📱 Adapting to Apple’s new privacy policy


March 30, 2021

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The Hustle
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Piestro

Good News: The infamous cargo ship Ever Given has been jostled free from the banks of the Suez Canal, restoring $9.6B worth of daily global trade.

Bad News: The memes were a lot less funny on Monday.

The Big Idea
Apple logo

Apple is shaking up the $400B digital ad market with a new privacy policy

Don’t let Apple’s squeaky-clean packaging fool you: The company isn’t afraid to mix it up.

With 1B+ installed iPhones, Apple is the gateway to the mobile world’s most valuable customers.

And the $2T tech giant is about to roll out a new user-tracking policy that could cost Google and Facebook ~$25B in ad revenue.

What is changing?

As reported by The Wall Street Journal, Apple is updating its iPhone software and letting users decide if they want to be tracked for targeted ads.

The current default allows such tracking. But in weeks to come, there will be a pop-up that requires an opt-in to be tracked.

The expectation is for many users to opt-out, which will severely disrupt the $400B digital advertising industry…one that depends heavily on data tracking.

How are companies coping?

The WSJ breaks down how various industry players are preparing for the change:

  • Facebook initially protested the change but recently stated that it could be stronger in the long run as it improves its in-app retail options (separately, FB will have its own phone pop-ups explaining the benefits of user tracking for targeted ads).
  • Google will comply with Apple’s changes but warns that metrics looking at how ads drive app usage and sales will be less useful (it does plan to create new performance-tracking tools not dependent on individual user data).
  • Big Chinese tech firms (Tencent, ByteDance) tested a workaround tracking method that Apple says it would reject from its app store.

Smaller apps may adapt by switching from free to paid.

Meanwhile, the WSJ says the tracking changes could really hurt gaming apps, which depends on targeting to find big-spending users.

Apple’s privacy angle is a winning hand…

… with consumers. However, other tech players in the ecosystem see it as Apple flexing its monopolistic might.

These changes come as Epic Games and Facebook wage corporate war against Apple’s ironclad control of the Apple App Store.

Further, a number of US states have (so far unsuccessfully) introduced legislation to change the App Store policies around installations and revenue take.

Right now, Apple’s beautiful aesthetic won’t stop people from saying it has dirty tactics.

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Snippets
  • Amazon-backed food delivery startup Deliveroo lowered its upcoming IPO range (to between £7.6B and £7.8B) after investor backlash about its workers’ rights.
  • **DJ Khaled voice** Another one: Aping social audio app Clubhouse, Slack has plans to roll out audio chat rooms.
  • Media merger? Axios (free business and politics newsletters) and The Athletic (paid sports subscription) may combine forces… and then go public via a SPAC.
  • C-suite: US senators from both parties are pushing for the White House to create a chief manufacturing officer role that would report directly to the president, per Axios.
  • A Twitter-ish clone called BitClout is creating a stock market for individual profiles — and not everyone is happy about it.
  • My precious: Rupert Murdoch’s News Corp. will acquire Houghton Mifflin Harcourt’s consumer-publishing arm for $349m, per WSJ. The publisher’s portfolio includes George Orwell (1984) and J.R.R. Tolkien (The Lord of the Rings).
  • US banking stocks sold off on Monday. Why? On Friday, a hedge fund called Archegos was forced to sell $20B+ of stock as lending banks demanded money from the fund in a margin call.
 
Fitness
Peloton bike

Peloton has been on an acquisition spree. Why?

Over the past year, Peloton — the connected fitness firm and everyone’s favorite way to get yelled at by bike instructors — has seen its valuation explode nearly 4x to $31B.

To paraphrase Spideman, with great expectations come great responsibilities.

And Peloton is trying to meet those expectations by acquiring startups…

… in the hardware, AI, and wearables spaces

According to Bloomberg, Peloton quietly dropped ~$78m at the end of 2020 and earlier this year on:

  • Aiqudo: AI-powered voice assistant technology.
  • Atlas Wearables: Smartwatch maker that provides workout instruction and tracks fitness levels.
  • Otari: A maker of interactive workout mats.

The tech and engineering talent gives Peloton options in the types of fitness-y services it can upsell from its core bike and treadmill products.

Peloton is spreading its wings

According to Pymnts, the company recently launched:

  • A partnership with Adidas on a performance line of apparel
  • On-demand fitness classes for its bike and the Peloton app

While Peloton just posted its first $1B+ quarter, it is seeing significant shipping delays on its bikes. The company’s December acquisition of fitness equipment maker Precor for $420m is meant to help meet the demand.

At the end of the day, if people can’t get yelled at by the bike instructors, these other acquisitions will be moot.

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Q&A
Jonah Lupton

This founder pivoted from a soundproof paint startup to become a fund manager at Social Capital

It’s a story that The Hustle has covered extensively: the pandemic forces an entrepreneur to pivot.

Jonah Lupton’s story certainly fits that mold, but his pivot is not one we’ve seen before.

Over the past year, Jonah has gone from a startup founder…

…at SoundGuard (which sells eco-friendly, soundproof paint) to a fund manager at Chamath Palihapitiya’s Social Capital.

As of March 1, Jonah began investing with Social Capital’s “Emerging Managers” Class of 2021, an investment program which spreads $50m of assets across 10 fund managers, who come from all types of backgrounds (the program had 1500+ applicants).

The career change isn’t completely out of the blue since Jonah spent a decade of his professional life — from 2002 to 2011 — managing assets for high net worth individuals at Morgan Stanley and Smith Barney.

He left finance in the aftermath of the Financial Crisis

“When your clients are losing money every month, the job is no longer about finding good investments because you’re forced to become a psychologist,” he tells The Hustle.

Prior to the pandemic, SoundGuard was gaining momentum but by the summer of 2020 it was clear that many prospective clients were canceling projects as the hotel industry took a hit.

Today, Jonah shares his investment-related content with 500k+ Twitter followers as well as 35k+ Substack readers (you can subscribe here).

The Hustle caught up with Jonah to find out more about his investing strategy, why he’s so transparent about his process and his plans for an exchange-traded fund (ETF).

Read the full Q&A here.

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Meme of the day

If you had the “Amazon News Twitter account clapping back at US politicians” on your 2021 bingo card… you win.

The company is currently under fire on a number of labor fronts:

  • In Alabama, Amazon warehouse workers are voting on whether to unionize this week.
  • Meanwhile, the tech giant is also getting called out for working conditions for drivers (some of whom reportedly have had to pee in water bottles on their shifts).

A number of US politicians have hit out on Amazon in recent weeks…

… and — seemingly out of nowhere — various Amazon-related Twitter accounts have been responding to lawmakers:

We have no idea who is running the @AmazonNews account, but here’s a guess:

Source: Twitter / @TrungTPhan

TRENDS

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Today’s email was brought to you by Zachary Crockett, Trung Phan.
Editing by: Zachary “Opt-in” Crockett, Ray Vaughn (Director of Staff Bonuses II).

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