Wednesday Sep.02, 2020

💻 Zoom's happiest hour

_Corporate happy hour intensifies_
_Corporate happy hour intensifies_

Hey Snackers,

Startup names are getting less silly, according to Crunchbase. “People are a bit longer with the names and going back to English words.” Guess Snax is a no-go.

Stocks ticked up to start September, building on August's historic gains.

Soar

Zoom's quarterly profit soars 3,330% as abnormal becomes its normal

Corporate Happy Hour has never been happier... Zoom absolutely smashed earnings last quarter (for a reason that requires no explanation). In just 3 months, the videoconferencing service made double the amount of money that it did during its entire 2019 fiscal year:

  • +355%: Zoom's quarterly sales more than quadrupled compared to the same quarter last year, clocking in at $663M. Sales for its entire 2019 fiscal year were $331M. Womp.
  • +3,300%: Zoom's quarterly profit was almost 33X bigger, coming in at $186M compared to $5.5M last year. Double womp.

Zoom, zoom, zoom... Investors brought Zoom to their room on Tuesday, sending the stock soaring 40%. Zoom's market cap is now $129B, up from $25B a year ago. It's worth more than IBM and Lyft combined, or as much as four Twitters. Why the wild stock surge?

  • Wild growth: Sure, other corona-conomy winners like Netflix and Clorox did well. Compared to Zoom, their growth was as yawn-worthy as a beachside virtual background.
  • Wild forecast: Zoom significantly upped its full-year growth forecast. Corona winners like Netflix and Home Depot didn't, suggesting they may have passed peak pandemic surge.
  • Wild situation: Zoom investors believe you'll be Zooming into the future, whether you stay remote or return to the office.

This is abnormally fast growth... for a publicly-traded, relatively mature company. For reference, let's look at some best quarters from the past: Apple killed it in 2008 with iPhone 3 and 90% sales growth. Facebook liked itself in 2014 with 72% growth. Netflix won an Oscar in 2011 with 50% growth. Zoom slayed in 2020 with 355% growth. Zoom is growing abnormally fast because its product was/is positioned to thrive during these abnormal times.

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Walmart reveals what's included in its $98/year Amazon Prime rival: Walmart+

We promise this isn't about Amazon... Suuureee. Walmart unveiled the deets of its Amazon Prime subscription rival, Walmart+ (creative). The service launches on September 15th and costs $98/year, less than Prime's $119 price tag (take that, Bezos). Here's what's in the cart:

  1. Unlimited free delivery: Free delivery from Walmart stores for over 160K items, from groceries to tech (with a $35 minimum order). Walmart's driving it up "as fast as same-day."
  2. Scan & Go: Scan bananas and t-shirts using the Walmart app in stores, then pay in-app for a cashierless-experience (can see this one going wrong — #fakescan).
  3. Fuel discounts: Save up to 5 cents a gallon (wow) at 2K gas stations.

But does it come with TikTok?... Walmart wants to acquire TikTok to leverage its massive ecommerce reach (wait for it — to crush Amazon). Walmart+ is yet another play to compete with the 'Zon. Prime is the secret sauce of Amazonian success, because perk-filled subscriptions are loyalty builders.

This isn’t a Prime-killer, but it might stop the bleeding... Let's be honest: these perks probably won't win Walmart new customers. But they might keep existing customers from ordering more on Prime — especially when it comes to grocery delivery:

  • Walmart makes over half its sales from groceries and is the US grocery leader. Its online grocery biz has been growing dramatically. Buuut...
  • Over half of Walmart’s top-spending families have Prime memberships — since they're paying $119/year, they might as well use Amazon's free grocery delivery instead. Walmart's hoping Walmart+ will keep them loyal.

What else we’re Snackin’

  • Musky: Tesla shares dipped 5% after the e-car icon said it's selling up to $5B in stock to cash in on its wild rally.
  • Cashed: Patreon, the website where you pay your favorite YouTuber, has reportedly raised $100M at a $1.2B valuation.
  • Mommy: Nike is launching its 1st-ever maternity activewear line (it's been 6 months since lockdowns — lots of babies coming soon).
  • Cuts: Ford reportedly plans to cut ~1K salaried jobs in North America as part of its $11B restructuring plan.
  • TokOff: TikTok acquisition talks reportedly hit a roadbump over China's new export restrictions.

