Tech Brew Ride Home - Fri. 11/13 – The DoorDash S-1 Is Surprisingly Good

Starting point is 00:00:00 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 Tech meme right home for Friday, November 13th, 2020. I'm Brian McCullough today. DoorDash files its S-1 and has a surprisingly good business, it looks like. The U.S. backs down on TikTok is the whole anti-IPO thing, not business, but personal. Why, you should probably wait to download MacOS Big Sur, how much Disney Plus continues to kill it, and of course, the weekend long read suggestions. Here's what you miss today in the world of tech. DoorDash has filed its S-1 with the SEC, which, of course, is the first step in an IPO. They will be listing their shares on the New York Stock Exchange under the ticker symbol,

Starting point is 00:01:14 dash, DASH. And speaking of Dash, we're expecting there to be a dash of companies rushing to go public before the end of the year. We're expecting Roblox, Wish, Affirm, Airbnb, all to file within weeks. But back to DoorDash. An S-1 means we finally get to take a look at the underlying business in any debuting company. DoorDash reported that they had $1.9 billion in revenue for the first nine months of 2020, on which they lost $149 million.

Starting point is 00:01:44 Compare that to revenue of only $587 million a year ago and a loss of $533 million. Quoting Alex Willam in TechCrunch. DoorDash is a heavily backed company with CrunchBase reporting that the food delivery giant has access around $2.5 billion in capital during its life, most recently, in a $400 million around this June. At the time, DoorDash was valued at a towering $16 billion post money giving the company big valuation shoes to fill when it prices its IPO and begins to trade. DoorDash has grown incredibly rapidly, scaling its revenues from $291 million in 2018 to $885 million in 2019, and more recently from $587 million on the first nine months of 2019 to $1.92 billion.

Starting point is 00:02:30 in the same period of 2020. That is 226% growth in 2020 thus far. The sort of expansion that explains why DoorDash was able to attract so much capital at such high prices. How high quality is DoorDash's revenue? In the first three quarters of 2019, the company had gross margins of 39.9% and in the same period of 2020, the figure rose to 53.1%, a huge improvement for the consumer consumable delivery confab. The result of DoorDash's epic growth and gross margin improvement has been radically improving profitability. The company's operating loss fell from $479 million in the first nine months of 2019 to just $131 million in the same period of 2020. DoorDash's net losses are slightly worse, $533 million and $149 million over the same timeframes, respectively. But again,

Starting point is 00:03:19 compared to the company's top line growth and revenue quality improvements are inconsequential. DoorDash has around $1.6 billion in cash and equivalents heading into the fourth quarter, meaning that it has ample cash to fund itself, Sands and IPO. The company is therefore going out because it thinks the time is ripe, end quote. Yeah, that's a bigger, better business than I certainly expected, growing faster than I expected, but then maybe I shouldn't be surprised because, you know, COVID, but also EBITDA positivity, improving gross margins. Maybe they think they need to get out the door now before a vaccine actually shows up and maybe

Starting point is 00:03:52 stalls their growth a bit. Real quick, because I'm really kind of sick of this mission. but the Wall Street Journal, no less, has headlined it thus. The U.S. has backed down on TikTok, which is otherwise to say TikTok has not gone dark and doesn't look like it will be anytime soon. The Commerce Department said Thursday it wouldn't enforce its order that would have effectively forced the Chinese-owned TikTok video sharing app to shut down in the latest sign of trouble for the Trump administration's efforts to turn it into a U.S. company. In announcing its decision, the Commerce Department cited a preliminary injunction against the shutdown last month,

Starting point is 00:04:31 by U.S. District Judge Wendy Beetlestone in Philadelphia in a suit brought by three TikTok stars, comedian Doug Marland, fashion guru, Cosette Renab, and musician Alex Chambers. Judge Beetlestone said that the government action, quote, presents a threat to the robust exchange of information materials, end quote, and therefore likely exceeds the government's authority under the International Emergency Economic Powers Act, the law that Trump administration has relied on to take action against TikTok. The U.S. government appealed that order late Thursday, end quote. And another quick follow-up to something we've been talking about, also from the Wall Street Journal. Sources are saying it was Chinese President Xi Jinping himself, who personally made the decision to stop the ant group's IPO, as he was reportedly furious about Jack Ma's criticism of regulators and incumbent banks.

