Protocol Index: What are investors looking for right now?

Protocol Index


Good morning! Welcome to Protocol Index: your daily guide to how markets and economics are affecting the tech industry.

With coronavirus hitting technology and the wider economy hard, we thought the time was right to equip you with the knowledge required to navigate this uncertain time. I'm Shakeel Hashim, and I plan to keep you informed on the financial movements that matter to tech during this crisis via this pop-up report. If you'd like to get Index in your inbox every morning, sign up here. And please send any feedback about what we should be covering, and how, to me:

Anyway, on with today, including yet more problems for SoftBank, a frankly horrific wave of layoffs, and why Tony Fadell is still feeling good.

What Matters Today

  • 7:30 a.m. PDT: The Dallas Fed manufacturing index for March will indicate just how much U.S. manufacturing has contracted. Trading Economics expects it to drop to -6, from February's 1.2.
  • 4:50 p.m. PDT: Japan's retail sales data for February will show whether tech sales fell, as well as giving a general sense of consumer spending.
  • 6 p.m. PDT: China's business activity indexes will show how its tech sector has fared this month, after last month's contraction.

Layoff Watch

The bigger picture: Salary negotiation startup Candor has started tracking layoffs and hiring freezes in tech-linked roles. According to Candor, so far 131 companies are laying people off and 484 have frozen hiring. And Protocol's Lauren Hepler spoke to the Boston startup behind the Layoff List, which has seen traffic to its firings index surge by 2,000% over the last two weeks.

Tip us: If you hear of layoffs we should know about, you can anonymously contact us.

Today's News

As of 3.45 a.m. PDT: Nasdaq Futures: 0.45% | Euro 600: -0.59% | Nikkei: -1.57% | Hang Seng: -1.32%




Diving Deeper

Some tech is more equal than others

Everyone's getting hammered in this crisis, but some are doing much worse than others. In general, tech is doing better than the broader market: So far this year, the S&P North American Expanded Technology Sector Index is down 15%, versus the S&P 500's 21%.

  • That's not too surprising — the big tech companies have a ton of cash, can weather the crisis, and their revenue isn't going to be that badly hit. Plus they had a huge rally in January, so they've had further to fall.

More interesting are the wildly different performances within tech, which have revealed just how cyclical certain tech sectors are. And a new survey from Wolfe Research published Friday showed where investors' heads are at these days.

  • When Wolfe last polled investors about tech sectors in December, they were most bullish about services and software.
  • Now, software's looking less appealing: Forrester Research thinks software spending will remain flat this year, while services spending could contract.
  • Instead, investors are now keen on "value sectors" like hardware and semiconductors — which Nvidia's successful $5 billion bond sale last week is testament to.
  • Wolfe itself is more specific: It doesn't want to hold hardware, but says chip stocks are set to succeed. It's just unsure about timing.

Tech as a whole is expected to outperform the wider markets this year, according to 70% of Wolfe's survey respondents. But such a dramatic shift in sentiment within the sector over such a short time period shows that it's hard to predict exactly who will benefit from that … well, if not success, how about we call it lack of failure.

Relatedly: Protocol's Biz Carson takes a look at the kinds of startups most at risk during the COVID-19 outbreak.


  • "The best time to invest is in a downturn." — Tony Fadell is looking for opportunities amid the crisis.
  • "Early stage businesses have seen a swift and severe contraction of investor interest." — Founders Factory's Brent Hoberman, asking the U.K. government to start investing in startups.
  • "You can't go public right now." — An anonymous head of equity capital markets, speaking to the Financial Times about startups' IPO prospects.
  • "Given the potential length and depth of downturn, it is hard to imagine overinvesting in pandemic-related investment." — Yale economist William Nordhaus on how the government should respond to the virus.
  • "Lending these companies more money will … make the companies even more vulnerable to failure in the long run." — Guggenheim's Scott Minerd, on his concerns about overleveraged companies.

Closing Bell

If everything changes, what stays the same?

According to Podtrack, the number of unique podcast listeners has dropped by around 20% this month, a decline it attributes to everyone turning their commute time into "I will not get out of bed until my first Zoom call" time. Now, that might go back to normal once we're let out again — but what if it doesn't? There are a lot of behavioral changes that could feasibly persist beyond quarantine: less business travel, lower demand for offices, and maybe a greater tolerance for silence and boredom. We talk a lot about tech's potential to benefit from that (Zoom! HQ Trivia!) but less so about how the way we live in the post-pandemic world could hit products that were built for the old world (TripActions, Quibi, WeWork). One thing is certain: Those companies will be spending some of this lockdown time thinking about how they'll pivot once we're out the other side.

Thanks for reading this first edition of Protocol Index. I hope you've found it useful, and would really appreciate any feedback you have: And if you'd like to get Index in your inbox every morning, sign up here. Have a good day, see you tomorrow.

Correction: An earlier version of this articles misstated the size of a potential funding round in Plenty being led by SoftBank. The funding round could be worth as much as $100 million, not $100 billion. The article was updated on March 30.

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