Twitter’s Jack Dorsey is under fire from Elliot Management as the investor seeks to push him out as CEO.
Paul Singer, founder of Elliot Management, has managed to acquire a 4% stake in the social media company with the goal of pushing for a CEO change. At the heart of the issue is Dorsey’s time being split between the company he originally co-founded and his new company Square, where he also serves as CEO. There is also concern that Dorsey plans on spending several months living in Africa this year, further raising questions about his ability to focus on his role as Twitter’s head.
Twitter recently announced its first $1 billion quarter, illustrating the untapped potential the company has. According to Real Money’s Eric Jhonsa, many investors applaud Elliot’s moves, and believe Dorsey and upper management are largely to blame for Twitter being eclipsed by newer rivals.
At least one high-profile individual is coming to Dorsey’s defense, as Elon Musk has tweeted his support. Like Dorsey, Musk also serves as CEO of two companies, and that perspective likely plays a role in his support.
Just want say that I support @Jack as Twitter CEO. He has a good ❤️.
Foxconn is informing investors that it plans to “reach full seasonal capacity by the end of March.”
Foxconn is one of the biggest electronic manufacturers, and the primary maker of Apple’s iPhone. The company has been dealing with restrictions the Chinese government has imposed on travel and business, leading to its factories in China to be shut down. Three weeks ago the company received permission to reopen its Zhengzhou factory, although it was only at 10% capacity initially.
According to the presentation (PDF) to investors, Foxconn is focused primarily on the safety of its employees, and it continues to comply with governments’ guidelines and requirements regarding the reopening of its factories.
“As of today, the production resumption has reached 50% of seasonal required
capacity,” reads the document. “Based on the current schedule, we shall be able to reach full seasonal capacity by the end of March.
“There are still plenty uncertainties which we can not quantify the potential impact on the full year. However, AI, semiconductor and 5G are still critical catalysts for the long-term. Therefore, we believe some demands will be pushed out to later of this year.”
The coronavirus has already led to Apple, Microsoft and many other companies issuing updated guidance, as the virus continues to spread and impact a variety of industries.
Twitter is encouraging employees worldwide to work from home, if at all possible, in an effort to help contain the spread of the coronavirus.
As the coronavirus, or COVID-19, continues to spread around the world, governments and companies alike are trying to contain it. Japan recently began recommending that companies encourage their employees to telecommute where possible. Amazon has begun relying on video interviews for some positions, rather than in-person interviews. Now Twitter has followed suit, encouraging its employees to work from home if they are able.
“In addition to the travel, event and visitor restrictions that we previously shared, today we provided additional guidance as we look to protect the health and safety of our workforce. Beginning today, we are strongly encouraging all employees globally to work from home if they’re able,” reads a company blog post. “Our goal is to lower the probability of the spread of the COVID-19 coronavirus for us – and the world around us. We are operating out of an abundance of caution and the utmost dedication to keeping our Tweeps healthy.
“We are working to make sure internal meetings, all hands, and other important tasks are optimized for remote participation. We recognize that working from home is not ideal for some job functions. For those employees who prefer or need to come into the offices, they will remain open for business. Our Real Estate & Workplace team is increasing deep cleaning and sanitizing in all spaces, as well as more visual reminders for personal hygiene best practices and pre-packaged, pre-composed, and pre-plated food options.
“Working from home will be mandatory for employees based in our Hong Kong, Japan, and South Korea offices due in part to government restrictions. Our criteria will evolve over time as we get more information, and we will communicate to affected Tweeps as appropriate.”
Twitter’s stand illustrates the effect the virus is having on companies around the world, as governments and medical personnel struggle to deal with the outbreak.
Huawei is turning to its own chip-making abilities in an effort to bypass a ban cutting off its access to U.S. technology.
