Protocol Index: What Facebook gets from its Jio deal

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: Facebook's made a big bet on India, Twilio's CEO Jeff Lawson told me what startups should be doing, and Netflix and Snap earnings showed the coronabump is real.

What Matters Today

  • 5:30 a.m. PDT: AT&T's earnings offer our first look at how telcos have coped with increased usage over the last couple months. Also look for discussion of how its media properties are faring — and expect lots of hype for HBO Max, which is officially launching next month.

Layoff Watch

  • LendingClub laid off 460 people, around 30% of its staff.
  • Patreon laid off 30 people, around 13% of its staff.
  • Oyo cut the pay of all employees in India by 25%.

Today's News

As of 3:55 a.m. PDT: Nasdaq Futures: 1.05% | Euro 600: 0.96% | Nikkei: -0.74% | Hang Seng: 0.42%


  • The Senate passed a new $484 billion stimulus package, which includes an extra $321 billion for the Paycheck Protection Program.
  • Apple is reportedly facing iPhone production delays for forthcoming devices.
  • And iPhone manufacturers are also reportedly slowing production of current models on the back of reduced demand.
  • Ericsson's earnings beat estimates, driven by demand for 5G equipment.
  • Google Shopping made product listings free.
  • U.S. video game sales were up 35% year-on-year last month.
  • Epic launched Fortnite on the Google Play store, and criticized Google for putting non-Play Store apps "at a disadvantage."


  • Lyft withdrew its 2020 forecast, saying ride volumes started to decline in mid-March and have continued to do so.
  • GM shut down Maven, its Zipcar rival.
  • Alphabet and other tech companies have reportedly halted office expansion plans.
  • Market intelligence firm IDC expects worldwide IT spending to decline 2.7% this year.
  • New immigration rules may make it harder to employ foreign tech workers.


  • Confluent raised $250 million at a $4.5 billion valuation.
  • Epic Games is reportedly looking to raise $500 million to $1 billion at a valuation "significantly higher than $15 billion."
  • Expedia is reportedly in talks to sell a $1 billion stake to Apollo and Silver Lake.
  • Huawei has secured over half of China Mobile's 5G contracts, worth $4 billion.
  • Palantir is reportedly delaying its IPO, which was planned for later this year. Peter Thiel and Alex Karp have sold stakes below the company's $20 billion valuation, The Wall Street Journal reports.
  • Only 44 startups raised money last month, with valuations increasing on average 46% from previous rounds.


Twilio's CEO on surviving a downturn

Twilio's Jeff Lawson tried to raise money at the worst possible time. Back in 2008, he had an investor meeting the morning Lehman Brothers collapsed.

  • "We walk into the meeting, and it's just like, 'Sorry guys, I don't know what to tell you: We're not investing right now,'" Lawson recently told me.

He and his co-founders persevered, and now Twilio's worth $15 billion. But then another downturn hit.

  • Some investors worry that Twilio's more vulnerable to this crisis than most companies. Its biggest customers include Uber, Yelp, and Airbnb — all casualties of the pandemic.
  • But Lawson told me the company's "spent the last several years really minimizing customer concentration" — revenue from its top 10 customers has declined from 31% of Twilio's revenue to 14% in the last four years.
  • And Twilio's strategy of pursuing growth over profits hasn't changed. "What we offer the world is more important than ever," Lawson said. "And so I think it's important that we invest to capture the opportunity."
  • The company's already seen an uptick in healthcare demand, for instance, with text-to-chat tools letting hospitals triage patients remotely.

Having built a startup in the last recession, Lawson has plenty of advice for company leaders today.

  • For one thing, ignore your share price. "The stock price is something that is not in our control … when our stock price has gone up, or when it's gone down, what I'll point out to the employees is, what new information do investors have to value us differently today?"
  • And focus on customers. "Investors, anyone else, they'll fall into place if what you have is a great product that's serving your customers," Lawson said.
  • "An intrinsic drive, a motivation to serve customers, to build products that you feel the world needs — that's what motivates the best entrepreneurs."

You can read our full conversation on Protocol here.

Everyone's Talking About

Facebook's big Jio stake

Facebook announced yesterday that it's bought a $5.7 billion slice of Jio Platforms, taking a 9.99% stake at a $66 billion valuation.

  • Jio Platforms was, until now, wholly owned by Indian conglomerate Reliance Industries. The company runs India's biggest mobile network, with over 370 million subscribers, alongside a range of apps and an ecommerce platform.

So what's in it for Facebook?

  • For one, that ecommerce platform. The recently launched JioMart, which lets small offline businesses sell online, will now integrate with WhatsApp. Only 1.6% of Indian retail is online, and Facebook now has a perfect way to make money off that number as it increases.
  • More broadly, Jio gives Facebook its best chance at becoming a WeChat-esque superapp, by enabling it to offer a range of Jio-provided services on WhatsApp, which is India's most popular messaging service.
  • Facebook was already set to launch WhatsApp Pay in India, but it was going to do so in a very crowded market. Being able to offer services within the app, paid for with WhatsApp Pay, seems like an easy way to boost its adoption.

But it won't be easy to change Indians' shopping habits, or to compete against Amazon and Flipkart. Nikhil Pahwa of the Indian intelligence firm MediaNama said: "I would be surprised if [the partnership] makes a dent." Facebook's bet $6 billion that he's wrong.


  • "We believe Nintendo will be one of the largest digital media services in the world, in a category with the likes of Netflix, Disney+, Tencent Interactive Entertainment and Apple Music." — ValueAct, in a memo seen by Reuters, told investors it's built a $1.1 billion stake in Nintendo.
  • "Globally (and in India) investors have almost shut their doors to new tech bets, especially for any rounds higher than $30-$50 million." — A "top tier fund partner" told The Economic Times that valuations in India could remain low for a year.
  • "There may be a window [for IPOs], the typical post-Labor Day window." — Goodwin's Rick Kline said IPOs aren't entirely off the table this year.

Diving Deeper

The coronabump is real. Sort of.

Earnings reports from Netflix and Snap yesterday told a similar story: Coronavirus has been good to content apps.

  • Snap reported a 20% year-on-year increase in daily active users, and a 44% bump in revenue.
  • Netflix, meanwhile, added 15.8 million subscribers last quarter, more than double its forecast of 7 million.

But both companies warned this wouldn't last: Q1 isn't going to be reflective of the rest of the year.

  • Snap didn't provide guidance, but said that revenue growth had slowed from around 58% year-on-year in January and February, to 25% in March, 15% in early April, and just 11% this week.
  • Netflix was more explicit. "Intuitively, the person who didn't join Netflix during the entire confinement is not likely to join soon after the confinement," the company wrote, warning investors to expect growth to slow later this year.

Analysts seem to agree. As Piper Sandler wrote this morning:

  • "We view the surge in subs for Q1 and outlook for Q2 as a pull forward of subscribers, with increased churn anticipated upon loosening of rules keeping people at home."

The numbers basically confirmed what you would expect: People are subscribing to Netflix now, but might cancel subscriptions when money's tight and we're allowed outside again. And though Snap might be benefiting from increased usage in the short term, what happens when all those people put their phones away and advertisers are nowhere to be found?

  • Content's not the only place where that's true. Texas Instruments said it saw an uptick in demand in March from people worried about component shortages, but it forecast second-quarter earnings below investors' expectations. The worst, it seems, is yet to come.

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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