It has been, to say the least, a wild week in the private markets. I’m taking you briefly inside my reporter’s notebook. (I do have both a literal notebook, and a Google Doc, for anyone wondering.) Here are some themes I’m watching, thinking, and hearing lots of chatter about:
– Those left behind: If you think about it, joining a startup is a little crazy. In many cases, a startup employee leaves behind a stable job at a longstanding company where their next several years of life can, more or less, be planned. But at a startup, anything can happen, for better or worse. That’s what people sign up for—an adventure. Along with the prospect of some decent financial upside.
And that’s something that’s come into question in recent days, as the social media ruckus over the Windsurf deal ballooned, followed by Scale cutting 14% of its staff (about 200 employees) Wednesday in the aftermath of its $14 billion Meta deal. Layoffs happen—we all get that—but a deal worth billions that potentially doesn’t account for all early employees is a tough pill to swallow. (To be sure, the full terms of these deals, particularly how they treat employee equity, are not known. It’s possible that the employees, even those laid off, will make out OK. If you have insight, hit me up!).
Beyond the specific cases of Scale or Windsurf, what I find most interesting is that we’re having a broader conversation about the startup employee social contract. The classic story where an entrepreneur mints hundreds of millionaires by building a generational company, to me, is still the greatest societal good of venture-backed startups. We may be living less and less in a world like that, but I hope not. (If you have thoughts on how deals like Scale and Windsurf will affect conventions for startup employees moving forward, email me! That’s our Friday essay.)
– OpenAI buy: It may seem that no one is left at OpenAI given the seemingly ceaseless reports of Meta’s talent poaching, but the $300 billion AI bellwether still has some tricks up its sleeve. The Financial Times reported that OpenAI is working on a checkout system for online sales that would be tied to the LLM and through which OpenAI would take a cut. The search-shopping intersection isn’t a new one, but I do think this is far more interesting and points at the potential for AI business models to expand beyond premium subscriptions (it also strikes me as something I’d be more likely to engage with as a consumer than, say, an OpenAI phone.) As the hunt for revenue in AI continues, don’t be surprised if we see more e-commerce-AI intersections this year.
– Trump’s Powell problem: The markets turned frenetic when reports initially emerged yesterday that Trump may fire Fed Chair Jerome Powell. For years Trump has called Powell a “very stupid person” and a “knucklehead,” so it was a surprise when Trump fired back that it was “highly unlikely” he’d fire Powell. (Per the Supreme Court, Trump does not have unilateral authority to fire Powell, whose term as chair ends in 2026.) Trump wants to see interest rates cut, as does a large swath of the private markets. But would that even be all that good of a thing?
After all, the famed boom of 2021 and 2022 derived its name, the ZIRP (zero interest rate policy) era, from the Fed. An intense bust followed, rescued by AI, where valuations have soared to stratospheric heights. So, the interest rate cut that Trump’s looking for could help the exit environment, but could also have concerning knockdown effects. As always, I would love to know what you think.
See you tomorrow,
Allie Garfinkle
X: @agarfinks
Email: alexandra.garfinkle@fortune.com
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