The U.S. has alleged that Huawei maintains backdoors in its network equipment, backdoors that are reserved for law enforcement use. As a result, officials have claimed Huawei represents a clear security risk, and that its equipment could be used by Beijing to spy on companies and governments around the world. In fact, Huawei has been accused of basically being an arm of the Chinese government.
In an effort to slow Huawei’s dominance, the U.S. banned the company and prohibited U.S. firms from doing business with it without special license. That has yet to slow its growth, however, as the company continues to be one of the dominant network equipment providers.
Huawei is stepping up its efforts to bypass the U.S. ban. According to Bloomberg, the company is turning to its own chip-making capabilities, selling as many as 50,000 network base stations in the fourth quarter, base stations that are completely free of U.S. chips or technology. Ultimately, the company would prefer to go back to using U.S. chips, but it may soon be too late.
“It’s still our intention to return to using U.S. technology,” Tim Danks, U.S. executive in charge of partner relations, told Bloomberg. Danks did, however, acknowledge that the longer Huawei uses its own chips, the harder it will be to go back to U.S. chips. This is likely a result of the natural decisions, dependencies and forks in the road that come with any development cycle.
Either way, the ongoing battle between the U.S. and Huawei shows no sign of abating.
Microsoft just announced a bevy of new features for Microsoft Teams, bringing Outlook integration, targeted communication, new files experience and more.
Microsoft is currently battling Slack for dominance in the corporate messaging space. Slack has recently netted some high-profile customers, driven in part by companies who compete with Microsoft not wanting to be dependent on their software. On the other hand, Microsoft has at least double Slack’s user base and touts Teams’ deep integration with the rest of their software as a key advantage.
With this latest round of updates, that integration is front-and-center, starting with Outlook.
“Teams is the hub for getting work done with your team—but we know that that is not the only way people communicate,” writes Marissa Salazar. “We have built this new integration between Outlook and Teams to make it easy to collaborate no matter where the conversation is taking place. The user can move an email conversation from Outlook, including attachments, into a Teams chat or channel conversation by clicking on the ‘Share to Teams’ in Outlook. They can also share a conversation from Teams to an Outlook email by clicking on the more options (‘…’) icon in a conversation.”
The update also brings targeted communication, allowing team members to use @mentions to send communication to everyone assigned to a particular tag. The update also rolls out the new SharePoint-based file experience to all users. Another interesting feature is live captions in Teams meetings, which should help “those who are deaf or hard of hearing, have different levels of language proficiency, or are connecting from loud locations.”
All-in-all, the February update includes a number of significant improvements that are sure to help Microsoft continue gaining new users.
Facebook is the latest organization to cancel a major conference as a result of the coronavirus, cancelling this year’s F8.
As COVID-19 continues to spread, its impact is being felt across industries. Companies, such as Apple and Microsoft, have issued warnings they will miss quarterly guidance as a result of the virus. Numerous companies pulled out of RSA Conference 2020, and MWC Barcelona was canceled over concerns. Now, Facebook joins the list of companies whose business and plans are being impacted.
“This was a tough call to make — F8 is an incredibly important event for Facebook and it’s one of our favorite ways to celebrate all of you from around the world — but we need to prioritize the health and safety of our developer partners, employees and everyone who helps put F8 on,” writes Konstantinos Papamiltiadis in a Facebook News for Developers post. “We explored other ways to keep the in-person part of F8, but it’s important to us to host an inclusive event and it didn’t feel right to have F8 without our international developers in attendance.
“We remain committed to the city of San Jose, where we’ve hosted F8, and its community. Every year, we donate a portion of F8 ticket sales to an organization working to diversify the tech industry. This year, we’re doubling that donation amount to $500,000 and will prioritize organizations serving local San Jose residents. We also typically host local students onsite at F8. Working with the next generation of developers is one of the highlights of what we do — and this year, we will still provide an F8-inspired experience for those students in lieu of hosting them at the event itself.”
Microsoft has issued a statement warning investors it will miss its quarterly guidance for its Windows business as a result of the coronavirus.
