Thursday May.28, 2020

📸 YouTube gets Insta-Zucked

Instagram: "_Beautiful day in Ibiza... also link in bio for this CBD wine_"
Instagram: "_Beautiful day in Ibiza... also link in bio for this CBD wine_"

Hey Snackers,

Important Unicorn update: scientists finally recorded the mystical sounds of the "Arctic Unicorn" (aka, the narwhal). The narwhals' whistles and clicks paired with the crackling sounds of glacial fjords make for a relaxing aquatic track (waiting for the Narwhal ASMR channel).

Markets rallied again on hopes for smooth economic reopenings across the US — the Dow closed above 25K for the first time since March, and the S&P 500 made it back above its 200-day moving average.

Stream

Instagram will share ad revenue with influencers for the first time ever

Less CBD lotions on your Insta feed... Something we can all get behind. And it might happen now that Facebook-owned Instagram is adopting YouTube's money-maker strategy: ad revenue sharing with content creators. It starts with IGTV, the one Instagram feature that you (probably) never use:

  • IGTV: Instagram launched the video app back in 2018 to compete with YouTube. You can use it separately, or directly through the Insta app to watch/upload up to 1 hour of video.
  • Insta will start running ads on IGTV, then give creators a 55% cut of revenue from their vids (Google has the same split for YouTube creators — #Zucked).

This is a first... In 2019, Instagram made $20B on the ads it placed in your feed and between friends' stories — that accounted for 25% of Facebook's total revenue. But Instagram has never shared ad revenue with creators before (even though creators drive usage):

  • "Influencer marketing" is the main way creators can monetize their Insta followings — eg: "casually" posing with a tub of protein powder or an oversized watch in the Maldives.
  • "Revenue sharing" on IGTV gives influencers a 2nd (and possibly much larger) money-making stream for their personal brands.

It's all about the user-generated content... Creators follow the ad bucks. By intro'ing revenue-sharing, Instagram may woo more famous creators onto IGTV. More popular creators = more popular content = more users = more ad money for Facebook. If Instagram's 1B+ users start tuning into IGTV to see their favorite YouTuber, Alphabet (YouTube's owner) is in a Zuck load of trouble.

Preserve

The Unicorn that won't expire: Apeel raises $250M for food preservation

Bringing sex apeel to food waste solutions... Apeel Sciences is like an anti-aging cream, but for your avocados. And it just hit a $1B+ valuation after raising $250M from investors like Oprah, Singapore's government, and Katy Perry (waiting for the invite to the investor conference);

  • Today, 40% of food grown goes to waste, according to Apeel. And it's worse in the corona-conomy: with restaurants and colleges closed, milk is being dumped and veggies are turning to mulch.
  • Apeel offers a food-preserving solution: Its proprietary plant-based product acts like a 2nd peel on your fruit's skin, slowing water loss and oxidation (aka, rotting). That can triple shelf-life of produce - so far this year, Apeel saved 20M pieces of fruit.
  • The catch: Right now, it's only "apeeling" avocados, asparagus, lemons, and limes. Eventually, it could expand to the wider world of fruits and veggies.

You can't buy Apeel (directly)... Apeel's customers are big grocery chains like Kroger that are looking to shrink their "shrinkage" — aka, how many fruits they have in store vs. how many they can actually sell (no one wants the mush avocado). By reducing food inventory that gets wasted, Trader Joe's can save big money.

"Is this avo apeeled?"... If consumers start to ask that question, Apeel has won. Brand labels matter — if shoppers associate Apeel with 3X shelf life, it could gain consumer love (and even more investor $$$). Slapping a label on it for consumers like you and us could boost sales for Apeel, retailers, and fruit producers.

Drive

Amazon might acquire a self-driving tech company to help automate deliveries

"Disneyland on the streets"... What Zoox wants to bring to the world — and don't call it a robo-taxi or self-driving car service: Zoox wants to build "an advanced mobility service." In 2018, the self-driving car company (sorry) hit a $3.2B valuation. Now, it might get acquired by Amazon ... but reportedly at a lower value.

  • Zoox tried to differentiate itself by bringing the triple whammy of autonomous vehicles together as one: self-driving, electric, taxi. That brought in big investment bucks. But now...
  • Bigger competitors are going for that same hat-trick: Uber acquired a self-driving startup, GM snatched up Cruise Automation, Google's Waymo started testing self-driving taxis, and Tesla has said electric robotaxis will be ready this year.

Amazon might get Zoox at a discount... Investors aren't so hot on Zoox anymore now that all these bigger, better-funded companies are going for the robotaxi gold. Amazon is seizing the moment to level up its driverless tech ambitions, without having to build anything from the ground up. Zoox gets some much needed cash, and Amazon gets some much desired tech.

If automation is involved, Amazon is probably interested... Amazon is all about speed, effectiveness, and cost. Where it can cut out expensive humans for tireless robots, it likely will.

  • In 2012, Amazon paid $775M to acquire robotics startup Kiva Systems — now it has 10K of their robots in warehouses fulfilling orders (and potentially saving it billions).
  • Last year, Amazon invested $530M in self-driving tech company Aurora Innovation — by acquiring Zoox, Amazon could get even closer to its goal of having driverless vehicles deliver its goods.

What else we’re Snackin’

  • Bubi: Mobile-first Quibi adds AirPlay streaming in hopes that'll attract more viewers — people aren't Quibi-ing while subway-ing (and advertisers want to bail).
  • Magical: Disney plans to reopen its Florida Magic Kingdom on July 11th, followed by Epcot on July 15th (with limited attendance and mandatory mask-wearing).
  • Electric: GE sells its lightbulb biz for $250M, dropping its last direct link to consumers.
  • Off: Boeing will lay off nearly 7K workers this week for a total of 12K job losses, but it's also re-starting 737 production.
  • Rent: Advantage files for bankruptcy, just a few days after its rental car peer Hertz did the same (both formerly private equity owned, both left heavily indebted).

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Thursday

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

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“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.

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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.

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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.

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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.

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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.

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