Fundings & Exits
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Equity Monday: The TikTok mess, and a grip of neat European VC activity
Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast where we unpack the numbers behind the headlines.
This is Equity Monday, our weekly kickoff that tracks the latest big news, chats about the coming week, digs into some recent funding rounds and mulls over a larger theme or narrative from the private markets. You can follow the show on Twitter here and myself here — and don’t forget to check out last Friday’s episode.
What a busy morning. We had to cover TikTok . We had to talk VC rounds. So, this is what we got up to:
- U.S. tech stocks are poised to sell off further this morning.
- The Oracle-TikTok-Walmart-ByteDance deal is either coming into focus, or a period of even less clarity. It’s hard to tell.
- Nikola founder Trevor Milton is leaving the board of his own company in the wake of fraud allegations. Shares of the company are sharply lower in pre-market trading.
- Turning to TikTok, this primer represents the best over-the-weekend roundup that we could find. But, of course, things are still breaking as we come to print.
- Since recording, Oracle has said that “upon creation of TikTok Global, Oracle/Walmart will make their investment and the TikTok Global shares will be distributed to their owners, Americans will be the majority and ByteDance will have no ownership in TikTok Global.” And, President Trump said this morning that China has to give up control of TikTok or the deal is off. ByteDance has said that it will retain control. You figure that out.
- But there was some good stuff to chat about. Including the super-neat Mobile Premier League round worth $90 million, growth news from EU-based Babbel, a new London-based seed fund that got raised and a Swedish health tech Series B.
- As you guessed from today’s title, it was fun to see such a concentration of EU VC activity.
- Finally, will the Nikola mess discourage more SPACs from taking companies public? If the rest of the stock market wasn’t selling off, we would have said “no.” But today? Is the answer “maybe”?
Equity drops every Monday at 7:00 a.m. PT and Thursday afternoon as fast as we can get it out, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts.
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With $100M in funding, Playco is already a mobile gaming unicorn
Playco is a new mobile gaming startup created by Game Closure co-founder Michael Carter and Zynga co-founder Justin Waldron, as well as game producers Takeshi Otsuka and Teddy Cross.
Although the Tokyo-headquartered company is only announcing its existence today, it’s already a unicorn — it says it has raised $100 million in Series A funding, at a valuation “just north of $1 billion.”
The round was led by Josh Buckley and Sequoia Capital, with participation from Sozo Ventures, Raymond Tonsing’s Caffeinated Capital, Keisuke Honda’s KSK Angel Fund, Taizo Son’s Mistletoe Singapore, Digital Garage, Will Smith’s Dreamers, Makers Fund and others.
Carter (Playco’s CEO) said the startup will be revealing its first games later this year. For now, he wants to talk about Playco’s vision: It’s trying to address the fact that “it’s very difficult to get two people into a single game in the App Store.” After all, downloading an app is a pretty big hurdle, especially compared to the early days of web and social gaming, when all you needed was a link.
“We’re going to bring that back,” Carter said — with Playco’s titles, sharing and playing a mobile game with your friend should be as simple as texting or calling them. “All it really takes is a hyperlink.”
He pointed to a number of technologies that can enable this “instant play” experience on mobile, including cloud gaming, HTML5 and platform-specific tools like Apple’s new App Clips. He claimed the team is “very good at this cutting edge technology” — and the company has created its own game engine — but he said technology is not the sole focus: “That’s just table stakes.”
Waldron (Playco’s president) argued that this represents the next big platform shift in gaming, and it will require “reinventing a lot of the most popular genres today” while also creating entirely new genres, in the same way that social gaming enabled new types of games.
“If you think about FarmVille, there were no farm games being advertised being in local console games stores,” Waldron said. “They don’t market well; if you put up a poster for a farm game, no one wants to play.” But if your friends invite you by sending you some digital crops, then you absolutely want to play.
Carter added that enabling instant play also means that the games themselves have to be fairly straightforward, at least at first glance.
