Monday, April 19, 2021

Notations From the Grid (Weekly Edition): On The Tech Scene On the Week That Was


It has been quite a week on the Tech Front.   We hereby present the following snapshot on the week that was in Tech courtesy the team at the Information: 

The Briefing

 By Martin Peers
April 16, 2021


The gig economy has a labor shortage. That’s the takeaway from Airbnb CEO Brian Chesky’s statement on CNBC today that Airbnb will need “millions more hosts” to meet demand once travel picks up after the pandemic. Just last week, Uber said it didn’t have enough drivers to meet demand.

Both are suffering from the after-effects of the pandemic, of course, when ride-hailing and travel both dried up. Drivers had to find other work. Airbnb infamously alienated hosts by letting customers cancel their bookings with full refunds when the pandemic hit.

The only real answer, for both companies, is paying more. Chesky doesn’t seem inclined to go that route, judging by the CNBC interview. “All we have to do is just continue to tell our story of Airbnb and the benefits of hosting,” he is quoted as saying. OK, then. Uber is more realistic, and has set aside $250 million in cash to lure more drivers. Then again, Uber faces more competition for drivers. Aside from Lyft, there also is DoorDash and Instacart, both of which likely pulled some drivers from the ride-hailing firms when food-delivery skyrocketed during the pandemic.

How the tug of war plays out for drivers in the next few months will depend on demand for the businesses. Presumably the food delivery market will lose some steam, making it easier for Instacart and DoorDash to cope if the refugees from ride-hailing return home. Those drivers would be following investors, who have already migrated from DoorDash to Lyft and Uber in anticipation of a shift in the business. The next few months will be fascinating to watch.

Onto other news...


It’s earnings season again, time to check in on how companies are performing. Netflix kicks off the quarterly roundup for tech on Tuesday, followed later in the week by Snap and Intel. For those of you following along at home, here’s our cheat sheet on what to expect, with Wall Street analyst consensus estimates courtesy of S&P Global Market Intelligence.

Netflix (Tuesday)
Expected first quarter revenue: $7.13 billion +24%
EPS: $2.97 +89%

Netflix had a gangbuster year in 2020, as the pandemic lockdowns made the video-streaming service a must-have for more people. This year, growth is expected to slow. Netflix has forecast it will show only six million net new subscribers in the first quarter versus 15.8 million in the first quarter of 2020. Sometimes the company does better than expected, however, so we’ll see. The tempered expectations on growth have contributed to a relatively flat stock price since the summer.

Snap (Thursday)
Expected revenue: $740 million +60%
EPS: (0.20) compared with (0.21)

Snap also had a very strong year last year. During the worst of the pandemic last spring, Snap outperformed most other internet firms reliant on advertising by continuing to post decent double-digit revenue growth. Snap benefited from advertisers running direct-response ads— those that prompt consumers to take an action. In the case of many ads on Snap, that means downloading a gaming app. Its revenue growth accelerated through the year, finishing with 62% in the fourth quarter. Analysts are expecting that to continue, projecting a revenue number that’s at the top end of Snap’s guidance.

Intel (Thursday)
Expected revenue: $17.9 billion
EPS: $1.14 compared with 1.14 (-21%)

This will be Intel’s first quarterly report since Pat Gelsinger took the reins of the chip giant, whose struggles have been well chronicled. Gelsinger last month laid out ambitious plans for turning around Intel, and at the same time said that Intel expected to exceed its earlier projections for the first quarter, which were for Intel to generate $17.5 billion under non-GAAP definitions, which reflects the analyst consensus. (Intel’s GAAP revenue projection was $18.6 billion.)


Amazon is experimenting with a service in which delivery drivers dropping off furniture or appliances also assemble the items, and take them back if the customer doesn’t like them, Bloomberg reported.

It’s the epitome of convenience, although what a job for delivery drivers. Imagine unpacking and assembling a bed, only to be told to pack it up and take it away. It also raises the question of how far will Amazon go to meet consumer demands. Will its delivery drivers dropping off food start preparing meals next? Maybe they could also do the dishes?


