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Happy Friday, legends. Hope your weekend plans are less complicated than Kalshi's.
Google's searches grew at their fastest pace in five years, and its stock still fell nearly 12%. ServiceNow grew revenue more than 20% and headed for its worst day ever. This week, Wall Street paid for growth that turns into money, and little else. Kalshi got a different kind of bill: a $40 billion valuation on Thursday, and criminal charges in Utah the day before. So two prices got reset at once: what your growth is worth, and what your legal risk costs. When did you last check either one?
In today's newsletter, we'll get into:
Kalshi's $40B week, with criminal charges
Why Google's busiest search quarter disappointed
DoorDash's $17B grocery bag
ServiceNow's worst day ever
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The founder’s dashboard / Your quick roadmap
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FOUNDER BOARD
🌱 16% of 2024's $1M+ seed raisers have made it past seed, so size your seed against the Series A bar: $2M–$3M ARR plus six months of runway.
🧴 Scento sells 3M+ perfume sample vials a year, and it built its advent calendars by ranking 12 months of paid orders before anyone brainstormed.
🧾 Two founders borrowed $11,850 in merchant cash advances and closed owing $34,000+, so turn the daily withdrawals into a yearly rate before you sign.
🤝 42% of people who quit say something could have kept them, so ask your best people why they'd leave this week, not at their exit interview.
⚡ Baseten's open 2B model costs $0.01 per million tokens and answers in ~20ms, so send your yes-or-no AI tasks to joey-1 instead of a frontier model.
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RUSHIN' ROULETTE
Five bullets of updates
🚗 General Motors will pay $220 million to settle claims from 36 state attorneys general that it sold drivers' braking, acceleration and trip data to data brokers. Insurers could buy it, and some drivers paid higher premiums. GM now needs drivers' "express consent" before collecting it. If you share user data with anyone, make sure you could prove that consent tomorrow.
🛒 DoorDash agreed to buy grocery-delivery rival Instacart for $17 billion, or $65 a share, and plans to keep Instacart's brand and app. The deal isn't expected to close until late 2027 or early 2028. If you sell through delivery apps, start planning for a single company across the table on both your takeout and grocery deals.
🍁 Toronto-based Cohere is raising up to C$7 billion at a C$35.7 billion valuation, the largest private round in Canadian tech history, with Canada's government among the buyers. Its recurring revenue grew 165%+ in a year. The pitch is AI that doesn't depend on a few US labs. If you sell to governments or banks, expect "whose model is this?" on the checklist.
📉 ServiceNow, the workplace-software giant, fell 27% Thursday, on track for its worst day ever, even though revenue grew 20%+ to $4.11 billion, roughly in line with forecasts. New AI contract value jumped 65%, but investors fear AI will upend how software gets sold. If you sell software, "we added AI" isn't the story anymore; show the money it saves customers.
👗 Meta launched Style Sketch, an AI app that builds a virtual closet from your Instagram photos and suggests outfits from it. It's live only in Indonesia, Singapore and Thailand for now. Startups like Alta already do this, but Meta's edge is years of outfits already posted to Instagram. If you build in AI fashion, your moat can't be the closet.
What sells your product now that AI is standard?
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STARTUP NEWS
Kalshi is worth $40B. Utah wants its founders in court.
Most founders celebrate a big round with a party. Kalshi's co-founders got a court summons. On Thursday, the prediction market announced a $1 billion round at a $40 billion valuation, nearly double May's $22 billion. A day earlier, Utah criminally charged the company, CEO Tarek Mansour and COO Luana Lopes Lara.
What is Kalshi? It runs an exchange for "event contracts," which pay out if, say, a team wins or a candidate gets elected. Kalshi calls that a financial market. Utah calls it something else.
A casino by any other name: "Kalshi runs an online casino in Utah and calls it a prediction market," Attorney General Derek Brown said. Utah is one of only two states whose constitution bans gambling, he noted, and it has held that line for 130 years. Per Ars Technica:
The company and both co-founders each face 13 felony counts and one misdemeanor.
They cover sports bets offered Sept. 13–24.
No arrest warrants, just summonses to appear in a Salt Lake County court.
Kalshi called it "a crazy overreach" and pointed to Arizona, where a federal judge blocked similar charges. And it has a big ally.
The feds call dibs: the Commodity Futures Trading Commission (CFTC), the federal futures regulator, sued Utah on Tuesday, its 10th lawsuit against a state, arguing only it can police these contracts. But in August, a federal judge ruled federal law doesn't stop Utah from enforcing its ban.
Know your referee: Kalshi built a $40 billion business on a federal reading of the law that many states reject. If your product is only legal because a federal rule beats a state one, that question belongs in your model before you scale, with a lawyer budget attached. Kalshi can afford that fight. A seed-stage startup can't.
Looking ahead… Appeals courts have split, so the Supreme Court will probably settle it. New Jersey has asked it to, backed by 39 other states and DC. Until then, nobody has won.
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STARTUP TV
The PAINFUL Road from Pitch Deck to Funding
In this video, we demystify the arduous journey of raising venture capital for your startup.
From the initial pitches to finally seeing the money in your bank, discover every step of the process with insights into pitching, diligence, negotiation, legal intricacies, and finally, securing the funds. Essential viewing for founders seeking venture capital.
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BIG TECH NEWS
Google search got busier, but the money didn't keep up
Giphy
Google's search queries just grew at their fastest pace in five years, and Wall Street punished it anyway. Third-quarter search revenue missed analysts' forecasts for the second straight quarter, and Alphabet's stock fell nearly 12% Thursday, per Ars Technica.
Here's where it gets interesting: more searches used to mean more money. This time, search revenue grew 12% to roughly $63 billion, per CNBC. But growth has slid from 19% in the first quarter to 17%, then 12%. Executives said currency swings were the biggest reason. They also admitted a problem currency can't explain.
Fewer ads per answer: each query in AI Mode, Google's chatbot-style search, earns less than a classic search, Chief Business Officer Philipp Schindler said. AI answers carry fewer ads, and those ads are cheaper. So each search Google moves into AI Mode earns it less, for now. (Great for your eyeballs, less great for the earnings call.) Google's fix is more ads: AI Mode ads are spreading to more countries, and US users will get "multi-turn" ads that change as the chat goes on.
Google needs that fix to work, because search pays for its AI spending. That spending pushed capital expenses to $51.4 billion last quarter and free cash flow (the cash left after running the business and paying for buildouts) to –$9.06 billion. And it's targeting more than $300 billion in AI investment in 2027.
Organic, for now: if a lot of your customers find you through Google's free results, that page is turning into a chat with paid slots inside it. Check what share of your signups comes from organic Google, and if it's your biggest channel, start building one Google doesn't control (an email list, a community, partners). If you buy Google ads, try AI Mode placements now, while advertisers are still figuring them out.
Next report card: the fourth quarter, when Alphabet expects an even bigger currency hit.
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