April 17, 2020
Photo: Chris Li/Unsplash
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."
As of 4:15 a.m. PDT: Nasdaq Futures: 2.25% | Euro 600: 3.35% | Nikkei: 3.15% | Hang Seng: 1.56%
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.
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.
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'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.
But that's no sure thing. Big tech companies are unlikely to abandon their expensive campuses altogether.
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.
Are you rethinking where you'll live after this? I'd love to hear from you: email@example.com
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.