“Ultimately, as we build up the portfolio, we think about what makes the game accessible to anyone on the planet, any ethnicity, any language,” he said. “And the answer is: It has to be broadly appealing. That doesn’t mean we can’t build into it relatively interesting and deep features, but the initial impression has to be the right sort of experience that people can easily relate to.”
Carter also acknowledged that it’s unusual for a startup to raise so much money in its Series A (“It’s not your typical company, and it’s not your typical Series A”), but he said that being more ambitious with fundraising allowed Playco to quickly grow the team to 75 people.
“Bringing talented people together is the most important thing, and [thanks to the funding] we haven’t had to make any really hard decisions,” he said.
As for how its games will make money, Waldron suggested that Playco will borrow from (but also potentially evolve) many of the existing business models in gaming.
“We don’t need to reinvent the wheel,” he said. “There’s going to be amazing things we can learn from my last company — we ended up inventing a lot of the ways these games are monetizing today … But these new technologies available today create new opportunities. The world has changed a lot since then, and I don’t think everything has caught up.”
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Was Snowflake’s IPO mispriced or just misunderstood?
Welcome back to The TechCrunch Exchange, a weekly startups-and-markets newsletter. It’s broadly based on the daily column that appears on Extra Crunch, but free, and made for your weekend reading.
Ready? Let’s talk money, startups and spicy IPO rumors.
Was Snowflake’s IPO mispriced or just misunderstood?
With an ocean of neat stuff to get through below, we’ll be quick today on our thought bubble focused on Snowflake’s IPO. Up front it was a huge success as a fundraising event for the data-focused unicorn.
At issue is the mismatch between the company’s final IPO price of $120 and where it opened, which was around $245 per share. The usual forces were out on Twitter arguing that billions were left on the table, with commentary on the question of a mispriced IPO even reaching our friends at CNBC.
A good question given the controversy is how the company itself felt about its IPO price given that it was the party that, theoretically, left a few billion on some metaphorical table. As it turns out, the CEO does not give a shit.
Alex Konrad at Forbes — a good chap, follow him on Twitter here — caught up with Snowflake CEO Frank Slootman about the matter. He called the “chatter” that his company left money on the table “nonsense,” adding that he could have priced higher but that he “wanted to bring along the group of investors that [Snowflake] wanted, and [he] didn’t want to push them past the point where they really started to squeal.”
So Slootman found a new, higher price at which to value his company during its debut. He got the investors he wanted. He got Berkshire and Salesforce in on the deal. And the company roared out of the gate. What an awful, terrible, no-good, mess of an IPO.
Adding to the mix, I was chatting with a few SaaS VCs earlier this week, and they largely didn’t buy into the money-left-on-the-table argument, as presuming that a whole block of shares could be sold at the opening trade price is silly. Are IPOs perfect? Hell no. Are bankers out for their own good? Yes. But that doesn’t mean that Snowflake screwed up.
Market Notes
No time to waste at all, let’s get into it:
- Lots of IPOs this week, and everyone did well. Snowflake was explosive while JFrog was merely amazing. Sumo Logic and Unity had more modest debuts, but good results all the same. Notes from JFrog and Sumo execs in a moment.
- Disrupt was a big damn deal this week, with tech’s famous and its up and coming leaders showing up to chatter with TechCrunch about what’s going on today, and what’s going on tomorrow. You can catch up on the sessions here, which I recommend. But I wanted to take a moment and thank the TechCrunch sales, partnership, and events teams. They killed it and get 0.1% of the love that they deserve. Thank you.
- Why is Snowflake special? This tweet by GGV’s Jeff Richards has the story in one chart.
- What are the hottest categories for SaaS startups in 2020? We got you.
- There’s a new VC metric in town for startups to follow. Folks will recall the infamous T2D3 model, where startups should triple twice, and then double three times. That five-year plan got most companies to $100M in ARR. Now Shasta Ventures’ Issac Roth has a new model for contention, what he’s calling “C170R,” and according to a piece from his firm, he reckons it could be the “new post-COVID SaaS standard.” (We spoke with Roth about API-focused startups the other day.)