As the coronavirus continues to impact companies and supply chains, its far-reaching effects are continuing to be felt. Apple recently issued a statement saying it would miss its guidance as a result of the virus. Now Microsoft expects its More Personal Computing business to miss revenue for the same reason.
“On Jan. 29, as part of our second quarter of fiscal year 2020 earnings call, we issued quarterly revenue guidance for our More Personal Computing segment between $10.75 and $11.15 billion, which included a wider than usual range to reflect uncertainty related to the public health situation in China,” reads the statement. “Although we see strong Windows demand in line with our expectations, the supply chain is returning to normal operations at a slower pace than anticipated at the time of our Q2 earnings call. As a result, for the third quarter of fiscal year 2020, we do not expect to meet our More Personal Computing segment guidance as Windows OEM and Surface are more negatively impacted than previously anticipated. All other components of our Q3 guidance remain unchanged.
“As the conditions evolve, Microsoft will act to ensure the health and safety of our employees, customers, and partners during this difficult period. We will also continue to partner with local and global health authorities to provide additional assistance. We deeply appreciate the commitment of the people and organizations that have united to address this health emergency; our thoughts are with all those affected across the world.”
As the coronavirus spreads, Japan is now encouraging companies to have their employees telecommute in an effort to contain the virus.
According to Reuters, “Japan has 160 cases of infections from the disease known as COVID-19, as well as 691 discovered on board the Diamond Princess cruise ship docked south of Tokyo. On Tuesday, broadcaster NHK reported a fourth death among passengers.”
As a result, at a cabinet meeting Tuesday, the government unveiled a plan to urge companies to have their employees work from home. “Rather than trying to contain the disease outright, authorities are seeking to slow its expansion and minimize deaths,” Reuters reports. “Telecommuting, or working online or from home, would reduce the infection risk from people gathered in one place.”
The news comes as governments around the world are struggling to contain the virus, with some experts warning it could turn into a pandemic. Cases have cropped up in areas outside China, with experts not always clear how the virus spread to those areas. Further exacerbating the situation is that some individuals infected experience only mild symptoms, yet may still be contagious.
As the virus continues to spread, it’s likely other governments will take similar measures as Japan.
Apple analyst Ming-Chi Kuo has sent out a note to investors predicting Apple will release a Mac powered by an ARM chip in the first half of 2021.
Apple has long been rumored to be moving toward ARM-based Macs, rather than relying on Intel’s processors. While Intel may be the industry standard, as the computer market has moved toward laptops and mobile devices, Intel has struggled to keep pace with the needs of companies, such as Apple, that want to build powerful computers in sleek designs.
Recent MacBook Pros have struggled to maintain performance due to heat issues, resulting in the processors throttling to keep from overheating. The only solution is to build bigger, bulkier laptops that have enough fans to provide the necessary heat dissipation, something that goes against Apple’s entire design philosophy.
In contrast, Apple has had tremendous success with its ARM-based processors in the iPhone and iPad. When the 2018 iPad Pro was released, it was faster than 92% of all laptops, including Apple’s own. The most impressive thing is that this level of performance was achieved without a single fan, while delivering all-day battery life.
As a result, experts have believed Apple has been working to port macOS to ARM processors and readying the developer tools necessary to help third-party software developers make the transition. ARM-based Macs would allow Apple more control over its own devices and product release roadmap, while giving the company the ability to customize performance for its computers.
According to MacRumors, Kuo’s note included the following details:
“We expect that Apple’s new products in 12-18 months will adopt processors made by 5nm process, including the new 2H20 5G iPhone, new 2H20 iPad equipped with mini LED, and new 1H21 Mac equipped with the own-design processor. We think that iPhone 5G support, iPad’s adoption of innovative mid-size panel technology, and Mac’s first adoption of the own-design processor are all Apple’s critical product and technology strategies. Given that the processor is the core component of new products, we believe that Apple had increased 5nm-related investments after the epidemic outbreak. Further, Apple occupying more resources of related suppliers will hinder competitors’ developments.”
