Tue, 7/17

Netflix shows mortality after weak Q2 subscriber and revenue numbers

Netflix Inc. is probably throwing some sad movies into their queue after the do-no-wrong streaming juggernaut posted ‘weaker-than-expected’ subscriber and revenue numbers in Q2.

MarketWatch reports that Netflix shares fell around 14% upon news that they added just 5.2m users, down from 6.2m estimate the company listed in April.

But they did hit their domestic earnings expectations

On the bright side, the company reported a profit of $384m at 85 cents a share, topping their projection of 79 cents, up from $66m in Q2 a year ago.

Unfortunately, they couldn’t say the same for their international revenue: In April, Netflix predicted a $65m+ impact on international revenue YoY, but Netflix says that a strengthened US dollar reduced the impact.

In their letter to shareholders, Netflix admitted the company had “over-forecasted” both domestic and global net subscriber growth.

Does this spell signs of the end?

Hahahaha… No. Netflix shares have risen 109% so far this year, while the rest of the S&P 500 rose around 4.7% combined.

But, the one concern that still plagues analysts is Netflix’s spending: The company blew through $559m more than it brought in (down around 8.8% from last year).

Tue, 7/17

Amazon wasn’t ready for Prime time: Their site crashed on its biggest day of the year

‘Tis the season for drone deliveries and Alexa queries: Amazon’s made-up holiday, Prime Day, was yesterday. But, this year’s Christmas-courtesy-of-Bezos kicked off with a major hitch.

Outages caused the e-commerce site to crash, causing premature gray hairs and headaches from Bezos to Boise and beyond.

An expensive outage

Amazon was projected to bring in $3.4B over the course of the 36-hour sale, meaning that every minute the site was down the company was potentially lost $1.57m in sales.

Prime Day started at 3pm ET. By 3:05pm ET, the site had crashed — leaving many shoppers stranded staring at pictures of ‘dogs of Amazon.’ 

In some areas, the troubles persisted for several hours, but by 5pm Amazon issued a statement saying that despite the ‘difficulty,’ shoppers were successfully back on the site spending.

A roller-coaster of a day for Bezos

Yesterday morning started out well for Bezos. Pre-Prime hype sent his personal fortune past $150B, making him the richest man in recent history.

Then, Amazon’s site crashed, dropping the company’s stock nearly 1% on a day when it was supposed to soar. 

And, this subprime experience may not be the worst of Beezy’s worries: 1.8k Spanish Amazon workers also went on strike yesterday, with more employees across Europe expected to walk out today. So even though your Prime day headache may be over, Jeff is keeping the Advil close.

Tue, 7/17

WeWork goes vegetarian — and so do its expense reports

To reduce their environmental impact, WeWork is striking meat from the corporate menu: barring employees from expensing any meat dishes.

First reported by Bloomberg, WeWork co-founder Miguel McKelvey announced the policy in an employee memo, stating, “New research shows avoiding meat is one of the best things to reduce [our] personal environmental impact.”

Still, people aren’t sure what to think…

While helping the environment sounds like a noble policy for any corporation to take on, some worry that it blurs the line of what’s kosher for companies to enforce upon their employees.

Law professor Cindy Schipani told CNN the meatless move could lead to trouble if employees who don’t agree with the policy become upset over their “employee benefit” being scaled back.

But, in terms of preserving the planet, WeWork’s push to remove flesh from the stew is tough to argue. The company estimates they will save 445m lbs of carbon dioxide emissions by 2023, north of 16B gallons of water, and over 15m animals.

Corporate responsibility… so hot right now

Companies like the ill-fated Juicero had similar policies in place for their employees, and many others are cutting costs on other environmental evildoers: American Airlines and Starbucks have both followed WeWork’s lead in their “zero plastic” initiative.

For those worried that WeWork is here to take employees’ meat away, never fear. Employees are still allowed to bring meat to work and eat it. Just not on the company dollar.

Tue, 7/17

Starting August 1, you can 3D print a gun

Last week, the Department of Justice made it legal to produce guns with a 3D printer in a settlement with gun-printing startup Defense Distributed.

