Friday Mar.25, 2022

🚕 Uber welcomes taxis

Trying to track down my Uber cab [Daniel Grill/Getty Images]
Trying to track down my Uber cab [Daniel Grill/Getty Images]

Hey Snackers,

We’ve seen the revival of early-2000s trends like low-rise jeans, mini purses, and butterfly clips (thanks, Gen Z). Now another Y2K staple is returning — but it’ll be hard for the TikTok generation to get on board: “dumbphones” are back. Bring on the button envy.

The techy Nasdaq index jumped nearly 2% yesterday, while mortgage rates hit a three-year high as the Fed starts bumping interest rates. Meanwhile, President Biden called for Russia to be expelled from the G20 — the forum for the world’s 20 largest economies — and said the US would welcome 100K Ukrainian refugees.

Cabby

After disrupting the taxi industry, Uber’s listing NYC cabs on its app to fuel growth

Big yellow taxi takes a turn… but Uber’s in the driver’s seat. The NYC Taxi and Limousine Commission has agreed to list all its cabs on the Uber app. Uber says taxi riders will see prices up front and pay roughly the same amount for a cab as they would for an UberX. Cabbies will see how much they’d make on a given ride, with the power to accept or deny. Uber says taxi drivers could make more with Uber than from regular street hailing, while Uber and its taxi partners will take a cut of each ride.

“Call a cab”… a phrase never uttered by 20-somethings with smartphones. Uber’s rivalry with taxis could best be compared to Giants vs. Yankees (#tense). Starting from when Uber was UberCab, the disruptive startup clashed with taxi unions and regulators.

  • 2010: California transit organizations ordered Uber to cease and desist, and San Francisco threatened Uber execs with 90 days of jail time for every ride offered.
  • 2014: The Verge published leaked documents revealing Uber’s cutthroat tactics for poaching Lyft drivers.
  • 2018: A wave of suicides among cabbies called attention to record-high medallion prices and the challenges of competing against the modern convenience of ride-hail apps.
  • 2021: By last year, the pandemic and ride-hailing apps had pushed two-thirds of NYC yellow cabs off the streets.

If you can’t beat ’em, leverage them… The ride-hailing app that once vowed to disrupt cab commerce now thinks food-delivery services, public-transit partnerships, and traditional taxis will fuel its next growth phase. Plus, Uber is likely getting a great deal: it’s absorbing a massive fleet of drivers in one of its most lucrative markets during a dire driver shortage. For the taxi drivers, the road ahead is less clear.

Fink

Wall Street’s most powerful investor says globalization as we know it is ending — and blue-collar workers could benefit

End of an era… According to Wall Street’s $10T man, Larry Fink, three decades of globalization is ending. Refresher: globalization is the movement of products, tech, and jobs across borders through free trade. Yesterday the BlackRock boss told investors he believes Russia’s invasion of Ukraine will halt globalization and cause countries to “decouple” from the global economy.

  • Fink’s words echoed across the business world because BlackRock manages $10T in assets (think: pension funds and retirement accounts). That’s more than the GDP of every country except the US and China.

The big breakup… Many countries cut financial ties with Russia after its invasion: the US halted Russian oil imports, and major corporations stopped doing biz there. Meanwhile, the EU is scrambling to phase out Russian energy by 2027. But Fink says Russia’s aggression will also push countries to reduce dependence on each other and boost domestic production.

  • The cons: Fink expects that companies will bring supply chains closer to home, which could drive up prices as businesses rebuild operations and hire domestic workers. “Onshoring” is already happening in the US’s EV industry and in the chip biz.
  • The pros: Blue-collar workers in the US, Mexico, Brazil, and Southeast Asia could benefit from more local manufacturing jobs. Green-energy adoption could accelerate as countries invest in renewables to limit reliance on imported fossil fuels.

Globalization is a mixed bag… and deglobalization could have pros and cons too. In the past three decades, globalization helped US companies by driving down production costs and boosting profits. It also benefited American consumers by lowering prices (think: $100 4K flat screens from China). But globalization hurt blue-collar Americans by outsourcing their jobs to cheaper labor markets. Now deglobalization could reverse those effects by shifting production stateside (think: TVs made in the US by American workers — but they cost $600).