If Kuo’s prediction is correct, this will usher in a new era for Apple and open a world of possibilities for the Mac.
In its ongoing battle with Microsoft Teams, Slack has scored two major wins as SiriusXM and Uber have both deployed the messaging app to their employees.
Microsoft Teams recently doubled Slack’s user base, helped by the app’s deep integration with the rest of Office. Slack has maintained, however, that its users are more engaged and shot down concerns that it couldn’t effectively compete with Microsoft. Underscoring Slack’s claims, it has been scoring a number of significant wins, including IBM and now SiriusXM and Uber.
“Collaboration is key to our success, which is why we decided to use Slack as part of our efforts to bring our employees together,” said Bill Pratt, SVP and CIO at SiriusXM. “We see Slack as an important day-to-day productivity tool for our organization.”
Similarly, according to tweets by Uber employees, it seems the ride-hailing company made the switch to Slack yesterday.
Given the size of the messaging market, there’s no reason Teams and Slack can’t both exist with a healthy user base. With Slack’s recent gains, the company obviously is doing well convincing users it is not only viable, but competitive.
Internet service providers (ISP) are suing the state of Maine to prevent a law designed to protect consumer privacy from going into effect.
In June 2019, Maine Governor Janet Mills signed a law designed to prevent ISPs from “the use, sale, or distribution of a customer’s personal information by internet providers without the express consent of the customer.” The law had bipartisan support and passed the state senate unanimously.
According to Ars Technica, the data covered by the law includes “Web-browsing history, application-usage history, precise geolocation data, the content of customers’ communications, IP addresses, device identifiers, financial and health information, and personal details used for billing.” All of the above data is extremely valuable to ISPs, giving them plenty of motivation to fight the law.
The lawsuit cites the First Amendment and the U.S. Constitution’s Supremacy Clause. The ISPs say their First Amendment rights will be violated by their being limited from advertising and marketing to their customers. They say the law violates the Supremacy Clause because a prohibition against sharing data would prevent the ISPs from cooperating with federal agencies.
Given that a recent court ruling allows states to set laws governing privacy and net neutrality, laws that may go beyond those the federal government enacts, the ISPs may have an uphill battle winning their case. It’s probably a safe bet the citizens of Maine are rooting against them.
Dell Technologies has agreed to sell RSA to Symphony Technology Group, in an effort to streamline its business portfolio and strategy.
The Symphony Technology Group consortium, which includes the Ontario Teachers’ Pension Plan Board (Ontario Teachers’) and AlpInvest Partners (AlpInvest), agreed to an all-cash deal of $2.075 billion. The deal includes RSA Archer, RSA NetWitness Platform, RSA SecurID, RSA Fraud and Risk Intelligence and RSA Conference, and should be completed in the next six to nine months.
RSA currently has 12,500 customers and provides “risk, security and fraud teams with the ability to holistically manage digital risk, including threat detection and response, identity and access management, integrated risk management and omnichannel fraud prevention.”
Dell is looking at the deal as a way of focusing its business and better aligning its portfolio with its long-term strategy.
“This is the right long-term strategy for Dell, RSA and our collective customers and partners,” said Jeff Clarke, Chief Operating Officer and Vice Chairman, Dell Technologies. “The transaction will further simplify our business and product portfolio. It also allows Dell Technologies to focus on our strategy to build automated and intelligent security into infrastructure, platforms and devices to keep data safe, protected and resilient.”
After a long-fought battle, Kickstarter employees successfully voted to unionize, marking a major victory for unionization efforts within the tech industry.
The technology industry has been famously difficult to unionize, with little to nothing to show for most efforts. Kickstarter appears to be the exception, however, although not by much. Employees voted 46 to 37 in favor of the union.
