🎮 Why is Google’s Stadia struggling

When Google introduced its Stadia game-streaming service in August 2019, it got flack for connectivity issues during the grand unveiling.

Those glitches may’ve been a sign of things to come.

Last month, the company shuttered its in-house studios — and now, its future is streaming in 240p (translation: things are a bit unclear).

Stadia had something good going

Google promised a platform for playing top titles across smartphones and TV — no 10-pound console necessary.

The company promoted exciting features like Crowd Play (that allowed streamers to pull fans directly into games off YouTube) and hired developers, designers, and producers from Ubisoft and Electronic Arts.

But Stadia’s problems were real

Stadia ended up being a little like one of those Tinder dates where the person who shows up looks nothing like his photos.

At launch, promised features and in-house games weren’t available. Since then, Stadia has struggled to recover, failing to meet 2020 growth targets by hundreds of thousands of users.

Some attribute these struggles to hiring failures: While it’s reported that Google planned to hire 2k people to make Stadia games, only around 150 were impacted by the closures.

What happens now?

Stadia could likely offer its tech to gaming companies for cloud services.

Meanwhile, other companies are working on their own cloud gaming platforms:

• Microsoft acquired over a dozen gaming studios and is methodically rolling out xCloud.
• Amazon just widely released its Luna platform, though its in-house studios have struggled despite spending $500m annually.
• Nvidia’s GeForce Now recently recorded 175m streaming hours in its first year.

Though Stadia has struggled, a large-scale move from consoles to streaming is likely just a matter of time, which is unfortunate because then we won’t get console memes like this:

• Drone unicorn: Per TechCrunch, Autonomous drone maker Skydio raised $170m in Series D funding led by Andreessen Horowitz, making it the first US drone unicorn.
• China’s doing lots of research: China’s R&D spend made up 2.4% of the country’s 2020 GDP, up 10.3% from 2019, and 3.6m patents were granted, up 40% year-over-year.
• New chauffeur in town: Premium ride-hailing company Blacklane is launching its luxury inner-city service in NYC, Boston, Chicago, LA, London, Paris, Berlin, Milan, Singapore, and Dubai this month per The Wall Street Journal.
• Alabamazon: President Biden announced support for workers’ rights to unionize at an Amazon warehouse in Alabama. If successful, they’d be the first Amazon employees to unionize in the US.
• Twilionnaire: Communications technology companies Syniverse and Twilio announced a $750m partnership in which Twilio — along with its API expertise — will become a Syniverse minority owner.
• $port$: Fenway Sports Group — owner of the Boston Red Sox and FC Liverpool — will be valued at ~$7B after selling a ~10% stake to RedBird Capital per the Huddle Up newsletter.
• Zoom’s earnings were insanely good, with revenue for three months ended January increasing 369% YoY per CNBC.

Can engineers help businesses tackle climate change?

Watershed thinks so. The startup creates software for companies to track and reduce carbon emissions at every step of their supply chain — and it’s founded by 3 alum of Stripe, the $100B+ fintech darling.

Carbon-footprint tracking, you say?

Square, Shopify, and Sweetgreen (oh my!) are among the customers of Watershed’s enterprise subscription software per Bloomberg.

What exactly does this software do? Let’s use Sweetgreen as an example:

1. It tracks direct emissions from Sweetgreen stores and HQ.
2. It tracks emissions from directly used energy, such as electricity for its stores.
3. It tracks emissions from each step of its supply chain. Sweetgreen can now determine which lettuce farms have not only better quality, but also lower carbon emissions.

The last of these is the hardest to measure, yet the most important, as it often comprises the majority of a company’s carbon footprint.

It’s not just Leo and Al Gore fighting climate change anymore

Watershed’s CEO Christian Anderson told Bloomberg that the market is seeing “an inflection moment,” and that climate change is now “a corporate imperative.”

For a company like Sweetgreen, a change at the corporate level trickles down the supply chain. To secure contracts, suppliers are now incentivized to track and reduce their own carbon emissions.

Stripe’s co-founding brothers (Patrick and John Collison) are investors in the startup, and — perhaps more crucially — the payments firm is a Watershed client.

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Crypto exchange Coinbase (listing date TBD) and gaming platform Roblox (listing on March 10) have highly anticipated upcoming public market debuts via direct listings.

Roblox was valued at $29.5B in a January funding round, while Coinbase has traded above $100B in private secondary market transactions.

Compared to recent hot tech names, both of these startups have spent much less on sales and marketing expenses (as a % of revenue) per CNBC:

• Coinbase = 4%
• Roblox = 6%
• Airbnb = 22%
• Unity = 25%
• DoorDash = 32%
• Palantir = 42%
• Wish = 64%
• Snowflake = 79%

Such low spend — particularly in lead-up to a public listing — suggests that both startups are growing organically.

And if you need a good historical analog: Google only spent 6% of revenue on sales and marketing before its 2004 IPO.

NOTE: We’ll be writing more on Coinbase later this week; you can find our previous piece on Roblox here.

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Apple once tried to get into the console gaming industry. The product was called the Apple Bandai Pippin (stylized PiP P!N) and was supposed to be an “inexpensive computer system” to play CD-based games.

It was priced at $599 and not particularly attractive.

The PiP P!N launched in March 1996 and was definitely NOT under Steve Jobs’ watch. Apple’s founder was still at his second startup Next, which Apple acquired in December 1996 (marking Jobs’ return).

To the surprise off literally no one, the PiP P!N was a flop and Apple discontinued the product in 1997.

It sold 100k units over its lifetime; in comparison, Nintendo’s N64 was released in June 1996 and sold 300k consoles…on the first day!