Will Cathcart, who runs WhatsApp, is doing whatever he can to keep the Facebook messaging service from crashing under a crush of users. Fidji Simo, who runs Facebook’s main app, plans to give small businesses a way to fundraise through the site. And Vishal Shah, a top executive at Instagram, is making live broadcasting more appealing on the photo-sharing app.
Like most leaders in the tech industry, the people who run Facebook’s highest-profile products have seen their jobs turned upside down over the last few weeks, as the coronavirus pandemic has forced them to ditch plans that now seem irrelevant while turning to other matters that are suddenly immediate necessities. In interviews with The Information, Cathcart, Simo and Shah talked about how their priorities have shifted in the past few weeks. They were less clear about how the economic fallout from the pandemic would hurt Facebook’s advertising business, though it almost certainly will.
The ride-hailing businesses of Uber and Lyft have shrunk by more than half in recent weeks compared with a year ago as a result of the coronavirus pandemic, according to people at the companies with knowledge of the figures.
The overall contraction could worsen for both companies as the pandemic’s toll grows and more people stay indoors. For now, the value of fares Uber and Lyft collect from passengers has fallen by more than 50%. At Uber, the impact on ride-hailing revenue could be somewhat smaller because Uber has been paying drivers a lower share of passenger fares than it did last year. Taking that change into account, Uber’s revenue from passenger rides, after paying drivers, is likely to be less than $450 million a month. That compares with about $800 million in monthly passenger revenue that Uber generated in last year’s first quarter.
Back in the fall of 2018, before it became a global phenomenon, TikTok had a problem: its fanbase of lip-syncing middle schoolers had stopped growing. A big advertising campaign on Facebook, YouTube and Snap to lure older users—which briefly featured scantily clad women—backfired by attracting the wrong kind of people. The app became the butt of jokes. Compilation videos of “TikTok cringe content” circulated online.
One of those compilations came from PewDiePie, the controversial videogamer and YouTube superstar, who broadcast it on his YouTube channel. “I don’t even understand what TikTok is, and I spent hours watching the videos,” PewDiePie, whose real name is Felix Kjellberg, told his 100 million followers. “I still don’t know what you do at TikTok.”
Nick Bastone dives into the way Apple has tried to manage the work-from-home era, where employees have to keep secret products under wraps while working in a non-secretive location. They've also had to deal with the challenges of employees staying put in the U.S., unable to travel to China and oversee manufacturing, even as China's economy comes back online.
Former AOL CEO Tim Armstrong, a veteran digital ad executive, predicts the coronavirus will devastate ad spending more severely than either the 2008 financial crisis or the recession that followed Sept. 11.
And that is despite the fact that people are spending far more time watching TV and streaming video thanks to the quarantines. “For the first time in history, you’re probably going to have the highest point of media usage in the history of the United States and the lowest point of advertising in the U.S.,” said Armstrong in an interview with The Information.
YouTube is planning to release a rival to TikTok, the hugely popular video-sharing app, by the end of the year, according to two people familiar with the matter.
YouTube is currently planning Shorts, its answer to TikTok, as a feature inside its existing mobile app. Shorts will include a feed of brief videos posted by users inside the Google-owned app and will take advantage of the video service’s catalog of licensed music, songs from which will be available to use as soundtracks for the videos created by users, said the people. The move represents the most serious effort yet by a Silicon Valley tech company to combat the rise of TikTok, a rare example of a Chinese-owned social media app that has become a global hit.
The coronavirus is decimating business at many venture capital–backed startups. But for a few firms, the pandemic has had the opposite effect, as consumers flock to products and services that make staying at home easier or help them cope with the crisis.
These companies, five of which we profile below, include an online pharmacy that has had a big jump in signups as people decide to have prescriptions delivered rather than risk a trip to the drugstore, and a long-struggling social media app that suddenly found an audience. Our roundup also looks at an online life insurance provider that has had a surge in inquiries, a painful reminder of the virus’s mounting toll.
