Tech Brew Ride Home - Fri. 01/10 - I Flip-Flop on Quibi

Episode Date: January 10, 2020

More trouble for Softbank startups, more layoffs at scooter startups, VC deals plateaued last year but music streaming continues to skyrocket, how much money does Netflix lose to password sharers and of course, the weekend longreads suggestions. Sponsors: Stackbit.com/techmeme Tiny Capital Links: SoftBank-Backed Oyo Firing Thousands Across China and India (Bloomberg) E-scooter startup Lime shuts in 12 markets, lays off around 100 (Axios) The Q4/EOY 2019 Global VC Report: A Strong End To A Good, But Not Fantastic, Year (Crunchbase News) U.S. Music Streams Topped a Trillion in 2019 (WSJ) Streaming Services Reckon With Password-Sharing "Havoc" (The Hollywood Reporter) I’m a Millennial, and I Don’t Understand What Quibi Is Trying to Do (Fortune) Weekend Longreads Suggestions: QUIBI VERSUS THE WORLD (The Verge) The hidden world and overlooked problems of acting in video games (Washington Post) Why your favorite celebs are ditching Twitter for an app you’ve never heard of (Fast Company) AN ORAL HISTORY OF RICKROLLING (Mel) Admit It: You Have a Box of Cords You’ll Never, Ever Use Again (WSJ) Learn more about your ad choices. Visit megaphone.fm/adchoices

On April 4th, 2023, around 2 in the morning, a man was found stabbed multiple times on a sidewalk in downtown San Francisco. Hey, who did this to you? What happened next turned the story into a political firestorm. Reports have identified the victim as Bob Lee, the founder of Cash App. From Bloomberg Podcasts, this is Foundering, the Killing of Bob Lee, beginning April 16. Welcome to the TechMeme right home for Friday, January 10th, 2020. I'm Brian McCullough today. More trouble for SoftBank startups. More layoffs at scooter startups. VC. deals plateaued last year, but music streaming continues to skyrocket. How much money does Netflix lose to password sharers?

And of course, the weekend long read suggestions. Here's what you missed today in the world of tech. The SoftBank Fallout Watch continues, as sources are telling Bloomberg that SoftBank, Bank-backed Oyo has let go of 1,800 staff, roughly 5% of its 12,000 employees in China and 12% of its total 10,000 employees in India. This is super interesting because aside from WeWork, if you were to run the clock back six months or so ago, Oyo was by far the crown jewel holding in the soft bank portfolio. Oyo, the Airbnb-like hotelier, is one of SoftBank's biggest investors. We continue to be one of the best places to work for, and one of the key reasons for this,

has been our ability to consistently evaluate, reward, and recognize the performance of individuals in a meritocratic manner, and enable them to improve their performance, Oyo said in a statement. Adding to Oyo's challenges, hotel owners in China have been protesting in front of the company's offices, accusing the startup of violating contractual agreements. The growing turmoil may complicate soft bank's efforts to raise a successor to the Vision Fund, the world's largest pool of startup investments, end quote. Filings that came out in December showed that Oyo had a net loss of $332 million on revenue of $900 million in the year through March 2019.

And operations in China, interestingly enough, accounted for 40% of those losses. And e-scooter company Lime says that it is laying off about 14% of its workforce, or roughly 100 employees, and it is shuttering operations in 12 markets as it seeks to become profitable this year. Quote, we're very confident that in 2020, Lyme will be the first next-generation mobility company to be profitable, Lyme President Joe Krause tells Axios. He said that projection is based in part on improvements to Lyme Scooter's longevity, which in 2019 went from six months to about 14 months, end quote. So that's very good news on the unit economics front,

as we've discussed on the show many times before. But it's a little concerning for two reasons. All the scooter companies popped into being in the wake of the ride-sharing phenomenon, right? And so they very much looked to be playing that old Uber playbook, i.e. grow at all costs, profitability later, raise a bunch of capital to try to create some sort of de facto monopoly situation and crowd out all your competitors. So if investors are asking for profitability now, then maybe the whispers about the game-changing in terms of startup expectations is true.

