Might Tech Companies Become Nonprofits? 0

Given the early mission of the internet to democratize information, it’s somewhat surprising that we don’t see more nonprofits operating in the tech space. Wikipedia is the strongest example of what that model might look like. In New York, The Driver Cooperative (TDC), is trying to launch a ridesharing app that would get closer to a nonprofit model:

When it rolls out to the pub­lic ear­ly next year, TDC will become New York City’s first work­er-owned rideshar­ing plat­form — owned by the dri­vers them­selves, rather than by big investors and exec­u­tives. Its founders’ brazen idea is that TDC can actu­al­ly gain a com­pet­i­tive advan­tage over Uber and Lyft — sav­ing mon­ey and fun­nel­ing those sav­ings back to dri­vers — by doing away with the most exploita­tive prac­tices of that dom­i­nant duop­oly. ​“The way the [Uber] mod­el is orga­nized is extrac­tive. It takes out the mon­ey and doesn’t give back much. Imag­ine a com­pa­ny that doesn’t have any prof­its, but has cre­at­ed bil­lion­aires,” Lewis says. ​“That mon­ey comes from drivers.”

TDC hopes it can also change the cost structure which could make them the low-cost provider:

By com­bin­ing the pur­chas­ing pow­er of all the mem­bers, they hope to low­er expens­es on costs like gas and insur­ance — expens­es that Uber and Lyft dri­vers must han­dle on their own. They project that this should all add up to 8 – 10% high­er earn­ings for dri­vers on every ride, even while being able to beat their com­peti­tors on fare prices. And if the coop has any prof­its left at the end of the year, they will be paid out to dri­vers as dividends.

It is very difficult to compete against an entrenched company in winner-take most markets. Being able to offer a comparable product at a lower price helps. Taking on nonprofit status could help companies achieve that. So as more markets mature, we might see competitors arise more frequently as nonprofits.

Here’s the full article on TDC.

The Future of On Demand Retail 0

We’ve seen how Ghost Kitchens have started to change the face of restaurants. Ghost Kitchens are essentially restaurants with no physical space for customers which means they are delivery-only restaurants. And in fact, some Ghost Kitchens will actually support multiple online-only restaurants from the same location. The economics of Ghost Kitchens are very different than traditional restaurants. Obviously their cost structure is lower because they can use less expensive space, but also their orders tend to be more tightly distributed around mealtimes (think 12PM for lunch, 6PM for dinner). In the immediate aftermath of the pandemic, as restaurants were forced to close their dining rooms, every restaurant became a sort of Ghost Kitchen, at least temporary.

We’re starting to see the model of no storefront move into other areas. Take, for example, Gorilla, a grocery start-up in Germany.

Founded by Kağan Sümer and Jörg Kattner in May this year and operating in Berlin and Cologne, Gorillas delivers groceries within an average of ten minutes. Unlike gig economy models, it employs riders directly and is emphasising its ability to get fresh groceries, along with other household items, to shoppers at very short notice and at “retail prices”. The idea is that the startup can address a large part of the groceries market that falls outside of a weekly bulk shop.

As TechCrunch reports, there are others (Diji and Weezy) who are building out similar services elsewhere in Europe. In the U.S. we have goPuff. These services are focused on the type of things you might buy at a convenience store. Or that you might run to the grocery to buy when you only need that singular thing.

Gorillas CEO Kağan Sümer says that mass supermarkets, including their delivery models, are designed so that the consumer organises their grocery shopping around the needs of the supermarket and supply chain, rather than the supermarket being designed around the needs of the consumer…bulk purchases are super served…all of the supermarket infrastructure is shaped around bulk purchases…our hypothesis was that people would appreciate it and shift their interaction with groceries to more on demand purchases

The internet is conditioning us to expect very quick, nearly instant, delivery. We’re already there with video on-demand and this will only become more pronounced in 2021 as studios close the windowing between theatric release and streaming release. Amazon has conditioned us to expect quick delivery of many things. We expect our Uber or Yelp to arrive quickly (and we want to track it while en route). We expect our meals to be delivered quickly. Those expectations will likely carry into other categories. Basic groceries and convenience store items make a lot of sense. But thinking outside of this, there are likely numerous sectors that will be pushed towards near-instant delivery models by competitive forces and consumer expectations.

The Competitive World of Bird Watching 0

…anyone can view rankings of the top eBirders in different hot spots, counties, states, and entire countries. You can even peruse a list of the top 100 eBirders in the world. These types of competitive lists have birthed trends like endless Big Years, in which birders constantly compete to see who can spot the most species in a year. In turn, such fads have spurred counterinitiatives, like the five-mile-radius challenge, which encourages birders to enjoy birds in local areas rather than seeking them out in far-flung places.

That is from a profile of eBird, an online database of bird sightings.

