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May 26, 2020
Good morning! I hope you had a lovely long weekend. This Tuesday, Slice's CEO gives his outlook for the future of food delivery, governments might make tech pay for the COVID recovery, and room service involves robots now. Want Index in your inbox each morning? Subscribe here.
What Matters This Week
- We've got a slew of enterprise tech earnings this week, with Workday, Autodesk, HP, Box and Poly all reporting Wednesday. Okta and Salesforce are likely to be highlights on Thursday, with the latter a bellwether for how software spending is holding up. Marvell, Dell, VMware and Zscaler also report on Thursday.
- Things are quiet on the data front, though April's personal spending and income report, out Friday, will give a sense of the economic contraction ahead.
- IBM is embarking on widespread layoffs, potentially affecting "thousands" of people, according to one affected worker.
- HPE said it would cut employees' salaries, alongside a broader "cost optimization" plan that could include layoffs. The news came as the company announced disappointing earnings.
- 600 Uber employees were laid off in India.
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- Shopify is switching to "digital by default" for all employees, allowing them to permanently work from home.
- Apple is reportedly looking to acquire exclusive podcasts.
- Audible, owned by Amazon, is looking to acquire more celebrity-hosted podcasts, too.
- Nvidia's forecast for the current quarter beat estimates. The company reported an 80% year-on-year surge in data center revenue.
- Pinduoduo beat revenue estimates thanks to surging ecommerce demand in China.
- So did Alibaba, though its shares dropped after its forecasts came in below expectations.
- Ant Financial made around $2 billion in profit in the last quarter of 2019.
- Meituan Dianping's revenue slid less than expected, with the company saying food delivery orders were now only down 10% from before the pandemic.
- Tencent plans to invest $70 billion on tech infrastructure over the next five years.
- JioMart rolled out across 200 Indian cities and towns.
- Amazon is reportedly moving Prime Day to September to help cope with demand. It's also reportedly planning a "Summer Sale" to help sellers offload inventory.
- Uber said it's spent $19 million on financial assistance for its drivers and has earmarked $50 million for PPE for them.
- Amazon, Microsoft and Google are reportedly providing web services to Chinese firms that have been blacklisted for their alleged involvement in surveillance of Uighurs.
- The Senate passed new legislation that would prevent Chinese companies from listing on U.S. exchanges unless they demonstrate they're not under the government's control.
- The U.K. reportedly plans to completely cut out Huawei from its 5G network.
- SelectQuote raised $570 million in its IPO. The insurance comparison site's shares jumped 35% upon the listing.
- KKR invested $1.5 billion in Reliance Jio Platforms.
- Tencent bought a 20% stake in Marvelous, a Japanese game developer. Marvelous' shares jumped 17% on the news.
- SoftBank's Z Holdings reportedly plans to issue $1.9 billion in new bonds next month.
- Bolt, an Estonian ride-hailing app, raised $109 million at a $1.8 billion valuation.
- Baidu is reportedly considering delisting from the Nasdaq and listing in Hong Kong instead.
- NetEase and JD.com both reportedly plan to list in Hong Kong next month. JD reportedly seeks to raise up to $3 billion.
- Magic Leap reportedly raised $350 million, halting layoffs.
Food delivery might become a luxury
Slice isn't like other food delivery apps. While Uber Eats and DoorDash handle delivery themselves, Slice is more of a pure tech company: It provides software that helps pizzerias do online delivery, letting them use their own delivery drivers. Its CEO, Ilir Sela, recently explained why that is.
- The Uber/DoorDash model "works in highly dense markets where the consumer is less sensitive to price," he told me. Manhattan is a perfect example: People are willing to pay more for convenience.
- "Can you make that work on a national scale in the U.S.? I don't know about that," Sela said.
- What consumers want isn't really possible, Sela suggested. If we want convenience, someone has to pay for it — either the restaurants or the consumers.
- "When you cap the cost on the supply side, on the restaurants, then I think it's just organically going to shift the burden on the consumer even further," he said. "I think delivery fees will go up." That could turn Uber and DoorDash into more of a luxury service, rather than something "the average American … [can] really use on a frequent basis."
That's part of why Slice is going after a very specific market: pizza. Not only is it delicious, it's also economically better.
- "Pizzeria pricing has the price of logistics built in, right?" It's an industry built around delivery, Sela said. So Slice thinks there's plenty of money to be made in bringing offline pizzerias online.
- Slice wants to have a "business-in-a-box" offering, Sela said. Pizzerias can focus on what they do best — making pizza — while Slice uses its expertise to handle other functions, like advertising.
- Sela calls it a "reverse franchise model," not unlike Domino's. But Slice wants to introduce economies of scale while maintaining restaurants' individual brands and menus, rather than homogenizing them like Domino's.
Slice recently raised funding from KKR, which it plans to use to build out its offering and add more pizzerias to its platform. One thing it certainly won't be using the money for? Hiring drivers.
- "We do not have any plans in becoming a three-sided marketplace," Sela said.
We talked about much more, including what pizzas travel well and how COVID is affecting pizzerias. Check out the full interview.
- "We expect that there will be more push for unionization when we get to the other side of this." — Stuart Applebaum, president of the Retail, Wholesale and Department Store Union, thinks this crisis could lead Amazon workers to unionize — and other experts agree.
- "We're seeing signs of the IPO market reopening and it is being led by growth equity." — Citi's Paul Abrahimzadeh thinks money is starting to flow into new listings, including tech companies.
- "You don't get to shake someone's hand and look them in the eye, but you do get to speak to a lot more people. That's a trade-off that people like." — BNP Paribas' Andreas Bernstorff thinks the virtual IPO roadshow might stick around.
- "If you feel like your timing is perfect, you're too late." — Square's Jim McKelvey thinks recessions are a great time to start a company, and you'll know you've timed it right if it feels too early.
- "Samsung is definitely a formidable rival for TSMC … [but] no single tech company or chip developer in the world will hope to source many of crucial chip components from its rival." — Cornucopia Capital's Eric Chen thinks Samsung's electronics business might hamper its contract manufacturing plans.
- "The self-operated business model helps JD to minimize the negative impacts from COVID-19 … compared to marketplace-model ecommerce such as Alibaba and Pinduoduo." — Guotai Junan's Danny Law thinks centralized ecommerce can perform better in this environment.
- "We see digital goods/services tax conversations advancing most rapidly in Europe." — Eurasia Group's David Livingston thinks governments might tax tech companies to pay for the COVID recovery — something which is already being proposed in the Philippines.
Room service is robots now
I spent basically my entire weekend on TikTok, which I am newly addicted to. In an attempt to justify that time as being "productive," here's a cool thing I found: a Savioke robot delivering room service at an Indiana Holiday Inn. It's the cutest thing ever — it says "Yay!" when you give it a five star rating and even says "Bye!" when it leaves. I'm very excited for my next hotel trip.