In a statement on the company’s blog, CEO Aziz Hasan voiced cautious support. Hasan’s tone is not surprising giving how much Kickstarter opposed the bid, even firing two employees who were organizing such efforts, although the company denies the firings were related.
“Today we learned that in a 46 to 37 vote, our staff has decided to unionize,” said Hasan. “We support and respect this decision, and we are proud of the fair and democratic process that got us here. We’ve worked hard over the last decade to build a different kind of company, one that measures its success by how well it achieves its mission: helping to bring creative projects to life. Our mission has been common ground for everyone here during this process, and it will continue to guide us as we enter this new phase together.”
The union, Kickstarter United, is organizing with OPEIU (Office and Professional Employees International Union) Local 153. In an age of increasing employee activism, it’s highly unlikely Kickstarter will be the last company to unionize.
T-Mobile and Sprint may have been cleared for their merger by U.S. District Judge Victor Marrero, but T-Mobile parent Deutsche Telekom may be going back to the drawing board in some respects.
Sources familiar with the matter told Bloomberg that Deutsche Telekom is looking to renegotiate the price of Sprint, given that its value has fallen from where it was when terms were first agreed upon. The news is not unexpected given Sprint’s current position in the market, as the fourth largest carrier has continued to bleed subscribers.
In fact, one of the arguments the companies made in their court case was that, without a merger, Sprint would not have the ability to continue forward as a national carrier. Instead, it would likely have to abandon a number of markets and settle for being a regional carrier.
Given the situation, it’s unlikely Sprint parent SoftBank will put up too much of a fight, although there are no guarantees. SoftBank founder and CEO Masayoshi Son ended the previous round of merger negotiations in 2017 because of a dispute over which company should have the controlling interest in a combined T-Mobile. In spite of the fact that Sprint was already losing ground and T-Mobile’s future was looking brighter than ever, Son wanted SoftBank to have the controlling interest in the merged company, not Deutsche Telekom.
Considering how far Sprint has fallen, however, Son may not have much room to negotiate this time around.
Essential, the startup Andy Rubin founded upon leaving Google, has announced it is shutting down.
Andy Rubin, the co-founder of Android, started Essential in 2015 with the goal of creating a new line of phones, as well as smart speakers. Unfortunately for the company, the Essential Phone (PH-1) didn’t received the greatest reviews and failed to carve out a substantial market.
Similarly, the company announced Essential Home, a smart speaker to compete with the likes of the Amazon Echo, Apple HomePod and Google Home. Ultimately, the company halted development on the speaker in an effort to focus on its phone lineup. The company also acquired CloudMagic, maker of the popular Newton email client. Essential finally announced a new phone initiative, Project GEM, that would have relied heavily on voice control and artificial intelligence.
In the announcement outlining the shutdown, the company says: “Despite our best efforts, we’ve now taken Gem as far as we can and regrettably have no clear path to deliver it to customers. Given this, we have made the difficult decision to cease operations and shutdown Essential.”
The company goes on to say the PH-1 security update that was released on February 3 will be the last, and Newton Mail will stop functioning after April 30, 2020. Although the company does not go into further detail about what led to the shutdown, it seems the company’s focus was somewhat scattered for a startup trying to break into a crowded market. In addition, given the sexual misconduct allegations against Andy Rubin, the company may have had difficulty securing additional funding and support.
Either way, it’s a sad end to a phone that had some promising potential and an email client that was beloved by many.
In a big win for Slack, Business Insider (BI) is reporting that IBM is deploying the messaging app to all of its 350,000 employees.
Slack is locked in a rivalry with Microsoft Teams, with the two companies battling for the corporate messaging market. Microsoft Teams recently doubled Slack’s user base, and has kept the pressure up with TV ads. In spite of Microsoft’s momentum, however, IBM has chosen Slack as its messaging app of choice. This, in turn, helps Slack make the case that it can compete with Microsoft on the largest scale, in the most mission-critical environments.
