Every January, Facebook’s CEO, Mark Zuckerberg, likes to go public with a resolution for the year ahead. His 2018 one to “fix Facebook” has clearly been an epic fail, given the stream of privacy scandals that have dogged the social-media behemoth over the past 12 months. Other high-profile tech companies, including Twitter and Google, have also found themselves under fire again this year.
The backlash—or techlash—is going to roll on through 2019, and it could get even worse unless the tech giants resolve to:
1. Do a far better job of protecting people’s data
This primarily applies to Facebook, which seems constitutionally incapable of keeping users’ information out of the hands of those who shouldn’t have it. In spite of the Cambridge Analytica affair, which broke in March and ended up with Zuckerberg being hauled in front of Congress to explain what went wrong, Facebook continues to leak personal data like a sieve. But it’s not the only Silicon Valley firm with an issue: in October it emerged that Google’s social network had exposed the data of half a million users because of a security flaw.
If big tech companies haven’t done so already, they should conduct a top-to-bottom audit in 2019 to ensure that private information can’t be exposed by their own apps, by third-party apps, or by any other means. In the US, they should also support efforts to create a national data privacy regime inspired by Europe’s General Data Protection Regulation, which came into effect this year and has tough financial penalties for offenders. If their lobbyists try to water down any new US regulations, it will be a clear sign the companies aren’t serious about keeping this particular resolution.
2. Fight harder against hate speech and fake news
This year provided yet more evidence of the way in which social media can be manipulated to cause violence around the world. Facebook admitted that it had allowed posts that incited violence against the Rohingya population in Myanmar, and its platform was temporarily banned in Sri Lanka because of concerns it was being used to whip up tensions there. In the US, Twitter tergiversated over whether to take down the accounts of far-right conspiracy theorist Alex Jones and his InfoWars outlet but finally did so.
There were some encouraging signs that tech companies are finally starting to take bolder action against fake information. They will rely heavily on better algorithms to help them police content in 2019, but this approach has inherent limitations. And it’s about to face an even stiffer test with the advent of AI-generated fake videos and audio files. These “deepfakes” promise to make it even harder to decide what information to trust. Social-media firms will need to commit significant resources and know-how to help tackle the deepfake threat next year.
3. Do more to promote workforce diversity
Workers in Silicon Valley are still overwhelmingly male and white or Asian. Big tech firms like Twitter, Facebook, and Google have pledged multi-year efforts to boost diversity, and some regularly break out employment figures by race and gender to track progress.
But the rate of change still feels glacial to many, including an African-American former executive at Facebook who recently made public a memo he wrote accusing the company of “failing its black employees and black users.” In response, Facebook said it’s committed to doing all it can to be a truly inclusive company. Civil rights groups and the media will be watching it and other Silicon Valley firms closely in 2019 to see if they live up to their diversity promises.
4. Pay a fair share of taxes
All companies try to minimize the amount of money they hand over to tax authorities, and big tech firms are no different. But public outrage at their efforts to avoid taxes through complex, globe-spanning webs of accounts has grown as their profits have soared. Countries including the UK and France are now pushing for new digital taxes on companies like Apple, Google, and Facebook. To stop the techlash from turning into a global taxlash too, tech giants should commit in 2019 to start unwinding their controversial tax-avoiding arrangements.
5. Stop using PR firms to smear critics
This resolution should be easier to make following revelations by the New York Times earlier this year about Facebook’s use of a company called Definers Public Affairs. The PR firm sought to discredit some Facebook critics by insinuating that they were financed by groups related to George Soros, a well-known investor who is frequently the target of anti-Semitic attacks. It was also behind the publication of dozens of articles attacking Google and Apple for unsavory business practices.
6. Curb anticompetitive instincts
There’s nothing Silicon Valley loves more than a monopoly, and plenty of tech giants have built up dominant positions in their markets. Monopolies aren’t necessarily harmful to consumers or the broader economy, but big tech firms have abused their dominance to unfairly crush potential competitors. This year, antitrust officials in the European Union hit Google with a $5 billion fine for alleged anticompetitive behavior; the company is appealing.
The case is yet another sign of growing concern about Big Tech’s market power. This isn’t limited to Europe: US antitrust officials have also said that they will be taking a harder look at tech firms’ behavior. Silicon Valley’s tech giants should tread far more carefully in 2019 if they want to avoid more legal headaches.
7. Keep reminding themselves of their resolutions
As anyone who’s made New Year’s resolutions knows, it can be really hard to keep them. Having a regular reminder helps, so the bosses of Silicon Valley’s biggest firms should resolve to find novel ways to keep their commitments top of mind.
Here’s a suggestion for Facebook’s Zuckerberg. In 2009, with the world economy in turmoil, his resolution was to wear a tie every day as a reminder that Facebook needed to get serious about developing a sustainable business model. In 2019, one of his resolutions should be to wear a tie and a suit to work every day as a reminder of the deeply serious issues Facebook now needs to fix. He has, after all, had plenty of practice wearing the combo at congressional hearings into Facebook’s failings.
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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