Tech Brew Ride Home - Thursday, June 28, 2018 - Amazon Kneecaps Walgreens

Episode Date: June 28, 2018

Amazon makes a ton of news including buying into pharmaceutical commerce and creating its own mini-package delivery army, Apple considers one subscription to rule them all, and the long Apple/Samsung war is over. Stories from: @angelicalavito, @jacknicas Tweets: @eugenegu Links:Amazon shakes up drugstore business with deal to buy online pharmacy PillPack (CNBC)Amazon’s new blue crew: Tech giant enlists entrepreneurs to own the ‘last mile,’ delivering packages in Prime vans and uniforms (GeekWire)Apple Eyes Streaming Bundle for TV, Music and News (The Information)Apple and Samsung End Smartphone Patent Wars (NYTimes)Bird CEO Explains Why His Scooter Startup Needed $300 Million (Bloomberg)AT&T more than doubles ‘admin fee’ for every wireless customer (The Verge)Colossal 128TB SD cards could soon be on the way (TNW) 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. E-Scooter startup Bird has made it official announcing today that it has raised a new $300 million round led by Sequoia Capital. The valuation of this round was at the $2 billion that has been rumored. So if you'll remember in March of this year, Bird had a $300 million valuation.

Last month, May, the last time it raised money, Bird was at a $1 billion valuation and now, the end of June, a $2 billion valuation. So if this is really one huge fad and really one of the oddest ones in recent memory, I'd like to point out it's a fad that literally everyone in venture capital wants to be in on. Let me read you the list of the investors who are re-upping in this round for Byrd. Craft Ventures, Index Ventures, Valor, Goldcrest, Tusk Ventures, and Upfront Ventures. And let me read you the list of new investors to Bird, a sell, B Capital, CRV, V, Sound Ventures, Greycroft, and EVentures. Anyone else you can think of has probably invested in Byrd's main rival, Lyme, including GV and Andreson Horowitz. And let me read you this quote from CRV's Sarger about why his firm wanted to participate in this round,

because I think it gives us some understanding of what VCs see in all this scooter hype. Quote, we have met with over 20 companies focused on the last mile problem over the years and feel this is a mulberry. multi-billion dollar opportunity that can have a big impact in the world. We have a ton of conviction that this team has original product thought, they created the space, and the execution shops to build something extremely valuable here. And we have been long-term focused, not short-term focus, in making the investment. The, quote, hype in our decision, the non-zero answer is that Byrd has built the best product in the market, and while we kept meeting with more startups wanting to invest in the space, we kept coming back to Byrd as the best company.

So in that sense, the hype from consumers is real and was a part of the decision. On unit economics, we view the first product as an MVP, as the company is less than a year old. And while the unit economics are encouraging, they played a part of the investment decision, but we know it is not even the first inning in this market, end quote. Bird has now raised $418 million since it was founded in April of last year. I recommend checking out the interview that Bloomberg posted today with Bird founder Travis van der Zandon, which I'll link to in the show notes, of course. Bird sees deploying as much as 10,000 scooters eventually in a city, the size of, say, San Francisco,

and generating $70 million a year in revenue in such a scenario. Notably, Van der Zanden answered the question about, why he had already sold so many millions of dollars worth of his own shares in Byrd. Van der Zandon said, quote, there's a top tier CEO that I really respect as a mentor that even him, we couldn't get in the round. In order to include him, I sold him a little of my secondary to just get him as a mentor, end quote.

Vander Zandin declined to name the CEO slash mentor in question. Small bit of consumer awareness here. If you're an AT&T wireless subscriber, your carrier has quietly raised a monthly fee by more than double that will cost consumers around $800 million a year. In every monthly bill, AT&T has a line item that reads administrative fee. This fee used to be a charge of 76 cents per month, but it has recently gone up to $1.99 per month. Over 12 months and 64.5 million wireless customers in the U.S., that's a, it's a $1 million. an additional $800 million in revenue for the company for, well, basically nothing, right? The Verge reached out to AT&T for comment and a spokesperson said, quote,

this is a standard administrative fee across the wireless industry, which helps cover costs we incur for items like cell site maintenance and interconnection between carriers, end quote. But as Nick Stat at the Verge writes, quote, it's not exactly clear why AT&T feels the need to jack up the amount of money it charges users without offering any tangible consumer benefit whatsoever. And it's hard to read cell site maintenance and interconnection between carriers as wholly believable excuses for generating nearly $1 billion in revenue from its subscribers when AT&T just spent $85 billion

acquiring Time Warner in one of the largest and priciest corporate consolidations in recent memory, end quote. Although that's probably your answer right there, isn't it? What if I told you that modest little SD card that you have either in your SLR camera right now or more likely sliding around unused in a junk drawer somewhere. What if I told you someday that little SD card could hold 128 terabytes of data? There's a new version of the SD memory card standard coming out called the SD Express that will have at least a theoretical capacity of 128 terabytes and a data transfer rate of