Starting point is 00:05:24 The rebuke was the culmination of years of tense relations between China's most celebrated entrepreneur and a government uneasy about his influence and the rapid growth of the digital payments behemoth he controlled. Mr. Xi, for his part, has displayed a diminishing tolerance for big private businesses that have amassed capital and influence, and are perceived to have challenged both his rule and the stability craved by factions in the country's newly assertive Communist Party. In a speech on October 24th, days before the financial technology giant was set to go public, Mr. Ma cited Mr. Xi's words in what top government officials saw as an effort to burnish his own image and tarnish that of regulators, the people said. At the event in Shanghai, Mr. Ma, the country's richest man, quoted, Mr. Xi saying, quote, success does not have to come from me, end quote. As a result, the tech

Starting point is 00:06:10 executive said he wanted to help solve China's financial problems through innovation. Mr. Ma bluntly criticizes the government's increasingly tight financial regulations for holding back technology development, part of a long-running battle between Ant and its overseers. Mr. Xi, who read government reports about the speech and other senior leaders, were furious, according to the officials familiar with the decision-making. Mr. Xi ordered Chinese regulators to investigate and all but shutdown Ant's initial public offering, the official said, setting in motion a series of events that led to the deal's suspension on November 3rd. Investors around the world already had committed to paying more than $34 billion for

Starting point is 00:06:44 ants' shares. It isn't clear whether it was Mr. Xi or another government official who first suggested the shutdown. Quote, Xi doesn't care about if you made any of those rich lists or not, said a senior Chinese official. What he cares about is what you do after you get rich and whether you're aligning your interest with the state's interests, end quote. Chinese regulators have long wanted to rein in, and according to the Chinese officials with knowledge of the decision-making, end quote. MacOS Big Sur is available for download and installation, and it's usually a bad idea to install a new OS right away, but it seems to especially be the case this time because there seem to be serious bugs that still need to be worked out. Among them, many Mac users are reporting app slowdowns during the launch of Big Sur, possibly due to issues with Apple's OCSP service being.

Starting point is 00:07:36 unable to validate certificates, quoting Ars Technica. It didn't take long for some Mac users to note that Trust D, a macOS process responsible for checking with Apple's servers to confirm that an app is notarized, was attempting to contact a host named OCSP.Apple.com, but failing repeatedly. This resulted in system-wide slowdowns as apps attempted to launch, among other things. The affected host name, which is really just a pointer to a whole bunch of servers on Apple's CDN is responsible for validating all manner of Apple-related cryptographic certificates, including the certificates utilized by app notarization. First introduced in Mojave and made mandatory in Catalina,

Starting point is 00:08:14 notarization is an automated process Apple performs on developer-signed software. The OCSP part of the host name refers to online certificate status protocol stapling or just certificate stapling. Apple uses certificate stabling to help streamline the process of having millions of Apple devices checking the validity of millions and millions of certificates every day. When an Apple device can't connect to the network, but you want to launch an app anyway, the notarization validation is supposed to soft fail. That is, your Apple device is supposed to recognize you're not online and allow the app to launch anyway. However, due to the nature of whatever happened today, calls to the server appeared to simply hang

Starting point is 00:08:51 instead of soft failing, end quote. Let's check in with Disney, which continues to be a non-tech company that we, need to cover for tech purposes, because look, they're absolutely killing it in streaming. In their earnings report last night, Disney revealed that Disney Plus now has more than 73 million subscribers, up from 57.5 million at the end of June. So not only have they in one year blown through their most optimistic subscriber projections for the first three years of Disney Plus's existence, but they seem to be continuing to grow. Across Disney Plus, Hulu, and ESPN Plus, now Disney can count more than 120 million accounts on their various streaming services, quoting

