Tech Brew Ride Home - Mon. 09/30 - Has WeWork Slain The Unicorn Market?

Episode Date: September 30, 2019

IS the new iOS release finally bug free? Add podcasts to your Spotify playlists, WeWork officially “delays” its IPO, which gives us a reason to examine why the Unicorn IPO Parade has mattered, and This Week In Elon Musk is all about achieving orbit. Sponsors: PixelUnion.net LinkedIn.com/ride Links: Apple Releases iOS 13.1.2 and iPadOS 13.1.2 with Fixes for Camera, iCloud Backup, HomePod Shortcut, and Flashlight Bugs (MacRumors) Spotify users can add podcasts to playlists (Engadget) HP’s Spectre x360 13 seems like an improvement in almost every way (The Verge) New Checkm8 jailbreak released for all iOS devices running A5 to A11 chips (ZDNet) Developer of Checkm8 explains why iDevice jailbreak exploit is a game changer (ArsTechnica) The 'Checkm8' exploit isn't a big deal to iPhone or iPad users, and here's why (Apple Insider) WeWork pulls IPO filing (CNBC) The Great Public Market Reckoning (AVC) Elon Musk aims to put SpaceX’s Starship in orbit in six months (The Verge) 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 Monday, September 30th, 2019. I'm Brian McCullough. Today is the new iOS release, finally, bug-free, add podcasts to your Spotify playlist. WeWork officially delays its IPO, which gives us a reason to examine why the Unicorn IPO parade has mattered.

And this weekend, Elon Musk is all about achieving orbit. Here's what you miss today in the world of tech. This may be the release you've been looking for. Apple Today pushed out iOS 13.1.2 and iPadOS 13.1.2 with fixes for several bugs, including those affecting camera, iCloud backup, shortcuts on HomePod, and even the flashlight. So, you know, some important things. The initial iOS 13 release did get a reputation for being pretty buggy.

So if you've been holding off on updating your devices, maybe time to dive in, I think, maybe. Marco Arment just tweeted, quote, They still haven't fixed the UI search controller, UI navigation bar corruption introduced in 13.1, which totally screwed my app. iOS 13 continues to destroy my morale as a developer, end quote. So then, correction, maybe don't update. If like me, you rely on Overcast as your podcast app of choice, as they say. Speaking of podcasts, Spotify users can now officially add podcasts to playlist, so you can now mix in your favorite shows or your favorite episodes all in a row, or you can mix podcasts with your

favorite songs to create the ideal hybrid playlist to get you through whatever. But for whatever reason, you can only do this at the moment on the mobile app. No desktop support just yet, quoting in gadget, Spotify tested podcast suggestions, and curated podcast playlist over the last few months. So it's maybe not too much of a surprise. It's now letting users add them to playlists as they see fit. The podcast update follows two new playlists. Spotify rolled out last week,

focusing on songs you've listened to the most over the last 30 days and favorites you haven't heard in a while, end quote. Well, it is International Podcast Day, which I only learned about this morning as being a thing. So, I guess, happy IPD to you and yours. Right as I was posting the show on Friday, a researcher claimed that he had found a permanent, unpatchable boot-rom exploit for iOS devices with A5 through A-11 generation chips, which would enable the jailbreaks of iPhone 4s through tens.

And then he released the code. I held off covering on Friday because I wasn't sure how important it was. as always this sort of thing is not exactly my bellywick, but it does turn out that it seems to be the real deal, and it's important in a way. The exploit is called Checkmate, but it requires physical device access to work, and lacks persistence after a reboot. Thus, it probably isn't something that most of us should worry about. Quick rundown of the reactions to the exploit and the implications. Ars Technica, who interviewed the developer who goes by the handle Axiomix, quote, Checkmate is different. It works on 11 generations of iPhones from the 4S to the 10.

While it doesn't work on newer devices, Checkmate can jailbreak hundreds of millions of devices in use today. And because the bootrom can't be updated after the device is manufactured, Checkmate will be able to jailbreak in perpetuity. Checkmate is unlikely to make it easier for people who find, steal, or confiscate a voluntary. vulnerable iPhone, but don't have the unlock pin to access the data stored on it. Checkmate, however, is going to benefit researchers, hobbyists, and hackers by providing a way not seen in almost a decade to access the lowest levels of eye devices, end quote. More on this from Apple Insider. Quote, in the very few hours after the checkmate exploit was revealed, there has been a lot

of fear, paranoia, and finger pointing done across the internet. There is no real reason for this at all. Fortunately, as of yet, there haven't been any nasty secret style headlines regarding this matter. We're sure that some content management system someplace has one stored, though, and we're also pretty sure we know who's going to do it first. Most of the headlines are right. This is a big deal for the jailbreak community. We don't think it's a bad thing at all. Because of limitations for assailants, it just makes no difference to nearly every iPhone or iPad user outside of that community. If you take anything away from this, it should be that you are no less safe today from the reveal of Checkmate than you were yesterday or the day before or four years ago.

