Protocol Index: An IPO, in this economy?
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Protocol Index: An IPO, in this economy?

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: Airbnb's "tone deaf" layoffs, Rackspace wants to brave the IPO market, and Quest thinks SoftBank isn't an "experienced operator."

Layoff Watch

  • From Protocol: Airbnb laid off contractors and postponed summer internships. One employee told Protocol that CEO Brian Chesky's announcement was "the most tone deaf, bizarre Q&A format I've ever seen."

Today's News

As of 4:15 a.m. PDT: Nasdaq Futures: 2.25% | Euro 600: 3.35% | Nikkei: 3.15% | Hang Seng: 1.56%




Everyone's Thinking About

An IPO, in this economy?

Rackspace is reportedly considering a, how to say it … rather bold move in the coming months. Reuters reported yesterday that the company confidentially filed for an IPO, and its owner, Apollo, apparently plans a stock market debut just as soon as the current volatility subsides.

That is contra to almost every other company, from Airbnb to Stripe, with planned offerings, which all justifiably think current economic conditions would be ruinous.

But it kind of makes sense for Rackspace. Reuters reports that the IPO would value the company at more than $10 billion, an awful lot more than the $4.3 billion Apollo paid for it in 2016.

  • It would be riding a recent surge in cloud stocks, one that has seen its competitor Fastly up 14.5% so far this year, for instance.

For Apollo, this could be a fairly easy win. Reading through its portfolio offers a list of businesses that aren't doing too well right now: Caesars Entertainment, Chuck-E-Cheese, an insurance firm that specializes in … northern Italy. Ouch.

  • Flipping a company that's seen a boost from coronavirus could realize a return at a time when one's sorely needed.

But it's risky. With markets this volatile and no return to normality in sight, that $10 billion valuation is a moving target. So judging when stability has returned to the markets will be crucial — but by no means straightforward.


  • "We have seen anecdotal evidence that advertising spending is dropping precipitously." — Wedbush, lowering its estimates for Facebook's first-quarter performance.
  • Apple "isn't immune to worldwide economic trends." — Tim Cook reportedly admitted to employees worried about job cuts that Apple was fallible, but also reassured them that it was currently in a strong financial position.
  • "We believe BlueJeans brings a mediocre product to VZ Enterprise whose sales force we view as weak." — Rosenblatt's Ryan Koontz doesn't think Zoom needs to worry about Verizon's latest purchase.
  • "One thing we've learned from the COVID-19 crisis is how important Amazon has become to our customers. We want you to know we take this responsibility seriously." — Jeff Bezos, writing in his annual letter to shareholders, where he also said Amazon is considering regular coronavirus testing of all employees.
  • "Post WeWork, investors are turning to experienced operators to identify and guide start-ups." — Quest Ventures' Jeffrey Seah, on why Kazakhstan's government decided to invest with Quest rather than SoftBank.

Diving Deeper

Looking beyond the Valley

We've talked a bit about what this crisis might mean for the distribution of the tech workforce: whether all this remote work might persuade people they don't need to be in California. In Protocol today, Levi Sumagaysay reports that might just happen.

  • "Anecdotally, we're hearing that large companies are definitely going to persist" in letting employees work remotely, Chris Herd, CEO of remote tool startup Firstbase, told Levi.
  • And AOL co-founder Steve Case said he hopes this period of reflection might lead people to move back to where they grew up.

But that's no sure thing. Big tech companies are unlikely to abandon their expensive campuses altogether.

  • And it's hard to replicate the Valley's network, the Institute for the Future's Marina Gorbis told Levi.

Perhaps more likely is a realignment of commutes. If working from home a few days a week becomes more common, people might not bother living as close to their offices.

  • "The downtown San Francisco real estate market will get killed," said Nicholas Bloom, a senior fellow at the Stanford Institute for Economic Policy Research.

Are you rethinking where you'll live after this? I'd love to hear from you:

Closing Bell

It's all about who you know

I've just started reading Sarah Frier's excellent new book, No Filter, and it ties in to Gorbis' point about professional networks above. I didn't know how much of Instagram's early success was driven by the people Kevin Systrom bumped into at various jobs, coffee shops, and parties. Creating that serendipity is much harder to do now everything's virtual — but people are trying. Chapter One's Jeff Morris Jr. is making a public list of people looking to start companies right now, to help them find co-founders and investors. I bet we'll see at least one $1 billion company come from that.

Thoughts/feedback/tips? Email me — — or anonymously contact Protocol. And subscribe to get Index in your inbox each morning. Have a great weekend, see you Monday.

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