985 mbPS. The SD Association is a group of nearly 9285mbPS. The SD Association is a group of nearly 9,000, 900 companies, manufacturers, device makers, etc., who prescribe SD memory card standards, and they recently announced that SD Express would integrate technologies called PCI Express and NVME to achieve new breakthroughs in bandwidth and low-latency storage. Hiroyuki Sakamoto, the SDA president, said, quote, with SD Express, we're offering an entirely new level of memory card with faster protocols turning cards into a removable SSD, end quote. The current standard, SD6.0, maxes out at two terabytes of storage and a maximum data transfer

rate of 624 MbPS. If this new standard ever comes to market at an affordable price, you'd be able to store 250,000 HD movies on a single SD card. Currently a 512 gigabyte SD card retails in the neighborhood of $300, and 1 terabyte SD cards have been promised but haven't quite hit the market yet. With things like full 360-degree VR and 8K video increasingly proliferating, though, we're certainly going to need storage like this pretty soon. That's all for today.

I've been your host, Brian McCullough. Follow me on Twitter at Brian MCC. And as always, I've had the able assistance of the TechMeme editors. Follow them on Twitter at TechMeme. Thanks for listening. Welcome to the TechMeme ride home for Thursday, June 28th, 2018. I'm Brian McCullough. Today, Amazon makes a ton of news, including buying into pharmaceutical commerce

and creating its own mini package delivery army. Apple considers one subscription to rule them all, and the long Apple Samsung war is over. Here's what you miss today in the world of tech. So a couple of stories about Amazon expanding around its margins, but when you're as big as Amazon is, when you just dip your toe into any market, you can cause major shockwaves. Amazon announced today it will be acquiring online pharmacy startup pill pack for an undisclosed amount of money.

If you've never heard of pill pack and I had not, their target market is people who take multiple daily prescriptions. You can order your medication online and pill pack delivers the specific doses as needed at specific times. In other words, do you need to take three yellow pills today and two orange ones? Pillpack will ship you what's needed in pre-sorted dose packaging and coordinate things like refills and renewals. So Amazon is buying an online e-commerce startup. Big deal, right?

But the news had an immediate and earth-shattering impact on stocks in this adjacent market. Walgreens, for example, opened down 9%. CVS stock opened down 8% and at one point Rite Aid was down by as much as 16%. Walgreens Boots Alliance CEO Stefano Pesina happened to be in a pre-planned earnings call when the news broke. His reaction was, quote, yes, it's a declaration of intent from Amazon, but the pharmacy world is much more complex than the delivery of a certain pill or package, end quote. But on Twitter, Mike Dudes said, quote, once tiny little pill pack has instantly shaved more than $13 billion off the market cap of the entire U.S. pharmacy slash drugstore industry via acquisition by Amazon. And Dr. Eugene Gou tweeted, wow, Amazon acquiring Pillpack is going to totally got all the

retail pharmacies and online drug delivery companies, too. It's like what Uber did to taxis and what Netflix did to Blockbuster, end quote. Amazon's Jeff Wilkie said in a statement, Pilpac's visionary team has a combination of deep pharmacy experience and a focus on technology. pill pack is meaningfully improving its customers' lives, and we want to help them continue making it easy for people to save time, simplify their lives, and feel healthier. We're excited to see what we can do together on behalf of customers over time, end quote. Pillpack is licensed to ship prescriptions in 49 states, and the rumor is that Walmart had previously considered buying the startup for less than $1 billion. Amazon already sells private label over-the-counter drugs and has a lot of money.

obtained pharmacy licenses in a few states. Okay, another line of business and another move by Amazon with disruptive potential. In a press release with the title, Wanted Hundreds of Entrepreneurs to Start Businesses Delivering Amazon Packages, Amazon also announced it is expanding further into package delivery and wants to enlist entrepreneurs and small business owners to start their own delivery service networks to do so. The new Delivery Service Partners Program will allow anyone to run. run their own package delivery fleet of up to 40 vehicles and 100 employees.