As of 2020, it has collected more than 860 million global bird observations from over 597,000 registered eBirders. By sheer numbers alone, eBird is one of the world’s largest citizen-science projects. It is now used to understand species distributions, population trends, migration pathways, and even habitat use….

At least 120 million observations are submitted per year, many through the handy eBird app, a kind of Strava-Yelp-Pokémon Go hybrid for birders. The app doesn’t ID birds for you—Cornell offers another app called Merlin for that—but instead provides an easy way to record and upload the birds you spot. To log sightings, you start a checklist (similar to the way you’d start a run on a smartwatch) and the app automatically pulls your location via GPS. You can choose hot spots near you, which generate lists of species you’re likely to see created from data submitted by users in those areas. The app tracks time and distance traveled while you “tick” species and numbers of birds seen and heard. It even lets you keep an offline checklist, so you aren’t inconvenienced without cell service. On the web platform, users can upload photos and audio recordings to beef up checklist documentation. Once submitted, the observations join thousands of others being made on the platform at any given time.

We’ve probably only started to scratch the surface of the things that we will track and catalog.

Here is the full story on Outside Magazine from Jessie Williamson. 

Reid Hoffman’s Airbnb Reflections 0

Reid Hoffman posted some reflections on Greylock’s investment in Airbnb. Reid is a wonderful writer and his post is provides a wonderful narrative on how the investment came about. The part that caught me was this:

Part of the reason that Blitzscaling opens with the Airbnb story is that it demonstrates how when you win a winner-take-most market with strong network effects, it can be not just industry-transforming, but world-transforming. I believe Airbnb is going to be a different kind of company, with a different kind of product and service, that will become a different kind of platform for launching businesses that go well beyond replacing hotel rooms. The reason I got into tech investing is to back companies that could have that kind of massive impact.

If you poke around the internet you’ll see a myriad of articles written about Airbnb’s IPO that suggest a bet on Airbnb is a bet on the future of travel. But here Reid suggests that Airbnb will eventually be a much bigger platform with more offerings than just short-term rentals. Of course, Airbnb already offers experiences. When I was in Cuba a few years ago, I enjoyed a wonderful cooking class that I booked through Airbnb. And in 2020 Airbnb has found success in offering online experiences. An interesting one next week will be a virtual cooking class featuring techniques from the 19th century. Oh, and its being held at the Alamo. If you catch Reid’s vision, these are probably just the start for Airbnb just like books were just the start for Amazon.

 

 

 

Facebook’s Antitrust Woes 0

Tim Wu is out with a few things press keeps getting wrong about the Facebook antitrust case. Tim’s second point is most insights. The government doesn’t have a duty to prove that Instagram or WhatsApp, absent the merger, would have become significant competitors.

Too many journalists have been falling for this assertion — and reporting it as the established legal standard — when it actually is a controversial theory and misreading of precedent that comes out of a paper funded by Facebook and published in a corporate-funded journal. (The New York Times is guilty of repeating this today.)
The theory is, roughly, that the Government needs to prove the hypothetical case that Instagram (say) would have prospered and become a significant competitor without Facebook’s acquisition, so that Facebook effectively eliminated a real competitor.

But Microsoft, the authoritative case in this area, says nearly the opposite — it says that the Government does not need to prove a hypothetical:

To require that § 2 liability turn on a plaintiff’s ability or inability to reconstruct the hypothetical marketplace absent a defendant’s anticompetitive conduct would only encourage monopolists to take more and earlier anticompetitive action. . . .

[T]he underlying proof problem is . . . [that] neither plaintiffs nor the court can confidently reconstruct a product’s hypothetical technological development in a world absent the defendant’s exclusionary conduct. To some degree, “the defendant is made to suffer the uncertain consequences of its own undesirable conduct.” 3 Areeda & Hovenkamp, Antitrust Law p 651c, at 78.

The court went out of its way to reject a “would have prospered” test, because it set too high a bar. The actual inquiry into what would have happened, the court said, was “edentulous” — toothless. Here is what the case says is the standard:

Nick Statt and Russell Brandom provide a good overview of the lawsuits here

COVID and New Product Introduction 0

In March I wrote about the impact COVID was going to have on new product introduction (NPI). Google delayed the release of its new Pixel smartphone by several months. The newest iPhone line-up was a month later this year. And last week Ford announced they would be delaying next year’s Bronco launch. So even some of the biggest, most capable companies couldn’t escape the impact of COVID. As I wrote about in March, one of the biggest issues from COVID was the impact travel bans would have on NPI:

Electronics manufacturers in the OEM supply chain would generally prepare for NPIs by traveling several times to visit input suppliers in the lead-up to full-scale production. Each of these trips would last up to a few weeks and would involve all aspects of the NPI process, including design tweaks, incoming component supply, assembly and test process definition, product qualification, reliability assurance, manufacturing yield assessment, and final product fulfillment models – all in preparation to support ramp to volume production requirements.