Publishers are bracing for a pullback in advertising amid the Covid-19 pandemic. And one big shoe has already dropped: Amazon and Walmart have temporarily suspended commerce marketing deals with digital media firms such as BuzzFeed, two people familiar with the situation said.
Commerce marketing has become an increasingly important part of revenue for online publishers such as Vox Media as well as BuzzFeed. Under most deals, the media sites publish posts about shopping with links to retail websites. If people click through the posts and end up buying something, the media sites get a cut of the revenue. BuzzFeed is more exposed than other digital media firms: It got about 20% of its revenue last year from the business, with half of that coming from Amazon and Walmart, the people say.
A global epidemic that’s forcing billions of people to work and study from home, or wear masks whenever they go out, might not seem like the ideal time to sell cosmetics. But in China, Perfect Diary, a four-year-old online makeup retailer selling items like brightly hued lip gloss and eyeliner, has been thriving. Perfect Diary’s sales grew 250% in both January and February compared to sales a year ago, according to people who have direct knowledge of the company’s performance.
No wonder, then, that earlier this month, Tiger Global Management led Chinese private equity firms Hopu Management Investments and Boyu Capital in a $100 million investment in the startup. The fundraising valued the company at $2 billion, doubling its previous valuation from last September when it most recently raised money, according to people with direct knowledge of the deal.
Airbnb shut down its marketing efforts last week, saving an estimated $800 million annually. But it likely will need to make more-substantial cost reductions across the board as the spread of coronavirus ravages its business.
An analysis of Airbnb’s profit statements shows that the company spends much more on fixed costs—such as product development, facilities and employee pay—than rivals such as Booking Holdings and Expedia. Airbnb in the past has balanced out some of those higher costs by spending less than its rivals on sales and marketing—but all travel companies have slashed advertising costs lately. That shifts the focus to those other costs.
The privately held travel giant spent the equivalent of 32% of its revenue in the first nine months last year on product development, facilities and employee compensation, compared with 21% for each Booking and Expedia, according to an analysis by The Information. Airbnb’s spending on these costs amounted to $169,151 per worker, 80% more than Booking and double that of Expedia over the same period (see chart).
Normally, Apple’s hardware teams meet in person at the company’s Cupertino, California, headquarters to review upcoming products, often bringing key components of their devices to show colleagues.
But now that they are sidelined at home due to Covid-19, members of those teams are improvising new tactics for getting their work done. During video calls, they have resorted to tracing shapes in the air to describe components they’ve had to leave back in the office, said two employees. Because of travel restrictions, they’ve had to make decisions based on grainy photos of parts sent from Chinese factories, rather than doing so in person.
As the tech industry braces for an economic downturn caused by the global pandemic, its biggest companies, which sit on billions of dollars of cash reserves, are perhaps best positioned. But Apple, one of the world’s most valuable companies, faces a unique set of challenges because of its secretive culture, focus on hardware and dependence on Chinese manufacturing, according to interviews The Information conducted in recent days with a dozen current and former employees, as well as others who work closely with the company.
Facebook has struck a deal to buy all of the augmented reality displays made by British firm Plessey, as the social network looks to build AR glasses capable of overlaying virtual objects onto the real world. The deal could give Facebook an edge over Apple, which recently looked at buying Plessey, one of the few makers of AR displays, according to two people familiar with the matter.
Instead, Plessey will license its technology to Facebook and dedicate its U.K.-based factory to supplying Facebook over several years, both companies confirmed. Facebook could have tried to buy Plessey to gain access to its AR displays, but that would likely have brought intense regulatory scrutiny. Striking an exclusive supply deal speeds up the work and gives Facebook the benefits of an acquisition without a lengthy regulatory review.
After the coronavirus forced Jay Jideliov to send all the employees of his company, Callision, home to work, he began pondering how he would cope with a period of indefinite isolation in his Los Angeles home.
Jideliov’s answer was to create what he describes as a “virus-free retreat” called Harbor, which will house around 33 guests—paying several thousand dollars a month—in a luxury villa away from Los Angeles so that they can wait out the pandemic as a group. Guests will be screened for Covid-19 before being admitted so that they can freely participate in open mics, fireside chats, daily yoga and parties without worry of infection. “No masks required,” a website for Harbor promises.
