April 16, 2020
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: Vast Data tells us what it's like to become a unicorn right now, TSMC's earnings were a mixed bag, and how one startup is looking at shadows to work out oil demand.
What Matters Today
- Just now: 5.2 million people filed for unemployment last week. That means all the jobs added since the last financial crisis have been wiped out in the past month.
- 8:30 a.m. PDT: Luxury conglomerate LVMH reports earnings after the French market closes. It could give a sense of how fellow luxury brand Apple performed last quarter, especially across Asia.
- 7 p.m. PDT: Chinese GDP numbers for Q1 will be published, alongside March retail sales and industrial production data. Economists expect a 6.5% year-on-year contraction in GDP. Look out for the tech manufacturing numbers, which could indicate what global demand was like last month, as well as tech retail data that'll show how the local recovery's fared.
- Carta laid off 161 people. It is also reportedly seeking to raise $200 million at a $3 billion valuation.
- GoPro said it would cut more than 20% of its staff and said it was shifting to a D2C strategy.
- Opendoor, which is backed by SoftBank, laid off over 600 employees, 35% of its staff.
- Zume, which is also backed by SoftBank, laid off around 200 people, two-thirds of its staff.
- View, which … yes, is also backed by SoftBank, laid off an unknown number of employees.
- Envoy laid off 30% of its staff, around 60 people.
- Sundar Pichai said Alphabet will slow hiring this year.
As of 5:35 a.m. PDT: Nasdaq Futures: 1.12% | Euro 600: 0.74% | Nikkei: -1.33% | Hang Seng: -0.58%
- Lyft started providing meal and grocery deliveries in certain U.S. cities, including San Francisco.
- Instagram launched new features to help businesses promote gift cards from Kabbage, Raise, Square, and Yiftee.
- GE and Microsoft launched patient monitoring software for COVID-19. They will waive all customer charges except installation fees until 2021.
- U.S. non-store sales, which largely comprise ecommerce, were up almost 10% year-on-year in March.
- Riot Games' new title, Valorant, will require tournaments to disable blood visuals to appease sponsors.
- Google Play is launching a Kids section which will feature "Teacher Approved" apps.
- New York state manufacturers expect their technology spending to plummet over the next months.
- PlayStation 5 production will reportedly be lower in its first year than it was for the PS4, with Sony apparently expecting the console's high price to weigh on demand.
- Oyo reportedly wants to move some Japanese staff onto SoftBank's payroll.
- After France said Amazon could only ship essential items, it closed its French warehouses altogether while it rushes to comply with the demand.
- Robinhood is reportedly raising $250 million at an $8 billion valuation, with the round led by Sequoia.
- Airwallex raised $160 million at a $1.8 billion valuation. Salesforce Ventures participated in the deal.
- Samsung will use Xilinx chips for its 5G networking equipment.
- Healthtech company Medopad acquired BioBeats and Tarilian Laser Technologies for undisclosed prices, and has rebranded to Huma.
Minting a unicorn amid coronavirus
A new unicorn was born today: Vast Data announced a $100 million series C round at a $1.2 billion valuation. The company makes high-capacity flash storage that it says is affordable enough to replace traditional enterprise hard drives.
I caught up with founder and CEO Renen Hallak to find out what it's like to raise money in this turbulent period.
- "We weren't actually looking" to raise, Hallak told me. "This was inbound interest" that Vast received earlier this year. Once the economy started to head south, Vast realized it should seize the opportunity.
- "Now is a good time to raise money, because we don't know what the markets will be like in the future," Hallak said.
Vast closed the round just last week, but Hallak said he hadn't seen any nerves from investors.
- "A couple of these investors were only brought in very, very recently, so after the market shifted," he said. But "we have not seen any difference in investor behavior before or after."
Even so, raising right now is completely different to the way it was before.
- "A couple of these new investors I haven't met in person — everything was done either on the phone or on video calls," Hallak said. He likes that though, calling it "surprisingly efficient."
- "I think investors get the feel for the team over video calls not as good as face to face, but almost as good," he added.
The money obviously puts Vast in a strong position right now. The company's not spent its $40 million series B round yet, so it now has a "war chest to go out and take over the world," Hallak said.
- "Most important is not to necessarily use all of this money, but to show customers that we are well capitalized, and we will be here for five, six, seven years from now," he added.
- What is spent will go toward building out Vast's salesforce and investment in R&D. Acquisitions aren't in the works, but they're "a possibility."
For now, Vast is seeing if it can help tackle coronavirus: It's donated systems to "universities and research institutes in the Boston area."
- "We have been impacted perhaps not quite as much as some of the others in the travel and tourism space." — Airbnb's Chris Lehane told Bloomberg that its recent fundraising was an attempt to come out of the crisis in a strong position.
- "Where things are right now, the IPO market is effectively closed." — Snowflake CEO Frank Slootman told Protocol's Tom Krazit it's not going public anytime soon.
- "The market hasn't fully factored in the uncertainties or potential risks in terms of earnings downgrades." — JPMorgan's Tai Hui thinks investors have yet to realize how bad things are.
- "There isn't a one-size-fits-all answer to returning to the office. It won't be like flipping a switch." — HP Chief Human Resources Officer Tracy Keogh told Protocol that reopening offices might not be as straightforward as you imagine.
- "We are positive on the iPhone SE [release] and see a larger TAM for the product than in 2016." — Deutsche Bank's Jeriel Ong thinks the new iPhone could help offset the company's store closures.
Our first look at tech's first quarter
Chip maker TSMC reported earnings today, offering our first glimpse at how the tech industry fared in the first three months of the year. It's a mixed bag.
- Profit almost doubled from a year earlier, thanks to strength in high-performance computing demand.
- But TSMC's smartphone revenue was down 9%, which doesn't bode well for Apple and Samsung's financial results.
More interesting were the forecasts for the rest of the year.
- TSMC forecasts 30% revenue growth for this quarter, and it said it still plans to invest $16 billion in its business this year.
- But it lowered its forecast for the rest of the year, from over 20% to "mid-high teen" growth.
"We don't see any significant reduction in our customer demand," CEO C.C. Wei said. "But we do expect the end-demand will have some impact in the second half of this year."
- That suggests we might have to wait a while to see the full impact of this downturn. And when it does come, it's not going to be pretty.
Also: Reuters reported this morning that Huawei plans to move production away from TSMC to SMIC, in response to anticipated U.S. restrictions.
Seeking answers in the shadows
Measuring the economy is pretty hard: Most official releases tend to tell you what's already happened, not what's happening right now. But as Protocol's Hayden Field reports, there's a whole industry built around using machine learning to provide "nowcasts." My favorite is Complete Intelligence, which analyzes the shadows of floating oil tanks on satellite images to figure out how much oil is being stored. Reserves are predicted to have increased by 5%, in case you were wondering.