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Wednesday

Disclosure: Authors of this Snacks own shares of Amazon and Apple

ID: 1320132

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Latest Stories

Power

World out of balance: It costs the US 3¢ to make 1 penny

The cost of producing the US penny rose 13% in fiscal 2023 to 3.07 cents. Yes, that means that Uncle Sam loses more than two cents for every cent it produces. (And no, you can’t make it up on volume.)

For the record, that’s the 18th-straight year the penny’s face value has been below production costs, fueling calls for abolishing the lowest value denomination coin. Canada started to phase out the penny in 2013, joining Australia, Brazil, Finland, New Zealand, Norway, and Israel, according to Smithsonian Magazine.

3.07¢
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Scuba Diving in the Wild Blue Yonder in French Polynesia
Business

Netflix is going to stop sharing subscriber numbers

After posting subscriber numbers that beat expectations today, Netflix says it’s no longer going to share those numbers starting in the first quarter of 2025. That’s a big deal since subscriber numbers have long been one of the main metrics that investors have looked at.

“In our early days, when we had little revenue or profit, membership growth was a strong indicator of our future potential,” its shareholders letter read. “But now we’re generating very substantial profit and free cash flow.” The company said that it will focus on revenue and operating margin as its main financial metrics, while it will look at time spent on the platform to gauge customer satisfaction.

Another way to read this? They’ve hit market saturation and just aren’t going to be growing that much anymore, and they thought they’d end on a good note. Going forward they’re focusing on how to get more money out of the customers they do have.

They’re doing so by cracking down on password sharing and charging for extra members. They’re also pushing people to ad tiers, which are more profitable than non-ad tiers.

“Scaling ads to become a more meaningful contributor to our business in ‘25 and beyond,” Netflix said.

Netflix’s ads membership grew another 65% in Q1 over the previous one, after rising 70% the quarter before, and 40% of signups in ad markets continue to be for those ad plans.

Tech

Meta’s not telling where it got its AI training data

Today Meta unleashed its ChatGPT competitor, Meta AI, across its apps and as a standalone. The company boasts that it is running on its latest, greatest AI model, Llama 3, which was trained on “data of the highest quality”! A dataset seven times larger than Llama2! And includes 4 times more code!

What is that training data? There the company is less loquacious.

Meta said the 15 trillion tokens on which its trained came from “publicly available sources.” Which sources? Meta told The Verge’s Alex Heath that it didn’t include Meta user data, but didn’t give much more in the way of specifics.

It did mention that it includes AI-generated data, or synthetic data: “we used Llama 2 to generate the training data for the text-quality classifiers that are powering Llama 3.” There are plenty of known issues with synthetic or AI-created data, foremost of which is that it can exacerbate existing issues with AI, because it’s liable to spit out a more concentrated version of any garbage it is ingesting.

AI companies are turning to such data because there’s not enough good, public data on the entire internet to train their increasingly greedy AI models. (Meta had reportedly floated buying a publisher like Simon & Schuster to satisfy its insatiable data needs.)

Meta, of course, isn’t the only company that’s tight-lipped about where its AI data is coming from. In a now infamous interview with WSJ’s Johanna Stern, OpenAI’s chief technology officer Mira Murati was unable to answer questions about what Sora, OpenAI’s video generating app, was trained on. YouTube? Facebook? Instagram — she said she wasn’t sure.

What is that training data? There the company is less loquacious.

Meta said the 15 trillion tokens on which its trained came from “publicly available sources.” Which sources? Meta told The Verge’s Alex Heath that it didn’t include Meta user data, but didn’t give much more in the way of specifics.

It did mention that it includes AI-generated data, or synthetic data: “we used Llama 2 to generate the training data for the text-quality classifiers that are powering Llama 3.” There are plenty of known issues with synthetic or AI-created data, foremost of which is that it can exacerbate existing issues with AI, because it’s liable to spit out a more concentrated version of any garbage it is ingesting.

AI companies are turning to such data because there’s not enough good, public data on the entire internet to train their increasingly greedy AI models. (Meta had reportedly floated buying a publisher like Simon & Schuster to satisfy its insatiable data needs.)

Meta, of course, isn’t the only company that’s tight-lipped about where its AI data is coming from. In a now infamous interview with WSJ’s Johanna Stern, OpenAI’s chief technology officer Mira Murati was unable to answer questions about what Sora, OpenAI’s video generating app, was trained on. YouTube? Facebook? Instagram — she said she wasn’t sure.

Today’s earnings: Who’s making money edition

Here are some some notable numbers out this morning, as earnings season gathers steam. Thursday’s main event will be Netflix after the close of trading. (Keep an eye on its advertising business.) But until then...

