Tech Brew Ride Home - Fri. 7/27 - The Dreaded MAU Strikes Again!

Episode Date: July 27, 2018

Slack takes out some competitors, Twitter get its own earnings shock, Amazon is just fine, thank you very much, Stripe issues credit cards, MoviePass… still alive at the time of this recording… and the weekend longreads suggestions. Stories from: @neilstrauss, @lmatsakis Tweets: @sparkycollier Links:Goodbye HipChat: Slack and Atlassian Team Up on Chat Software (Bloomberg)This is the Amazon everyone should have feared — and it has nothing to do with its retail business (Recode)Stripe Starts Issuing Credit Cards (Bloomberg) Weekend Longreads:Brock Pierce: The Hippie King of Cryptocurrency (Rolling Stone)How Silicon Valley Has Disrupted Philanthropy (The Atlantic)THE 'GUERRILLA' WIKIPEDIA EDITORS WHO COMBAT CONSPIRACY THEORIES (Wired)Inside Google’s Shadow Workforce (Bloomberg)MySpace and the Coding Legacy it Left Behind (Code Academy) 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 Tech Meme Right Home for Friday, July 27th, 2018. I'm Brian McCullough. Today, Slack takes out some competitors.

Twitter gets its own earnings shock. Amazon is just fine. Thank you very much. Stripe issues credit cards. Movie pass is still alive at the time of this recording. And the weekend Longreads suggestions. Here's what you miss today in the world of tech. Slack continues.

March to workplace domination. Atlasian, the $15 billion Australian software company has announced that it is selling its popular hip chat and stride messaging services to workplace messaging platform Slack. As a part of the deal, Atlassian will make what is being described as a small but symbolically important investment in Slack. Quote, this deeper partnership exemplifies our shared belief that the world of enterprise software is moving to a model in which people are building their own technology stack with the highly specialized, interoperable tools that best suit their needs, said Slack Chief Product Officer April Underwood in a statement. Shares of Atlassian soared close to 70% in after-hours trading on this news. Bloomberg described this tie-up like this, quote,

The deal gives Slack more customers, most of whom pay a monthly service fee and allows Atlassian to exit a business that failed to generate as much demand as expected. Combining the two businesses bolsters Slack at a time when Microsoft is pushing a rival product called Teams to some 135 million Office Cloud customers. Microsoft introduced a free version of Teams this month in a bid to lure people who don't subscribe to Office 365, end quote. Taking out a competitor is good for Slack, as Slack CEO Stuart Butterfield straight up admitted to Bloomberg, quote, there's fewer choices for people,

Butterfield says. Yes, increasingly, it seems like your choices are Slack or Microsoft. Yesterday when we discussed the now infamous earnings debacle where Facebook lost the most market value of any stock in a single day in the history of the U.S. stock market, we speculated whether or not other tech companies might have a similar quarterly earnings reckoning coming. Well, today,

Twitter has been having one. And in some ways, it's completely different than Facebook's reckoning, but in some ways, it's largely the same story. At the time of this recording, Twitter is down nearly 20%, but it only had a $40 billion market cap at its height, so that only erases about $8 billion in market value. Twitter posted good numbers, by the way. Arguably the best they've ever reported. They beat estimates, Q2 profit of $100 million on revenue of $7.7.5.5.5.5.5.5. 111 million, 24% year-over-year revenue growth, all-time records for the company. So why so down, Twitter?

Once again, it's Mao. Twitter reported one million less monthly active users quarter over quarter. The market seems to be unhappy that Twitter is unable to grow monthly active users in the U.S. And when Twitter warns that monthly active users will probably continue to drop in the small, single-digitig. millions? Well, that's when Wall Street gets off the bus. That darned Mao. But here's what's interesting. Wall Street is, on the one hand, reacting to Twitter also lowering its earnings forecasts, which is understandable. But Twitter has long since given up trying to match Facebook when it comes to user numbers. Twitter might never have a billion monthly active users. Just get used to

that fact. Instead, Twitter has been focusing on monetizing what it does have better, and it's been doing very well at that. And arguably, in a more aggressive way than Facebook, Twitter has been actively trying to clean up its network. Twitter said it removed about 70 million accounts in May and June, accounts that were fake or bots or spam. In a shareholder letter, the company wrote, quote, we are making active decisions to prioritize health initiatives over near-term product improvements that may drive more usage of Twitter as a daily utility. Twitter is essentially saying to Wall Street, we're losing users, but that's okay. They weren't quality users anyway, and this will be better overall for the real quality

