April 20, 2020
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Today: The trends set to dominate this earnings season, even food-delivery startups are struggling, and Marc Andreessen wants you to BUILD.
As of 4:15 a.m. PDT: Nasdaq Futures: -0.90% | Euro 600: -0.38% | Nikkei: -1.15% | Hang Seng: -0.21%
I hope you like numbers, because you're about to be bombarded with them. Tech earnings season kicks off in earnest this week, with Netflix, IBM, Intel and Snap all reporting. Many other big names publish theirs next week.
Here, I'm going to focus on what the results tell us about the tech industry as a whole, particularly when it comes to startups. Here's what I'll be looking out for:
As a sector, tech's expected to fare relatively well: Investors broadly expect flat earnings growth, compared to huge plunges in other sectors. If that materializes, it means that tech valuations could remain relatively insulated from this crisis, as investors flock to its relative safety in a time of disaster everywhere else.
On Friday, the U.K.'s Competition and Markets Authority provisionally approved Amazon's investment in food-delivery startup Deliveroo. That's great news for Deliveroo — but the reasons the CMA gave for approving the deal are sobering for everyone else.
This doesn't bode well for the big U.S. delivery companies. GrubHub, DoorDash, and the like are probably in a similar position to Deliveroo. Growth in Uber Eats might also not offset the parent company's massive drop in rides.
The big takeaway (sorry) is this: Deliveroo, despite its $1 billion in other fundraising, needs an extra $575 million to get through this crisis. What happens to everyone who doesn't have access to that kind of cash?
So said Marc Andreessen — in all caps! — in a widely-shared blog post published this weekend. He lambasted institutions for underfunding hard problems like healthcare, education, and housing. The problem isn't money, he argued: "We have the money to wage endless wars in the Middle East and repeatedly bail out incumbent banks, airlines, and carmakers." (Apropos of nothing, Andreessen Horowitz has $2.7 billion under management, some of which is invested in … Soylent, Lime, and that site you use to look up song lyrics?)
Look, maybe this does mark a change in what Silicon Valley is interested in. Maybe VCs have woken up to the biggest societal problems. And maybe they'll start funding companies that can help solve them! But equally, VC Twitter also spent the weekend fawning over an invite-only group phone call app called "Clubhouse." So let's just say I'm not getting my hopes up yet.