I mean, no one was asking Uber or Lyft to be anywhere near profitable at this stage in their startup gestation. But also, look at the markets Lyme is reportedly exiting. Atlanta, Phoenix, San Diego, and San Antonio. That is certainly eyebrow raising because we had always heard that one of the key challenges for the scooter market was seasonality. That, you know, people just didn't tend to scoot as much in the winter months. So you would think the cities I just mentioned, warmer cities would be prime markets for an e-scooter company. I mean, San Diego?

A couple of year-end data points to throw at you. First, crunch-based news says that more VC deals were struck around the world in 2019 than in any other year in history. But the total dollar volume of those deals dropped slightly from 2018. Quote, like with deal volume, global venture dollar volume has plateaued in the past couple years, which is somewhat expected giving how late into the current bull cycle we find ourselves today. Many of the most capital-hungry companies from the last decade have either already graduated to public markets or hit roadblocks, which stymied growth and accordingly may simultaneously diminish the amount of capital they need from private market investors and

their likelihood of successfully securing said financing going forward, end quote. And then, according to Nielsen, U.S. music streams on services like Spotify and Apple Music grew 30% in 2019, which is a big number percentage-wise to reach an even bigger number, 1 trillion total streams last year. Streaming accounted for 82% of music consumption in 2019. Quote, hip-hop, which has risen in popularity along with music streaming, continues its reign as the biggest genre with 28% share of total listening, followed by rock at 20% and pop at 14%. Rapper Post Malone, whose albums have broken various streaming records, was the top artist of 2019 by a combination of sales and streams.

Drake, Billy Elish, Taylor Swift, and Ariana Grande, round out the top five, end quote. And one more interesting stat for you. Researchers estimate that streaming video companies lost about $9.1 billion due to piracy and credential sharing, password sharing, just last year in 2019. The research also says that lost. will rise for these video platforms to $12.5 billion by 2024. Quote, for now, many streamers, including Netflix, Hulu, Disney Plus, and Amazon Prime, seem content to allow the practice of password sharing to continue even while they crack down

on illicit password sales. But as services mature, priorities will likely change. When the growth starts to flatten and you start to look at the balance sheet, you're going to be looking for revenue, says Jean-Marc. Rasin, chief product officer of video delivery and security firm Cine Media, end quote. This is something that I actually thought about when I was walking out of the Quibi event on Wednesday, you know how Quibi is not going to have a free tier. You'll pay a little bit for ads and then a little bit more for no ads. But no free tier means no way for people to test out their offering

before, you know, getting hooked on it. A more aggressive move on Quibi's part would have been to start out the ad-supported tier as free for a time. And I wondered if Quibi should have gone this route for the reasons that are suggested above. Netflix has made millennials into the Netflix and chill generation because all of those kids, an entire generation, glommed off their parents' accounts for years, and Netflix knew it and was fine with it because they knew that, like health insurance, eventually you'll have to get off your parents' plan. But if you're hooked, Netflix figured you would pay up eventually. Quibi will not have that advantage. And actually, speaking of Quibi, as I tweeted in my cab ride back from the airport last night,

I don't know if it's because I'm back in Brooklyn now and maybe the bright lights of Vegas just seduced me on Wednesday. But I'm officially back to being hella skeptical of Quibi again, mainly because I read Polina Maranova's term sheet newsletter in Fortune last. night. Link in the show notes, if you want to read it yourself, but this was the part that smacked me upside the head and reminded me that I'm dubious about Quibi's prospects and why, quote, I fall right in Quibi's target demographic, which is users who are 25 to 35 years old and I don't watch TV. I primarily watch Netflix or random videos on my phone, but here's the biggest problem that contributes to some of my personal skepticism. I use Facebook and Instagram regularly. Do I watch short form video content on Facebook watch,

Instagram TV or Snap Originals? Never. And that content is free. Let's look at some of the innovations that Quibi has in store. First, it'll break up movies into several minute chapters. This means a two-hour movie could take 12 chapters to play in its entirety.