The ruling is the result of multi-year crusade spearheaded by gun-rights evangelist Cody Wilson and allows Defense Distributed to post detailed blueprints for ‘ghost guns’ — which are untraceable, unregistered, and DIY for anyone with access to a 3D printer.

The rise of ‘wiki-weapons’

Cody Wilson (creator of hate-based crowdfunding platform Hatreon and one of the perennial “most dangerous people on the internet”) founded Defense Distributed in 2012 to make homemade weapons available to all.

But, after DD’s ‘Wiki Weapon Project’ spat out its first functional firearm, The Liberator, in 2013, the Justice Department forced Wilson to remove the gun’s blueprints from the internet, invoking a gun export law.

Wilson, being the radical libertarian/crypto-anarchist he is, decided to appeal the State Department’s ban in court.

New technology, old amendment

Wilson argued that posting digital blueprints of automatic weapons online was simply an expression of his First Amendment right of free speech — and the Department of Justice ruled in his favor.

Now, thanks to improved  3D-printing technology and this new law, turning digital schematics into actual guns requires only an internet connection and a 3D printer. For DIY gun lovers without 3D printers, Defense Distributed produces a specialized machine called the Ghost Gunner.

Ghost guns: Coming to a garage printer near you

After winning the settlement, Defense Distributed relaunched its comprehensive gun encyclopedia, DEFCAD, which features guns ranging from AR-15s to Berettas. The website is open for uploads and will allow for downloads starting in August.

To reduce the number of mass shootings in America (where gun deaths are 25x higher than other high-income countries), politicians are debating ways to control gun ownership. 

Suggestions range from background checks, bans on assault weapons, minimum age requirements, and ‘red flag’ warning systems — all of which are impossible if anonymous gunsmiths can download and print untraceable guns in their garages.

Mon, 7/16

Luckin coffee is now worth $1B as it looks to challenge Starbucks in China 

On Friday, Chinese company Luckin Coffee closed a $200m funding round, giving the young company a $1B valuation, as they attempt to steal Starbucks’ bean crown in the area.

Now serving, ‘some competition’

With over 3k stores, ‘bucks is currently the largest coffee slosher in China (the frappe giant’s 2nd largest market after the US), but Luckin is coming in hot and steamy.

The Beijing-based startup has grown at an insane rate, opening 525 outlets across China’s major cities less than 9 months after its launch. 

1 pump Starbucks, 2 pumps China’s ‘new retail’ strategy

As part of their “new retail” strategy, the company makes their customers download their app to order coffee, where they can pay for the Joe using WeChat or Luckin’s own “coffee wallet.”

Meanwhile, Luckin’s also trying a new legal strategy: suing Starbucks in May for “monopolistic behavior.”

Mon, 7/16

The CEO of Sidecar has spoken: “The ‘Uber of scooters’ is going to be Uber”

In a bold contributor post on Recode, the co-founder of Sidecar, Sunil Paul, predicts that Uber will undoubtedly reign victorious in the so-called “scooter wars.” 

Hey, what makes him such an expert? 

Well, in his words, it’s because, “I was the co-founder and CEO of Sidecar, one of the PIONEERS of ride-sharing.” 

And today’s scooter wars stink of the 2011 rideshare wars

Companies like Sidecar, Uber, and Lyft birthed the very battle that revolutionized the industry as a whole, and Paul knows it.

“Sidecar had the first-mover advantage,” Paul writes, “but Uber ended up being the dominant player” by aggressively pushing competitors out of the space.

The early Uber rival ended their ridesharing and delivery services at the end of 2015, just as Kalanick and the gang stormed the castle and took hold of the industry.

But Paul doesn’t think it’s all about the Benjamins 

He believes Uber won the scooter wars the moment they bought the bike-sharing startup, Jump, last month.

Now, with Jump (and their most recent investment in Lime), the company has a “dominant source of demand for mobility solutions,” on top of their stronghold on the rideshare market as a whole.

As for the bright-eyed new scooter companies like Bird and Lime? They may be here for a good time, but not a long time. Paul warns: “The Scooter Wars will be a bloodbath.”

Mon, 7/16

Pulling in $70m, Roblox’s content creators crowdsource their way to cash

Roblox, a popular online multiplayer game that features Lego-like characters, announced that is on track to pay creators $70m in 2018.

