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Proptech’s big problem
Good morning, and welcome to Protocol Index, your daily pop-up report about the financial movements that matter to tech during the COVID-19 crisis. Want Index in your inbox each morning? Subscribe here.
Today: Palantir thinks it might make a profit, proptech companies might struggle to make a profit, and Facebook revisits its past.
What Matters Today
- 5:30 a.m. PDT: Inflation rate data is published for March. Prices are expected to have fallen 0.3% month-on-month, with low oil prices and slumping demand to blame.
- U.S. and European markets are closed for Good Friday.
- Intel's CEO said first-quarter demand was boosted by WFH laptop purchases.
- Palantir reportedly thinks it can make a profit this year, expecting $1 billion in revenue. It also plans to add new independent members to its board, Bloomberg reports.
- Murata, which makes ceramic capacitors, said smartphone orders are at the same level as last year.
- Amazon is building its own coronavirus testing lab, so it can test its warehouse staff.
- Twitch now lets U.S. streamers broadcast Prime Video content.
- Apple TV+ has made some content free.
- Starship Technologies launched a driverless delivery service in Arizona.
- Euro area finance ministers agreed terms for a stimulus package that includes €200 billion of lending to companies. The deal still needs to be agreed by countries' leaders.
- Indonesia's government is using healthtech startups, including Grab's GrabHealth, to help reduce strain on hospitals.
- China's Meituan now sells Huawei phones with 30 minute delivery windows.
- Amazon warehouse workers in California filed complaints with regulators, asking for an investigation into working conditions.
- U.S. security agencies asked the FCC to ban China Telecom from operating in America. A spokesperson for China's foreign ministry said the U.S. should "cease unjustifiable oppression of Chinese companies."
- San Francisco's Court of Appeals revived a class action lawsuit accusing Facebook of violating privacy rights.
- Masa Son pledged up to 60% of his SoftBank shares to banks, seemingly in an attempt to avoid margin calls on personal loans.
- Cannabis brand Caliva said it would no longer use delivery service Eaze, and instead launch its own shipping service.
- Travelex had to pay $2.3 million to hackers after a ransomware attack.
- Sophos found over 3.5 million iOS users have downloaded "fleeceware" apps, with high-priced auto renewing subscriptions.
- Data storage startup Cohesity raised a $250 million Series E round. It's now valued at $2.5 billion.
Proptech's big problem
During this last boom, a lot of "tech" companies have really been property arbitrage companies: essentially middle men that take advantage of mispriced or misused property to try to generate a profit.
But those businesses now face a huge problem: What happens when the property market grinds to a halt?
- "iBuyers" like Zillow, Opendoor, and Redfin, which use their data to buy and flip houses, have all paused purchasing amid the coronavirus crisis.
- They're so desperate to get out of deals that they're even forfeiting deposits, reports The Wall Street Journal. The problem is that no one is moving house while so many of us are quarantined and the economy is so precarious. (And also while many realtors can't even do their jobs).
If the economy stays weak, that could depress house prices — eating into the iBuyers' already thin margins.
- "I don't know if all the iBuyers will survive," Mike DelPrete, scholar in residence at the University of Colorado Boulder, told the Journal.
They're not the only ones affected by real estate woes.
- WeWork's whole business model was renting out space for more than it paid in rent. But with people abandoning offices, it's found itself struggling to pay the bills. WeWork's leases also tend to last 15 years, so it may struggle to adjust its costs as rents fall.
- And what will happen to Airbnb? Lower travel demand and lower property prices — which Airbnb might actually be exacerbating! — could feed through to lower room rates on the platform. For Airbnb, which charges a percentage commission on those rates, that could be yet another headache for the already-hurting company to deal with.
- "[If the EARN IT Act passes], it would not be possible for a small nonprofit like Signal to continue to operate within the United States. Tech companies and organizations may be forced to relocate." — Signal developer Joshua Lund said it would struggle to police its platform.
- "There's a big chance for ecommerce right now." — Fast Retailing CFO Takeshi Okazaki thinks coronavirus could finally make online retailing popular in Japan.
- "[We have seen] an increase in inquiries from non-union workers over the last couple of weeks who want advice about their options for delivering safety and economic demands to their employers." — Cindy Schu, director of organizing at the Office and Professional Employees International Union, says tech workers are increasingly looking to join unions.
- "It was a struggle to get guidance from [Silicon Valley Bank]." — Air CEO Shane Hedge told The Information that his experience suggested the bank is facing problems with processing Paycheck Protection Program applications.
Time is a flat circle
Researcher Jane Manchun Wong found an intriguing new product test from Facebook. It's called Campus, and is a pretty neat idea: A social network that connects college students to other people in their college. Sound familiar?