Starting point is 00:09:39 the streamable. Disney shared that most of the growth came from Disney Plus Hot Star, which is the exclusive home of IPL cricket matches in India. Disney Plus Hot Star now makes up just over 25% of Disney Plus subscribers, meaning that there are around 55 million outside of India. In October, competing service Netflix announced they reached 195.15 million global subscribers in Q3, with over 73 million in the U.S. and Canada. However, the company added just 2.2 million worldwide this quarter compared to 6.8 million in the same quarter last year as a result of what the company says is, quote, our record first half result and the pull toward effect, end quote. A few weeks ago, HBO and HBO Max announced 38 million subscribers as of Q3 2020, up 1.7 million

Starting point is 00:10:24 from last quarter. Peacock, which hasn't disclosed subscribers, announced 22 million signups since launch in July, end quote. Time for the weekend long read suggestions. And let's start out with a Twitter thread, wherein Ken Sharif takes a look back at the first ever arm processor, the arm one, which was built back in 1985 and had 25,000 transistors compared to the 16 billion transistors of Apple's new M1 chip. The arm one processor ran at 6 megahertz, while the M1 runs at 3.2 gigahertz over 500 times faster,

Starting point is 00:11:05 While the arm one was a single processor, the MU has four high-performance CPU cores, for efficiency CPU cores, a 16-core neural engine, and an eight-core GPU. The arm processor started with the ACORN Risk Machine project in 1983. Apple got involved in the late 1980s using the low-power Arm 610 processor in the ill-fated Newton handheld. In 1990, ACORN, Apple, and VLSI technology formed Advanced Risk Machines, or arm with Apple owning 43% end quote. And next, Forbes has an interview with AI expert Kai Fu Lee, who says, if there's any doubt, he's going to just go ahead and call it.

Starting point is 00:11:45 China has officially caught up to the U.S. when it comes to artificial intelligence, quote, China has, thanks to data, AI, and the entrepreneur ecosystem, rapidly evolved from a copycat into a true innovator. It currently co-leads artificial intelligence with the United States. When my book AI Superpowers came out in 2018, I think it was a bit surprising to people. Let's use TikTok as an example. It became a runaway success and has proven to be uncopyable by top American companies. TikTok is a great example of China's natural advantage. The company has leveraged huge amounts of data in China to develop an interface that shows you

Starting point is 00:12:20 videos that become attractive and even addictive for you to use. And then, gathering all that data, TikTok uses it to bootstrap in the U.S. and other countries and create similar experiences for different audiences. AI lets TikTok deliver a targeted experience with each individual and thus gathers data for constant iteration. TikTok shows that if you have a good product, iterate the products, use the AI to get users more interested, you can grow more geographies. It has become a global phenomenon. That is a typical Chinese story. Arguably, there are no breakthrough AI technologies in TikTok. It is excellent execution, lots of data, iteration, and aggressive growth. I think that is the formula that led to the Chinese consumer AI security.

Starting point is 00:12:59 success, end quote. And now two pieces on a similar subject. One Zero looks at how the need for contact tracing recently has hooked employers on worker surveillance devices. So even when we all go back to the office full time, don't be surprised if your boss welcomes you back with a tracking device, quote. From time clock punch cards to RFID access cards, workplace tracking has traditionally focused on whether an employee is present at work or not. Physically tracking individual workers has until now been reserved for high-risk workplaces like health care and construction because the promise of a safer working environment has outweighed potential privacy concerns. That said, digital surveillance of white-collar and remote workers, which includes tracking

Starting point is 00:13:42 their locations and what they type, has recently been on the rise. But now that every office, manufacturing plant, fulfillment center, and sports arena carries an immensely elevated risk due to the coronavirus, physically tracking employees may be going mainstream, end quote. And vice takes a look at the exam monitoring. software that students have been forced to use as they learn remotely and how students are starting to buck against the use of things like hand mirrors and 3D room scans, quote. There has been a fierce backlash against respondists at WLU.