As the world’s largest user-generated gaming platform, Roblox lets users create games within the game — and pays them when they’re played.

If The Sims and the App Store had a baby…

It would look a lot like Roblox. So far, the crowdsourced model has proved successful both for the game and its players. 

The game uses a virtual currency called ‘Robux’ that rewards the platform’s owners and developers. The community has produced 40m games, pushing the platform’s value to $2.4B.

Of the game’s 64m players, 4m have developed their own games. Last year, the platform paid its creators $30m — with some teenagers earning as much as $3m.

Distributed content just can’t wait to be king

The success of Roblox, which is cash-flow positive and growing, has encouraged others to mimic its content-crowdsourcing model. Minecraft has made a marketplace for creators to sell in-game accoutrements.

Since many of Roblox’s creators are former or current players, the company encourages players to learn development skills, including an annual developer conference and partnerships with 500+ coding camps to teach kids to code cool (Roblox) games.

Mon, 7/16

Johnson & Johnson ordered to pay $4.69B in damages for its dirty talc

A Missouri court ordered Johnson & Johnson to pay $4.69B in damages to 22 women who accused the company’s baby powder of giving them ovarian cancer.

Johnson & Johnson, which plans to appeal the court’s decision, finds itself in the middle of multi-decade debate on the medical impact of talc thanks to its past marketing campaigns that encouraged the use of powder for feminine hygiene.

This isn’t the first complaint — more like the 9,000th

The 22 women in this case are among 9k plaintiffs who claim that asbestos in Johnson & Johnson’s talc-based products has caused ovarian cancer and other medical problems. In its natural form, talc contains asbestos, a chemical known to cause cancer when inhaled. 

But, asbestos-free talc has been used in commercial products since the 1970s, and the National Cancer Institute does not believe that talc causes cancer.

Scientific debate continues, and so will the lawsuit

Johnson & Johnson’s first talc trial, in 2013, resulted in a finding of negligence (but no damages were awarded). Since then, the medical community has continued to disagree on the dangers of talc.

Now, J&J will “pursue all available appellate remedies” to get the recent ruling overturned. Given the disagreement within the medical community, it has a good chance of winning its appeal — it has successfully appealed numerous talc cases in the past.

Sweeping the powder under the rug

Regardless of how the case ends, J&J’s denial of wrongdoing sounds familiar: A big brand denies health risks and then sweeps old, unproven marketing under the rug when science finally calls BS.

J&J stock fell 1.4% after the recent verdict. But until talc is officially deposed, J&J will continue to defend itself, claiming its “products do not contain asbestos and do not cause ovarian cancer.”

Fri, 7/13

Chinese snake milkers make $3m selling deadly venom to pharma companies

Snake farmers in the tiny Chinese village of Zisiqiao make up to $3m a year by selling snake venom harvested from millions of deadly reptiles, reported the South China Morning Post

These farmers sell the profitable poison to large pharmaceutical companies that need the deadly snake juice.

Why do pharma companies need snake venom?

Pharmaceutical companies use real snake venom that is ‘milked’ from live snakes to produce the antivenom that treats potentially lethal snakebites.

The number of people bitten by venomous snakes each year is only increasing from the current 2.7m annually, and that means pharma companies are upping their research and development of antivenom. 

The market for antivenom is expected to rise to $2.95B by 2025, and with it, the demand for venom. 

If you’re hard up for some dollars, go milk a snake

Since snake venom is hard to find and harder to (safely) harvest, communities with lots of scaly squatters reap the financial benefits (a single gram of snake venom is worth around $750).

Since commercial snake farmers can raise millions of snakes at a time, the venom business can reshape local economies. The village of Zisiqiao has a population of 600 people — but, thanks to its 3m serpents, its snake farms generate $12m annually.

Fri, 7/13

Overwatch League has arrived at Disney and ESPN

Game-maker Activision Blizzard struck a deal with Disney on Wednesday to air the Overwatch League playoffs on ESPN and Disney XD — premiering them that very same day.