Or, you know, I could just press pause on my regular two-hour movie and return to it later. Secondly, Quibi revealed its turnstile feature which will allow users to rotate their smartphone or tablet to watch content in both portrait and landscape modes to see a different perspective. Katzenberg says it, quote, is unlike anything creators have had before, end quote. Realistically speaking, though, how many times do you rotate your phone while watching a video, end quote? Yeah, this is why I was skeptical to begin with. quibby very much seems like a solution in search of a problem, or at least a focus-grouped product

in search of a market. Forget about the fact that people don't necessarily want to watch things exclusively on their phones. We just want to watch things on our phones when we want to watch things on our phones. I don't think I mentioned it earlier, but you can't get quibby on your TV, on your Roku on anywhere else but your mobile device. Why limit yourself like that? Why just find your audience wherever it wants to find you. And forget about the fact that there are already entrenched players doing what Quibi says no one else is doing well. Forget about the fact that they're forcing you into a subscription.

What about this idea of shoehorning all of what it wants to do into short form? This whole thing of quick bites, quick bites, quick bites, quick bites. Again, why limit yourself? I've said this about a dozen times on Twitter since Quibi was announced, but Jeffrey Katzenberg has been obsessed apparently with short-form video and bite-sized consumable content for 20 years now. There was a startup called Pop.com, which went belly up in the dot-com bubble. And guess what? Same people were involved.

Steven Spielberg, big name stars, Jeffrey Katzenberg. Pop.com blew up about $100 million in investment money back in the year 2000. And that was when $100 million was the equivalent. of a billion dollars of being a unicorn. Let me read from a piece in The Guardian dated September 10th, 2000, a piece describing how pop.com had just fired everyone and was closing up shop after only being in business for about 11 months. The idea behind the company to broadcast a mix of animated and live action short films,

emphasis mine, on the internet, was greeted with much excitement last October before the dot-com shakeout took hold. Founders Ron Howard, Steven Spielberg, and Jeffrey Katzenberg trumpeted their new venture as one of the firms that would revolutionize the way films were made and distributed. As soon as the technology allowed, they believed pop.com would transform from showcase for talented young filmmakers into fully fledged production and distribution company. Announcing the new company, Katzenberg said, Just as MTV introduced a new entertainment forum for music videos,

we think this new enterprise will offer a new form of entertainment for the rapidly growing population of internet users. Pop.com has the ability not only to offer a variety of entertainment options, but to tap into an as yet undiscovered talent pool that is as global as the internet itself, end quote. So same playbook minus the chasing young talent part. Maybe Katzenberg just doesn't want to go that route anyway. Maybe he figures all the talent is on TikTok and YouTube and stuff like that. But same playbook in terms of raise a bunch of money. Throw it at your bold name Hollywood Friends, and crucially, back to that short-form content idea, just like music videos, just like the MTV of old. It's almost like Jeffrey Katzenberg once saw a TED

talk about how kids don't have attention spans for anything over 10 minutes anymore, and he's not been able to get that out of his head ever since. But is he right about that? I mean, I kind of argue the opposite is true. You're more likely to hear somebody say that they binged an entire season of a show over the weekend for six hours straight, more likely to hear that than to hear about some webisode that everyone and their mother watches for five minutes in between posting something to Instagram. Time for the weekend long-reed suggestions. First, to give Jeffrey Katzenberg the ability to rebut me himself.

Check out the Verges interview with Katzenberg from this week so he can tell you his own version of what his vision is. Quote, we're competing against free, he says. We have to offer something that is meaningfully, measurably, quantifiably, creatively, creatively different. Instagram and YouTube are happy to let people watch user-generated content for free, but Katzenberg, as always, is bullish on Star Power. The social media companies don't actually understand how to make quality content, he says. They don't know how to do what we do, with all due respect, he says. So he's going to make tech go Hollywood. What have we learned from Mandalorian? asked Katzenberg. We learned a big hit TV show attracts a lot of business. He cracks up the room. It's true. It's obvious. He joins the rest of us in

chuckling, adding, quote, sorry, I've been doing this before you all were effing born, end quote. Next, the gaming industry has risen to become the biggest entertainment industry in the world, far bigger than Hollywood. But in terms of talent, the Washington Post looks at the actors and voice actors and motion capture actors, et cetera, and seeing how they're making out

in this new entertainment revolution and it's not pretty, quote, the work of Jeffreys and her peers have given rise to some of the world's most memorable video game characters. What has failed to produce, however, is clarity around certain rights and standards for these actors regarding their work.

