Detail from an early appearance of the Apple Store online
It wasn’t enough that Steve Jobs came back to Apple and stripped its messy range down to a few core products. The iMac wasn’t enough to turn the company around either —not by itself. While it may not have seemed it at the time, the launch of the online Apple Store on November 10, 1997 turned out to be crucial component of the company’s survival.
There’s an argument that it was born of irritation rather than anyone seeing how useful it would be. But while there is truth in that, the full story is that Apple badly needed its own online store.
Back in the 1990s, there were no bricks-and-mortar Apple Stores. You had to buy Macs through specialist dealers or through big chain stores. The chains famously employed whatever the opposite of Geniuses is, and they all pushed whichever box they got the most commission on.
Given that Apple was rarely, if ever, the most profitable sale for someone in a store, what Macs were there tended to be ignored. And you don’t run a retail store by taking up space with inventory that isn’t selling, so Apple was being stocked by fewer places.
Shortly before the launch of its own online store, Apple announced a deal with CompUSA to create what it called a store-within-a-store. It meant a higher profile for Apple than before, but it was still under someone else’s control.
A Sears store selling a Macintosh Performa back in the day. Those are washing machines behind them.
“All that the salesman cared about was a $50 spiff,” Steve Jobs later told Walter Isaacson. “Unless we could find ways to get our message to customers at the store, we were screwed.”
Whereas apple.com/store was owned and run by no one but Apple itself.
There were few online stores for computers in the late 1990s, but what there was proved to drive Apple down this road though a combination of irritation and insight.
There was really only one online store for computers at the time, and that was Dell’s. The company didn’t design computers in the sense that Apple did, it really just packaged them, but at the time, it packaged them extremely successfully.
Dell had also circumvented the need for resellers and chain stores, by chiefly selling over the phone. Not only did it cut out the need and the cost of these other companies, it meant Dell could ask customers what they wanted and then give it to them.
Just as Apple was starting to do, Dell had got its stock of completed computers down to a minimum. “If I’ve got 11 days of inventory and my competitor has 80,” said Michael Dell at the time, “and Intel comes out with a new 450 megahertz chip, that means I’m going to get to market 69 days sooner.”
While few or no other sellers were doing much online, in 1995 Dell began to create its web store. It launched in July 1996 and by that December was earning $1 million per day.
Apple had to be aware of this success and had to see that it was a way that it too could go around resellers and get Macs in front of people. However, this was also Dell. This was the company whose owner Michael Dell famously wrote off Apple’s chances. “I’d shut [Apple] down and give the money back to the shareholders,” he said in October 1997.
And it is also the company who originally built this extremely successful online store using WebObjects —software tools created by Steve Jobs’s NeXT firm.
How Dell’s hugely successful online store looked around the time Apple launched its own
So Apple, having bought NeXT and brought back Steve Jobs, had the talent to make a store but it also had the need if it were to make its machines as easy to buy as they were intended to use. Michael Dell’s comment came after Apple had started to develop its online store, but it definitely smarted —as you can see in video of Steve Jobs launching the Apple online store.
You can see it, but you can’t really hear it. Video survives of the presentation, but it is close to inaudible.
What Jobs says in it, though, is directed both at potential buyers —and at Michael Dell.
“In 1996, Dell pioneered the online store and Dell’s online store has become, up till now, the standard of ecommerce sites,” said Jobs. “We’re basically setting a new standard for online ecommerce with this store. [And] I guess what we want to tell you, Michael, is that with our new products and our new store and our new build-to-order manufacturing, we’re coming after you, buddy.”
The new online Apple Store brought in $12 million of revenue in its first 30 days, for an average of $730,000 per day. That’s three-quarters of where Dell’s daily revenue had reached after its first six months. ‘
It’s not possible to compare Apple’s online sales then with how the online store does today. Apple doesn’t release figures that would help, and the company itself is radically different today. Back in 1997, there were no services, for instance, it was all hardware sales. And while there were physical stores you could Macs in —in October 1998, Apple announced a deal with Best Buy —there were no Apple Stores.
However, there surely wouldn’t be physical Apple Stores today if the online one hadn’t succeeded and if it hadn’t helped Apple survive. Similarly, resellers were declining, so even if Apple had managed to get through the 1990s, it’s likely that there would be few physical places to buy Apple gear.
Back in the day, this was considered high resolution. A typical opening screen from the online Apple Store in its earliest days.
So while it can only give a taste of how Apple has changed, it is possible to take the company’s latest financial announcements and break them down to give some slight basis for comparison.
From the last financial earnings call, if you focus solely on hardware sales alone and ignore businesses like Services which didn’t exist in 1997, Apple sold $570 million worth of devices each day in the last quarter.
The online Apple Store was key to getting Apple back up on its feet, but it’s also proved to be instrumental since the company became a born-again success.
It’s now a promotional tool as well, as Apple makes a big deal of taking down the entire store for hours when it is about to announce a new product.
While any other company would long for the world to notice when its online store is down, Apple has also used it to pull off something that surely no other company would dream of.
We no longer see the huge lines around the block as people queue up and camp out to be first to buy a new device. You can question why anyone would ever do that —though trust us, it is remarkably fun —but the optics were fantastic. News coverage never seemed to tire of showing us these lines of people, and that was free advertising that kept reminding the world that Apple was this popular.
And yet during Angela Ahrendts’ time as head of retail, Apple worked to at least reduce those lines.
Maybe the company saw that the furore was dying down by itself, but Apple took steps to instead have us waiting in front of our computers or iOS devices for the launches.
It’s done that by opening pre-orders ahead of the release date, and opening them at a specific time.
Nobody else gets worldwide headlines for taking their web store offline.
Now instead of the lines around the block, the news is always that devices have sold out in a very short time.
Apple’s online store is an incredible operation that usually manages to look simple. It’s hard to grasp just how many transactions go through it. But what’s easy to comprehend is that Apple owns and runs the whole process without any retailer or big chain reseller in the middle.
As it does with its hardware and software, Apple owns the whole stack in its online store and it absolutely maximises every benefit that brings.
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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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