Proptech’s big problem

Protocol Index

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.

Layoff Watch

Today's News




Diving Deeper

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.

Closing Bell

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?

Thoughts/feedback/tips? Email me — — or anonymously contact Protocol. And subscribe to get Index in your inbox each morning. Thanks for reading, see you next week.

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