News: Week 47
Airbnb, DoorDash & Affirm publish S-1s, Zuckerberg and Dorsey face the senate on election content moderation and Twitter launches ‘Fleets’.
|Nov 21, 2020|
Amongst the trying conditions of 2020, the IPO market has continued to deliver some cracking new tech listings. While we had the anti-climax of Ant Group, we’ve seen big listings from firms such as Palantir, Asana and Snowflake. Three more consumer giants published their S-1s over the past week, including the most anticipated IPO of the year in Airbnb.
The plan is to provide analysis of all three companies before the end of the year through my Monday columns, with each shedding new light on their respective industries of travel, food delivery and payments.
But for now, what happened in Week 47;
Airbnb S-1, finally!
After the pandemic dashed Airbnb’s hopes of an IPO earlier this year, and caused CEO Brian Chesky to lay off 1,900 of his staff, the firm has done a remarkable job of adapting to a crisis and they now feel ready to re-launch their IPO plans. I will be covering Airbnb in Monday’s email (shameless plug) so I’ll save the analysis for when I have the word count to do it justice, but needless to say it’s fun finally seeing a financial breakdown of the hotel disruptor. (Form S-1)
Affirm is an American Buy Now Pay Later payments firm, competing with the likes of Afterpay, Klarna and now PayPal. The firm reported $4.6 billion in FY20 sales, with 6 million consumers and 6,500 merchants registered on the service. Although remarkably, 28% of Affirm’s revenue came from a single merchant last financial year: Peloton. Affirm allows customers of Peloton to purchase the $2,000 exercise bike on 0% finance in the US and Canada. Understandably, that customer concentration was called out as a risk in their S-1. I’m looking forward to writing a deeper dive on Affirm very soon. (Form S-1)
This one came in just after my writing deadline last week. DoorDash is the market leader for restaurant food delivery in the US, with an estimated 50% market share, which includes Caviar the premium restaurant delivery business DoorDash acquired. Other players in the US market include UberEats, which has also acquired Postmates, and Grubhub, which was recently acquired by the European group Just Eats. Consolidation has been caused by a general lack of profitability in the sector, as price became a race to the bottom. However encouragingly DoorDash boasted a profit of $23 million for Q3, on YTD revenues of $1.9 billion. There is a lot to unpick in this category, and with many of the main players (perhaps only excluding Deliveroo) now being public or soon to be, it makes a market write up a little more feasible. Certainly one for before we break for the holidays. (Form S-1)
‘Fleets’, not Tweets
Twitter has launched a new feature that allows users to post text, audio and video that disappears after 24 hours. Sound familiar? That’s because it is. This is “stories” for Twitter. The business case for this is social media 101: active daily users x time spent on the app = advertising revenue. And stories (sorry, ‘Fleets’) has been a proven medium for increasing time on Instagram and Snapchat. I wrote a couple of weeks ago that Twitter was falling behind Facebook and Snap for ad revenue growth, and needed to explore new ideas. I’m just not sure “stories” is the answer for Twitter. I was hoping for something a little more unique to the platform’s niche. But then again, this is why I’m not a social media growth hacker!
Facebook and Twitter senate hearing on election monitoring
Zuckerberg and Dorsey were again subject to a grilling by the Senate Judiciary Committee regarding the social media companies' attempts to moderate political content during the US Presidential Election. Republicans argued that it is not the place for social media businesses to moderate content, after many of President Trump’s posts were labelled or even hidden behind fact check warnings. Meanwhile Democrats were concerned that not enough moderation was done to protect voters. Section 230 of the Communications Act is a law that protects social media apps from being responsible for content posted by users on their apps. Of course social media apps already censor and remove dangerous content, but we’re now moving into the grey area of moderation. With more intervention by Facebook and Twitter comes a view that they should be treated like newspapers, making them liable for content posted by users, which clearly won’t work. Regulating this category is hard. (link $)
Bumble plans Q1 IPO
The online dating app known for asking women to make the first move is planning an IPO as early as Q1, 2021. Bumble was founded by Whitney Wolfe Herd, who was an early employee of Tinder. Wolfe left Tinder and later settled on a sexual harassment claim against her prior employer. Bumble is expected to be valued at between $6 and $8 billion. Interestingly in 2017 Match Group, the parent company of Tinder, along with dozens of other dating apps, offered to buy Bumble for $450 million. Wolfe and her co-founders turned down the offer. (link)
Amazon Pharmacy - drugs, delivered
Jeff Bezos’s “Everything Store” is about to disrupt another sector. The ecommerce giant this week announced their new product, Amazon Pharmacy, which will allow customers of 46 US states to manage and order prescriptions online for delivery within two days for Amazon Prime subscribers. The consumer benefits here are clear, but there are lots of questions about how Amazon will manage patient data. And will they use customer data to cross sell ancillary products? (link)
Walmart is growing online sales
In a sign that shopping online has truly hit mainstream America, Walmart reported impressive growth in its ecommerce business with a 79% YOY increase in online sales. This matters because of Walmart’s scale, which comfortably outperformed Amazon in the US for Q3 retail sales at $88 billion to $53 billion. Excluding things like fuel, 6% of Walmart’s sales for the period happened online. (link)
Lanistar called out by FCA
Any press is good press, right? Well not when the UK financial regulator is naming and shaming you. Lanistar Bank is (another) new consumer spend management fintech, this time targeting Gen-Z with social media influencer campaigns which has included the cast of Love Island and some high profile professional footballers. The first sentence of the FCA’s statement read “We believe this firm has been providing financial services or products in the UK without our authorisation. Find out why to be especially wary of dealing with this unauthorised firm and how to protect yourself from scammers.” While this is likely just a case of Lanistar getting ahead of itself in marketing before completing the required onboarding steps with its licensed partners, it’s not a great start for the fintech. (link)
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Google Pay, more than just payments
If you’re one of my American readers, and use Google Pay, then I highly recommend checking out this piece in The Verge. In summary, Google has totally transformed it’s smartphone contactless payments app, and it’s now a really rich product that includes P2P payments, financial management (with connected bank accounts powered by Plaid), shopping deals and in 2021 Google will offer checking and savings accounts.
These accounts won’t be provided by Google themselves, but rather they will partner with a range of banking partners. This banking as a service model differs from that of its peer Apple, who launched the Apple credit card with single provider Goldman Sachs. Instead Google wants to offer a choice of checking and savings accounts, and at launch will have no less than 11 banks participating. BaaS is about to hit critical mass with the big tech firms now in the game.
Okay that’s all, have a great & safe weekend out there!