The Overwatch League is the first city-based league for competitive gaming, with teams like the Dallas Fuel and the San Francisco Shock. Not to mention some huge name backers such as New England Patriots CEO, Robert Kraft, and Kevin Durant. 

And with this deal come even more firsts

The agreement marks the first time a live competitive gaming event has aired during prime time on ESPN, and the first broadcast of an esports championship on ABC.

The multi-year deal will also air Overwatch League Season 2 next year, reportedly amounting to hundreds of hours of programming across 4 major networks.

Yes, but how do esports stack up against real sports?

TechCrunch notes that the growth of gaming stars through Twitch and the popularity of gaming in general have carved out new territory in sports media — and a new, lucrative industry.

According to Newzoo, by 2020 sponsorship revenue is expected to reach $655m, and ad spending will grow to $224m, which is child’s play vs. the NFL’s $1.3B in sponsorship revenue last year alone.

But, as they say in sports, it’s not about where you start, but where you end up, and everything is slowly coming together for esports to create an audience big enough to get advertisers’ attention. 

Fri, 7/13

Porn site Naughty America pitches a tent at the top of the first real VR wave

The rise of VR is nigh. And, with immersive videos like “Bangin’ the Babysitter,” plus other, more NSFW titles, porn site Naughty America is leading the charge.

According to David M. Ewalt (author of the book “Defying Reality: The Inside Story of The Virtual Reality Revolution,” the San Diego-based studio is one of the most productive VR content creators in the world — releasing over 108 VR vids since their launch 18 months ago.

We wish we were surprised… 

Any human with reproductive organs should’ve seen this coming a mile away.

Give people a cutting edge technology and they’ll find a way to make it X-rated: Ewalt says the porn biz has helped pioneer the popularization of pretty much every other revolutionary media format in the past — from VHS, to Blu-ray, and video streaming.

But no one knew it’d be this big 

In 2016, Samsung, HTC, Google, Sony, and Facebook’s Oculus sold just over 6m VR headsets worldwide… while NA’s customers downloaded more than 20m VR vids in the month of December that year alone.

VR also has people paying for porn again, and NA has the data to back it up: 1 in every 167 visitors who peep VR pages on NA’s website becomes a paying customer, compared to 1 in 1,500 for traditional.

In the first year of their VR service, NA’s website grew 55%; revenue grew 40% since their first VR video; in 2016, VR revenue was up 433%.

In other words, they’re a shower and a grower.

Fri, 7/13

Known for savvy buys, Broadcom’s rogue CEO baffles Wall Street with a $19B deal

Silicon Valley-based chipmaker Broadcom just bought seemingly unrelated New York software company CA Technologies for $18.9B, paying 20% more than the company’s stock value. 

Confused by the purchase, investors sent Broadcom’s stock plummeting 19%

But, Broadcom CEO Hock Tan has a cult following thanks to his track record of successful and unexpected acquisitions, leading many to wonder: What’s Hock hiding up his sleeve? 

Broadcom has boomed in the last decade

From 2009 to 2017, Broadcom’s share price increased 14x and the company became the largest player in the $400B chip market.

Within that time period, Broadcom’s revenue increased 49% annually — giving the company plenty of cash to pursue an aggressive expansion policy under the Hock-like supervision of its CEO.

“In Hock we trust”

Broadcom owes its remarkable growth to Hock Tan, a Malaysian immigrant who earned scholarships to MIT and Harvard Business School before building a global computer hardware empire. 

Tan increased Broadcom’s revenue by purchasing smaller businesses, stripping them down to their highest-performing units, and incorporating them into the company. With this acquisition strategy, Tan managed to increase Broadcom’s profit margins by more than 20 percentage points.

Hock’s past success has earned him a fan club of financial analysts that say things like “In Hock We Trust” and “it’s hard to bet against this guy.”

But not everyone agrees that Hock rocks 

After President Trump blocked Broadcom’s $117B hostile bid for Qualcomm earlier this year, Hock decided to invest in a software company to avoid the harsh light of antitrust scrutiny.

But this time, investors are skeptical the Hock-star could replicate his semiconductor success, driving Broadcom’s market cap down as much as $14.5B.

But Hock isn’t worried. He told reporters that this purchase would be the first “building block” of many acquisitions to come.

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