There are a lot of worries today about technology’s harmful effects. How do you retain your famous optimism about it?
Look at how long people are living, the reduction of under-five mortality, the reduction in how poorly women are treated. Globally, inequity is down: poorer countries are getting richer faster than the richer countries are getting richer. The bulk of humanity lives in middle-income countries today. Fifty years ago, there were very few middle-income countries. Then there’s the ability of science to solve problems. In heart disease and cancer we’ve made a lot of progress; in some of the more chronic diseases like depression and diabetes … Even in obesity, we’re gaining some fundamental understandings of the microbiome and the signaling mechanisms involved.
So, yes, I am optimistic. It does bother me that most people aren’t.
Maybe you have successful person’s bias?
Of course, we have to factor that in. In my own life I’ve been extremely lucky. But even subtracting out my personal experience, I think the big picture is that it’s better to be born today than ever, and it will be better to be born 20 years from now than today.
One of the technologies on your list is lab-grown meat, which is still very tentative and expensive. Why did it make the cut?
Part of the reason I picked it is to remind people that clean energy does not solve climate change. Only about a quarter of emissions come from electricity generation. This is a category that people weren’t paying much attention to as a greenhouse-gas problem. And yet I think the path to solve it is clearer than in, say, cement or steel or other materials.
Another of your picks is the reinvented toilet, which you call the biggest advance in sanitation in 200 years. Why?
Building sewers, using clean water, having a processing plant—that’s the paradigm in rich countries. In low-income countries, the capital cost of a sewer system is just unattainable. This toilet takes the human waste, liquid and solid, and in most cases does some type of separation. The solids you can essentially burn. The liquids you can filter. That’s a huge effect on quality of life, in terms of both disgust and disease, in an increasingly urbanized world. The Gates Foundation has given out $200 million in grants to try to get this technology going. It’s not there yet.
Three of your picks are about reducing greenhouse-gas emissions. You lead a $1 billion investment fund, Breakthrough Energy Ventures. But it feels like there are already a lot of technological solutions to climate change. Do we really need more? Isn’t the biggest problem political?
No, the problems are when you say to India, “Provide electricity to everyone to have things we take for granted—heating, air conditioning.” Their path is to build more coal plants. That’s the cheapest form of electricity for them. In France they were asked to pay a 5% increase on their diesel price, and even that was unacceptable.
The politics is where you decide how much you’re going to put into basic research or how you’re going to make things attractive for innovative companies. But if we freeze technology today, you will live in a 4 °C warmer world in the future, guaranteed.
One of those picks is nuclear fusion. That’s something that’s always seemed just around the corner. What makes you optimistic about it?
The company that Breakthrough put money into, Commonwealth Fusion Systems—the methods they’re using allow you to get a dramatic reduction in the size and therefore the capital cost. It’s very impressive. There are over 10 companies pursuing fusion in different ways. Most of them will not work. But these projects certainly will make a big contribution. So I think it’s important we back fusion.
China is becoming a technology superpower. How do you think that will play out as fear about its power gets entrenched?
The idea that they’re starting to be innovative—that is good for the world.
Like most middle-income countries, they’re more than willing to do big projects. Think of the US in the ’50s and ’60s, Japan in the ’70s and ’80s, Korea in the ’80s and ’90s. Your technological capability gets really strong, and you’re willing to go out and do very, very ambitious things.
For the US, it’s good to have a sense that we have to renew our edge. In the ’70s and ’80s, when we were like, “Oh jeez, has Japan figured things out we haven’t,” we renewed our commitment to basic research. In fact, Japan was never going to overtake us in terms of scientific innovation. But I do think that was healthy for us.
These are edited excerpts from a conversation with Gates at his Seattle office on January 9. You can watch a longer version of the interview here.
These ten enterprise M&A deals totaled over $40B in 2019
It would be hard to top the 2018 enterprise M&A total of a whopping $87 billion, and predictably this year didn’t come close. In fact, the top 10 enterprise M&A deals in 2019 were less than half last year’s, totaling $40.6 billion. This year’s biggest purchase was Salesforce buying Tableau for $15.7 billion, which would…
It would be hard to top the 2018 enterprise M&A total of a whopping $87 billion, and predictably this year didn’t come close. In fact, the top 10 enterprise M&A deals in 2019 were less than half last year’s, totaling $40.6 billion.
