Good morning! This Monday, Bill Gates is under scrutiny, how the remote-work revolution became a gold mine for anyone wanting an office, the WarnerMedia-Discovery merger that could change the streaming game and what happened to the Colonial Pipeline hackers.
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The Big Story
Bill Gates into the spotlight
The richest person alive has done a surprisingly good job over the years of keeping his personal life private. But as Bill Gates goes through a divorce from his wife Melinda French Gates, some of his past (and not-so-past) actions are coming to light for the first time. Much of what's in these reports is now all too familiar-sounding for powerful CEOs:
- Gates had an affair with a Microsoft employee, which The Wall Street Journal reported led to some company board members deciding Gates needed to step down from the board. (A Gates spokesperson denied the connection.)
- Gates's money manager Michael Larson was also accused of sexual harassment, and French Gates was reportedly unhappy with the way it was investigated and handled. Gates also "pursued women who worked for him at Microsoft and the Bill and Melinda Gates Foundation," The New York Times reported.
- His connection to Jeffrey Epstein has long been public knowledge and a reputational problem for Gates. But The Daily Beast reported that their relationship was much closer than Gates says. (A Gates spokesperson also denied this.)
- In general, most stories characterize the Gates's marriage as loveless and businesslike for many years before anyone actually filed for a divorce.
Though both Bill and Melinda were hugely well-known — even more so as a result of their vaccine work during the pandemic — their day-to-day lives have been largely left private. As divorce proceedings continue, I suspect we're about to learn a lot more about the last 27 years of their lives.
A new Netflix rival?
WarnerMedia and Discovery are merging, creating a new public media giant. It puts together two companies that have largely tried to avoid head-on competition with Netflix — HBO Max with blockbuster movies and ultra high-quality programming, Discovery with the food, house and reality shows that are underrepresented in most of streaming — into a single company meant very much to compete with Netflix.
- AT&T shareholders will own 71% of the new company, which will be led by Discovery's David Zaslav. It's not yet clear what will happen to WarnerMedia's Jason Kilar, who is mentioned exactly zero times in the press release announcing the deal.
- AT&T will also get $43 billion in cash from the deal, if it closes as expected next year.
In a sense, the whole thing is an admission of failure from AT&T, which spent massive sums of money trying to become a media company, only to then turn around and decide it was happy enough being a dumb pipe. (And yes, that's exactly what Verizon just did with Verizon Media Group.)
But as a streaming move, it makes some sense. We're nearing subscription saturation for a lot of people, many of whom were likely to pay for either HBO Max or Discovery+, but not both. And maybe neither, in a world where Disney+ and Netflix exist. The Warner/Discover combo (Discoverer?) has both the breadth and depth to vie for the place as users' second subscription. And as the world goes streaming, that's a strong place to be.
Anybody want an office?
Here's a scenario companies all over the tech industry, especially in Silicon Valley, are facing right now: You've spent the last year working from home, and discovered your team functions pretty well remotely! Plus, people like the flexibility. So you want to lean into the new hybrid future of work.
OK! But you just spent millions, tens of millions, even billions of dollars on office space, and in a market where subletting was once impossibly easy, it's now a lot harder to offload your space.
- 9.7 million square feet of commercial real estate were available for sublease in San Francisco at the end of March, according to Avison Young. The vacancy rate overall in SF has roughly tripled since last year.
- It's a Bay Area-wide problem, but SF has been hit harder than most places. It's not even the top city for office leases anymore, ceding that spot to Seattle for the first time.
- Companies like Dropbox and Airbnb (which have two of SF's coolest and most-loved offices) have taken huge earnings hits related to their real estate. Others are surely coming, as they reassess the value of their HQs.
- Other cities are betting on SF never coming all the way back: Atlanta, Raleigh and even New York City are seeing an uptick in tech-related real estate moves. They all seem to think companies will at the very least shift to having several smaller HQs instead of one Apple-like behemoth spaceship thing.
Here's where things get tricky. Because of all these newly remote companies, this is a historically buyer-friendly moment for tech real estate. Instead of having to use the closet in your VC's office or sublet from a sublet from a sublet from a failed SaaS play, startups and big companies alike will have their pick of the litter for the next few months. And if SF rebounds like many think it will, that real estate could quickly become a huge asset.
This question is tied up in so many others, too. If you're going to be a virtual-first company, does it make sense to pay for an office when nobody might show up? If you do bring people back to the office, do they have to be vaccinated? Do they have to wear masks? And are you ready to sign a 10-year lease knowing exactly how quickly things can change?