users we have. Twitter even said as much in its earnings release, quote, when we suspend accounts, many of the removed accounts have already been excluded from Mao or Dow, monthly active users or daily active users, either because the accounts were already inactive for more than one month at the time of suspension or because they were caught at sign-up and were never included in Mao or Dow, end quote. And Wall Street seems just unimpressed with all of this, as the verges Vlad Savov said on Twitter, quote, Twitter and Facebook's stock prices going to hell because they took steps to improve their service is everything you need to know about the deleterious

influence of Wall Street, end quote. Well, one note to Wall Street about Twitter in particular, as Williams and a lot of other Twitter apologists are pointing out, daily active users grew 11% year over year with double digit growth in five out of the top 10 global markets. So if that sort of thing continues, maybe you can see the logic here, actually cleaning up the network and making it function better for the core existing committed users might actually get those users to use the service more. That has to be a good thing, right? Even for the bottom line. Given all of these earnings apocalypses, apocalypsi, I said yesterday that it would be interesting to get Amazon's earnings. Well, we got them and TLDR, Amazon is fine. Yesterday,

Amazon reported its largest quarterly profit in its history, $2.5 billion on revenue of $52.89 billion. That revenue number was a bit of a miss based on consensus expectations, but who cares? Because Amazon has now been profitable for 13 straight quarters, and in each of the last three quarters, the profits have been in the billions. And who cares because, for a while now, the real story on Amazon has been, yes, they're continuing to swallow all of retail. Right now, today, Amazon's AWS cloud services is a beast, an act. absolute beast of a business. AWS sales were up 49% year over year to $6.2 billion, and

operating profit just of the AWS unit is $1.6 billion. As OpenStack co-founder Mark Collier tweeted, AWS represents just 11% of Amazon's revenue, but two-thirds of their profit. A wise man once said, your profit margin is my opportunity. He's referring to Bezos. Jeff Bezos said that. In this case, AWS customers are providing the very funding Amazon needs to go after the margins in their customers' core business. Genius, end quote. And there's another narrative playing out with Amazon that we've spoken about a bit in recent months. Add sales on the Amazon platform, which Amazon puts in its quote, other category, saw sales of $2.2 billion in Q2 alone.

That's up 132% year over year, making it Amazon's fastest, growing segment. So just by gently turning on the advertising tab, Amazon has quickly been able to make more money on advertising than either Twitter or Snap do. It's funny. When you look at it that way, Google contorted itself into alphabet just in order to somehow innovate out of being a one-trick pony, right, in order to incubate new moonshot businesses beyond the core business of online advertising. Amazon, almost accidentally, almost as an afterthought, has generated two huge new businesses, advertising and cloud services, and it didn't do anything but just turn on the lights. And none of that even gets us into talking about the opportunities in the Alexa platform. That's being way over simplistic, of course, but as Jason Delray and Rani Mala wrote for Recode, this is the Amazon that all of its rivals should feel.

and it has nothing to do with Amazon's core business of just selling people stuff online. Although, that too, because the more money Amazon makes with these side bets, the more it can subsidize its absorption of all of retail. Your margin is my opportunity. Stripe, of course, is the modern payments company that has made it easier for small and medium-sized businesses to take payments, largely online, but not entirely, and has written that simple mission to around a $10 billion unicorn valuation. And yesterday it announced a clever new feature.

Bloomberg headlined it this way. Stripe starts issuing credit cards. But listen closely because it's a little more interesting than that. With a new product, it's calling Stripe issuing. Stripe will now allow businesses of all sizes to issue their own credit and debit cards to employees. These will be both physical and virtual, are certified with all major credit card networks

and can be used on the Apple Pay and Google Pay platforms. This will allow businesses, again, of all sizes, to issue credit and debit cards to their employees so that it will be easier to make business payments and control costs. Quote, we've tackled many of the major problems on accepting payments, but businesses still have trouble moving money. So said Lackey Groom, head of the new Stripe Issuing Division to Bloomberg. We realized we're staring at another stripe-sized hole in the payment.

economy, end quote. Here are the use cases Groom gave to Bloomberg. A car sharing company could manage and track gas purchases made with its fuel cards. Contractors sent to run errands could use a one-time virtual credit card number to go shopping and only get approved if the purchase is the right amount at the predetermined store. A manager could set dynamic budgets for a sales team's expense accounts rather than waiting to approve dining purchases later. And new banks, could issue credit cards to customers in a matter of months rather than more than a year. A stripe-sized hole in the payments economy indeed. Quick update on the MoviePass saga, you MoviePass fans.