“Going wall to wall in IBM — it’s basically the maximum scale that there is, so we now know that Slack will work for literally the largest organizations in the world,” Slack CEO Stewart Butterfield told BI.
Konrad Lagarde, director of IBM Toolbox, told BI that one of the reasons IBM went with Slack was their willingness to meet IBM’s needs. When Lagarde first starting using the app, teams were limited to 2,000 individuals. With some departments larger than that, IBM needed an app that could scale better and Slack was willing to add the necessary features.
IBM also likely chose Slack over Microsoft Teams as a result of increasing competition between the two computing giants. Microsoft is second in the U.S. cloud market, and IBM has increasingly staked its future on moving into the cloud. In fact, IBM’s recent earnings were buoyed by its cloud business. Just as many retail companies are turning to Microsoft rather than relying their prime competitor Amazon, IBM probably wants to avoid relying on a company it directly competes with.
Either way, today’s announcement is good news for Slack and will likely help the company continue to attract business, both large and small.
The newest branch of the U.S. military is wasting no time making its presence known as it prepares to deploy its Space Fence, according to Popular Mechanics.
Space Fence is a radar system designed to track objects in orbit as small as four inches in diameter. It is a significant upgrade over the previous system, which could only track objects in low-Earth orbit, or 99 to 1,200 miles. Space Fence, on the other hand, can track objects in medium-Earth orbit (up to 22,000 miles) and geosynchronous orbit (beyond 22,000 miles). While the old system could track up to 2,000 objects, Spence Fence should be able “to detect five to ten times more.”
As space flights become more common, debris poses a serious risk to spacecraft. Everyone remembers the catastrophes that happen in Sandra Bullock’s Gravity, and Space Fence should help spacecraft avoid those circumstances.
The new radar system will also be able to track Russian and Chinese satellites, “predicting when their satellites will be over the United States and U.S. forces abroad.” Space Fence is based on the remote Kwajalein Atoll in the South Pacific and could be online as early as this month.
Just a week after FedEx Ground announced it would offer Sunday deliveries, UPS said it plans to more than double its weekend deliveries in 2020, according to Reuters.
As Reuters points out, UPS “pioneered seven-day delivery in 2013, in partnership with the U.S. Postal Service (USPS), and is now spending billions of dollars to speed up its free shipping.” In recent years, however, it has faced increasing competition from FedEx, as well as from Amazon. Amazon has started using its own drivers for deliveries, and often reserves the most desirable, high-density delivery routes, leaving UPS to handle rural and low volume routes.
One way to offset the challenges is by increasing the delivery volume, and is part of the motivation behind UPS’ announcement. Expanding weekend delivery also ensures UPS stays a viable option in the minds of customers who want items delivered as soon as possible.
“E-commerce spikes on the weekends, and retailers want those orders delivered sooner,” said UPS Chief Marketing Officer Kevin Warren, according to Reuters.
As the delivery market continues to heat up, it will be interesting to see if UPS and FedEx’s weekend options help them better compete with Amazon.
Another day, another company abusing customer privacy. A joint investigation by PCMag and Motherboard has discovered that antivirus maker Avast, who also owns AVG, has been selling extremely detailed information about customer browsing histories to marketers.
The company division responsible is Jumpshot, and it has “been offering access to user traffic from 100 million devices.” In a tweet the company sent last month to attract new clients, it promised to deliver “‘Every search. Every click. Every buy. On every site’ [emphasis Jumpshot’s,]” according to Motherboard.
In fact, the level of detail the data provides is astounding, allowing clients to “view the individual clicks users are making on their browsing sessions, including the time down to the millisecond. And while the collected data is never linked to a person’s name, email or IP address, each user history is nevertheless assigned to an identifier called the device ID, which will persist unless the user uninstalls the Avast antivirus product.”
