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Protocol Index: VCs have time on their hands

Protocol Index

Good morning! This Wednesday, Airbnb's layoffs suggest it might yet survive, everyone's reporting slow user growth, and pitch deck data suggests VCs are still shopping. Want Index in your inbox each morning? Subscribe here.

What Matters Today

  • Just now: Shopify reported earnings that beat expectations. But it suspended its financial outlook, saying there's too much uncertainty.
  • 1:30 p.m. PDT: Lyft's earnings won't be pretty. Its lack of a food-delivery business means it won't see any uplift, but it may have fared better than Uber last quarter: Wedbush analysts note that Uber is exposed to Europe and Asia, which experienced lockdowns earlier in the year. Still, they expect a 36% year-on-year drop in Lyft's revenue.
  • 2 p.m. PDT: PayPal's earnings could mark it as a major beneficiary from the forced shift to ecommerce, though we'll also see if consumer spending has held up in recent weeks. Reporting at the same time is Square, which is more exposed to physical retail. As MarketWatch notes, both are expected to discuss their roles as Paycheck Protection Program lenders.
  • 2 p.m. PDT: Twilio executives will talk through its earnings, which will show how badly it's been hit by tanking demand for its biggest consumer-facing customers (Uber and Lyft included). CEO Jeff Lawson recently told me Twilio's customer base was diverse enough to withstand the fall: We'll see if that's true today.
  • Also reporting today: T-Mobile, Etsy, Peloton, Sonos and Zynga.

Layoff Watch

  • Although overall job openings continue to decline, tech postings are on the up: Glassdoor reports a 4.9% increase between April 13 and April 27.


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Today's News

As of 4:30 a.m. PDT: Nasdaq Futures: 0.82% | Euro 600: 0.30% | Nikkei: -2.84% | Hang Seng: 1.13%




  • Sinch acquired SAP's Digital Interconnect business for $250 million. I'm talking to Sinch's CEO tomorrow — tell me what you want to know:
  • Magic Leap is reportedly in talks to raise $100 million from a "major health care company," rumored to be Zimmer Biomet.
  • Nokia said it would buy back its bonds but plans to issue new ones (presumably at a lower rate).

Everyone's Thinking About

How Airbnb finessed its layoffs

Airbnb announced yesterday that it's cutting 1,900 jobs, around a quarter of its workforce, as it forecasts 2020 revenue will be less than half of 2019's.

  • It's a sign of just how much trouble the company's in, despite its massive cash pile (which has been augmented in recent months by even more cash).
  • "We are collectively living through the most harrowing crisis of our lifetime," CEO Brian Chesky wrote in a memo to employees.

What's particularly interesting here is the way the layoffs are structured.

  • "When travel does return, it will look different," Chesky wrote, predicting that demand will increase for domestic, affordable travel that offers "human connection." In other words, Airbnb's bread-and-butter.
  • So the company's scaling back on everything that isn't that. It's pausing its transportation efforts and TV production, and it's reducing investment in its hotel booking and luxury property businesses.
  • If Chesky's right about the direction of travel (sorry), Airbnb's poised to come out on top. And other companies are going to be really hard-hit — think Expedia and

The other notable thing is how these layoffs were handled. Chesky wrote a long, thoughtful note to employees outlining the reasons for the decision, and he said, where possible, affected people were told about the layoffs in 1:1 meetings.

  • And Airbnb was very generous with severance packages, offering at least 14 weeks of pay and a year of health insurance, dropping equity cliffs, and letting employees keep their MacBooks. The company has received praise for all this, helping it turn what could have been a PR disaster into something a bit less awful.
  • Oh, and the company provided the press with his memo ahead of time (you can read it here), meaning it really did get ahead of the narrative. Smart!


  • "In the past, we used diversity to survive. I want diversity to be a strength." — Sony CEO Kenichiro Yoshida thinks it's good that Sony makes more than just consumer electronics.
  • "This is the first time we have engineers looking for jobs and reaching out versus the other way around, where you are actively begging them." — Lerer Hippeau Ventures' Amanda Mulay says the startup hiring market is changing.
  • "Everything has to line up perfectly right now. Hard to get it just right." — Haystack's Semil Shah says it's a rough time to be an early-stage investor.
  • "You're going to have winners and losers, and quite a few losers … The crisis is going to massively impact the fintech sector." — Forrester Research's Aurelie L'Hostis thinks Revolut could be one of the winners.
  • "I'm not a believer in saying only that the big will survive: I think you're going to see small- to medium-sized companies do this extremely well." — PwC's Tim Ryan told Protocol that he thinks companies' management quality matters more than size right now.
  • "Long term, we do expect Apple to open up." — Spotify CEO Daniel Ek thinks Spotify's antitrust complaints will lead to change. He also said he expects Spotify's ad revenue to soar.


VCs have time on their hands

We all know the fundraising market is a bit messy right now, but some data suggests it's not as bad as you might think. DocSend monitors founder and VC activity on its platform and has seen remarkable stability.

  • "When this started we actually saw a pretty big plunge," DocSend CEO Russ Heddleston told me, with founders putting pause on sending out pitch decks. But founders are back to pitching, and VCs are reviewing those pitches.
  • "VCs are spending even more time than they were in the last two years" looking at pitch decks, Heddleston said. And founders are sending more links than they historically did, too.
  • Heddleston's explanation for the VC interest? If you're a VC, "you're stuck at home … trying not to lose your sanity," and what else is there to do except read pitch decks? Interestingly, the amount of time VCs are spending on decks dropped slightly last week — perhaps suggesting some element of lockdown fatigue.

On the startup side, Heddleston thinks there's a divide.

  • "People who can afford to wait are waiting," he said, because they don't want to take a haircut on valuation.
  • But there's an increase in companies that do need to raise, because of the crisis. Those two groups "kind of balanced out."

For startups that do need to raise, Heddleston thinks investors are looking for a couple things.

  • "If you're raising money, they want to see that you've already cut enough that you don't necessarily need their money to survive. People get nervous that they're putting money in to keep a company alive," he said.
  • And startups need to show some awareness of how the downturn is affecting their business and outline how they're responding to that.

The main thing that's changing is timing: "The number of meetings will probably go up, because it'll just take longer to get to know each other."

  • That means startups need to be prepared for an already long process to get even longer.

Closing Bell

Think before you tweet

Twitter said yesterday that it's testing a new feature that'll prompt users to rethink their messages before they tweet anything with "language that could be harmful." Hopefully forcing people to consider the consequences of their actions will help reduce the amount of hate. I'd quite like them to expand the feature, too: It needs to warn me not to post bad jokes so I don't publicly embarrass myself.

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

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