looks for domestic chip sovereignty.
2. Reuters reports that Apple will bring its Vision Pro headset to China, the first country outside the U.S. to get the headset. That’s a big win for China, underscoring how tightly woven Apple and the manufacturing-forward nation remain.
3. Just how good are AI chatbots for helping people with their mental health? The AP recently dug in, looking at apps that offer mental-health-esque services but avoid saying that they’re apps for therapy.

Before You Go

How one venture fund is transcending borders: Ethos Capital wants to back founders who have had exposure to multiple cultures. Given that expanding to new markets often requires understanding local regulations and the people in question, Ethos could be a fit for startups that want to break free from their domestic borders and pursue a global customer base.

• Chief of Staff at OpusClip (United States)
• CFO/Investment Fund Raiser at Flipping Technologies Inc. (Riverside, CA, USA)
• Instructor at Oregon Institute of Technology (Wilsonville, OR, USA)
• Director of Engineering at GridX (Denver, CO, USA)
• VP of Data Management at RetireeFirst (Mount Laurel, NJ, USA)

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