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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: Software developer hiring is way down, Alphabet may have an unusual acquisition strategy, and a day of more threats than I almost dare write about.
What Matters Today
- 7 a.m. PDT: Brookings hosts a webinar with Federal Reserve Chair Jerome Powell, on "COVID-19 and the economy." Investors will analyze the talk for any sense of what the Fed's planning to do next. Also watch for San Francisco Fed President Mary Daly's Quora session at 1 p.m. PDT.
- 7 a.m. PDT: The University of Michigan will release preliminary consumer sentiment and inflation expectations for April. Sentiment is forecast to plunge the most on record.
- 7 a.m. PDT: OPEC+ hosts a video meeting, after it was delayed from Monday. All eyes are on whether Saudi Arabia and Russia can agree to a production cut, to prop up oil prices and the stock market. Another meeting is expected tomorrow.
- Eventbrite laid off 45% of its employees. The Hangouts call announcing the decision "was pretty brutal," one affected employee told Protocol's Matt Drange.
- Yelp is laying off 1,000 employees and furloughing a further 1,100.
- Conversational AI startup Cogito reportedly laid off 24 employees and six contractors.
- Oyo furloughed thousands of staff outside of India. CEO Ritesh Agarwal told employees that its revenue has dropped by over 50% this year.
- DJI denied Chinese media reports that it was planning to cut 50% of its staff, calling the suggestion "ridiculous."
As of 6 a.m. PDT: Nasdaq Futures: 1.03% | Euro 600: 0.98% | Nikkei: -0.04% | Hang Seng: 1.38%
- The Fed announced an extra $2.3 trillion in stimulus measures.
- Disney+ said it has 50 million subscribers. It had told investors it wanted 60 million by 2024.
- Twitter has stopped letting most users turn off "mobile app advertising measurements." European users can still opt out.
- European food delivery company Just Eat Takeaway posted a 50% jump in first-quarter orders, and said order values increased in late March.
- The Department of Justice approved Google's application to operate an undersea internet cable between the U.S. and Taiwan. It said the cable cannot connect the U.S. to Hong Kong, however.
- Google made its Stadia Pro game streaming service free for two months.
- Zoom responded to security concerns by forming a CISO council.
- Jared Kushner wants to work with tech companies to build a coronavirus dashboard.
- Tesla sold more cars in China than ever last month, according to an industry body.
- Japan will fund manufacturers that want to move production from China to Japan.
- The U.S. is in a recession, according to Bloomberg Economics.
- WeWork has reportedly skipped rent payments at some locations, and is trying to renegotiate lease terms.
- Booking Holdings said room reservations are down 85% from a year ago. The disclosure came in an SEC filing for a $750 million convertible senior notes offering.
- Airbnb reportedly projects a 54% fall in revenue for 2020.
- Democrat senators have reportedly raised concerns about Amazon's firing of a protest organizer.
- The Occupational Safety and Health Administration is examining Amazon's coronavirus safety measures at its Pennsylvania warehouse.
- Labor groups asked congressional leaders to reject Uber's recent proposal to offer drivers more benefits while keeping them classified as independent contractors.
- Microsoft is planning to delay Windows 10X devices, including the Surface Neo, according to ZDNet.
- Cloudflare will stop using Google's reCAPTCHA, citing privacy and cost concerns.
- The Senate reportedly told members to stop using Zoom. Google also banned the software.
- France told Google it must pay news outlets for re-using their content.
- The U.K. and U.S. said hackers are taking advantage of coronavirus anxiety.
- Airbnb stopped U.K. bookings for everyone except key workers and "other essential stays."
- Singapore delayed awarding digital bank licenses.
- Ride-hailing startup Bolt asked the Estonian government for credit support.
- Investcorp bought cybersecurity firm Avira at a $180 million valuation.
- Sony bought a $400 million stake in Chinese video site Bilibili, valuing the company at $8 billion.
- Index Ventures closed $2 billion in new funding, to be used for a $1.2 billion growth fund and $800 million of emerging startup investments.