What else we’re Snackin’

  • Block: Google says Moscow is restricting access to Google News in Russia as part of a broader effort to censor Western internet companies. Russian journalists face 15 years in prison for posting “fake” info.
  • Garlic: No light at the end of the breadstick for Olive Garden’s parent company. Darden disappointed on earnings and lowered its yearly outlook, expecting that food and labor costs will keep soaring.
  • Hungry: Instacart says it’ll build micro-fulfilment warehouses in partnership with grocery stores like Aldi and Publix as it looks to out-deliver competition from Amazon and newer apps like Gopuff.
  • Deny: Toshiba stakeholders are fighting again, this time because shareholders rejected a plan from execs to split the Japanese conglomerate into two parts: one focused on electronics and one on energy.
  • Hacky: There’s something ominous in mum’s basement: researchers investigating recent cyberattacks on Microsoft, Nvidia, and Okta arrested seven British teens believed to be connected with the hacker group Lapsus$.

Friday

  • Earnings expected from: China Petroleum

Authors of this Snacks own: shares of Uber, Google, Netflix, Microsoft, Nvidia, and Amazon

ID: 2095977

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Latest Stories

Business

Tesla's recall reveals just how bad Cybertruck delivery numbers have been

Thanks to a recall of Tesla’s Cybertrucks, we now know how many of them have actually been delivered: 3,878 since the EV company began releasing them to customers in November.

In its third and fourth quarter earnings report, Tesla said that its current Cybertruck production capacity was greater than 125,000 a year. Musk had previously said he expected to produce 250,000 Cybertrucks a year by 2025.

Either way, that’s a lot more than the roughly 775 it’s delivered each month so far.

The recall is over an issue with the gas pedal pad that, the National Highway Traffic Safety Administration says when pressed, “may dislodge, which may cause the pedal to become trapped in the interior trim above the pedal.” The cause of the issue: “unapproved” soap that the manufacturer used to aid in getting the pad on the pedal.

A Cybertruck customer this week posted a TikTok about a terrifying incident in which this happened and “held the accelerator down 100%” in his 6,000+ pound vehicle. Thanks to some quick thinking where he held down the brake and put it in park, he wasn’t injured.

This is the long-awaited Cybertruck’s second recall since it came out five months ago.

Either way, that’s a lot more than the roughly 775 it’s delivered each month so far.

The recall is over an issue with the gas pedal pad that, the National Highway Traffic Safety Administration says when pressed, “may dislodge, which may cause the pedal to become trapped in the interior trim above the pedal.” The cause of the issue: “unapproved” soap that the manufacturer used to aid in getting the pad on the pedal.

A Cybertruck customer this week posted a TikTok about a terrifying incident in which this happened and “held the accelerator down 100%” in his 6,000+ pound vehicle. Thanks to some quick thinking where he held down the brake and put it in park, he wasn’t injured.

This is the long-awaited Cybertruck’s second recall since it came out five months ago.

Markets

Cocoa hits $11,000

Cocoa prices are breaking records on an almost daily basis — with cocoa futures closing at (another) all-time high of $11,020 per metric ton yesterday.

That’s up 158% since the start of the year, and over 4x on the typical prices seen in 2022 — as crop production continues to fall short of demand.

Major cocoa-producing nations like the Ivory Coast and Ghana, which between them grow about two-thirds of the world’s cocoa, have seen excessive tree failure due to disease, changing weather patterns, and hot, dry conditions causing devastating droughts.

As such, consumers are starting to see the effects of the largest cocoa supply deficit in over 60 years: “shrinkflation” and reduced-cocoa recipes might soon hit your favorite chocolate bars, and Hershey stock was recently downgraded. Unfortunately, the worst may still be yet to come: the International Cocoa Organization expects production to lag behind demand by 374,000 tons for the 2023-24 season.

Cocoa prices

Major cocoa-producing nations like the Ivory Coast and Ghana, which between them grow about two-thirds of the world’s cocoa, have seen excessive tree failure due to disease, changing weather patterns, and hot, dry conditions causing devastating droughts.

As such, consumers are starting to see the effects of the largest cocoa supply deficit in over 60 years: “shrinkflation” and reduced-cocoa recipes might soon hit your favorite chocolate bars, and Hershey stock was recently downgraded. Unfortunately, the worst may still be yet to come: the International Cocoa Organization expects production to lag behind demand by 374,000 tons for the 2023-24 season.

Cocoa prices
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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¢
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.

Business
Rani Molla
4/18/24

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."