🏠 Twitter's permanent WFH

Wednesday, May 13, 2020 by Robinhood Snacks | Disclosures

Food delivery wars losing steam

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Hey Snackers,

We never thought we would have to compete with potato chips, but here we are: Pepsi just launched Snacks.com for online delivery of digestible snacks__ like Cheetos, Lays, and Doritos (they beat us to the domain name circa 20 years ago). FYI: we're snacks.robinhood.com 😉

All 3 major indexes had their worst daily drops since May 1st, as renewed COVID-19 outbreaks crop up in South Korea, Germany, and China (which have all recently loosened restrictions). Dr. Fauci warned the US could face more deaths if states reopen too quickly.

Eat
1. Mafia-style delivery wars consolidate: Uber reportedly offers to buy Grubhub

All Uber the place... Uber's been on a consolidation streak lately. First came last week's sizable investment in e-scooter company Lime (and consolidating it with its own e-scooter/bike biz). Now, Uber has reportedly offered to acquire Grubhub (to consolidate with its own Uber Eats delivery) as early as this month. Let's reacquaint ourselves with the mafia-style delivery wars:

  • Uber is 10X bigger than Grubhub in terms of market value, but Grubhub has a bigger share of the US food delivery market.
  • Right now, DoorDash is still the leader, controlling 42% of the US market, followed by Grubhub with 28%, Uber Eats with 20%, and Postmates with 9%.
  • Uber and Grubhub combined would control almost half of the market, and Grubhub stock jumped 30% on news of the potential engagement.

Tackling the promiscuity problem... Back in October, Grubhub's CEO famously called its users "promiscuous" — there's no loyalty in the food delivery game, as you switch from app to app according to whoever offers the best promos.

  • Food delivery is largely unprofitable thanks to these code-diggers. To win customers, all the apps compete to offer the best promos (aka give away free money) — this has caused Grubhub some major profit losses.
THE TAKEAWAY

Consolidation breeds consolidation... And more of it is coming. Once 2 competitors merge to form a mega-competitor, even the biggest competitor in the game will feel threatened, and then be tempted to team up with someone else. If Uber and Grubhub mega-merge, DoorDash might team up with Postmates to regain its don-style market leader status.

Drive

Test driving the couch... You buy socks, matcha powder, and dumbbells from your couch — why not throw a minivan in the cart too? Online used-car seller Vroom reportedly just filed to go public — and it's circled the calendar for June. Vroom wants to disrupt the car dealership experience:

  • Less Haggling: By cutting out the car dealer middleman, Vroom says it's better able to pass on savings to its customers (no haggling). Still, in 2019 over half of Vroom's sales came from traditional dealerships.
  • Contact-free: The style of Vroom's car-delivery service — this method involves three separate instances of either you or your delivery driver "walking a safe distance away."
  • 7-Day Returns: Sweater not the right shade of peach? Return it. Prius not as "magnetic gray" as in the pics? Send it back within a week.

Not every company that plans/files to IPO actually does it... Postmates, DoorDash, and (cough) WeWork still haven't. But Vroom's plan to IPO in June, in the middle of the corona-conomy, suggests it's confident in its outlook (or it just needs to raise money):

  • In December, Vroom raised $250M at a $1.5B valuation, but we don't know what it's worth today.
  • We do know that Vroom's bigger/better-known rival Carvana saw its share price jump 7X since its 2017 IPO (it's now trading at near-record levels).
THE TAKEAWAY

Vroom thinks its IPO filing is coronavirus proof... Vroom’s S-1 filing (it's still confidential) will give potential investors a lot of info — we're betting Vroom will highlight its corona-conomy strengths: Vroom's anti-human-contact, online-focused biz model. And for people looking to avoid public transit, Vroom's used cars may fit snuggly with economic strain and germ worries.

Work

Never wear real pants again... Twitter just told employees they'll be allowed to work from home forever. Jobs that require being physically present will still have to come in, but other than that, WFH is officially a forever thing. Google and Facebook and a bunch of others have already made WFH optional until 2021 — but "forever" takes it to a whole new level:

  • Employees: Don't have to pay for a $3K 1-bedroom to work driving distance from Twitter HQ in SF. CEO Jack Dorsey can work from his 10-day silent vipassana meditations in Myanmar.
  • Company: Twitter pays less rent for office space if it scales down (and less on food/snacks/supplies). It can also potentially pay workers less if they're not paying rent in an expensive city.
  • Cities: Could alleviate housing crunches and traffic congestion.

But there are a lot of unknowns... Do employees really want to work from home forever? Will this hurt productivity, collaboration, and collegial relationships? Will Twitter lose talent/applicants to companies with cool, social offices if people don't want a remote office culture? WFH is also almost entirely dependent on services like Slack, which had some down time yesterday.

THE TAKEAWAY

This could be the start of a mega-trend... But its effects aren't so clear. Permanent WFH hasn’t been tested long-term, so we really don't know how it might affect company/employee success. Guess Twitter can be the guinea pig, if enough employees choose to do it (permanent work from home will be optional at Twitter, not mandatory).

What else we’re Snackin’
  • Snooze: While sales of pants and bras have fallen around 13%, pajama sales have soared 143% (that 24/7 onesie life).
  • Fall: Saudi Aramco's 1st quarter profit falls 25% (but it was still $16.6B) – now Saudi Arabia says it'll cut oil production to try and raise prices.
  • Violet: Amazon builds a moving UV-light robot that may be able to kill COVID-19.
  • Drive: Alphabet's self-driving car company Waymo closes an extension of its latest financing round, bringing its total fundraise to $3B.
  • Burned: Luckin Coffee, the Chinese coffee giant that fabricated its sales numbers, (finally) fires its CEO.

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Snacks Daily Podcast

A Snacker tweeted us about his wife going into labor while listening to the Snacks Daily pod (must've been something we said) — Check it out on Snacks Twitter or Instagram.

Wednesday

Disclosure: Authors of this Snacks own shares of Uber, Sony, Luckin, and Twitter

Correction: On Monday, we mentioned that Peloton's app cost $19/month — it's actually now $12.99/month

ID: 1184755

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