- So what is it? Per his own notes: “If a startup entering COVID season with $2-20M in revenue is on track for 170% of their 2019 revenue AND is aligned with the new normal of remote, they will be able to raise new capital on good terms and are set up for future venture success.” He goes to note that there’s less of a need to double or treble this year.
- Our thought bubble: If this catches on, a lot more SaaS startups would prove eligible for new rounds than we’d thought. And as Shasta is all-in on SaaS, perhaps this metric is a welcome mat of sorts. I wonder what portion of VCs agree with Shasta’s new model?
- And, closing, our dive into no-code and low-code startups continues.
Various and Sundry
Again, there’s so much to get to that there is no space to waste words. Onward:
- Chime raised an ocean of capital, which is notable for a few reasons. First, a new $14.5B valuation, which is up a zillion percent from their early 2019 round, and up around 3x from its late 2019 round. And it claims real EBITDA profitability. And with the company claiming it will be IPO ready in 12 months I am hype about the company. Because not every company that manages a big fintech valuation is in great shape.
- I got on the phone with the CEO and CFO of JFrog after their IPO this week to chat about the offering. The pair looked at every IPO that happened during COVID, they said, to try to get their company to a “fair price,” adding that from here out the market will decide what’s the right number. The CEO Shlomi Ben Haim also made a fun allusion to a tweet comparing JFrog’s opening valuation to the price that Microsoft paid for GitHub. I think that this is the tweet.
- JFrog’s pricing came on the back of it making money, i.e. real GAAP net income in its most recent quarter. According to JFrog’s CFO Jacob Shulman “investors were impressed with the numbers,” and were also impressed by its “efficient market model” that allowed it find “viral adoption inside the enterprise.”
- That last phrase sounds to us like efficient sales and marketing spend.
- Moving to Sumo Logic, which also went out this week (S-1 notes here). I caught up with the company’s CTO Christian Beedgen.
- Beedgen, I just want to say, is a delight to chat with. But more on topic, the company’s IPO went well and I wanted to dig into more of the nitty-gritty of the market that Sumo is seeing. After Beedgen walked me through how he views his company’s TAM ($50 billion) and market dynamics (not winner-takes-all), I asked about sales friction amongst enterprise customers that Slack had mentioned in its most recent earnings report. Beedgen said:
- “I don’t see that as a systemic problem personally. […] I think people in economies are very flexible, and you know the new normal is what it is now. And you know these other guys on the other side [of the phone], these businesses they also need to continue to run their stuff and so they’re gonna continue to figure out how we can help. And they will find us, we will find them. I really don’t see that as a systemic problem.”
- So, good news for enterprise startups everywhere!
- Wix launched a non-VC fund that looks a bit like a VC fund. Called Wix Capital, the group will “invest in technology innovators that are focused on the future of the web and that look to accelerate how businesses operate in today’s evolving digital landscape,” per the company.
- Wix is a big public shop these days, with elements of low and no-code to its core. (The Exchange talked to the company not too long ago.)
- And, finally my friends, I call this the Peloton Effect, and am going to write about it if I can find the time.
I am chatting with a Unity exec this evening, but too late to make it into this newsletter. Perhaps next week. Hugs until then, and stay safe.
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Unity Software has strong opening, gaining 31% after pricing above its raised range
Whoever said you can’t make money playing video games clearly hasn’t taken a look at Unity Software’s stock price.
On its first official day of trading, the company rose more than 31%, opening at $75 per share before closing the day at $68.35. Unity’s share price gains came after last night’s pricing of the company’s stock at $52 per share, well above the range of $44 to $48 which was itself an upward revision of the company’s initial target.
Games like “Pokémon GO” and “Iron Man VR” rely on the company’s software, as do untold numbers of other mobile gaming applications that use the company’s toolkit for support. The company’s customers range from small gaming publishers to large gaming giants like Electronic Arts, Niantic, Ubisoft and Tencent.
Unity’s IPO comes on the heels of other well-received debuts, including Sumo Logic, Snowflake and JFrog .