By all indications, the recovery is starting. (A space internet startup is reportedly taking over Uber's amazing Pier 70 office, for instance.) Restrictions are easing faster than most people thought, and companies all over the country are thinking about accelerating their return to the office. The opportunity to get your dream HQ at a cut-rate price may only last a few months. If you build an amazing office, will they come?
A MESSAGE FROM AMAZON
A recent study from the University of California-Berkeley and Brandeis University found that when Amazon raised their starting wage to $15/hr, the average hourly wage in the surrounding area rose by 4.7% as other employers followed their lead.
People Are Talking
Reddit is learning monetization lessons from Roblox, Steve Huffman said:
- "There is a similar path for Reddit. It probably won't be around gaming but it will be around community creation and what people can do when they are together."
I … think Elon Musk is serious about Dogecoin being the future?
- "Ideally, Doge speeds up block time 10X, increases block size 10X & drops fee 100X. Then it wins hands down."
Too many companies treat Africa as a single, homogeneous place, AppsTech's Rebecca Enonchong said:
- "A company will try to use the same strategy to enter the market in Côte d'Ivoire as they do in Ghana. They are so different."
Antonio García Martínez fired back after being let go by Apple:
- "Apple was well aware of my writing before hiring me. My references were questioned extensively about my bestselling book and my real professional persona (rather than literary one). This set of prominent Valley VCs and execs are all willing to assert as much under oath."
On Protocol: When he went from Google to government, Rick Klau said he immediately discovered one big shift:
- "When you're a tech company, you can make a decision that I'm only going to focus on a slice of my potential market … We meet the 39.5 million Californians where they are. We don't get to tell them that they have to comply with our demands. We've got to be responsive to where they want to meet us today."
Coming This Week
The Gojek-Tokopedia merger is official. GoTo becomes the largest tech company in Indonesia, and will be led by Gojek's Andre Soelistyo.
It's Epic v. Apple week three! We're getting out of expert testimony and back into executives. A lot has been discussed, and a lot of big questions remain.
Google I/O starts tomorrow, where we'll hear about everything from Android to Search to whatever wacky robot stuff the Google Assistant can do now.
In Other News
- Eyitayo St. Matthew-Daniel is set to be the FTC's new antitrust enforcer, The Information reported. She's currently a criminal antitrust prosecutor at the DOJ.
- On Protocol | Policy: Biden revoked Trump's social media executive order. Protocol previously reported that the order, which asked the FCC to review Section 230, was in response to Twitter's decision to apply fact-checking labels to Trump's tweets.
- BuzzFeed found Joe Biden's Venmo, finding a social graph of his connections and raising privacy concerns about how that was so easy to do. (He uses Venmo to send money to his grandkids, in case you were wondering.)
- On Protocol: Facebook lost its bid to block a data flow inquiry by Ireland's Data Protection Commission. The decision effectively ensures that Facebook will have to dramatically restructure its data storage operation to keep user data from the European Union siloed off.
- On Protocol | Fintech: Marqeta filed for an IPO, and we've got everything you need to know about the payment infrastructure powerhouse.
- The DarkSide ransomware hackers closed up shop, with their servers and Bitcoin seized. It's unclear if authorities were responsible. Crypto compliance company Elliptic found that DarkSide received $17.5 million since March.
- The story everyone was talking about this weekend: The New York Times on the guy who bet everything and then some on Dogecoin, and is still all in.
- Elon Musk appeared to suggest that Tesla will sell all its Bitcoin holdings. Bitcoin crashed accordingly, though recovered a bit after Musk clarified that Tesla hadn't sold any Bitcoin … yet.
Work In The Future
More hours, more work
You know how they say "work expands to fill the time allotted?" Turns out that's one of the stories of the pandemic: University of Chicago researchers found that at one company, employees were putting in about 30% more hours with almost no uptick in the amount of work actually getting done. Which is … not great.
But the study also found that while having more Teams meetings and doing lots of late-night work didn't really improve productivity, carving out more time for focused work made a huge difference. So that's your task for the week: Make sure you and your team all get more uninterrupted, no-meeting-no-Slack-no-nothing time to actually do work. And then quit at 5. Because according to science, nothing good happens after that.
A MESSAGE FROM AMAZON
"Before working at Amazon, it was hard for me to pay my bills on time and save money." Going from $11 an hour at her last job to making more than $15/hr at Amazon meant Kimberly could afford a bigger place.
Today's Source Code was written by David Pierce, with help from Anna Kramer and Shakeel Hashim. Thoughts, questions, tips? Send them to firstname.lastname@example.org, or our tips line, email@example.com. Enjoy your day; see you tomorrow.