Malware can't exploit it at all. And if you maintain physical security of your iPhone 5S and newer, then your passcode and your data remain safe, end quote. We're getting into Prime laptop and desktop announcement season and release season. even if we don't mention the hardware on that side of the equation as much on this show. Between basically now, because of the holiday season and CES, this is when a lot of new hardware, actual hardware, with like, you know, a mouse or a trackpad or something, gets announced at least, and a lot of it gets released ahead of the shopping season. We mentioned some new hardware last week, I think it was, and today it's HP, who has updated its HP Specter.

X-360-13-inch laptop with 10th generation Intel CPUs, a 4K-O-led display, up to 22 hours of battery life, exclamation point, exclamation point, exclamation point, optional LTE, also exclamation points triplicate, and available in October starting at $1,09. Quoting Cameron Faulkner in The Verge, H.P. Specter X36013 has undergone a fairly drastic makeover for 2019. It's still very much a specter. The premium two and one has glossy edges, a cleverly placed power button, and one USBC port embedded into its two diagonally cut corners. But HP has cut away a lot of the excess from the old design, making its latest version smaller. Still, somehow it feels bigger when you use it. That thinner and smaller,

but feeling larger effect is achieved in part by its significantly trimmed down top and bottom bezels, giving it a 90% screen-to-body ratio. The top bezel is 5.8 millimeters thick, seemingly too thin to fit a webcam, but HP has engineered the world's smallest Windows Hello-enabled IR webcam for that bezel. It's 2.2 millimeters thick, and while that's impressive, I'm skeptical that such a small camera will yield good picture quality. The chassis is 23mm meters shallower than last year's model, making it easier to tuck into your arm and carry around. It requires less space on your desk, and it will fit a little easier on a train or airplane seat tray. Thankfully, that still leaves enough space for the same keyboard layout with a new dedicated microphone mute key,

though the track pad is just a bit smaller, end quote. WeWork has officially said it will file a request to withdraw its IPO prospectus. after that aborted road show and the management turmoil, which, of course, among other things, saw Adam Newman step down as CEO of the company. Newly installed co-CEOs. Artie Minson and Sebastian Gunningham said today, quote, we have decided to postpone our IPO to focus on our core business, the fundamentals of which remain strong. We are as committed as ever to serving our members, enterprise customers, landlord partners, employees, and shareholders. We have every intention to operate WeWork as a public company and look forward to revisiting the public equity markets in the future, end quote. Nothing more to add to that, really, but it does allow me to talk about this.

Believe it or not, I've held off on all of the WeWork postmortems, and there've been plenty, as well as soft bank hand-ringing articles, and even recently a batch of Uber-concern trolling pieces, that popped up even just this morning. I do, in fact, try not to talk about the same stories over and over again, the same companies every day, if I can't avoid it. But one thing that I have harped on all year has been the parade of unicorn IPOs, which, frankly, is the larger narrative that we work and Uber and all the rest have really been playing into, if you think about it. Here's why this has been a big deal. You've essentially had a generation of investors chasing a generation of companies that collectively learned the lessons of especially Facebook and Google,

and we're like, okay, if we're in this new software has eaten everything world, and where mobile and Internet of Things and machine learning are arguably accelerants, well then, if a company can hit that magical metric of scale in the fullest sense of the word, in the sense of billions of users, then are those sorts of companies, the ones that hit that scale, are they absolutely can't miss prospects. Could someone be the Facebook of transportation or the Facebook of real estate? And I don't mean a social network for any of those categories, but again, a company that could achieve the level of scale that Facebook did in its category and these other categories.

If a company like that is indeed a can't miss proposition, then you wouldn't want to miss out, right? People forget this. But people were skeptical of Facebook all along. Go back and read the articles about when Microsoft invested $200,000. $40 million in Facebook back in 2007. People thought they were crazy. Or heck, when Facebook went public and slumped down to what was it, like $30 a share, $25, kicking yourself for missing out can be a hell of a drug, especially for investors. I argued in my book that half of the reason the dot-com bubble even

happened was because investors were kicking themselves for not getting in on Microsoft in the 1980s. Well, over the weekend, Fred Wilson had a typically brilliant post on his AVC blog that reminded me why the unicorn IPO parade was such a big deal, why it has been so obsessively watched in especially Silicon Valley, but also, you know, in finance, all sorts of places. In short, we're seeing 10 years of a major investment thesis getting tested. And so far, not so good. quote, I believe that we have seen a narrative in the late stage private markets that as software is eating the world, real estate, music, exercise, transportation, every company should be valued as a software company at 10x revenues or more. And that narrative is now falling apart. If the product is software and thus can produce software gross margins 75% or greater, then it should be valued