As the video games industry explodes, it's becoming an increasingly attractive avenue for working actors, but the relative novelty of this field means there are few established standards. From a legal perspective, the medium does not fit neatly into either the art or tech worlds existing in a gray area when it comes to intellectual property, labor practices, and compensation.

It's kind of the Wild West, said Marta Sebtek, a London-based motion capture performer, end quote. Fast Company has a look at community, the social network that celebrities are apparently flocking to because it allows them to interact with their fans directly without the mitigation of a platform like Instagram or Twitter. It allows celebs to text their fans directly by giving out a phone number, actually. And it's kind of also part of this whole movement away from public media, from social media, from siloed media that we've been hearing about. quote, Paul McCartney signed up in May ahead of the official July kickoff. Jake Paul and Marshmallow got their numbers in July. The Jonas Brothers made the leap in August, and Jennifer Lopez signed up in September.

Diddy and Mark Cuban joined in October. Amy Schumer came on board in November. The Pod Save America guys asked their fans to join them in December. Ashton Coutcher, who helped define Twitter as a place for celebrities to connect with fans a decade ago and who has sent more than 10,000 tweets, has posted just. seven in the past two months, as he told fans in October, quote, not every conversation is for public consumption, end quote. Mel Magazine has an oral history of Rick Rowling, quote, one of the first Rick

rolls and possibly the first one, was disguised as a preview for Grand Theft Auto 4 in May 2007, because that was such a hugely anticipated game at the time. A lot of people fell victim to Rick Rowling. Prank mostly remained on 4chan for about a year. Then on February 10th, 2008, members of the Internet group Anonymous protested the Church of Scientology for trying to censor videos about Scientology. During these rallies, never going to give you up, was played from boomboxes by anonymous members, end quote. And finally, the Wall Street Journal wants you to admit it. You're a cord hoarder.

You have a big box of cords in your house. that you'll probably never use again, don't even know what the chords are for, and haven't even had the CD player that that power cord goes to for 15 years or more, but you're afraid to throw any of the chords out. Lord knows this is me, quote, a common cord hoarder refrain is that there's a principle like Murphy's Law governing their disposal. Immediately upon getting rid of cords, it goes, you are guaranteed to need one of them. Emily Batti, 39, a police department analyst in Edmonton, Alberta, said she and her husband decided to get rid of their cord box before moving.

It felt like no big deal, she says. We were both agreed that we didn't need it. A few months later, they went to set up the printer in the office but couldn't find the cord to connect it to the computer. The couple realized that when they had converted the office in their old house to a nursery, they had unhooked the printer and stored it away and had put the cord in the box they threw out. I knew exactly where it was and that we just couldn't get it back, says Ms. Batty. They both print things at their offices now, she says, and have no plans to buy a new cord. Quote, we just gave up on having a printer, she says. We still have the printer. I'm not really sure why, end quote.

A lot of you got in touch overnight to let me know that the title of yesterday's show was half blank. Well, it actually wasn't. Let me explain. All this week, I was titling show. shows CES day one, CES day two, day three, et cetera. So yesterday I was going to do something like CES the end or CES fin or something like that. I ended up going with a solidus or a whack, in other words, a forward slash. So the title actually was forward slash CES, representing in code and CES, right? But then, because it was code, I put brackets around that.

thus making it a literal line of HTML code, I guess. And I guess that made your podcast readers read it as HTML or gibberish or something, thus leaving it blank. If you look in the actual RSS feed, you'll see it there. I guess it couldn't render that without breaking the actual feed, since that would put it inside the brackets for the, you know, whatever. So that's what happened. I guess I'll keep it that way now because I find it funny,

forever the Phantom title. or maybe I'll just rename it to Phantom Title. I don't know. Anyway, one weekend bonus episode coming at you tomorrow. A check in on the world of health tech. Talk to you on Monday.