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Good morning! This Thursday, a former Uber exec's thoughts on ride-sharing's outlook, TikTok's plans for U.S. domination, and SoftBank execs might be having another feud. Want Index in your inbox each morning? Subscribe here.
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What Matters Today
- 6:45 a.m. PDT: U.S. PMI data for May should follow this morning's European data in showing a slight uptick. Manufacturing activity appears to be holding up much better than services activity, although that seems to be driven more by a collapse in consumer-facing services than by B2B offerings.
- 2 p.m. PDT: Deutsche Bank analysts have low expectations for HPE's earnings, thinking that a drop in IT spending in April will hurt the company.
- 2:30 p.m. PDT: Investors hope that strong data center demand will boost Nvidia's earnings for the last quarter. Look too for any indication on whether spare fab capacity from new Huawei restrictions will help alleviate Nvidia's supply shortages.
- Vehicle sensor-maker Samsara laid off 300 people, 18% of its staff. It also raised $400 million at a $5.4 billion valuation, well below its previous $6.3 billion valuation.
- Intercom laid off 39 people, relocating a further 47 to Dublin.
- Glassdoor reports that "Internet and Tech" hiring is up 72% month-on-month, and 105% year-on-year.
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- Shopify announced a range of new finance products, including debit cards for merchants and a pay-in-installments offering.
- Samsung said it was pressing ahead with $16 billion of new construction projects, expanding its memory-chip factory in Xi'an and building a new chip line in South Korea.
- Xiaomi's revenue beat estimates, with the company saying "smartphone demand has rebounded quickly" in China.
- A State Department official said the government might alter the wording of new Huawei restrictions, with the current wording allowing some shipments still.
- HBO Max, which launches next week, still hasn't announced deals with Amazon, Comcast or Roku.
- The EU is reportedly asking consumers what they think of big tech companies and their responsibilities, using their responses to draft new laws.
- The £250 million government fund for U.K. startups received £450 million worth of applications on its first day.
- Intel acquired Rivet Networks, which makes wireless networking products, for an undisclosed price.
- Panasonic bought a 20% stake in Blue Yonder, valuing the company at $5.5 billion.
- SoftBank Group said it would sell 5% of SoftBank Corp., its listed telecoms subsidiary.
- Rent the Runway is reportedly raising more than $25 million at a valuation of around $750 million, below its $1 billion valuation from last year.
- Google Cloud did a "seven figures" cyber-defense deal with the Department of Defense.
Can ride-sharing survive a pandemic?
With Uber laying off a quarter of its workforce, everyone's wondering what happens to the ride-sharing company next. Will people be willing to get in a car with strangers again?
- "It's probably some real short-term pain," former Uber exec James Cox told me. Cox led the global rollout of Uber Pool back in 2015 — a product that now seems a long way from being practical.
- Demand has already dropped in some areas, like trips to and from airports. And Cox admits that it's going to take a while for shared rides to bounce back. But that doesn't spell doom for Uber, he thinks.
- "You may see some growth in demand," he said, from people "choosing to take it over public transit." (Count me as one of those who will be taking Ubers instead of trains for the foreseeable future.)
- The supply-side economics are good for Uber (but not for drivers). "There will be significantly more supply than needed for quite some time" thanks to all the layoffs, Cox said. "That will likely have an impact on driver incentives, in a positive way for the ride-sharing companies."
- So yes, there will be pain. But "I also think it leads to some potential for significant long-term gain," he said.
Cox was recently appointed COO of Routable.ai, which develops ride-sharing logistics software. The company was born out of MIT research that found an algorithm to make vehicle-routing more efficient.
- "I don't think it makes sense for every transportation agency and operator in the world to build this" tech by themselves, Cox told me. "I don't think they'll be able to, and … I don't think it makes sense from a cost perspective."
- So Routable licenses out its tech to transit operators instead. It's proving particularly useful in the current situation: Routable is working with a U.S. transit authority to model how many buses it will need when capacity restrictions are imposed.
The pandemic has increased governments' urgency for this sort of tech, Cox said.
- They were already starting to think about mass transit problems anyway, he said. But "they're in more need" now.
- "The reduction in sales tax they get from less demand ultimately pushes them more towards solving these sorts of problems," Cox added.
- "It is particularly troubling that this merger is being contemplated during a pandemic, when consumer demand has increased and when restaurants are more desperate for revenue than ever." — Democratic lawmakers, including Sen. Amy Klobuchar, are worried about the Uber/GrubHub deal.
- "The asymmetry between tech profits and the public interest needs to be corrected." — Stanford Cyber Policy Center's Marietje Schaake thinks big tech companies need to pay more tax.
- "We've chased unhealthy growth over the years, and Google and other performance marketing channels have tried to disintermediate us, and we've made some not terribly smart choices along the way." — Expedia CEO Peter Kern was blunt about the company's problems. It reported a 15% year-on-year drop in revenue.
- "There are many job listings, but no one on my team that I know of has gotten any serious offers." — Laid-off Uber employee Asa Shoemaker said it's hard to find new work.
- "While we have had our occasional differences, I have a close and collaborative relationship with Rajeev [Misra], including my involvement with many of the Vision Fund's largest portfolio companies." — SoftBank's Marcelo Claure downplayed new Bloomberg reports of a rift between the executives.
The TikTok playbook
When TikTok hired Disney's Kevin Mayer as its new CEO, everyone knew it meant business. Today on Protocol, Chris Stokel-Walker explains just how much business. Chris reports that the company is rolling out its India-playbook to the U.S.: a carefully honed strategy of ad-fueled growth to get things started, an influencer network to improve the platform's content, and then a prominent exec hire with experience in the local market to help manage its reputation. The similarities are eerie: TikTok's India boss is a Disney veteran, too.
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