TechCrunch caught up with Unity’s CFO, Kim Jabal, after-hours today to dig in a bit on the transaction.
According to Jabal, hosting her company’s roadshow over Zoom had some advantages, as her team didn’t have to focus on tackling a single geography per day, allowing Unity to “optimize” its time based on who the company wanted to meet, instead, of say, whomever was free in Boston or Chicago on a particular Tuesday morning.
Jabal’s comments aren’t the first that TechCrunch has heard regarding roadshows going well in a digital format instead of as an in-person presentation. If the old-school roadshow survives, we’ll be surprised, though private jet companies will miss the business.
Talking about the transaction itself, Jabal stressed the connection between her company’s employees, value and their access to that same value. Unity’s IPO was unique in that existing and former employees were able to trade 15% of their vested holdings in the company on day one, excluding “current executive officers and directors,” per SEC filings.
That act does not seemed to have dampened enthusiasm for the company’s shares, and could have helped boost early float, allowing for the two sides of the supply and demand curves to more quickly meet close to the company’s real value, instead of a scarcity-driven, more artificial figure.
Regarding Unity’s IPO pricing, Jabal discussed what she called a “very data-driven process.” The result of that process was an IPO price that came in above its raised range, and still rose during its first day’s trading, but less than 50%. That’s about as good an outcome as you can hope for in an IPO.
One final thing for the SaaS nerds out there. Unity’s “dollar-based net expansion rate” went from very good to outstanding in 2020, or in the words of the S-1/A:
Our dollar-based net expansion rate, which measures expansion in existing customers’ revenue over a trailing 12-month period, grew from 124% as of December 31, 2018 to 133% as of December 31, 2019, and from 129% as of June 30, 2019 to 142% as of June 30, 2020, demonstrating the power of this strategy.
We had to ask. And the answer, per Jabal, was a combination of the company’s platform strength and how customers tend to use more of Unity’s services over time, which she described as growing with their customers. And the second key element was 2020’s unique dynamics that gave Unity a “tailwind” thanks to “increased usage, particularly in gaming.”
Looking at our own gaming levels in 2020 compared to 2019, that checks out.
This post closes the book on this week’s IPO class. Tired yet? Don’t be. Palantir is up next, and then Asana .
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Schools are closing their doors, but Opendoor isn’t
Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast (now on Twitter!), where we unpack the numbers behind the headlines.
This week Natasha Mascarenhas, Danny Crichton and myself hosted a live taping at Disrupt for a digital reception. It was good fun, though of course we’re looking forward to bringing the live show back to the conference next year, vaccine allowing.
Thankfully we had Chris Gates behind the scenes tweaking the dials, Alexandra Ames fitting us into the program and some folks to watch live.
What did we talk about? All of this (and some very, very bad jokes):
- The Great American SPAC-Off: As both Opendoor and Desktop Metal approach the public markets on the wings of SPACs, we ask why. And why we have to keep talking about SPACs, which we do not want to do.
- But the public markets are hot and active, with companies like JFrog and Snowflake going public to great effect. JFrog had a great IPO. Snowflake had an insane IPO.
- But there was a lot of action from the private markets as well, including Airtable raising $185 million, ApplyBoard raised a $55 million extension and Tonal raised $110 million, because connected fitness is hotter than SaaS at the moment.
- We also riffed on Natasha’s venture trends’ piece, digging into how to get to conviction in a remote-only world. As it turns out, we have notes on video games.
- And there were two new funds, including one from the Chainsmokers (hot, fun, great) and another from Greylock (traditional, Victorian and huge). In more serious commentary, the Greylock raise continues the mega-fund era.
And then we tried to play a game that may or may not make it into the final cut. Either way, it was great to have Equity back at Disrupt. More to come. Hugs from us!
Equity drops every Monday at 7:00 a.m. PT and Thursday afternoon as fast as we can get it out, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts.
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Demand Sage raises $3M to make sales and marketing data more accessible
Demand Sage, a new startup from the founders of recently acquired mobile analytics company Localytics, announced this morning that it has raised $3 million in seed funding led by Eniac Ventures and Underscore VC.
When I spoke to CEO Raj Aggarwal, CTO Henry Cipolla and CPO Randy Dailey back in February, they outlined a vision to make it easier for marketers to get the data and insights they need, initially by automatically generating Google Sheets reports using data from HubSpot.
More recently, Demand Sage has been expanding into sales data.
“From our solid base with marketers we noticed sales leaders pulling us in to help them too,” Aggarwal told me via email. “We’ve been able to give them visibility they didn’t have, in areas such as where deals are getting stuck and which activities actually drive revenue. It makes sense since there is a ton of overlap between the sales and marketing functions, especially in SMBs.”
Aggarwal also said that Demand Sage has expanded its product lineup beyond pre-built report templates by introducing a no-code “Report Builder,” and by testing out an insights tools that could, for example, help salespeople determine which deals need their attention.
In a statement, Vinayak Ranade, CEO of Demand Sage customer Drafted, said, “With every sales and marketing tool I’ve used, eventually you give up and export data to a spreadsheet to dig into the numbers,” whereas with Demand Sage, it’s “like having a Google Sheets power-user that automatically makes the spreadsheets that you really want to see.”
As for how the business has fared during the pandemic, Aggarwal said, “Demand has really jumped. Companies need more cost-effective solutions and greater flexibility as business models shift.”
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Which 5 cloud startup categories are the hottest?
Hello from the midst of Disrupt 2020: after this short piece for you I am wrapping my prep for a panel with investors from Bessemer, a16z and Canaan about the future of SaaS. Luckily, The Exchange this morning is on a very similar topic.
The Exchange explores startups, markets and money. Read it every morning on Extra Crunch, or get The Exchange newsletter every Saturday.
Today we’re parsing some data that Bessemer and Forbes shared regarding their yearly Cloud 100 list. It’s a grouping of private cloud and SaaS companies, giving us a good look into valuation trends over time and also where the most valuable startups are focusing their efforts.
The data show a changing focus from the biggest and most impressive private SaaS and cloud companies. And the valuation trends show how growing private valuations could limit future returns, given historical results.
Of course, modern cloud valuations make it hard to be bearish on SaaS revenue multiples, but all the same, how much higher can they go? Every startup looks cheap when money is cheap. Let’s get into the numbers.
A changing sector focus
The Cloud 100 cycles companies in and out as time passes. As the list is focused on private companies, cloud and SaaS firms that sell to another company or go public leave the cohort. And new companies join, keeping the total group at precisely 100 companies.
Here are the top five sectors those 100 companies are focused on, in order of popularity:
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As low-code startups continue to attract VC interest, what’s driving customer demand?
Investor interest in no-code, low-code apps and services advanced another step this morning with Airtable raising an outsized round. The $185 million investment into the popular database-and-spreadsheet service comes as it adds “new low-code and automation features,” per our own reporting.
The round comes after we’ve seen several VCs describe no- and low-code startups as part of their core investing theses, and observed how the same investors appear to be accelerating their investing pace into upstart companies that follow the ethos.
The Exchange explores startups, markets and money. You can read it every morning on Extra Crunch, or get The Exchange newsletter every Saturday.
Undergirding much of the hype around apps that allow users to connect services, mix data sources and commit visual programming is the expectation that businesses will require more customized software than today’s developers will be able to supply. Low-code solutions could limit required developer inputs, while no-code services could obviate some need for developer time altogether. Both no- and low-code solutions could help alleviate the global developer shortage.
But underneath the view that there is a market mismatch between developer supply and demand is the anticipation that businesses will need more apps today than before, and even more in the future. This rising need for more business applications is key to today’s growing divergence between the availability and demand for software engineers.
The issue is something we explored talking with Appian, a public company that provides a low-code service that helps companies build apps.
Today we’re digging a little deeper into the topic, chatting with Mendix CEO Derek Roos. Mendix has reached nine-figure revenues with its low-code platform that helps other companies build apps, meaning that it has good perspective into what the market is actually demanding of itself and its low-code competition.
We want to learn a bit more about why business need so many apps, how COVID-19 has changed the low-code market and if Mendix is accelerating in 2020. If we can get all of that in hand, we’ll be better equipped to understand the growing no- and low-code startup realm.
A growing market
Mendix, based in Boston, raised around $38 million in known venture capital across a few rounds, including a $25 million Series B back in 2014. In 2018, Mendix partnered up with IBM to bring its service to their cloud, and later sold to Siemens for around $700 million the same year.
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Is the vaunted cloud acceleration falling flat?
Welcome back to The TechCrunch Exchange, a weekly startups-and-markets newsletter. It’s broadly based on the daily column that appears on Extra Crunch, but free, and made for your weekend reading.
Ready? Let’s talk money, startups and spicy IPO rumors.
Is the vaunted cloud acceleration falling flat?
This week we’re taking a look at the bad side of the cloud software market. In case you were avoiding the news over the last week, tech and software stocks are struggling. Not much compared to their 2020 gains, mind, but after months of only going up their recent declines have been notable. (As I write to you, the tech-heavy Nasdaq is headed for its worst week since March.)
The pullback makes some sense. Having watched SaaS and cloud valuations get stretched to historical highs, Slack’s earnings were an endcap on a good, but not-quite-as-good-as-expected set of results from public cloud and SaaS companies.
As we’ve noted, most public software companies are not seeing their revenue growth accelerate. Some public software companies may be seeing their growth deceleration slow, but the number of public software companies actually accelerating in 2020 is tiny. The actually-accelerating group is Zoom, and maybe one or two other companies.
Why is that, given all that we’ve heard about the presumably accelerating digital transformation? Slack earnings are a good explainer. The enterprise communications company’s recent filings explain that its COVID-bump has somewhat dissipated, while a number of COVID-related problems are persisting.
Seeing recently risen valuations slip in the face of a lack of materially accelerated growth and some churn issues is reasonable.
Does this matter for startups? Some. Public software valuations are still elevated compared to historical norms, which helps software startups defend their valuations and raise well. And there are plenty of startup hotspots as we’ve noted, including API-delivered startups enjoying time in the sun, as well as edtech startups that caught a COVID-related tailwind.
I am chatting with investors from a16z, Bessemer, and Canaan next week at Disrupt about the future of SaaS, collecting notes on the private-market side of this particular issue. So, more to come. But for now, I think we’ve seen the top of the peak and are now dealing more with reality than hype. Or, as public investors might say, the COVID trade has run its course and earnings will set the tone moving forward.
Market Notes
Moving on to market notes, a fintech stat, and some other bits of data for your consumption and edification:
- Fintech is staying hot, with M1 Finance doubling its AUM from $1 billion to $2 billion in about half a year. TechCrunch covered M1 reaching the $1 billion AUM threshold because it’s a Chicago company and I could not resist the fintech data point. Then M1 raised $33 million at $1.45 billion AUM in June. Now it’s at $2 billion.
- Our read? The savings and investing boom that helped power Robinhood to new revenue records, along with other players, is continuing.
- More evidence of that? Alpaca, a startup that delivers equity-trading capabilities via an API, is seeing insane growth. (That piece has more notes on API-led startups in case that is your jam.)
- Quickly turning to the public markets, JFrog is about to show the power of profits in today’s markets, and next week should see a number of debuts of JFrog, Sumo Logic and Snowflake. Palantir is the week after. (More notes here if you need them.)
- Oh, and folks are pricing Palantir at a fraction of its final private valuation. Whoops. Maybe that’s why so many insiders are selling now? Big ups to Danny for that story. (Also, yowza this is not at all good.)
A brief interlude: Disrupt is next week, you should come. You can enjoy it from the comfort of your couch.
Various and Sundry
SaaS and cloud earnings continue to trickle in, which means I spent a good portion of my week talking to more execs at public companies. Short notes from Smartsheet, nCino and BigCommerce to follow, along with some final thoughts for your weekend.