As Instacart founder and CEO Apoorva Mehta sat down to write an email to his management team on February 24, it wasn’t about his previous rallying cry for the year: getting closer to profitability ahead of an eventual IPO. Something bigger was looming.
The grocery delivery company’s investors and board members, including Jeff Jordan of Andreessen Horowitz and Michael Moritz of Sequoia— were seeing, through their other investments and connections, how rapidly COVID-19 was upending business in China. In particular, consumers were flocking to food delivery as the virus was spreading faster than expected. It was time to get prepared.
Jessica Toonkel talks about why Spotify decided to go on a spending spree to get into the podcasting business. In the past year the company has made a number of expensive acquisitions, buying podcasting production companies and tech platforms in an effort to build its ad revenue. We discuss how this can pay off for the company, and how long it could take to show results.
Airbnb plans to halt all of its marketing, pause most hiring, and likely withhold employee bonuses as it tries to conserve cash amid a slide in bookings, CEO Brian Chesky told employees in a video conference call Thursday, a person familiar with the matter said.
The steps are the first indication of how the company is planning to reduce costs to blunt the damage of the coronavirus pandemic. Airbnb’s losses have already stretched into the hundreds of millions of dollars, according to people close to the company. It wasn’t clear if the company, which has more than 7,000 employees worldwide, also intends to lay off staff. When asked about layoffs, Chesky told employees that nothing is off the table, another person familiar with the matter said.
No matter how the pandemic ends, one thing is certain: Zoom Video has become a household name as people flock to it to connect with work colleagues, family and friends. That has helped send Zoom stock into the stratosphere—it is up 46% in the past five weeks even as the overall market has fallen 25%. But like the pandemic itself, this isn’t a rally that can last.
Just how staggering has Zoom’s run-up been? Zoom’s enterprise value—its market capitalization less net cash—is about 45 times this year’s expected revenue. Slack, whose workplace chat product has also taken off as more people have been working from home, has seen its stock rise only about 4% in the past few weeks and is now trading at about 17 times this year’s revenue. Atlassian, which sells another workplace collaboration tool, is also trading at about 17 times revenue.
For several weeks, tens of thousands of employees at Amazon’s corporate offices in Seattle and elsewhere have been hunkering down in their homes to curb the spread of the coronavirus, trying to get on with business however they can. That is resulting in some stern reminders from the company about corporate policies.
For example, Amazon recently handed employees working on upcoming Echo smart speakers and other devices a checklist of rules for keeping prototype hardware products confidential if they bring them home. The company has ordered them to keep the devices covered when not in use, to avoid placing them near windows where strangers could catch glimpses of them and to remind housemates that the prototypes are confidential, according to guidelines seen by The Information. And if housemates happen to work for Amazon competitors, employees must get a greenlight from an Amazon vice president to bring prototypes home, the guidelines say.
Until recently, many people didn’t think twice about signing their name on a store payment screen at checkout, or touching a door handle on the way out of the office. But now, communal surfaces are feared as potential sources of contagion, leading U.S. consumers to rethink a host of behaviors ranging from the way they pay for goods to the way they flush toilets.
Covid-19 and other viruses can spread through contact with shared surfaces, though it isn’t yet clear how long the new coronavirus survives on screens, metal or other materials. As the virus’s spread has accelerated, companies that make hands-free products say they have been seeing a jump in inquiries and, in some cases, sales.
To understand the unprecedented challenges facing China’s coronavirus-stricken economy, take a look at the struggles of a merchant on Alibaba’s online marketplace.
Li Jiabin, a former mechanic in northeastern China’s rust belt city of Anshan, sells jade jewelry on Alibaba’s Taobao, China’s biggest shopping app. The coronavirus has hurt his business by forcing factories and wholesalers to shut down. But Li’s bigger concern is that, even after the supply problems get fixed, consumers will cut back on purchases—especially now that the pandemic is causing a global crisis.
Page created: Fri, Apr 03, 2020 - 09:05 AM GMT