The company is still alive, I think, but yesterday MoviePass had what it called a service outage. MoviePass subscribers were complaining all over social media that they couldn't use their movie pass accounts to get movie tickets in theaters. And now, thanks to a Securities and Exchange Commission filing this morning, we know why. As Business Insider put it, MoviePass briefly ran out of money yesterday. Apparently, MoviePass missed a payment to one of its fulfillment processors, and that contractor refused to process payments until it got paid. Thanks to the SEC filing, we know that MoviePass owner Helios and Matheson Analytics

quickly borrowed $5 million in cash to fix the problem. FYI, earlier this week, Helios and Matheson did a reverse stock split because the stock was in danger of being delisted by the NASDAQ due to shares trading under a dollar with a market cap under $50 million. The reverse stock split took shares from $0.9 up to around $14. This morning, though, on the news of this emergency loan, shares were trading back down at around $6. If you can't go to the movies this weekend because your movie pass won't work, why not pass the time with some long reads? It's time for the weekend long reads suggestions, everybody. Have you heard the story of the blockchain millionaires and billionaires who have been moving down to Puerto Rico in order to build a crypto utopia? In its classic gonzo journalism tradition that it's known for, Rolling Stone has a profile up of one of them by the name of Brock Pierce, former chairman.

child actor famous for a part in the Mighty Ducks movies, and today, Chairman of the Blockchain Foundation, and number nine on Forbes's list of cryptocurrency's wealthiest people. Quoting from the piece, he stands five feet four with dirty blonde hair and dirtier blonde goatee. He's wearing a leather satchel slung around his torso and a black, wide-brimmed hat with two playing cards, a queen of spades and a queen of hearts, perfectly spayed in a multi-colored band. He's a burning man mashup of young Indiana Jones, Theon Grayjoy, and an itinerant street musician. Or, as John Oliver once put it, a sleepy, creepy cowboy from the future, end quote. Pierce, by the way, says he's committed to giving away all of his crypto wealth, not on his death,

but now. And speaking of philanthropy, the Atlantic has a story up about how Silicon Valley has been disrupting philanthropy. The Boys and Girls Club of America was having a hard time raising money in Silicon Valley. Their tried and true mission of giving kids a place to go after school so they don't get into trouble. Just wasn't resonating with tech donors who prefer to do things like disrupt poverty. So the Boys and Girls Club started speaking Silicon Valley's language. STEM summer camps.

Shark Tank style events to pitch donors. reports to shareholders letters. This piece is an interesting look at either philanthropy getting with the Times or else sucking up to tech folk using the lingua franca of the Silicon Valley cultural bubble, depending on your point of view, I guess. Places like YouTube have begun turning to Wikipedia to combat fake news and conspiracy theories,

so Wired takes a look at the so-called guerrilla Wikipedia editors who are combating these scourges. Quote, today the guerrilla skepticism on Wikipedia project has more than 120 volunteer editors from around the world, each of whom Gerbik has recruited and trained herself. They're collectively responsible

for some of the site's most heavily trafficked articles on topics like Scientology, UFOs, and vaccines, end quote. Bloomberg has an interesting piece up about Google's so-called shadow workforce. Google has about 90,000 direct employees. but it also has an army of contract workers. Full Google employees wear white badges, contract Google employees wear red badges,

and the color of your badge can have a lot to do with how your workday goes. Quote, Yana Kalu, an organizer with advocacy group co-worker.org, who speaks with Google employees and contractors, said that both groups are concerned about the workers who aren't full Google employees. They feel isolated, precarious, and like second-class citizens, Kalu said. It's a microcosm of what's happening in the economy as a whole, end quote. Finally, today, the programming environment we come up in can have an outsized influence on the tech we go on to create later in life.

A ton of us came up messing around with HyperCard when we were kids, so when the web hit the scene, boom, it felt perfectly natural to us. Code Academy has a nice, nostalgic, encomneum up about MySpace and the influence it had on a generation of devs and designers of a certain age. Sure, your MySpace page was most likely a messy, almost mirror reflection of your childhood bedroom, but that was kind of the point, right? The piece is titled MySpace and the coding legacy it left behind, and it should speak to a lot of you out there.

You know who you are. That's all for a pretty eventful week. Hope you have a restful weekend. This will be my last restful weekend for a while. We're moving next Saturday to a new house. Moving's always stressful, but in the olden times, it felt relatively straightforward to me. You just put your junk in a truck and then unload the junk. Well, this is my first move since having kids, so there's a lot more junk.

pray for my wife and I. Talk to you guys on Monday in honor of monthly active users and the power they have over the market cap of tech companies.