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What a week. What a month. Are you okay? It’s okay when you are tired. We are all. That’s why we have weekends.
Let’s ponder what happened this week: Individual traders outraged more professional investors by doing something weird, namely, making a trade that made sense – betting that a withering physical retailer would continue to be out of date – and him to reverse.
With GameStop’s long life, investors flipped the script for the smart money. Then everything snapped open, some stocks were blocked from trading services, Congress got angry, billionaires started acting like the common man on Twitter, some cryptos were growing, Dogecoin of all things, and as we headed off for the weekend, nothing was really resolved. It was strange.
Let’s talk about the lessons we learned. First, don’t short a stock to such an extent that there is a risk of the trade being suspended and inverted to your disadvantage. Second, the fintech startups TechCrunch has covered for years have been more brittle than expected, either due to reserve requirements or due to simple platform risk. And third, things can get more and more stupid.
The evidence for this final lesson came during the week’s news cycle when it became known that WeWork could conduct a public listing through a SPAC. So much for this year, which is more serious and normal than 2020.
But let’s stop recap and move on to our main topic today, which is a chat with the person I actually work for, Guru Gowrappan, the CEO of Verizon Media Group (VMG). For those who don’t know, Verizon owns VMG, which in turn owns TechCrunch. VMG is a collection of assets ranging from Yahoo to media brands to technology products. It makes billions in annual revenue, which should help determine how far above my seat – an excellent seat within TechCrunch but not an org-stature – guru.
Very far away.
But we follow us on Twitter and after Verizon reported profits this week, including some honestly pretty good numbers from VMG that I tweeted about, I have about half an hour for Guru. This meant that I had my boss’s boss [etc] Boss on the record with zero agenda. How could I say no
In the fourth quarter, VMG had sales of $ 2.3 billion, up 11% over the same quarter last year. Verizon described this as “the first quarter of year-over-year growth since the Yahoo! Acquisition. “What drove earnings? According to Verizon’s win call,” Strong advertising trends are increasing with revenue of 41% on the demand-side platform year over year. “
If you’re a guru, or frankly your humble servant, the growth was welcomed after VMG’s sales fell to $ 1.4 billion in Q2 2020, a 24.5% drop from last year’s earnings.
I had a couple of questions: Would the recent advertising momentum continue into 2021, which could impact a multitude of businesses well beyond the VMG organization? How important was it to Verizon that VMG saw year-over-year growth? how he expects to balance trade and journalism; and what Guru thinks of new media products like the recent rebirth of newsletter technology that Substack, Twitter and even Facebook are tinkering with.
Here’s what I learned:
- Regarding the strong advertising performance in the last months of the year during COVID, Guru said, “The most important fundamentals [of] The market dynamic has changed so it’s more permanent. “Consumer behavior is now“ more digital, online ”than before.
- The VMG CEO declined to share expectations for the first quarter of 2021 in detail, but noted that VMG’s goal is to “continue [its] Swing. “
- Part of that dynamic comes from subscription products that Guru called profit: “If you look at any of the trends that have emerged due to COVID, it’s consumers [are] Move to more trustworthy content and want to spend more time and money consuming subscription-based products […] TechCrunch / Extra Crunch grew nearly 196% year over year. “
- I read from his response to our position today that it is not a bad time to be in the online media game, which hasn’t applied much in recent years, dealing with what is left of the journalism industry.
- Regarding VMG’s home in Verizon – something I was thinking about after the Buzzfeed-HuffPost deal – I asked Guru if VMG’s recent financial performance made our company more attractive to Verizon and if we proved the bet that we wanted to do. This is the kind of question, by the way, that is pretty easy to write down but a little harder to ask when you’re talking to someone who could quit you at will. However, Guru replied “completely”. The CEO of VMG summarized the CEO of Verizon by saying that Verizon’s media business is “core” and that our parent company “will continue to invest in the media business as we continue to deliver on our promise.” Sign up for Extra Crunch.
- According to Guru, VMG will not trade revenue for credibility in promoting e-commerce on its platform: “At no point will we trade the dollar value of a transaction for trust. there is no possibility. […] The editorial team is keeping me honest, ”he said, adding that he is staying away from changes that could upset the journalistic balance. That was good to hear.
- And finally there are new media products that VMG wants to emulate or buy? Guru was generally optimistic about personalization but declined to say VMG is about to buy Substack or anything like that.
Oh, and I asked if VMG would sell or otherwise dispose of any other media properties following the HuffPost-BuzzFeed decision. Guru said that the Verizon CEO said the broader company was “fully committed” to the media business and that it would not “build on the divestment”. Instead it will be built “after investment and growth” and there are “no plans to sell additional properties”. Since I like my health insurance, that was nice to hear.
I understand the above isn’t a standard exchange listing, but one thing I will always try is to bring to you the conversations that get in my way thanks to my job.
Now back to venture capital.
Market notes
GameStop was your entire Twitter feed this week, but there are other things you need to know. Alfred, a US-based fintech company, raised $ 100 million on Tuesday, for example. The company brings together digital intelligence and people to help users manage their financial lives. Neat.
In addition to our most recent data-driven coverage of corporate data for 2020 – including an immersion in the African VC market – investment group Work-Bench took a look at how the enterprise tech scene in NYC was evolving in the second half of last year. This is exactly the kind of data I would analyze for you in a more regular week. But since we had this week, you’ve got to do it yourself.
Hello, a startup that supports companies in recruiting various candidates has published a series of data in its report “Black Founder Funding Q4 2020″. Read it. If you don’t have time, I’ll give you the headline that both caught my eye and left my heart crushed: “Hello, research shows that of the 1,537 companies we analyzed [in Q4 2020]40 were run by black founders. ”
And this week I whined with Microsoft after it reported profits. With most of it saved for later, two things were clear: The cloud world still has tons of growth ahead of it, which is good news for a large part of the startup software market. If you want more team growth data to better understand why Salesforce bought Slack, wait another quarter.
Miscellaneous and miscellaneous
Finally, in August 2014, I came up with the idea for a burrito cannon delivery service. You’d press a button in an app and deliver a burrito to your office without making any decisions. Then postmates actually built a burrito cannon into their app, which was both fun and funny.
Fast forward to 2021, and Postmates is now part of Uber. And with the return of the burrito cannon, it’s back:
I didn’t expect my lazy, stupid idea to help an NFL star sprint down a field over half a decade later while an industrial-scale potato cannon shot a Mexican joy in his direction. But it’s 2021 and here we are.
I think all of my startup ideas are brilliant.
Alex