  • Apple Music told music artists that it pays a penny per stream, about double what Spotify pays, the Wall Street Journal reported.
  • Wall Street isn’t lovin’ AppLovin. Shares of the mobile gaming firm fell further on Friday, bringing its losses since its IPO to 24%. The IPO isn’t so much as broken as totaled. Shares of another newly public stock, autonomous truck startup TuSimple, closed the week just five cents below its IPO price, having traded 20% lower on occasion.
Andreessen Horowitz Values Clubhouse at $4 Billion With DST, Tiger
By Alex Heath

Andreessen Horowitz is valuing the social media app Clubhouse at $4 billion in a round of financing with new investors DST Global and Tiger Global Management, according to a person familiar with the matter.

The round triples Clubhouse’s valuation from January, which Andreessen Horowitz also led, and comes as rivals Twitter and Spotify roll out rival audio chat features. It couldn’t be learned how much money investors are putting into Clubhouse this time, though the round is likely to exceed the roughly $100 million that Clubhouse raised a few months ago.

Social App IRL in Talks to Raise Funds at $1 Billion Valuation
By Alex Heath

Group messaging app IRL is in talks to raise more than $50 million at a $1 billion valuation, 10 times the level of its last round, according to two people familiar with the matter.

The funding for IRL, which has caught on quickly in recent months among teenagers in the U.S., follows a resurgence in competitive deals for social media startups like Clubhouse and photo-sharing app Dispo. IRL hasn’t finalized the new funding round, but has recently been approached by investors that include Tiger Global and IVP, among others, the people said.

Like Clubhouse, IRL appears able to command a billion-dollar valuation before it even has brought in any revenue. IRL is expected to try to make money by charging commission on paid features, rather than by selling advertising. The company was last valued at $100 million in September. It has raised a total of $28 million to date from investors that include Goodwater Capital, Floodgate, The Raine Group and Founders Fund.

‘These Guys Are Very Different’: Inside Andreessen Horowitz’s Rise
By Kate Clark and Amir Efrati

As recently as two years ago, the performance of Andreessen Horowitz’s investments in tech startups were average, despite the firm’s outsize public profile. But its partners had placed bigger bets on cryptocurrencies than almost anyone else, and they did so during moments when most investors had soured on the field.

The firm’s patience paid off. With this week’s Coinbase public listing, Andreessen Horowitz generated one of the biggest paper returns from a single-company investment in VC history. Its stake in the cryptocurrency brokerage is worth $10 billion, which is more than half the amount of capital the firm raised from investors in its 12 years of operation. It could generate a similar return from its stake in enterprise software firm Databricks, and it holds billions of dollars’ worth of other cryptocurrency assets, according to a person with direct knowledge of the firm.

Now, in the wake of a pandemic that accelerated the adoption of internet software and caused a rush of new capital into private and public technology stocks, Andreessen Horowitz is supercharging the bold VC playbook that brought it to this point. It’s continuing to hire staff to help startup founders with functions such as sales, marketing and recruiting. It’s placing bets on more startups than any of its top Silicon Valley rivals, underscoring its faith in co-founder Marc Andreessen’s doctrine that “software is eating the world”—even if that inevitably means enduring some spectacular startup flameouts in the process.

Coinbase Direct Listing’s Biggest Winners
By Berber Jin

Coinbase’s public stock market debut today crystallizes enormous gains enjoyed by the crypto firm’s earliest investors, most notably Union Square Ventures and Andreessen Horowitz. But for Andreessen, the win is even sweeter, given its decision two years ago to double down on its stake even as USV was selling.

USV led Coinbase’s Series A round, becoming one of the biggest shareholders. But after Bitcoin’s price plunged in 2018 and 2019, USV sold about a quarter of its stake, leaving it with its current position of around 5% of the outstanding shares (including options), worth $5.3 billion at the opening trade of $381 Wednesday.

Andreessen, in contrast, was a slightly later investor. It led the company’s Series B round in 2013 and then participated in the next round two years later. But in 2018–19, when USV and other venture firms were trimming their positions, Andreessen was a buyer. It ended up as the second biggest shareholder after CEO and co-founder Brian Armstrong, with a roughly 11% stake worth $11.2 billion.


No comments: