Dell has announced plans to spin off VMware as a standalone company, in a deal expected to bring in $9 billion.
VMware is a leading virtualization company, with its software powering some of the most critical digital infrastructure in the world. Dell originally acquired VMware as part of its EMC acquisition in 2015.
The two companies have agreed to a spin-off for VMware, one that will provide Dell with $9.3 – $9.7 billion.
“By spinning off VMware, we expect to drive additional growth opportunities for Dell Technologies as well as VMware, and unlock significant value for stakeholders,” said Michael Dell, chairman and chief executive officer, Dell Technologies. “Both companies will remain important partners, providing Dell Technologies with a differentiated advantage in how we bring solutions to customers. At the same time, Dell Technologies will continue to modernize its core infrastructure and PC businesses and embrace new opportunities through an open ecosystem to grow in hybrid and private cloud, edge and telecom.”
At the same time, VMware expects the spin-off to open new doors for their business.
“We will have an enhanced ability to extend our ecosystem across all cloud vendors and on-premises infrastructure vendors and a capital structure that will support growth opportunities,” said Zane Rowe, chief financial officer and interim chief executive officer, VMware. “Our strategic partnership with Dell Technologies remains a differentiator for us, and, as we execute on our multi-cloud strategy, we continue to provide customers our solutions and services on any public cloud and any infrastructure.”
Aside from those stated benefits, much of the relationship will remain unchanged, with the two companies continuing to work closely together. In fact, Michael Dell will remain chairman of the VMware board.
The deal is expected to close in the fourth quarter of 2021.
“It should not be called a credit card for sure in part because it’s sort of the anti-credit card,” says Affirm co-founder and CEO Max Levchin. “I don’t need to be provocative but the idea of credit cards fundamentally is to get you to spend, get into debt, and stay in debt. Literally, every single one of these things is the exact opposite for Affirm’s card.”
Max Levchin, CEO of Affirm, describes the company’s debit card as the anti-credit card:
Affirm’s Debit Card Is The Anti-Credit Card
It should not be called a credit card for sure in part because it’s sort of the anti-credit card. I don’t need to be provocative but the idea of credit cards fundamentally is to get you to spend, get into debt, and stay in debt. You will not know when you’re done paying off any specific purchase. You’re not really sure exactly how much you’re gonna pay. You should actually expect late fees if you miss a payment.
Literally, every single one of these things is the exact opposite for Affirm’s card. You know exactly what you’re going to pay. You know exactly what the schedule of repayment is and there’ll be no late fees under any circumstances. It’s sort of the exact opposite in many ways. It does serve the same purpose. You get to pay for things right now or over time.
Card Form Factor Is Extraordinarily Elegant
I don’t really know how long the card as a form factor will be with us, but I do think it’s extraordinarily elegant. The majority of the offline world certainly in the US still transacts with plastic and chips these days so I think it’s important to meet the customer where they are. I do know that our user base is primarily millennials and Gen Z’s. They love their debit cards they love to transact with them offline.
The purpose of this product was to bring by functionality that they have really loved online and really offline as well with us but have never had in a card. Particularly, a card that is embedded inside their daily everyday spend tool. The debit card form factor is a metaphor for everyday spend and that’s what we’re trying to get to.
What I Care About Is The Return Of The Country
The primary signal that I care about is the return of the country. We’re all kind of holding our breath a little bit to see when vaccines are coming. There are a bunch of reopenings and, knock on wood, everything sort of starts to come back to a little bit more normal. There’s just an incredible amount of opportunity to grow with this product that we have. It’s seen so much adoption in areas like travel, which has been effectively zero growth for the last several quarters because of the pandemic.
There are lots of interesting new challenges as the country reopens. The dominant thread is that there is that reopening creates a lot more opportunity for this product. We have proven that this product is what our customer wants and needs. This debit card will absolutely meet them where they are as they hopefully come out of their houses and go into restaurants and coffee shops and start traveling and buy tickets.
Affirm’s Debit Card Is The Anti-Credit Card, Says CEO Max Levchin
Google is reportedly switching from Oracle finance software to SAP, with the move occurring in the next few weeks.
Google made the announcement in an email to employees, seen by CNBC. The move doesn’t appear to be related to Google’s Supreme Court win over Oracle earlier Monday. Nonetheless, there is no love lost between the two companies.
As CNBC points out, Oracle refused to certify its software for Google Cloud for years, costing Google business as some companies were hesitant to use a cloud solution that didn’t have Oracle’s blessing. In response, Google started focusing on SAP deployment with its cloud offerings, rather than Oracle.
That relationship appears to be advancing to the software Google uses in-house, with it adopting SAP’s financial software and migrating away from Oracle.
“Digital transformation will come out as a faster trend out of the pandemic,” says Workday co-CEO Aneel Bhusri. “What’s been interesting about the pandemic is that for companies that were in the cloud they figured out how to how to thrive and adjust to the new world. Companies that weren’t in the cloud realized that they needed the flexibility, agility, and ability to plan instantaneously. They needed those capabilities.”
Aneel Bhusri, co-CEO of Workday, discusses how the pandemic will drive digital transformation forward at an even faster pace:
Digital Transformation To Be Faster Trend Out Of Pandemic
The first three quarters during the pandemic were challenging. The vagaries of subscription accounting models are such that it is a lag indicator. We expect new bookings growth to accelerate this year and that is our primary indicator and the way we run the business. We’re very excited about where we’re headed. That acceleration will probably take at least a year to show up in subscription accounting numbers just because of the way the model works.
What’s been interesting about the pandemic is that for companies that were in the cloud they figured out how to how to thrive and adjust to the new world. Companies that weren’t in the cloud realized that they needed the flexibility, agility, and ability to plan instantaneously. They needed those capabilities. In many ways, companies like Nike that are just such great market-leading companies, recognize that they needed to move this capability to the cloud. So I think actually digital transformation will come out as a faster trend out of the pandemic.
Employee Engagement Rose To The Top Of The List
It comes back to the flexibility and agility that that cloud solutions like Workday provide. We’ve been very fortunate. We’re so happy to have Laboratory Corporation of America become a customer. J&J is a customer. Visor’s a customer. AstraZeneca is a customer. I just feel honored to be able to support these companies who are doing the best they can to save our lives and are just doing amazing work with the vaccines and testing. We’ve always had a strength in the pharmaceuticals and diagnostics role. We’re going to do everything we can to make sure that they’re successful because they’re taking care of all of us.
Coming back to what we learned during the pandemic, employee engagement just rose to the top of every CEO’s list and every head of HR’s list. In a remote work orientation, it was harder to really understand how do employees think about the company they work at, their engagement level, their comfort with their manager, and if they are feeling fulfilled at work. We were already down the path at Workday with something called Pulse Surveys. We recognized that this emerging trend was going to be critical going forward.
We Fell In Love With Peakon So We Acquired Them
We concluded that we had to get in this market now, the market’s happening now, and Peakon is the well-known leader in this category. Peakon is a UK-based company with an amazing management team. We fell in love with the product and the management team so we made them part of Workday. They’re one of the new generations of companies that’s machine learning first.
They really use machine learning in the right way to guide decisions and really give you insight into how employees are thinking about the company that they’re working for and how engaged are they. That is a supercritical set of information that’s going to drive companies going forward.
Digital Transformation To Be Faster Trend Out Of Pandemic, Says Worday co-CEO Aneel Bhusri
During yesterday’s earnings call Disney CEO Bob Chapek said it has accelerated the company’s pivot towards a DTC-first business model. “Our recent strategic reorganization has enabled us to accelerate the company’s pivot, towards a DTC-first business model and further grow our streaming services,” says Chapek. “Disney+ has exceeded even our highest expectations, in just over a year since its launch with 94.9 million subscribers. ESPN+ and Hulu have also performed well, with 12.1 million and 39.4 million subscriptions, respectively.”
Chapek attributes the company’s massive streaming growth to its huge collection of brands. “The wealth of IP from our unrivaled collection of brands and franchises provides us with an incredible breadth and depth of storylines and characters to mine for Disney+ and our other streaming services,” says Chapek. “We have the ability to interconnect these storylines and characters in unprecedented ways as we saw with The Mandalorian and WandaVision tying into the broader Star Wars and Marvel franchises. We’re excited to continue exploring the endless possibilities that this unique ecosystem provides.”
DTC Results Improved By $650 Million
“We believe that we’ve got a great price-value relationship,” says Chapek. “I think the best insulation we’ve got (to lower churn) is to keep the price-value relationship very high and there’s no better way to do it than powerhouse franchises cranking out regular new releases on a monthly basis.”
Disney’s direct-to-consumer results have improved by nearly $650 million versus the prior year. “Last quarter, we guided to direct-to-consumer operating income declining by $100 million versus the prior year under our former segment structure,” says Disney CFO Christine McCarthy. “Our reported results are $750 million higher than that guidance.”
Lower Disney Losses Attributed To Disney+
Disney attributes their lower losses to the growth of the Disney+ streaming service. “A lower loss in the first quarter compared to the prior year was driven by subscriber growth partially offset by higher costs due to the launch and expansion of Disney+. With 94.9 million paid subscribers at the end of Q1, Disney+’s global net additions were 21.2 million versus Q4.”
“Disney+ Hotstar subscriber additions continued their strong growth trend with Disney+ Hotstar subscribers making up approximately 30% of our global subscriber base,” said McCarthy. “We also saw strong additions to our subscriber base from our November launch in Latin America.”
Disney Happy With Level Of Churn
Disney is also very happy with its level of churn especially as it relates to subscribers who came into the Disney+ service via their Verizon partnership which helped power its launch last year. “We are very pleased with what we’ve seen so far on the level of churn,” said McCarthy. “And as our product offering matures and we put more content into the service and our subscriber base becomes more tenured, we expect to see our churn rates continue to decline.
So in regard to the specific churn related to the anniversary of the Verizon launch promotion from last November 2020, we’re really happy with the conversion numbers that we have seen there going from the promotion to become paid subscribers.”
100 New Titles a Year
“With Disney+ originals along with the theatrical releases and the library titles, we’ll be adding something new to the service every week,” noted McCarthy. “We are very pleased with the engagement overall. We believe we’re going to reach that cadence of getting content on the service every week within the next few years. We’ve also set that target for 100-plus new titles per year. And that’s across Disney Animation, Disney Live Action, Pixar, Marvel, Star Wars, Nat Geo. And of course, we’ll continue to add more to our library as we go through time as well.”
“Given the value of growing our sub base, we are continuing to invest in high-quality content,” says McCarthy. “We believe that content is the single biggest driver to not only acquiring subs, but retaining them.”
Reddit has hired Andrew (Drew) Vollero as its first CFO as the company prepares to go public.
Reddit has been steadily working towards an IPO, recently becoming more transparent about its user base. In December, the company reported it had 52 million daily users in October. Previously, the company had only reported its monthly user base.
The company is now taking the next step, hiring Vollero to help it prepare to go public. Vollero comes from Allied Universal, the largest US security and facility services firm. Prior to his work at Allied Universal, Vollero was Snap’s first CFO during its IPO.
“Drew is an industry thought leader, who brings a track record of building a global finance organization for high growth companies,” said Steve Huffman, co-founder and CEO of Reddit. “He will be a tremendous addition to our Executive Team, as Reddit continues accelerating our business and user growth.”
Reddit is much smaller than its social media rivals, but its growth rate far exceeds them. This makes it an attractive option for advertisers, and could set it up for a public offering sooner rather than later.
Elon Musk has officially dubbed himself ‘Technoking of Tesla’ and CFO Zach Kirkhorn is now ‘Master of Coin.” Seriously, this title change was in an SEC filing. In other news, Howard Stern is still ‘King of All Media’, and Dwayne Jonson would like to be called Dwayne Johnson but says calling him ‘The Rock’ is also fine.
“Effective as of March 15, 2021, the titles of Elon Musk and Zach Kirkhorn have changed to Technoking of Tesla and Master of Coin, respectively. Elon and Zach will also maintain their respective positions as Chief Executive Officer and Chief Financial Officer.”
This title change by Musk is not to be confused with Techno King Zenki Fujiyoshi, who made this techno video that garnered over 600,000 views on YouTube:
Obviously, Musk has a penchant for messing with all of us and especially the SEC since they took away his Board Chairman title.
In his annual letter to Berkshire Hathaway shareholders, Warren Buffet admitted that he personally made a mistake that cost the company $11 billion. He said that the $11 billion loss resulted from a write-down in the value of a few subsidiary and affiliate businesses that Berkshire Hathaway owns.
The final component in our GAAP figure – that ugly $11 billion write-down – is almost entirely the quantification of a mistake I made in 2016. That year, Berkshire purchased Precision Castparts (“PCC”), and I paid too much for the company.
No one misled me in any way – I was simply too optimistic about PCC’s normalized profit potential. Last year, my miscalculation was laid bare by adverse developments throughout the aerospace industry, PCC’s most important source of customers.
In purchasing PCC, Berkshire bought a fine company – the best in its business. Mark Donegan, PCC’s CEO, is a passionate manager who consistently pours the same energy into the business that he did before we purchased it. We are lucky to have him running things.
I believe I was right in concluding that PCC would, over time, earn good returns on the net tangible assets deployed in its operations. I was wrong, however, in judging the average amount of future earnings and, consequently, wrong in my calculation of the proper price to pay for the business.
PCC is far from my first error of that sort. But it’s a big one.
The pandemic and its accompanying restrictions on travel, business, and work, has caused company’s to rethink business models going forward. In other words, businesses like their new focus on being lean and mean, even while they get back to normal sales levels. In a Wall Street Journal article, Tripadvisor CFO, Ernst Teunissen says that the company is going to hold the line on adding back costs. Trip Advisor reduced expenditures by a staggering 32 percent in 2020 as governments worldwide banned and restricted travel.
“We’re going to very much resist just adding back what we had before just because we can,” Mr. Teunissen said. “You could argue that a company should have the discipline to always do that, but a pandemic really sharpens your focus.”
Tripadvisor has reduced the company headcount by nearly 62 percent, from 4,194 pre-pandemic to 2.596 currently. Simultaneously, like most other companies, Tripadvisor employees have been predominantly working remotely and for the most part, they plan to continue with that strategy.
Mr. Teunissen said he is looking closely at Tripadvisor’s real estate footprint to determine how much office space the company will need after the pandemic, as it expects to adopt a hybrid model of remote and office work.
Tripadvisor has roughly 30 offices spanning about 600,000 square feet and its lease obligations totaled $168 million as of Dec. 31. The company is considering subletting more of its space and, in some cases, moving to smaller locations, Mr. Teunissen said.
“Business is really simple, and people are more productive, and they’re doing things that can lead to growth and opportunity,” says ServiceNow CEO Bill McDermott. “That’s the whole point of digital transformation. Right now, companies are hunkered down with systems that are absolutely wearing them out. It’s time to make the bold move, pivot to ServiceNow, and let’s get in there and fix the job.”
Bill McDermott, CEO, and President of ServiceNow says that only one in four digital transformation projects actually deliver positive ROI due to lack of integration:
Most Digital Transformation Projects Don’t Deliver
We have a situation on our hands where digital transformation, cloud computing, and business model innovation, are all converging at once. ServiceNow is the platform, of all the enterprise platforms, that really makes business work. One of the big lessons that business has right now is trillions have been poured into digital transformation yet only one in four projects actually deliver positive ROI. The reason for that is lack of integration.
Our system integrates with all the existing systems as well as all the collaborative tools in the enterprise. From day one, the customer gets it up and running swiftly because it’s in the cloud. They begin to derive value from it because you automate the way the work is done and ultimately, you’re now in a position to serve your customers the way they want to be served. It’s a speed game and ServiceNow is at the top of its game.
Companies Have To Create New Business Models
We’re an example. If you’re going to grow your company you’re going to take advantage of digital transformation. This is the only way out and it’s the only way forward. In the 20th Century companies put in big heavy on-premise systems. The issue is now they can’t, in a frictionless economy, immediately pivot those business models because they haven’t digitally transformed their business.
About 25 percent of the opportunity of businesses out there today over the next three years will come from white space places they are not in today. They have to create new business models. They have to think about new partnerships and new routes to market. Without the baseline of a platform like ServiceNow they’re not going to get there.
That’s The Whole Point Of Digital Transformation
I am very optimistic that the economies of the world not only are going to recover but actually going to do very well this year because people are going to be investing in digital transformation. We have seen that does not cost jobs. On the contrary, it frees people up to do things like go after new markets, derive new ideas, and so forth, because the AI revolution is also on.
We have built-in machine learning and AI into our platform. So 80 percent of the soul-crushing work people don’t want to do is done by the Now platform. The 20 percent that involves a human immediately gets initiated through a workflow order from the Now platform.
Business is really simple, and people are more productive and they’re doing things that can lead to growth and opportunity. That’s the whole point of digital transformation. Right now, companies are hunkered down with systems that are absolutely wearing them out. It’s time to make the bold move, pivot to ServiceNow, and let’s get in there and fix the job.
Fastest-Growing Pure-Play SASS Silicon Valley Company
If you look at our actual earnings results, they were stunning and obviously achieved beyond expectations performance across the board. We also followed that through in the guide. We’ll continue to be the fastest-growing pure-play SASS Silicon Valley company. We will continue to have the best margin profile of all of them. Obviously, we’re going to continue to gain market share in industries around the world, in geographies around the world, particularly in Europe and Asia Pacific, and Japan.
We will also gain market share on personas. Lots of people are getting the memo now that ServiceNow obviously dominated the IT automation market but the same backbone platform has enabled us to change the employee experience, the customer experience. In these tough times with COVID we can write low-code onto our platform in minutes and roll out new applications to hundreds of thousands of people so companies can move super fast.
We keep the guide consistent with the revenue that we generated in 2020. If there’s an upside to that… fantastic. That’s what good companies should do. They should go beyond expectations when they can but we stand by the guide and we’re looking forward to having a great year.
ServiceNow Was Born In The Cloud
The whole idea of ServiceNow is so different than SAP which was a company that needed to pivot to the cloud in 2010. We did that and that was very successful. ServiceNow was born in the cloud. It’s a very young company with tremendous growth opportunity on the organic front. Having said that, (we would be in interested in an acquisition) if you have a situation where there is a partner out there that has a substantial TAM, that can be highly complementary and synergistic with ServiceNow on the revenue side.
It also would have to do great things for the customer, because we have a precious platform and we jealously protect the integration power of that platform. A lot of things would have to be right but I can tell you as responsible business people we always look at it. We don’t need it to make our goals but you always have to look at it. We do want to be the defining enterprise software company the 21st century. That’s our plan.
“I believe SMBs deserve innovation,” says Bill.com CEO and founder Rene Lacarte. “That innovation that we focus on is around the digital processes that are lacking in the back office of SMBs. We’ve seen it in part with the pandemic showing that there’s a need for being digital and to be able to run your business from anywhere. It’s a requirement now. The pandemic reinvention is real and something that we think is going to stick around.”
Rene Lacarte, CEO of Bill.com, says that the pandemic reinvention is real for small and medium-sized businesses and that they need to innovate and digitize the back office:
SMBs Deserve Innovation
At the core of why I started the company is that I believe SMBs deserve innovation. That innovation that we focus on that I really believe is missing out there is around the digital processes that are lacking. We digitize the back office. Then we connect that back office to the banking system so money can move, to the accounting system so records can be reported, and to the accounting firms that they’re involved with.
All of that connection creates a connective tissue that operates and automates the financial operations. Because of that it’s driving demand, it’s driving opportunity, and it’s driving growth across our existing customers as well as the new customers coming in. That’s how we do it. That’s how we bring the back office into the back pocket.
Pandemic Reinvention Is Real For SMBs
Nobody gets into business to actually do the back office. I grew up in small businesses. My parents had small businesses. My grandparents had small businesses. A lot of our friends had small businesses. This was always the bane of existence. This is what people had to do on Friday night. Who wants to do this on a Friday night? That’s what people are doing when they’re trying to run their business from their back pocket when they don’t have the tools. They have to do it at night at home.
We take care of that. We automate the processes. That’s what’s driving the demand, it’s the opportunity. We’ve seen it in part with the pandemic showing that there’s a need for being digital. This opportunity to be able to run your business from anywhere is a requirement now. The pandemic reinvention is real and something that we think is going to stick around.
Pandemic Reinvention Is Real For SMBs, Says Bill.com CEO Rene Lacarte
“There’s a perniciously false effective markets argument made for shorting,” says Tesla CEO Elon Musk. “It is vice disguised as virtue. Short selling is frankly used against the public. We don’t have shorting in private companies. The vast majority of companies, over 90 percent are private, and you cannot short them. Yet somehow, private companies get things done.”
Elon Musk, CEO of Tesla, explains in an interestinginterview with Sandy Munro, why short selling is an attack on the people and is actually vice but described by its greedy advocates as virtue:
Short Selling Is An Attack On The People
There are very few areas in life where you can sell things that you don’t own. Short selling, where you can sell shares that you don’t own, when I said it was vestigial I meant it came from an era when stocks were traded by people traveling on horseback to exchange stock certificates. In order to have the transaction speed not take weeks, somebody would say well the stock certificate is coming on that horse. I don’t have the stock certificate right now but I promise you that I’m getting the stock certificate and the rider is going to be here in New York from Chicago in three days and then I’ll be able to give you the stock certificate.
That’s where this whole silly thing arose. But then the problem is like the way short selling is used today is it’s frankly used against the public. Most people aren’t aware that short selling even exists. Then the ones that are aware very few of them know actually how to use it. It’s basically like .01 percent of stockholders know how to use short positions to get ahead. I think it is effectively an attack on the public.
It Is Vice Disguised As Virtue
Tesla was under a massive attack by the short and distort, where they take a short position and then they do everything possible to trash the company six ways to Sunday, and they were successful. This has now happened to Tesla twice. It happened in 2013, and it happened in 2017 through 2019. The intensity of the attack was crazy. I was like man, it would cause you to lose faith in humanity, the extent of the greed of this that went on.
We don’t have shorting in private companies. The vast majority of companies, over 90 percent are private, and you cannot short them. Yet somehow, private companies get things done. There’s a perniciously false effective markets argument made for shorting. It is vice disguised as virtue.
IBM today announced third-quarter 2020 earnings results. Although overall revenue was slightly down again cloud revenue was up big.
“The strong performance of our cloud business, led by Red Hat, underscores the growing client adoption of our open hybrid cloud platform,” said Arvind Krishna, IBM chief executive officer. “Separating the managed infrastructure services business creates a market-leading standalone company and further sharpens our focus on IBM’s open hybrid cloud platform and AI capabilities. This will accelerate our growth strategy and better position IBM to seize the $1 trillion hybrid-cloud opportunity.”
Highlights for the third quarter include:
GAAP EPS from continuing operations of $1.89
Operating (non-GAAP) EPS of $2.58
Revenue of $17.6 billion, down 2.6 percent (down 3.1 percent adjusting for divested businesses and currency) — Cloud & Cognitive Software revenue up 7 percent (up 6 percent adjusting for currency)
Total cloud revenue of $6.0 billion, up 19 percent — Total cloud revenue of $24.4 billion over the last 12 months, up 22 percent (up 25 percent adjusting for divested businesses and currency)
Red Hat revenue up 17 percent (up 16 percent adjusting for currency), normalized for historical comparability
GAAP gross profit margin of 48 percent, up 180 basis points; Operating (non-GAAP) gross profit margin of 49 percent, up 160 basis points
Net cash from operating activities of $15.8 billion and free cash flow of $10.8 billion, over the last 12 months
“In the third quarter we continued to deliver strong gross profit margin expansion, generated solid free cash flow and maintained a sound capital structure with ample liquidity,” said James Kavanaugh, IBM senior vice president and chief financial officer. “We have the necessary financial flexibility to increase our investments in hybrid cloud and AI technology innovation and skills, while remaining committed to our long-standing dividend policy.”
Forbes created a cool two-minute video timeline of the richest billionaires in America over the last ten years. The current wealthiest American, of course, is Amazon founder and CEO Jeff Bezos who is worth $179 billion. He is followed by Microsoft co-founder Bill Gates who is only worth $111 billion. Interestingly, both of these billionaires would be even richer had Bezos not divorced and Gates didn’t give away a huge chunk of his fortune to his family foundation.
Bezos’s divorce cost him $38 billion in stock at 2019 prices. If he had stayed married and held onto his shares he would be $57 billion richer and be worth an astounding $236 billion. Bill Gates has reportedly given away over $50 billion to charitable causes over the years. If he had held on to his Microsoft shares who knows, he might even be richer than Jeff Bezos!
Rounding out the current Top Ten Richest American Billionaires are Facebook’s Mark Zuckerberg at $85 billion, investor Warren Buffett at $73.5 billion, Oracle founder Larry Ellison and current potential TikTok investor at $72 billion, former long-time Microsoft CEO and current Clippers owner Steve Ballmer at $69 billion, PayPal-Tesla-SpaceX entrepreneur Elon Musk at $68 billion, Google co-founders Larry Page and Sergey Brin at $67.5 and 65.7 billion, and last but not least Sam Walton daughter and Walmart heiress Alice Walton at $62.3 billion. Notably, Alice Walton is the richest woman in the world.
Video Timeline: Richest Billionaires Over The Last 10 Years
We started Aiera with the idea of just trying to help clients engage with the advances that were coming through tech. Our focus was really Amazon. Aiera spawned from an Amazon research report, where we’re trying to just advocate for clients that they have to start taking this seriously in terms of how industries will change. We thought one way to help them do that aside from just the stock price and what Amazon had been doing in the past was to help them look to how their own roles could change.
Aiera stands for AI Equity Research Analysis. The AI is silent. Within Aiera we’re really trying to pay respect to the research analysts role. We’re trying to learn that the best we can in terms of the rules that they follow to understand markets that are constantly in flux, equities, and where their stories are constantly changing. We’ve been at this for about three years now.
Analysts really want to understand the why. They want to understand the critical events within conferences, filings, and news. We want to make that as easy as possible. What we’re trying to help clients with the most is helping them be able to be updated on the 40,000 events that we are processing right now. We want to help them access those events easily. Ultimately, whether it’s through alerts, search, or comparisons, really be more informed than they’ve been in the past. That’s how we’re trying to revolutionize the more traditional sell-side models.
A little bit is generational (in terms of the use of Aiera). When we started Aiera the business side was very focused in New York. All of our clients were in New York and there was a lot more face to face and a lot more in their offices showing them Aiera on a big screen. But inevitably we’d run into well how do we connect to the WiFi? Well, can you see what I’m trying to show you here? Whereas on a screen you can just follow the cursor. It’s easier to express to that other side exactly what it is trying to show them when selling software.
My generation still very much values that face-to-face. But when I look at our devs and most of them have worked distributed from the beginning they don’t value that same kind of face-to-face. I can also look to the other generations particularly those who are in tech and say they don’t need it in the same way. They don’t even know maybe what they’re missing in the same way that I feel from what’s happened during COVID.
Aiera is an event intelligence and insights platform founded by former Internet equity research analyst, Ken Sena (CEO), and Amazon Alexa engineering lead, Bryan Healey (CTO). Aiera began as a collaboration on how natural language processing could improve investment workflow. Aiera now covers over 40,000 live events per year, including earnings calls, analyst days, management conferences, and more, tying these events to millions of documents it is simultaneously processing and analyzing, and offering users the ability to set intelligent monitors to track what matters to them most.
“Revolve is a whole new species of fashion retail,” says Jesse Timmermans, the CFO at Revolve, in an interview with Entrepreneur Network partner Business Rockstars. “We’ve taken the traditional retail model and evolved that experience to be laser-focused on the largest buying power in the world, the millennial.” (View video below)
Timmermans says that the biggest challenge of being a CFO for him is balancing risk, cost, opportunities and reaching the right decision for the long-term. “There is a vast amount of data available out there, so how do you take all of that data, translate it, find the right indicators, and make the right decision for the long term,” he said.
On Competition: You Have to Offer More
Customer behavior is changing fast and customer expectations are increasing all the time with the larger more transactional based digital retailers making it harder and harder to compete, so you have to go beyond that and offer more. Beyond free shipping, it has to be fast shipping. Beyond free returns, it has to be easy returns.
We at Revolve treat the home as a dressing room, so we allow the customer to return, we encourage the customer to try new things. We offer a lot of emerging brands, so it’s important for that customer to try something on in their home and to be able to return free and easy.
Constantly Monitoring Data to Read Brand Performance
At Revolve we carry a lot of emerging brands, so we need to continually read and react to the performance of these brands. After launching on the site we read within 24 hours how that brand is performing, how that style is performing. We read many many attributes on each piece of clothing and then we make a quick call on do we go deeper or do we cut the brand and the style?
About Revolve
Revolve is an ecommerce startup that was founded in 2003 and is headquartered in Cerritos, California. The company describes itself as the virtual home for an unrivaled collection of over 700 of the world’s most-coveted established and emerging brands in women’s and men’s designer apparel, shoes, and accessories. Based in the Los Angeles area, Revolve’s is deeply rooted in the Southern California lifestyle from which it was founded, where a savvy view of fashion and fun-loving attitude are infused into the entire customer experience.
“Zoom is now integrated into all aspects of our lives,” says Zoom CFO Kelly Steckelberg. “We look forward to the day that the pandemic is over and we can resume more normal activities and yet I don’t think that in itself is a threat to Zoom. People have grown accustomed to it. Working from home is not a fad. We are all really adjusting to this new way of life and are integrating Zoom into all aspects.”
We indicated coming into the quarter that we really expected strong growth in Q2. We saw that across all geographies and all industries. International grew over 600 percent year over year. We saw strong performance in industries like education and nonprofits. We also had our largest Zoom Phone deal to-date signed in Q2. There was really strong performance across all aspects of our business.
What we saw from the retention perspective is that working from home is not a fad. People are really adjusting to this new way of life. They’re integrating Zoom into all aspects. We saw strong retention not only in our enterprise but in customers with fewer than ten employees as well. As we’ve continued to focus on leveraging both the public cloud as well as our own co-located data centers that’s why we saw improvement in the gross margins. We are going to continue to optimize across all of those metrics as we focus on the rest of the year.
Hired Over 500 Employees In Q2
We have worked very tirelessly. Our entire Zoom team is doing everything we can to continue to support not only our existing customers but to ensure that every customer who has a need for Zoom has access to it. We have focused quickly on scaling up our employee base. We have hired over 500 employees in Q2. That’s the largest growth we’ve had to date. We are also working from home like many of our customers are and really supporting our employees to ensure that we can meet the needs of the customer. We are leveraging great partners like AWS and Oracle as we need to in order to ensure that we have the capacity to continue to support our customers along the way.
We continue to look for opportunities to invest to grow the top-line (while free cash flow rose by 2,000 percent year over year). We had record operating margins in the quarter at 41.7 percent. We expect those to come down for the rest of the year as we are focusing on investing in more salespeople to meet the demand and more engineers to continue to innovate and build our platform. Of course, we are always looking for opportunities with M&A, technology, or teams that can really augment our platform or our team to continue to drive that top-line growth.
Video Is The Future Of Communications
We really believe that video is the future of communications. With that, we want our Zoom customers to be able to use the Zoom platform with other best of breed products in platforms that they choose. We have integrations with many products out there and that’s great. We want our customers to be able to use the products that they know and love and have them work together seamlessly.
What we’ve heard from our customers is that while everyone is really longing for the day that we get to go back to a more normal life before COVID that in many ways they are loving the flexibility that this has brought to them. They get to wake up with their children, have a full day of work and then have dinner with their family at the end of the day.
End Of Pandemic Is Not A Threat To Zoom
I really believe that Zoom is now integrated into all aspects of our lives. We look forward to the day that the pandemic is over and we can resume more normal activities and yet I don’t think that in itself is a threat to Zoom. We have grown accustomed to it. We have seen so many additional use cases. If you think about Formula One having these great premium experiences leveraging Zoom now in bringing clients into the paddock.
There is a company in Singapore using it to do virtual tours. They did half of their new properties that came to sale in Q2 they showed them virtually and sold them this way. We are starting to see more and more ways that people are making more efficient and more effective. This way of communicating and working is here to stay.
Zoom CFO Kelly Steckelberg: End Of Pandemic Is Not A Threat To Zoom
“The (COVID-19 crisis) has really transformed what used to be a business platform primarily used for enterprises to now be used for all kinds of new consumer and small business use cases,” says Zoom CFO Kelly Steckelberg. “I don’t see everybody going back to the way that it was before. I don’t think that everybody that’s working from home today is going to go back to their office necessarily or that these small business owners are going to stop using it in the way that they’ve had.”
Kelly Steckelberg, Chief Financial Officer of Zoom, discusses how the COVID-19 crisis has transformed Zoom into a consumer platform with a 20-times increase in daily usage:
Zoom Has Transformed Into a Consumer Platform
We are proud that we’ve enabled over 90,000 schools in over 25 countries around the globe to use a Zoom. That along with many other use cases that we didn’t contemplate before this such as grandmother’s using Zoom to read bedtime stories to their grandchildren across the country. We are also seeing small businesses using it now to do tutoring or give yoga lessons. It has really transformed what used to be a business platform primarily used for enterprises to now be used for all kinds of new consumer and small business use cases.
That has caused a 20-times increase in our daily participants from just December through March. Yes, with that has come new opportunities and challenges as well including opportunities to educate and enable our users in a very different way than we needed to before. Coming into this pandemic and seeing the increase in demand we have been very focused on ensuring that the platform is stable and reliable and available for everybody who needs it.
When we had our earnings call on March 4th we did talk about this that we already had started to see the rise in demand. While I’m not confirming guidance today, we did indicate then that we expected to see an increase in our cost of goods sold that would have an impact on our gross margins. That is consistent with what we’ve continued to see.
I Don’t See Everybody Going Back To The Way It Was
In terms of what does this mean going forward and are we trying to convert some of these users, we have a freemium version of our product that many of these new users are using today. We are really focused on ensuring that everybody and anybody who needs Zoom or has a use for it today can get access to it. We really want to focus on minimizing the disruption and communication during this difficult time for everyone.
It’s too early to tell what comes next. Ideally, in a few months, we’re all back to a more normal state. I don’t see everybody going back to the way that it was before. I don’t think that everybody that’s working from home today is going to go back to their office necessarily or that these small business owners are going to stop using it in the way that they’ve had. So we’ll just see what that brings. it’s really too early to tell today.
Zoom Has Transformed Into a Consumer Platform, Says Zoom CFO Kelly Steckelberg
“Our view is that the commercialization of autonomous driving for passenger vehicles will probably take a bit longer than people would think,” says Richard Zhang, CFO of Full Truck Alliance. “We think the commercialization of autonomous driving for trucks will probably take place a lot sooner than it will take place in the passenger car vehicle sector.”
Full Truck Alliance is a multi-billion dollarvalued company that is becoming the Uber of trucks throughout China. The fragmentation of the trucking industry in China between independent truckers and shippers has resulted in an empty load rate of over 40 percent, about four times higher than in the United States. The Full Truck Alliance app and online platform connects shippers to truckers in real-time enabling huge reductions in empty loads.
Richard Zhang, CFO of Full Truck Alliance based in China, discussed the company’s future in an interview on CNBC International TV this morning:
Full Truck Alliance in China is the Uber for Trucks
The problem we’re trying to solve is very simple because there are high inefficiencies between matching with the truck drivers and also matching with the shippers. The empty load rate in the US is only ten percent while the empty load rate in China is 40 percent. The empty load rate is very similar to the vacancy rate in the hotel business. The reason is that the market here is highly fragmented. You have highly fragmented truck drivers and highly fragmented shippers, lots of SMEs.
Before we came into existence the matching between the truck drivers and shippers were taking place across a thousand offline marketplaces in China. What we have been trying to do is bring that offline marketplace online and use our algorithms in the back office to match automatically the truck drivers and the shippers. We are trying to reduce that empty load rate to well below 40 percent.
Monetization Via Membership and Uber-Like Fees
Our monetization strategy for Full Truck Alliance is as a product of a merger between two companies, Truck Alliance and also Yunmanman a little over a year ago. Post-merger we started monetization and the monetization takes place in two ways. Number one is we are charging a membership fee for the shippers and also very similar to Uber or DiDi we’re charging a take rate on the transactions themselves.
We were very close to achieving our 2018 profit objective. We are actually very marginally close to break-even at the current moment and we have no doubt that we’re going be making earnings in 2019.
Autonomous Driving for Trucks Will Happen First
Our view is that the commercialization of autonomous driving for passenger vehicles will probably take a bit longer than people would think. We think the commercialization of autonomous driving for trucks will probably take place a lot sooner than it will take place in the passenger car vehicle sector. Therefore we are deploying a certain amount of resources into that sector in the form of investment.
We have decided to be a strategic investor in an autonomous driving truck company for them to actually develop that technology and for us to actually use. The mandate for the partner is to actually put a fleet on the road in China to start working with our shippers in the next 12 to 24 months. That’s our mandate and so it depends on how successful they’re going to be at executing our strategy.
Marketers often think that their voice is not listened to and that there is often a disconnect with C-suite execs. Unilever CMO Keith Weed said, “I often joke with my CFO, he counts where the money’s going, I say where the money’s coming from.” How can you as a marketing executive effectively get through to others in your organization?
Marketing Week recently asked several prominent marketers how they ensure their voice is heard by the rest of the C-suite:
The key thing is to talk to them about how you can help them achieve their objectives rather than trying to convince them to help you achieve yours. Many people approach marketing with an open mouth but in reality, many people don’t understand it. Business leaders see it as a tax on their business. The role of a marketing leader is to help them understand that marketing is an enabler that helps them achieve their business objectives and their business strategy. Once they see it as something they own then they’ll be prepared to invest in it.
The secret to having your voice heard in the C-suite is caring passionately about what all the other people around the table do. If you’re myopically focused on just the marketing then you won’t be taken seriously. You need to understand everything about the finances of the business, about how the sales channels are working, about the HR problems, and the organizational opportunities. You need to understand the whole thing.
Debrah Dolce, SVP, Group Brand & Marketing Director, TJX Europe
I think to be effective in the C-suite, clearly, it’s going to be about relationships and a business approach that can showcase the impact that marketing can have on the commercial side of the business as well as the long-term brand building and customer engagement that we’re obviously all responsible for.
For me, it would very much be about the partnership and the relationships within the C-suite. As the world becomes more connected and more integrated I see that only becoming more and more important. To function as a high-performing exec team it’s going to take everybody to care about the customer. I think that’ll be critical for all marketers moving forwards to share that passion.
Keith Weed, Chief Marketing and Communications Officer, Unilever
There is no stainable growth other than consumer or customer demand-led growth and marketers should be at the core of consumer demand-led growth. If you can do that you can tell the people around the table where the growth is coming from. I often joke with my CFO, he counts where the money’s going, I say where the money’s coming from, and that’s important for business.
The way marketing leaders can ensure that their voices are heard in the C-suite, number one is they’ve got to be able to talk the language. So really understand what the business is about, understand finance, and then think about you know what is core to making that business grow. If you can combine all those three you’ll have a great voice in the C-suite.
Tony Miller, VP, Digital Marketing & CRM, EMEA, Disney
In order to make our marketing leaders’ voice heard to the rest of the C-suite group it’s about really open dialogue, being honest with your peers, and having the ability to have debate and encourage debate and discussion around things that are happening in the industry and specifically within your brand and your sector.
I think marketers today need to ensure that they have everything backed up through data and insight, whether it’s about kind of proving return on investment of that marketing value through brand engagement or customer satisfaction or sales and return on investment. Having the data and letting that help speak and guide those conversations.
John Rudaizky, Partner, Global Brand and Marketing Leader, EY
I would say from point of view, how does your marketing and your brand contribute to the growth agenda? You really have to work hard at making sure that that’s clear. Most businesses are looking at growing through very disruptive times at the moment. The next thing is from a digital transformation point of view, I think marketing has never been more relevant in the boardroom.
When you think about the total customer experience being changed through digital and technology, marketing has probably got the best ever moment in time to have a seat in that conversation. Thirdly, I’d say trust, every business is going through change and if you think about digital things reputations can be affected overnight. From a brand point of view, marketing and brands can play an active role in helping the boardroom navigate through these disruptive times.
AppZen has released a report, The State of AI in Business Spend, which shows that enterprise companies are only auditing 10 percent of employee expenses in expense reports submitted, which makes it very unlikely they will catch mistakes or even outright fraud.
The report, which used anonymized data from hundreds of companies, found that companies were missing fraudulent expenses related to strip clubs, escorts, tattoos, gambling, and much more.
AppZen offers a solution that processes data crawled from the internet through their AI-powered algorithm to automatically identify the type of business being expensed and flagging it for human auditors.
AppZen software uses AI to help companies find expense report abuse
Anant Kale, CEO of AppZen, discusses in an interview on Fox Business, how AppZen helps companies use AI to audit 100 percent of reimbursable employee expenses in order to avoid getting ripped off:
Companies Using AI to Identify Expense Report Fraud
AppZen has released its Business Spend Report where we have compiled private and anonymized data from hundreds of companies across a variety of industries. The results are very surprising. What we found are that companies who are relying on human auditors are auditing less than ten percent of their expenses. This means that if you are an employee of one of these companies the chances of ever getting caught is close to zero.
Companies that are using artificial intelligence are auditing 100 percent of their expenses within minutes. They are finding lots of surprising things. One of them is concerning duplicates. You would be surprised to find how many employees are getting paid for the same expense. This means that some employees are submitting the same expense with different descriptions and different amounts which is very difficult for auditors to catch.
AI Makes it Harder for Employees to Lie on Reports
Another expense is where employees or a group of employees are submitting dinner meals with customers with what seems to be a restaurant when in reality when the artificial intelligence technology goes out and scours the web for that data we found that sometimes those or strip clubs and sometimes even escorts. That is happening far more often that you would like to believe.
These were going through the companies systems before AI came in. The reason why they are very difficult for human auditors is that they just don’t have the time necessary and the number of expenses being reviewed is much less with humans.
AI Software Looks at 100% of Reimbursable Expenses
When AI does it, it looks at each and every expense. It doesn’t just use the data on the expense report but also uses things like social data and reviews from websites and then puts the doc together. So it’s very difficult to escape from what the AI technology can find out versus what a human auditor can.
What the AI technology does is unravel what’s going on with the expenses. This lets the company determine what the best way to deal with information is. Often, it includes better communication with employees. We are seeing all kinds of things including mistakes, fraud, and non-compliance with company policies and sometimes government regulations.
These are on all kinds of expenses around travel, hotel, and airfare, which you would believe are far more controlled in companies today.