The data is anonymized so that, in theory, it can’t be tied to an individual user. However, the device ID is where the trouble comes in. For example, all a retailer would need to do is compare the time stamp that correlates to a specific purchase against their records to identify the customer. It would then be a simple matter to use that device ID to build a complete—and completely identifiable—profile of that person. With their entire browsing history, the retailer would know everything about what sites they visit, their habits, what their interests are and who their friends are.
According to PCMag, Jumpstart even offered different products tailored to delivering different subsets of information. For example, one product focused on search results, both the terms searched for and the results visited. Another product focused on tracking what videos people are watching on Facebook, Instagram and YouTube.
The granularity is particularly disturbing in relation to a contract Jumpstart had with marketing provider Omnicom Media Group, to provide them the “All Clicks Feed.” The service provides “the URL string to each site visited, the referring URL, the timestamps down to the millisecond, along with the suspected age and gender of the user, which can inferred based on what sites the person is visiting.” While the device ID was stripped from the data for most companies that signed up for the All Clicks Feed, Omnicom Media Group was the exception, receiving the data with device IDs intact.
Much of the collection occurred through the antivirus software’s browser extensions, and Avast has since stopped sharing the data it collects through those extensions. However, the company has not committed to delete the data it has already collected. The company can also still collect browsing history through its Avast and AVG antivirus software, on both desktop and mobile.
That ambiguity has not gone over well with Senator Ron Wyden, a staunch privacy advocate. According to both PCMag and Motherboard, Wyden said in a statement that “It is encouraging that Avast has ended some of its most troubling practices after engaging constructively with my office. However I’m concerned that Avast has not yet committed to deleting user data that was collected and shared without the opt-in consent of its users, or to end the sale of sensitive internet browsing data. The only responsible course of action is to be fully transparent with customers going forward, and to purge data that was collected under suspect conditions in the past.”
The full read at either PCMag or Motherboard is fascinating and is another good reminder that nothing in life is free. Companies that offer a ‘free service’ are making their money somewhere—often at the expense of the customer.
According to Quartz, and originally reported on by the Financial Times, Amazon and Goldman Sachs may soon team up “to offer small business loans in the U.S.”
Goldman Sachs has already shown itself willing to work with big tech, as it partnered with Apple to launch the Apple Card. If the report is accurate, Goldman Sachs may be “developing technology to provide lending through Amazon’s lending platform, potentially reaching thousands of enterprises that sell through the e-commerce giant.”
As Quartz highlights, Goldman Sachs has a lot to gain by working with big tech. A latecomer to the consumer banking industry, the company has no branch locations and is likely looking at big tech as a good way to gain market share. In fact, according to Quartz, “the Wall Street bank explicitly outlined partnerships (pdf) and co-branded relationships as part of its strategy for Marcus, its fledgling consumer brand.”
Big tech companies have increasingly been looking to expand into the financial industry, seeing it as a way to keep customers involved in their ecosystems. At the same time, regulators are growing more concerned as tech companies expand beyond their traditional realm. If the report is true, a deal between Amazon and Goldman Sachs is likely to draw further scrutiny.
Direct to consumer brands are doing incredible numbers on Shopify, says Shopify COO Harley Finkelstein. He says that Kylie Jenner has generated almost a billion dollars in sales on the platform and many other influencers such as Kanye West, Drake, and most recently Tom Brady are also doing very well.
“Even if you go beyond just Kylie, you look at companies like Bombas and Allbirds and Tommy John and Fashion Nova, these are brands that didn’t exist five or ten years ago and they’re absolutely doing incredible numbers on Shopify with no slowing down in mind,” says Finklestein. “Shopify was built to help anyone that has an idea start a great business and sell to a global audience.”