7.13%

The 30-year fixed rate mortgage is back above 7%, according to weekly numbers from the Mortgage Bankers Association, the highest level in four months. High borrowing costs are creating havoc for would-be buyers, as affordability lingers at the low levels not seen consistently since the late 1980s.

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Business

Amazon’s spy ops on rivals: shell companies, printed docs, and a fake Japanese streetwear brand

Some companies check out rivals’ websites, stores and public filings to stay abreast of the competition. Amazon made its own fake shell company and brands, transacted hundreds of thousands of dollars per year undercover on competitors’ platforms, and kept its intel operation a secret for nearly a decade even from others at Amazon, according to a fascinating investigation by the Wall Street Journal.

Working as a seller called Big River, a secret group of Amazon employees gained access to rival platforms, including Walmart, FedEx, and Alibaba. They used Big River email addresses and went to seller conferences as Big River employees. They even stayed hidden within Amazon itself. These employees would take screenshots of competitors’ systems that they would then show others at Amazon in person to avoid an email paper trail.

Perhaps most strange of all, the company created a fake Japanese streetwear brand called “Not So Ape” (clearly a play on A Bathing Ape) and continues to sell products from the brand on a Shopify store, presumably as an attempt to learn the inner workings of the shopping platform. Of course, copying is old hat for Amazon.

In meetings where they’d use this clandestine information to inform Amazon’s own business practices, the group resorted to literal paper. “[T]he team avoided distributing presentations electronically to Amazon executives. Instead, they printed the presentations and numbered the documents. Executives could look at the reports and take notes, but at the end of the meeting, team members collected the papers to ensure that they had all copies."

Working as a seller called Big River, a secret group of Amazon employees gained access to rival platforms, including Walmart, FedEx, and Alibaba. They used Big River email addresses and went to seller conferences as Big River employees. They even stayed hidden within Amazon itself. These employees would take screenshots of competitors’ systems that they would then show others at Amazon in person to avoid an email paper trail.

Perhaps most strange of all, the company created a fake Japanese streetwear brand called “Not So Ape” (clearly a play on A Bathing Ape) and continues to sell products from the brand on a Shopify store, presumably as an attempt to learn the inner workings of the shopping platform. Of course, copying is old hat for Amazon.

In meetings where they’d use this clandestine information to inform Amazon’s own business practices, the group resorted to literal paper. “[T]he team avoided distributing presentations electronically to Amazon executives. Instead, they printed the presentations and numbered the documents. Executives could look at the reports and take notes, but at the end of the meeting, team members collected the papers to ensure that they had all copies."

Crypto
Jack Morse
4/17/24

Worldcoin pivots to the blockchain… with a 'humans only' discount

Worldcoin, the “proof of personhood” crypto project launched by OpenAI’s Sam Altman, said it plans to launch its own ethereum layer-2 (L2) blockchain dubbed World Chain. The pitch: a blockchain where it’s both easier and cheaper for people to transact than bots.

Worldcoin has made waves for its iris-scanning metallic orb that promises a future where people can mathematically prove they’re real humans and not AI bots.

But it’s run into trouble: the orbs have been banned across Europe and Africa, and the associated WLD crypto token has plunged 50% over the past month.

For project insiders, who reportedly received a token allocation of 25% of supply, that could equal significant losses. 

Which is what may make World Chain attractive. Crypto exchange Coinbase launched its own L2, Base, last year. Base has since seen rapid user growth — activity that’s generated the exchange millions of dollars in weekly fees

Worldcoin could benefit from similar revenue if its L2 is adopted around the world.

But it’s run into trouble: the orbs have been banned across Europe and Africa, and the associated WLD crypto token has plunged 50% over the past month.

For project insiders, who reportedly received a token allocation of 25% of supply, that could equal significant losses. 

Which is what may make World Chain attractive. Crypto exchange Coinbase launched its own L2, Base, last year. Base has since seen rapid user growth — activity that’s generated the exchange millions of dollars in weekly fees

Worldcoin could benefit from similar revenue if its L2 is adopted around the world.

Business

Smooth sailing? Not for superyachts

Sales of the luxury boats sank 17% last year. Meanwhile, Super-SUPER yachts (over 650 feet long) took the biggest sales dip, falling around 40%. Part of the problem: a pandemic-era backlog has led to a three- to four-year waitlist for new yacht orders. Meanwhile Russian oligarchs — former MVP customers — are largely out of the boat-buying business due to sanctions.

Dr Martens shares have been stomped

American sales of Docs have dropped