Protocol Index: Automation could make some job losses permanent

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: Adam Neumann's down $13.5 billion, Airbnb's down $14 billion, and robots may really be coming for our jobs now.

What Matters Today

  • 5:30 a.m. PDT: U.S. non-farm payrolls, average earnings, and unemployment rate data is published. It's not looking good, obviously: Goldman Sachs, which has analyzed commuting patterns, estimates non-farm payrolls to have declined 180,000 in March. The data won't show what happened in the final weeks of March, when COVID-19 disruption really started to hit; those losses will show up in April's report, which Goldman says will "likely show job losses in the millions."
  • 6:45 a.m. PDT: Markit releases its final U.S. services PMI, closely followed by ISM's figures at 7 a.m. They will include sectoral breakdowns, and an indication of how exports are faring in the tech industry. This morning, comparable data in the U.K. was revised lower, though tech services did show some signs of growth.

Layoff Watch

Today's News

As of 3.50 a.m. PDT: Nasdaq Futures: -0.95% | Euro 600: -0.64% | Nikkei: 0.01% | Hang Seng: -0.19%




Everyone's Thinking About

Startups could get bailed out

Remember the affiliation rule that was set to exclude VC-backed startups from the coronavirus stimulus package? Turns out that problem may, possibly disappear.

  • House Minority Leader Kevin McCarthy told Axios that "this is going to be solved," having spoken to Treasury Secretary Mnuchin about it.
  • Rep. Ro Khanna said he hopes that's the case. He told Protocol's Issie Lapowsky: "The VCs will say, First plan: lay off half your employees. Is that what we want? To get the money from the private sector fund who will insist on layoffs?"

Protocol's Biz Carson spoke to VCswho backed up Khanna's thinking:

  • "We're fiduciaries of someone else's capital," said Gaurav Jain, managing partner of Afore Capital. That means they can't send good money after bad.
  • Even if they wanted to, many VCs say they just don't have the resources. "We literally don't have the funds to bridge every single one of our 300 U.S. companies or 450 global portfolio companies," said Lightspeed growth partner Amy Wu.
  • "We need to figure out which portfolio companies we are going to save, and which ones we can't," an anonymous VC added.

Across the pond, meanwhile, the debate still rages about whether governments should get something in return for their support.

  • Most recently, seven U.K. tech bodies have asked the government to set up a £300 million (around $370 million) fund which would take equity stakes in startups.

Be warned: This is all far from over in the U.S., where private equity backed companies — which still appear to be ineligible for the loans — will now look to their owners for help.


  • "Our checks suggest [Roku's 2020] OTT advertising growth could be negatively impacted by 20%, with April and May being the most impacted." — Oppenheimer on the streaming company's murky outlook.
  • "Activity, both in terms of campaigns going live and volumes of investments, has slowed a bit." — Jeff Lynn, chairman of crowdfunding platform Seedrs, said the site's seen a 20% drop in funding.
  • "In a dark environment, [Tesla's] delivery numbers will be a sigh of relief for the bulls." — Wedbush on Tesla's first quarter delivery numbers, which surpassed investors' expectations.
  • "I never thought I'd see such a print in my lifetime." — Pictet's Thomas Costerg, on yesterday's 6.6 million jobless claims.

Diving Deeper

Will everyone go back to work?

With more than 6.6 million people having filed for unemployment in the U.S. last week, it's no overstatement to say that the labor market is set to be transformed like never before in history.

Protocol's Hayden Field and Mike Murphywrote a great story explaining that coronavirus could give automation a huge boost.

In fact, some jobs being eliminated today may never come back, Hayden and Mike report:

  • "If a company lays off half its workforce for the short term and they had automation plans, they may not hire back the entire half of their workforce when things pick up," NYU professor Arun Sundararajan told Protocol.
  • Instead, "they may say, 'Here is a good opportunity to introduce the automation technology without the friction of having to lay off people.'"

This isn't just theoretical. Some startups are already seeing businesses looking to automate.

  • "The thing that we're hearing from customers is many of their budgets have been frozen except for budgets for automation," said Fetch Robotics' Melonee Wise. "We've been fielding a lot of inbound from new customers."
  • Wipro Digital's Rajan Kohli said customers expecting lower revenue in the short- and medium-term are increasingly looking to save costs. With automation cheaper than ever, it's an obvious solution.

But it could all take time, because the companies offering automation solutions also have challenges in the current climate:

  • "Long-term, the future got brighter for us; short-term, it's a challenge," Scott Gravelle, CEO of Attabotics, said. "Venture capital conversations right now have kind of dried up and gone quiet. So that's one problem: Everyone thinks it's a great idea — in the future."

Automation was always a trend that couldn't be stopped. The question now is: How much does the COVID-19 pandemic change the dynamics of its encroachment on labor?

  • Sundararajan explained that the gig economy flourished after the last financial crisis, because people were "more willing to experiment with new ways of earning money."
  • "Through that lens," he added, "I think that there are lots of ongoing technological changes that could be dramatically accelerated by the current crisis."

Closing Bell

Diplomacy via Zoom

Everyone's adjusting to WFH — including the world's most powerful people. On Monday, OPEC+ is hosting a virtual meeting in an attempt to hash out the oil price war. I am fascinated by how that kind of high-stakes negotiation works remotely. Will Saudi Arabia's MBS use Zoom's touch up feature? Will Putin set a bear as his virtual background? Will everyone secretly be DMing each other while the meeting's going on? Let's hope they publish the call recording so we can find out.

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

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