Amazon will pay these people to deliver packages while providing discounts on vehicles, uniforms, fuel, etc. The partners will operate as individual business entities, and Amazon says that if you want to get started, you can do so for as little as $10,000 up front and could potentially earn $300,000 annually in profit. So instead of buying UPS, say, or launching its own version of FedEx, Amazon is going to try to let a thousand flowers bloom. Amazon launched Amazon Flex in 2015, which lets normal people deliver packages using their own cars. But in the photo op announcing this new service, Amazon showed off Amazon Prime-branded delivery vans

and delivery workers in distinctive teal blue uniforms. Geekwire sat down with Dave Clark, who heads Amazon's delivery logistics operations, and he said the new initiative is, quote, the next big. building block of our end-to-end supply chain. You will see the amount of Amazon delivery vehicles on the street grow in the years to come. There will be a diverse mix of providers for the foreseeable future." But as Timothy Bowen predicted on Twitter, I like this because it's giving the small guy an opportunity. But you know Amazon will crush those same entrepreneurs once they get a delivery robot.

On to the unfolding saga in the future of entertainment. The Infoferencing Saga, the Influence Information is reporting that Apple is considering a single subscription offering that would encompass the original TV shows. It's producing for its upcoming expected streaming video service, as well as its existing Apple Music Service and magazine articles all for one single subscription, sort of like Amazon Prime. I imagine Apple could also bundle in something like iCloud storage into this. I've often wondered why Apple didn't just offer people unlimited cloud storage. This could be a way to achieve that. One app for entertainment, anyone? Or at least one app for everything Apple.

Quoting from the information piece, as a first step toward the new offering, Apple is expected to launch a digital news subscription service next year. The service would combine its existing Apple News app with a digital magazine subscription service acquired by Apple in March. The subscription service texture offers more than 200 publications, including the New Yorker and Vanity Fair, $9.99 a month. As the next step, Apple is looking to bundle the digital new subscription offering

with the video content it has begun producing and its Apple Music subscription service, which has grown to 40 million paid subscribers since 2015. It is unclear when Apple will unveil the new subscription offering, the people said. The company also would continue to allow subscribers to sign up for each of the services separately, end quote. So to me, the logic of this is obvious, but Philip Elmer DeWitt pushed back a bit, writing, quote, My take, Steve Jobs' original idea was a best-of-TV package that let you buy only the shows you watched and not the 800 channels you didn't. When the cable monopolies declined to play ball,

Apple tried to get the TV programmers, Fox, CBS, and ABC to put together a skinny bundle of content it could sell for a relatively low monthly fee. Those negotiations collapsed, according to the Hollywood press, under the weight of Eddie Q's arrogance. Last spring, Q was pitching HBO Showtime and Stars on a Best of Premium Cable bundle. That was before Apple hired Ehrlich and Amberg and started rolling its own, end quote. Elmer DeWitt calls the idea of this new package deal muddled. Speaking of Steve Jobs, it was announced that Apple and Samsung have settled their seven-year-long patent fight over allegations that Samsung copied the design of the iPhone.

Jobs famously told his biographer Walter Isaacson that he would go, quote, thermonuclear war on what he felt were rip-offs of Apple innovations. Again, quoting Jobs, I will spend my last dying breath if I need to, and I will spend every penny of Apple's $40 billion in the bank to write this wrong, end quote. And on some level, we can only speculate to what degree Apple has been continuing this litigation all this time against one of its key strategic. suppliers, simply because it wanted to honor Jobs' wishes. But it's all over now. In terms of the settlement were not disclosed, the patent battle started in 2011, and appeals took it all the way to the U.S. Supreme Court. According to Axios's Ina Freed, quote, Apple really lost the case in the early days when it failed to get an injunction forcing Samsung to change its phone design. After that point the fight was less about product or competition than over money, which neither company is

hurting for, end quote. So I guess seven years, and it was all just a wash. Santa Clara University law professor Brian J. Love told the New York Times, quote, if I had to characterize it, it didn't really accomplish anything. Close to a decade of litigation, hundreds of millions of dollars spent on lawyers, and at the end of the day, no products went off the market. Apple can find better ways. of earning hundreds of millions of dollars than fighting a decade-long lawsuit." Yes, but if your iconic CEO's dying wish was for vengeance, I guess you have to honor that, right?