Starting point is 00:14:13 Petitions demanding that the school administration ban the software from campus or change its proctoring policies have collected thousands of signatures. Similar petitions have spread across scores of universities. Wilfred Laurier is not the only school where students must comply with complex, often bizarre remote exam requirements. At Arkansas Tech University, some students were sent a long list of instructions for taking tests through the exam monitoring software Proctor U. Before beginning an exam, students were required to hold a mirror or their phones front-facing camera to reflect the computer screen, and then adjust the webcam so the instructor can see

Starting point is 00:14:46 your face, both hands, scratch paper, calculator, and the surface of your desk, according to an email obtained by motherboard. The WLU Student Government has met with administrators to share student complaints about the software, and the university has already been forced to backtrack on a department policy that would have required all students taking a math class to purchase an external webcam and tripod, something the department head himself acknowledged would be difficult given the pandemic-induced webcam shortage, end quote. The Wall Street Journal dives into a question I've been wondering about this week, i.e., is SoftBank really on the mend, on the turnaround path? And if so, how did Masasan

Starting point is 00:15:23 pull this off? Well, according to the journal, he had help. quote. Mr. Sahn pulled his conglomerate back from the void with a sharp and surprising strategy shift, selling off holdings that have been central to his investment and operating blueprint and buying back shares. The world's biggest tech investor relinquished majority control over its last major operating businesses, sealing SoftBank's transformation into an investment firm, and Mr. Sond's reputation for not doing anything by halves. When SoftBank's shares lost nearly half their value, almost $50 billion in two weeks this spring, Mr. Sond and his senior team held daily calls with executives at hedge fund firm Elliott Management Corp, said people familiar with the

Starting point is 00:16:02 discussions. Elliot since last fall has built a soft bank stake that likely makes it the company's number two shareholder after Mr. Son, they said. Among Elliott executives counseling, the Japanese firm was Gordon Singer, the founder's 46-year-old son and head of Elliott's London office. Mr. Singer and his team pressed Mr. Son to improve corporate governance and buyback shares. In the end, SoftBank bought back more stock than Elliott had pressed for, surprising executives at the hedge fund, and sold enough assets to leave the company as much as $60 billion in available cash, said a person with knowledge of softbanks finances, end quote. Finally, some devs and other tech workers who had the ability to do so have been decamping to exotic locales to try to work through the pandemic in style. Heck, I keep

Starting point is 00:16:48 hearing about NYC tech folk heading to Miami to write out what looks to be the coming storm in the north this winter. But for those who went further afield, who went overseas, some seemed to be regretting it. According to the New York Times, tax trouble has followed, personal relationships have been strained, and even guilty consciences have resulted. David Malka, an entrepreneur in Los Angeles, had heard from friends who were living their best work lives abroad. In June, he created a plan. He and his girlfriend would work from Amsterdam with a quick stop at a discounted resort in Mexico along the way. The first snag happened almost immediately. In Cabo San Lucas, Mr. Malka and his girlfriend realized that the European Union wasn't about to reopen its borders to American travelers, as they had hoped.

Starting point is 00:17:29 Returning to the United States wasn't an option. Mr. Malka's girlfriend was from the United Kingdom and her visa wouldn't allow it. The two decided to stay in Mexico a bit longer. At first, it was glamorous, Mr. Malka said. Working by laptop, he manages a portfolio of vacation rental properties, they had the resort to themselves. But by the second week, their situation began to feel like Groundhog Day. The city and the beach were closed, so the couple never left the resort. Meanwhile, the travel shutdown was hammering his business. All we could do is sit by the pool or go to the gym, Mr. Malca said. The repetition, boredom, and isolation all wore on them, end quote. Yeah, I'm sharing this as either a hate read or schadenfreude or read or eat your heart out read sort of story depending on your

Starting point is 00:18:10 perspective on all this. Friday to the 13th feels a little ominous at the moment with the virus spiking everywhere. Be safe, everyone. I know you're tired of it. I'm tired of the virus too, but a vaccine is coming, so it would suck if you did all of the right things for the first nine months of this crisis, only to get sick a month or two before you could have gotten a vaccine. Don't lose the race in the last leg of it. Double down now. See it through. No weekend bonus episode this weekend, as I used to say on the coronavirus show. Be well, everybody. Talk to you on Monday. day.

Tech Brew Ride Home - Fri. 11/13 – The DoorDash S-1 Is Surprisingly Good

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