This year’s biggest purchase was Salesforce buying Tableau for $15.7 billion, which would have been good for third place last year behind IBM’s mega deal plucking Red Hat for $34 billion and Broadcom grabbing CA Technologies for $18.8 billion.
Contributing to this year’s quieter activity was the fact that several typically acquisitive companies — Adobe, Oracle and IBM — stayed mostly on the sidelines after big investments last year. It’s not unusual for companies to take a go-slow approach after a big expenditure year. Adobe and Oracle bought just two companies each with neither revealing the prices. IBM didn’t buy any.
Microsoft didn’t show up on this year’s list either, but still managed to pick up eight new companies. It was just that none was large enough to make the list (or even for them to publicly reveal the prices). When a publicly traded company doesn’t reveal the price, it usually means that it didn’t reach the threshold of being material to the company’s results.
As always, just because you buy it doesn’t mean it’s always going to integrate smoothly or well, and we won’t know about the success or failure of these transactions for some years to come. For now, we can only look at the deals themselves.
Jumia, DHL, and Alibaba will face off in African ecommerce 2.0
The business of selling consumer goods and services online is a relatively young endeavor across Africa, but ecommerce is set to boom. Over the last eight years, the sector has seen its first phase of big VC fundings, startup duels and attrition. To date, scaling e-commerce in Africa has straddled the line of challenge and…
The business of selling consumer goods and services online is a relatively young endeavor across Africa, but ecommerce is set to boom.
Over the last eight years, the sector has seen its first phase of big VC fundings, startup duels and attrition.
To date, scaling e-commerce in Africa has straddled the line of challenge and opportunity, perhaps more than any other market in the world. Across major African economies, many of the requisites for online retail — internet access, digital payment adoption, and 3PL delivery options — have been severely lacking.
Still, startups jumped into this market for the chance to digitize a share of Africa’s fast growing consumer spending, expected to top $2 billion by 2025.
African e-commerce 2.0 will include some old and new players, play out across more countries, place more priority on internet services, and see the entry of China.
But before highlighting several things to look out for in the future of digital-retail on the continent, a look back is beneficial.
Jumia vs. Konga
The early years for development of African online shopping largely played out in Nigeria (and to some extent South Africa). Anyone who visited Nigeria from 2012 to 2016 likely saw evidence of one of the continent’s early e-commerce showdowns. Nigeria had its own Coke vs. Pepsi-like duel — a race between ventures Konga and Jumia to out-advertise and out-discount each other in a quest to scale online shopping in Africa’s largest economy and most populous nation.
Traveling in Lagos traffic, large billboards for each startup faced off across the skyline, as their delivery motorcycles buzzed between stopped cars.
Covering each company early on, it appeared a battle of VC attrition. The challenge: who could continue to raise enough capital to absorb the losses of simultaneously capturing and creating an e-commerce market in notoriously difficult conditions.
In addition to the aforementioned challenges, Nigeria also had (and continues to have) shoddy electricity.
Both Konga — founded by Nigerian Sim Shagaya — and Jumia — originally founded by two Nigerians and two Frenchman — were forced to burn capital building fulfillment operations most e-commerce startups source to third parties.
That included their own delivery and payment services (KongaPay and JumiaPay). In addition to sales of goods from mobile-phones to diapers, both startups also began experimenting with verticals for internet based services, such as food-delivery and classifieds.
While Jumia and Konga were competing in Nigeria, there was another VC driven race for e-commerce playing out in South Africa — the continent’s second largest and most advanced economy.
E-tailers Takealot and Kalahari had been jockeying for market share since 2011 after raising capital in the hundreds of millions of dollars from investors Naspers and U.S. fund Tiger Global Management.
