Wednesday Oct.28, 2020

🛍 Postmates delivers holiday shopping

_Trying to get something delivered pre-Postmates_
_Trying to get something delivered pre-Postmates_

Hey Snackers,

Juicy news: the European Parliament has declared that veggie burgers can, in fact, be called "burgers." Farmer lobbyists are Beyond salty about the decision.

Markets dipped as more than 20 US states reported COVID-19 cases at or near records. But the tech-heavy Nasdaq inched up ahead of earnings from Apple, Amazon, Google, and Facebook tomorrow. They must've coordinated in the Big Tech group chat.

Scented

Postmates reaches peak “Delivery Everything” with LA retail shopping

Need that Santal 26 White Concrete Candle... stat. Food delivery app Postmates is launching a new retail delivery platform, starting in LA. It includes boutique stores like Estee Lauder’s Le Labo, Zadig & Voltaire, and Anastasia Beverly Hills (soooo LA). From a "Shop" tab in the Postmates app, users can get clothes, makeup, and home goods dropped off same-day.

  • Postmates can capitalize on demand for contactless holiday shopping.
  • Businesses can do the same without building their own delivery tools.

Ran out of patchouli essential oil... Postmates wants to deliver your energy-shifting incense as fast as it drops off truffle pizza. If enough merchants join, Postmates Shop could be an appealing alternative to Amazon Prime — especially since Postmates plans to expand it to other cities in 2021.

  • Faster: Instead of waiting a few days for your silk pajama set, you can get it as quickly as pad thai (#instantgratification).
  • Local: The charming boutiques you used to visit pre-corona probably aren't on Amazon — but they could be on Postmates.

"Delivery Everything" is here... The delivery system is the hardest part. If you have one, you can deliver almost anything — and there’s no better time to start doing that than during a pandemic. That's why food delivery apps have expanded beyond noms. The first step was convenience stores: Postmates x Walgreens, DoorDash x CVS, Instacart x 7-Eleven. The next step is retail: DoorDash x Macy's, Instacart x Sephora, and Postmates Shop (the boldest delivery pivot of them all).

Ride

Harley-Davidson ditches the pursuit of Millennials to rev up Boomer classics

Heard it from a mile away... Harley-Davidson stock surged 22% yesterday after the motorcycle legend reported expectation-beating earnings. Harley's quarterly sales fell 8% compared to a year ago, but profit spiked 39%. That's because Harley's new CEO Jochen Zeitz has been majorly streamlining:

  • Slash costs: Harley laid off ~10% of its employees. It's also closing underperforming dealerships and some international operations to zero in on core markets.
  • Optimize sales: Zeitz is cutting ~30% of Harley's least profitable models (hardcore). And he wants customers to pay full price for recently discounted two-wheelers.

Bring back the bicep tats... and the head bandannas. Before Zeitz took over in February, Harley was chasing a new customer base: Millennials. It tried to win young love with cheaper, smaller rides like electric motorcycles and bikes. The old CEO wanted to launch up to 100 of these models. The new CEO doesn't care if a 25-year-old from Williamsburg likes it:

  • Harley's going back to its OG strategy of making big, expensive motorcycles for diehard fans.
  • 10 popular models made up more than two-thirds of Harley's sales. Harley's now honing in on those Baby Boomer favorites instead of its other 27.

Harley's choosing short-term gain over long-term growth... Harley's cost-slashing, Boomer-focused plan means higher profits now. But its US bike sales have fallen for five years straight through 2019. Meanwhile: cuter, youth-friendly motorcycles have lifted sales for rivals like Polaris and Eicher. Harley needs to take Millennials along for the ride to notch long-term growth.

What else we’re Snackin’

  • ShopTok: Shopify is partnering with TikTok to help its 1M+ merchants sell products through shoppable video ads.
  • Softie: Microsoft earnings beat expectations across the board as its Azure cloud business grew 48% from last year.
  • Zap: London is using UV lights to sanitize its subway network (aka: the tube) — escalator handrails are getting zapped.
  • Bling: LVMH and Tiffany are discussing new terms for their merger after LVMH tried to ditch the $16B acquisition.
  • Jolly: Amazon is hiring 100K seasonal workers in the US and Canada to meet holiday demand (so many rice cookers).
  • Gassy: Oil giant BP posts its fifth-straight quarterly loss — Shell, Chevron, and Exxon also report this week.
  • Cheeto: Microchip giant AMD is buying rival Xilinx for $35B, accelerating consolidation in the semiconductor industry (exciting).

🍪 Thanks for Snacking with us! Want to share the Snacks? Invite your friends to sign up here.

Wednesday

Disclosure: Authors of this Snacks own shares of Uber, Microsoft, Shopify, and CVS

ID: 1387882

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Latest Stories

Tech

China makes Apple remove WhatsApp, Threads, Signal and Telegram from app store

In its latest move to restrict foreign tech, Beijing has ordered Apple to remove a number of popular messaging apps from its app store there, including WhatsApp, Threads, Signal and Telegram.

These apps had only been available through VPNs but were popular nonetheless, according to the Wall Street Journal.

Apple said the Chinese government asked them to remove the apps in the iPhone maker’s second biggest market over “national security concerns.” Last week, China told its state-owned telecoms to phase out the use of US chips by 2027.

Apple said the Chinese government asked them to remove the apps in the iPhone maker’s second biggest market over “national security concerns.” Last week, China told its state-owned telecoms to phase out the use of US chips by 2027.

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."