as a software company. If the product is something else and cannot produce software gross margins, It needs to be valued like other similar businesses with similar margins, but maybe at some premium to recognize the leverage it can get through software. But we have not been doing it that way in the late stage private markets for the last five years. I think we may start now that the public markets are showing us how, end quote. So basically, yeah, all of the valuations that led to unicorn valuations, they're actually getting tested, the rubber's meeting the road, and so far it seems like all of the VC assumptions

over the last few years might have been off by a bit. As always with Fred, it's worth reading the whole thing. As he points out by way of illustration, and to explain more what we're talking about here, he lists the gross margins of seven unicorn IPOs of recent vintage and one near IPO. And after I read these out to you, go do a quick search of the stock performance since IPO or even in the last year of these companies and see if you notice a grouping play out here. For example, Zoom, 81% gross margins, a software play, cloud flare, 77% gross margins, software, dated dogs, 75% gross margins, software. Compare that with Uber, 46% gross margins, Lyft 39%, Peloton, 42%, and then WeWork. gross margins of 20%. Also, Spotify, gross margins of 26%. I actually think it would be interesting

to mix in Shopify and Twilio here for comparison as well. Basically, what Fred's saying is the public market simply aren't buying so far these software multiples for companies unless they truly, truly are software companies. The market seem to be saying just because you call yourself a software-enabled lawn care platform, superjuiced with automation, autonomy, machine learning, blockchain, etc. You're still just a lawn care company unless you have margins that are meaningfully different than any other lawn care service out there. This also is from Dan Primex newsletter. Quote, we're about to get a bit of a break from these sorts of deals, which I think is good for everyone, a top Wall Street banker told me this morning. Private markets follow

public markets, so don't be surprised to see some valuation and or deal-sized pullback for these hard-to-comp companies, particularly if SoftBank fails to raise vision. Fund, too. Goodbye to egregious governance terms. Dual class will survive, but we work laid out a third rail for others to avoid. U.S. IPOs have still outperformed the S&P 500 in 2019, although the gap has shrunk significantly this month. Or put another way, the sky isn't falling, but it's gotten a lot darker, and for some, downright stormy, end quote. Well, we do have one more really biggie coming, Airbnb. But after that, is the parade of unicorn IPOs over for this epoch in time, at least this type of unicorn company, at least this generation of companies and business models and investment theses. Finally today, also over the weekend, Elon Musk gave a presentation to reporters and he said that SpaceX would like to make it to orbit soon. Quote, this is a presentation to reporters. This is a question. This is a day. is going to sound totally nuts, but I think we want to try to reach orbit in less than six months,

Musk said, provided the rate of design improvement and manufacturing improvement continues to be exponential. I think that is accurate to within a few months, end quote. During the presentation at SpaceX's testing facility near Bocachika, Texas, just north of the U.S.-Mexico border, Musk also said that he expected the Starship prototype towering behind him to do controlled hops in a few months, up to an altitude of 65,000 feet. Once that milestone is reached, Musk indicated the next flight goal would be achieving orbit. A rendering of starship displayed at the presentation

indicated that the ship will have a length of 50 meters, about 164 feet, and a diameter of 9 meters, about 30 feet, and should eventually be able to lift a payload of 150 tons. The starship will be launched into space by a massive rocket called the Super Heavy. The Super Heavy will also be 9 meters in diameter with a length of 68 meters or 220 feet, end quote. So kind of a typical Elon Musk performance, though it did set my space Twitter a flutter over the weekend.

There was nothing really new. We knew that they were moving towards orbit. That was the next step. But also, it was full of promises and promise of a vision that really makes your heart flutter. Though it's worth noting, Starship is a different program than the crew dragon, which, as we've discussed before, SpaceX is building for NASA's commercial crew program

and which has suffered from delays recently that we've spoken about. In fact, NASA administrator Jim Biddenstein tweeted ahead of Musk's presentation, quote, I am looking forward to the Space X announcement tomorrow. In the meantime, commercial crew is years behind schedule. NASA expects to see the same level of enthusiasm focused on the investments of the American taxpayer. It is time to deliver, end quote. Musk acknowledged this sub-tweet by saying less than 5% of SpaceX was working on the Starship program. To be clear, the vast majority of our resources are focused on Falcon and Dragon,

especially Crew Dragon, Musk said. Well, anyway, a new timeline to keep track of, I guess. orbit for starship by April-ish, give or take a few months, I suppose. That is all for today. I've been Brian McCullough, as always. I haven't watched any of Season 2 of Succession yet. So this is the first show in a while where I'm assiduously trying to wall myself off from anything, any discussion on Twitter, any spoilers. But I'll try to catch up this week because I figure that can't last. It actually really puts a damper on my podcast listening because I listen to so many recaps of great TV. So once I get this done, I've got about, I don't know, hours and hours to catch up on.

Anyway, until then, nah, nah, nah, nah, nah, nah, can't hear you. No spoilers. Talk to you tomorrow.