Everyone's Thinking About
New data this morning showed that 6.6 million people filed for unemployment in the last week, well above economists' consensus of 5 million. That's slightly down on last week, and continuing claims came in below expectations (7.5 million vs. the 8.2 million expected), but make no mistake: The job market is not doing well. As POLITICO's Ben White says, the numbers are "terrible," and it's no surprise that the Fed is trying to "blast [them] out of the headlines" with the announcement of its new stimulus plan.
And tech isn't immune from the pain. Burning Glass, a job market analytics company, shared data with Protocol that shows just how badly tech's getting hit.
- Information sector job postings declined 42% from the week of March 2 to the week of March 30, compared to 43% for the U.S. overall.
- And software developer hiring was down across all sectors. Professional, Scientific, and Technical Services was the most affected sector, with a 46% drop in job postings, while finance and insurance saw a 45% decline.
- The least affected sector for software developers was Public Administration, where postings were only down 7%.
Burning Glass CEO Matt Sigelman told me that this hiring pullback could have long lasting economic effects.
- "If employers are backing off ... from making hires in fields like software and engineering," he said, that says "profound things about how employers are investing in the future or not."
- "Pretty quickly, those sorts of things become self fulfilling prophecies. If you stop investing in the future, then inherently the future is going to be less bright and more bleak."
- Sigelman also pointed out that it takes a long time for a tech hire to produce output — so hiring freezes today could impact growth as far away as Q2 2021.
I also asked Sigelman what he thought about the big claims that remote work is here to stay.
- "I think some of the voices you hear on this question, frankly, I think are a bit exaggerated," he said.
- But he thinks there'll be some change, with a "non trivial number of managers who will realize that having somebody remote is not the end of the world."
- He doesn't expect that to lead to a hunt for cheaper developers, though. "In the knowledge economy, jobs follow skills," he said. "Those kinds of jobs move less because the talent is cheaper than because the talent is delivering higher quality output, or is more productive."
For now, everyone's going to struggle. But it could be worse:
- People with tech skills are "eminently more secure," Sigelman said, and he expects the jobs that get eliminated to be those most vulnerable to automation.
- "I can't predict how far the economy will fall or, when we'll start to move into recovery, what the focus of that recovery will be. But I'd rather be tech talent in that recovery than be manufacturing talent.
- "Most of [Alphabet's acquisitions] have been dire failures … I wonder whether they meant them to fail, whether they're actually buying things and shutting them down. And whether one day as a result, we may see some great returns emerge again because they'll have killed everybody who's competing with them." — Fund manager Terry Smith, speaking at his Annual Shareholders' Meeting, highlighted the potential for regulatory concerns over Alphabet.
- "Towards the end of the quarter, a significant amount of new business was postponed. This is reflected, in particular, in the significant year over year decrease in software licenses revenue." — SAP announced its preliminary first-quarter results.
- "Private equity has been steadily creeping into the growth market, a trend that will accelerate as long as funds' terms permit it." — Bloomberg's Alex Webb thinks other PE firms will follow Silver Lake and Sixth Street in trying to get deals on hot tech companies.
- "We are concerned that unless urgent changes are made … then the high-growth U.K. tech sector will be put at risk." — The CEOs of Darktrace, Graphcore, and Improbable, amongst others, asked the U.K. government to lend money to the tech industry.
- "I am certain that of all the threats that Covid-19 poses, the threat to early-stage startups is the least we should worry about." — LocalGlobe partner Robin Klein, meanwhile, thinks the U.K. government should not do that.
Travis Kalanick is very upset
On Monday, Travis Kalanick's new company sent out a press release announcing the "Internet Food Court," which is said to be a bunch of cloud kitchens — restaurants without seating — all under one roof. It's a real building in L.A., with real kitchens … but you're not supposed to know about it yet. Apparently, a rogue employee set up the brand (which included commissioning an award-winning designer!), and announced the Food Court without permission. A source told the Financial Times that "Travis wants it to be very clear that this is not something he created. He's very upset."