So how did things turn out in West and Southern Africa? In 2014, the lead investor of a flailing Kalahari — Naspers — facilitated a merger with Takealot (that was more of an acquisition). They nixed the Kalahari brand in 2016 and bought out Takelot’s largest investor, Tiger Global, in 2018. Takealot is now South Africa’s leading e-commerce site by market share, but only operates in one country.
In Nigeria, by 2016 Jumia had outpaced its rival Konga in Alexa ratings (6 vs 14), while out-raising Konga (with backing of Goldman Sachs) to become Africa’s first VC backed, startup unicorn. By early 2018, Konga was purchased in a distressed acquisition and faded away as a competitor to Jumia.
Jumia went on to expand online goods and services verticals into 14 Africa countries (though it recently exited a few) and in April 2019 raised over $200 million in an NYSE IPO — the first on a major exchange for a VC-backed startup operating in Africa.
Jumia’s had bumpy road since going public — losing significant share-value after a short-sell attack earlier in 2019 — but the continent’s leading e-commerce company still has heap of capital and generates $100 million in revenues (even with losses).
Airbnb’s New Year’s Eve guest volume shows its falling growth rate
Hello and welcome back to our regular morning look at private companies, public markets and the gray space in between. It’s finally 2020, the year that should bring us a direct listing from home-sharing giant Airbnb, a technology company valued at tens of billions of dollars. The company’s flotation will be a key event in…
Hello and welcome back to our regular morning look at private companies, public markets and the gray space in between.
It’s finally 2020, the year that should bring us a direct listing from home-sharing giant Airbnb, a technology company valued at tens of billions of dollars. The company’s flotation will be a key event in this coming year’s technology exit market. Expect the NYSE and Nasdaq to compete for the listing, bankers to queue to take part, and endless media coverage.
Given that that’s ahead, we’re going to take periodic looks at Airbnb as we tick closer to its eventual public market debut. And that means that this morning we’re looking back through time to see how fast the company has grown by using a quirky data point.
Airbnb releases a regular tally of its expected “guest stays” for New Year’s Eve each year, including 2019. We can therefore look back in time, tracking how quickly (or not) Airbnb’s New Year Eve guest tally has risen. This exercise will provide a loose, but fun proxy for the company’s growth as a whole.
Before we look into the figures themselves, keep in mind that we are looking at a guest figure which is at best a proxy for revenue. We don’t know the revenue mix of the guest stays, for example, meaning that Airbnb could have seen a 10% drop in per-guest revenue this New Year’s Eve — even with more guest stays — and we’d have no idea.
So, the cliche about grains of salt and taking, please.
But as more guests tends to mean more rentals which points towards more revenue, the New Year’s Eve figures are useful as we work to understand how quickly Airbnb is growing now compared to how fast it grew in the past. The faster the company is expanding today, the more it’s worth. And given recent news that the company has ditched profitability in favor of boosting its sales and marketing spend (leading to sharp, regular deficits in its quarterly results), how fast Airbnb can grow through higher spend is a key question for the highly-backed, San Francisco-based private company.
- 2009: 1,400
- 2010: 6,000 (+329%)
- 2011: 3,1000 (+417%)
- 2012: 108,000 (248%)
- 2013: 250,000 (+131%)
- 2014: 540,000 (+116%)
- 2015: 1,100,000 (+104%)
- 2016: 2,000,000 (+82%)
- 2017: 3,000,000 (+50%)
- 2018: 3,700,000 (+23%)
- 2019: 4,500,000 (+22%)
In chart form, that looks like this:
Let’s talk about a few things that stand out. First is that the company’s growth rate managed to stay over 100% for as long as it did. In case you’re a SaaS fan, what Airbnb pulled off in its early years (again, using this fun proxy for revenue growth) was far better than a triple-triple-double-double-double.
Next, the company’s growth rate in percentage terms has slowed dramatically, including in 2019. At the same time the firm managed to re-accelerate its gross guest growth in 2019. In numerical terms, Airbnb added 1,000,000 New Year’s Eve guest stays in 2017, 700,000 in 2018, and 800,000 in 2019. So 2019’s gross adds was not a record, but it was a better result than its year-ago tally.
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