Harley Finkelstein, COO of Shopify, talks about the incredible numbers DTC brands are doing on Shopify, the huge success of Shopify Capital, and their quick acceptance of cannabis stores in Canada and potentially the rest of the world, in an interview with Jim Cramer on CNBC:
DTC Brands Doing Incredible Numbers on Shopify
We’re really happy with how we ended the year and certainly, the quarter was great and we’re really excited about our future. We’ve been at this now for almost 14 years. We’ve grown to 820,000 merchants up from 600,000 merchants a year ago. We have a big top of funnel with brand new entrepreneurs getting started on Shopify for the very first time. We also have some very large brands like the big CPGs and some big direct to consumer (DTC) companies all using Shopify to scale their businesses. We’ve got a really great business model and we’re having a lot of fun.
It’s amazing. I think the Kylie story ($1 billion in sales) was surprising to a lot of people, not for us because we see so many stories like that all the time. Whether it’s Kanye West launching his Yeezy store on Shopify or Drake’s store or Tom Brady’s new store, we see all of these major brands and huge influencers using Shopify to create authentic products and sell it to the audience. I always sort of think back to if DTC and direct-to-consumer were around when Michael Jordan was creating the Jordan brand with Nike I think Nike would be a supplier and Michael Jordan would be the brand. He would own the entirety of his business as opposed to getting a licensing fee.
We’re really excited about this. But even if you go beyond just Kylie, you look at companies like Bombas and Allbirds and Tommy John and Fashion Nova, these are brands that didn’t exist five or ten years ago and they’re absolutely doing incredible numbers on Shopify with no slowing down in mind. Shopify was built to help anyone that has an idea start a great business and sell to a global audience. We really do bend the learning curve to make it really easy to get started.
Shopify Helping Democratize the Entire Business Process
The ones that succeed, not all of them do, but the ones that do succeed they grow really large with us and over time we want to provide them with more services and more solutions. For example, we launched Shopify Payments a couple of years ago. We went to the payments companies and negotiated rates on their behalf. We launched Shopify Shipping and went to the shipping company and negotiated shipping costs on their behalf. We always are trying to find economies of scale to help democratize the entire business process for these small businesses.
More recently we realized that a lot of these small businesses also need capital. Because we have so much information on them we’re able to make really quick and very effective underwriting decisions so we were able to go and offer them capital cash advances. We’ve given out hundreds of millions of dollars of cash advances to a lot of these small businesses who if it wasn’t for Shopify would not be able to get this money on their own.
Entrepreneurs Want to Own Their Audience
Etsy fundamentally is a marketplace. Etsy is a place where someone who makes a product can go to find an audience. But our feeling is that you know for an entrepreneur they don’t always want to rent the audience. They want to own the audience. They want to have a direct relationship with their customers. They want to own the entire to profit margin. They want to be able to sell and have long-term relations with the people that are buying their products.
So companies like Etsy do a really good job of curating a bunch of products and renting those customers to those makers. We think the marketplaces are really great but we think ultimately makers and entrepreneurs and merchants want to have a direct relationship with the people buying their products. One of the things that is not well known about Shopify but one way to think about what we do is really this retail operating system. Merchants can start a store with us very easily and they can build a beautiful online store but they can also cross-sell to different marketplaces like eBay or Amazon.
The idea is that it feeds all feeds back in one centralized back office which is Shopify. That’s where they can run the entirety of their business. Really the idea is let’s become the most important piece of software they use on a daily basis. The first thing they open every morning, the last thing they close every night. So obviously marketplace will play a role there but ultimately merchants want to find customers wherever those customers exist and more and more they want to sell direct to those customers.
Shopify Facilitating Cannabis Sales in Canada
The reason we started with Canada was there was clarity in Canada. The Canadian government, the legislature, they were very clear with how they were going to roll out the commercialization and the legalization of cannabis sales on the consumer side. We felt it was really important for us to act quickly and effectively to not only win as much of the Canadian market as we possibly could but also to show the rest of the world as they begin to think about cannabis sales that we are the first phone call that they should be making.
Whether it’s the province of Ontario or British Columbia or most of the largest licensed producers like Canopy in Canada, Shopify is what’s powering those retail sales. We think that we can do a great job helping other countries and other regions do the same thing.