- On the valuations front, Smartsheet CEO Mark Mader told TechCrunch that “investors are thinking about how to balance historically high multiples with historically high potential returns in the space that’s still very young.”
- He added that no one doubts that cloud “is going to be the answer” to a lot of stuff, or that “people are [going to] change how they work,” but did note that cloud companies are not impervious to macro headwinds, because “cloud companies serve non-cloud companies,” and not merely companies in sectors that are excelling.
- This fits neatly into our notes on Slack above. More on Smartsheet’s earnings here.
- nCino had a good quarter, beating expectations and guiding well during its first public earnings report. However, like many other SaaS and cloud companies, it has lost some valuation altitude in recent weeks. It’s still miles above its IPO price, however.
- I was curious about how the post-IPO period has been for the company’s CEO, Pierre Naudé, and his response was fun. Like all new public company CEOs, he made sure to note how quickly his team got back to work after the debut, but he also told The Exchange that he does now spend time that he used to invest in customers and “innovation” talking to analysts and investors.
- Being a public company, therefore, has time and focus costs that are worth considering, as we see so many tech shops approach the public markets.
- And then there was BigCommerce, which went public quite recently. I got back on the horn with CEO Brent Bellm, wanting to learn a bit more about the current state of the e-commerce market.
- Here’s what the CEO had to say, lightly edited and condensed for clarity:
“I think it’s staying pretty hot. The surprising thing in the post-pandemic weeks was just how rapidly growth accelerated, and consumer and business adoption grew. We all kept saying ‘well at some point stores will reopen, and the growth rates will come back down.’ But the growth rates for actual sales running through stores continued to be very strong. You know, whether you look at our customer set, or [at] credit card data from Bank of America or others […] you can see quite clearly that e-commerce remains very, very hot. It’s a permanent change in behavior. Consumers have found a lot more places where they now like to buy online and reasons to like to buy online, and companies have found new and more effective ways to sell.”
- This is probably a good reminder to turn our attention back to e-commerce when we get a chance post-Disrupt.
- And, finally, read Natasha on why rolling funds are blowing up, something that we talked about on the podcast this week.
That’s all the room we have. Hugs, fist bumps, and good luck.
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China may kill TikTok’s US operations rather than see them sold
The controversial push to force Chinese tech unicorn ByteDance to divest part or all of its smash-hit TikTok social media service to a U.S.-based company could be in doubt after a report today indicated that China’s government may oppose the transaction. According to reporting by Reuters, the Chinese government may prefer TikTok to simply shutter its U.S. operations instead of allowing it to be sold to an American company.
The potential divestment of TikTok is not a regular business transaction. Instead, the deal is being demanded by the U.S. government, as President Donald Trump directs foreign and economic policymaking via executive fiat. Leaning on his own fabled business acumen, the American premier has also demanded that his government receive a portion of any final sale price. It is not clear if that concept is legal.
As the U.S. and China spar around the globe for both economic and political supremacy, the deal is a flashpoint between the countries with a muddle of companies stuck in the middle. ByteDance is in the mix, along with Microsoft, Walmart and other companies to a lesser degree, like Oracle. The Trump administration has set a mid-September timeline for a deal being struck, though as the month burns away it is not clear if that timeline could be met.
The United States is not alone in taking steps to curb Chinese influence inside its borders, as the TikTok sale comes after India banned the app, along with dozens of other China-based applications.
The deal is also under pressure from a changing regulatory environment in China, with the country’s autocratic leadership changing its export rules to possibly include elements of TikTok that could limit a transaction, and perhaps scuttle its sale.
For ByteDance, the situation is a nightmare. For lead-suitor Microsoft, the transaction is a shotgun marriage that it might not be entirely enthused about. For the Trump administration, it’s an attempt at a power play. And for China’s increasingly authoritarian government, the deal could feel like submission. So, if the deal does manage to come together it will be more surprise than eventuality.
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