Corporate travel bans have canceled many of these trips and left engineering teams rushing to develop alternative approaches. Some are turning to U.S. firms to help. Because build schedules are already extremely tight, delays of any kind could impact planned product release dates. In short, the coronavirus outbreak is causing delays that could affect planned NPIs.

Mark Gurman reports on Apple’s Apple Inc. virtual town hall meeting with employees on Thursday:

Dan Riccio, senior vice president of hardware engineering, called remote work a “huge challenge” for device design that is usually done in lab settings. He said travel restrictions in March were particularly tough because that is when engineers typically travel to China to help kick off manufacturing of products launching in the fall.

Apple worked around this, with engineers controlling robots from home and using iPads with augmented-reality software to guide technicians in overseas factories, Riccio said. Staff also worked different hours to communicate better with staff already stationed in China. The “very best is yet to come,” Riccio added. The company is focused on developing augmented-reality and virtual-reality hardware products for debut in coming years, Bloomberg News has reported.

There’s a lot of talk about companies remaining virtual even in a post-pandemic world, but the manufacturing sector probably isn’t ready for that and the full set of tools needed are probably years away. Companies pivoted, but it exerted a toll on their employees. As Tim Cook noted:

“There’s no replacement for face-to-face collaboration, but we have also learned a great deal about how we can get our work done outside of the office without sacrificing productivity or results,” he told staff, according to people familiar with the comments. “All of these learnings are important. When we’re on the other side of this pandemic, we will preserve everything that is great about Apple while incorporating the best of our transformations this year.”

Growing Unemployment Across States 0

Roughly one in ten workers have filed for unemployment in the last three weeks. Here’s a look at estimated unemployment by state:

Three states might have unemployment rates over 20% right now: Michigan, Pennsylvania and Rhode Island.

15 states (and the District of Columbia) likely have unemployment rates over 15%: Alaska, California, District of Columbia, Hawaii, Kentucky, Louisiana, Maine, Massachusetts, Michigan, Nevada, New Hampshire. New Jersey, Ohio, Pennsylvania, Rhode Island, Washington

Only 11 states have estimated unemployment rates under 10%: Colorado, Connecticut, Florida, Nebraska, Oklahoma, South Dakota, Texas, Utah, Virginia, West Virginia, Wyoming

Colorado is showing what could be the lowest unemployment rate in the country and it is still an estimated 6.9%. At the end of February, only 6 states had unemployment rates over 5%.

If you add the 16.8 million individuals who have filed for unemployment over the last three weeks to the 7.14 million who were already unemployed, the national unemployment rate jumps to nearly 15 percent.

Yes, there has been some hiring over the last three weeks, but hiring has unlikely not proceeded at the same rate as it was earlier in the year. It is likely also true that many who are eligible for unemployment benefits have not applied. Some of these figures could be our lower bounds.

The Fed’s Growing Balance Sheet 0

Over the last two weeks, the Federal Reserve has added over $500B a week to its balance sheet.

Until March 2020, the largest weekly increase in the Fed Balance sheet was $292 billion (October 2008). There were two weeks in October 2008 that saw the Fed’s balance sheet increase more than $200 billion. Until March 2020, these were the only two weeks that saw the Fed’s balance sheet increase by more than $200 billion.

In just the last two weeks, the Fed has increased their holdings of U.S. Treasuries by $700B, mortgage-backed securities (MBS) by $91B, loans by $101B and swaps with foreign central banks by $348B. This doesn’t include another $162B purchased on April 2nd and April 3rd.

The Fed balance sheet has increased $1.143 trillion over the last two weeks and just under $1.5 trillion over the last three weeks. The balance sheet has increased by almost 25 percent in the last two weeks, and 35 percent in three weeks.

Making Sense of the Unprecedented March 2020 Job Losses in the Hospitality Sector 0

The loss of hospitality jobs in March 2020 is unprecedented.

When we have April data in a month, we’ll see the U.S. economy suffered more hospitality job losses in two months than during the entirety of the last recession.

The leisure and hospitality sector includes businesses like hotels, restaurants, bars, casinos, amusements parts, museums. Some 85% of the sector is accommodations and food service (think hotels and restaurants). The sector reported 459,000 fewer jobs in March 2020. The worst monthly change prior to March 2020 was a loss of 83,000 (August 1989). The sector accounted for roughly 66% of the total decline in Nonfarm payroll (701K) during March 2020.

The leisure and hospitality sector shed 623,000 jobs during the Great Recession (Jan 2008-February 2010). That decline happened over two years. The current downturn is bigger and quicker than we have ever seen.

The March 2020 data only include workers who are paid by their employer for all or any part of the pay period including the 12th of the month. So it doesn’t include the destruction we saw in the second half of the month. That will come in April’s data. March is much worse than the data suggests.

Some of these furloughed employees will likely return to payrolls in 90 days. Many will not.

 

 

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