|From: Glenn Petersen||5/29/2020 10:58:25 AM|
|Zoom aims to be the next big platform for start-ups to build billion-dollar businesses|
Published Fri, May 29 20208:47 AM EDT
Rebecca Fannin, special to CNBC.com
-- Zoom teams up with start-ups to fast forward product innovation as competition from tech titans heats up.
-- The company held an app marketplace contest online for start-ups to build new features and functions for Zoom using Zoom APIs.
-- Docket — a start-up in Indianapolis with an app to make meetings more efficient with collaborative agendas, note-taking tools, archives and task steps — won the competition and hopes to raise $2 million in venture capital.
Jim Scheinman, founding managing partner of Maven Ventures and an early investor in Zoom Video Communications, is still betting on the videoconferencing company’s future and on the vision of its founder and CEO Eric Yuan. The company has been on a tear — stoked by the need for its essential services during the pandemic — but as competition nips at its heels from Microsoft, Facebook and Google, there is a need to keep innovating its product line. To achieve that goal, Zoom is teaming up with start-ups building the next big app on its open platform using Zoom APIs.
Zoom has grown to 300 million daily users from its launch in 2013, and its market cap has risen from $15.9 billion at the time of its IPO in April 2019 to near-$50 billion. Maven Ventures has reaped a 200 times return on investment during the start-up’s meteoric rise.
To spur the next wave of growth, Scheinman came up with the idea for an app marketplace contest online for start-ups to build new features and functions for Zoom. In a so-called Whale Watch competition held earlier this month with a virtual backdrop of whales swimming, leaders of 10 tech start-ups who were selected as finalists among 600 contestants presented business plans in Shark Tank-like pitches over Zoom to Scheinman and four other judges. They were: Zoom’s Platform and AI head Wei Lei; Carl Eschenbach, a partner of Sequoia Capital; Santi Subotovsky, general partner of Emergence Capital, and Bart Swanson, advisor of Horizons Ventures who are Zoom investors that also serve on the company’s board.
Each start-up team pitched their made-for-Zoom apps, ranging from Pledgeling for pledging donations and iScribeHealth for virtual physician consultations to Bloom for specialized online classes for kids. Votes came in from an online audience poll while the judges went off-screen to decide and then announce the winner: Docket, a start-up in Indianapolis with an app to make meetings more efficient with collaborative agendas, note-taking tools, archives and task steps.
As the contest champion, Docket stands to receive up to $2 million in funding from the four participating venture firms once due diligence is done, said Darin Brown, co-founder and CEO of Docket, which launched in January 2019 with $1.5 million in VC backing and is one of several apps on Zoom. “For us, it was a no-brainer to roll out our app on Zoom because of the number of users and the deep integration of Docket within the video platform,” said Brown. He expects that Docket will reach 10,000 users by the end of May, up from 3,000 at the beginning of 2020.
The growth and venture funding opportunity for other contestants with innovative apps that ride on Zoom could be huge. “Zoom will be the next big platform for start-ups to build billion-dollar businesses,” Scheinman said. “Of the 10 companies we chose as finalists, every single one has a potential $1 billion business opportunity.”
Zoom’s growing pains
Not many start-ups have experienced a surge like Zoom – from 10 million average daily meeting
participants in December 2019 to more than 300 million each day by late April 2020. “The way people communicate will be forever changed,” noted Eric Yuan, founder and CEO of Zoom Video Communications in San Jose, pointing to such benefits as increased productivity and collaboration, and ease of use. “In the long run, working from home and use of video communications will be more accepted as standard practice in day-to-day business,” he pointed out in an email response.
The once scrappy start-up must keep innovating to stay ahead of established tech titans that have ramped up their own video conferencing services integrated within full product suites. The rebranded Microsoft Teams, which replaces Skype for Business Online for voice calls and video conferencing and functions within the collaborative Microsoft Office 365 platform, added 31 million users in one month and reached 75 million active users by late April. Google’s Hangouts, renamed Google Meet in early April and combined with its portfolio of business services such as Gmail, Docs and Drive, is adding about 3 million users every day and climbed to more than 100 million daily participants.
In addition, Facebook has expanded its video conferencing and chat features while Verizon Business entered the race in mid-April by agreeing to acquire Blue Jeans Network, a cloud-based video conferencing and event platform.
The services have similar features such as screen sharing, gallery views and meeting recordings, and even live transcripts such as from Otter.ai, which has transcribed 25 million meetings. Pricing differs little, ranging from free, limited feature versions to monthly subscriptions of $5 for small teams and $15 and $20 for larger businesses and enterprises.
“The services all do have similar features but the differences come in how various features are de-emphasized in the mix,” said Dan Rothman, president of software development consultancy Flatbridge Technology in New York. He pointed out that Google Meet is good for social grouping because it can be easy to access contacts, while Microsoft Teams is more business oriented, integrated with Office 365.
Beyond the usual start-up growing pains, Zoom also has contended with a needling perception that it’s made in China and subject to foreign spies listening in. In early April, Yuan admitted that some meetings had been mistakenly routed through China, to handle surges in traffic.
Zoom isn’t made in China – rather in Silicon Valley. But Zoom has a large developer team in China to supplement higher-level R&D teams in the U.S. According to researchers at the University of Toronto who studied the potential security issues, some 700 Zoom engineers work in China. Zoom plans to expand in the U.S. with engineering centers in Phoenix and Pittsburgh, and hire 500 engineers in the U.S. over the next few years.
Not a Chinese app
An American citizen, founder Yuan grew up in Shandong province, China, and earned a bachelor’s degree in applied mathematics from Shandong University of Science & Technology and a master’s degree from China University of Mining and Technology and later, in 2006, an Executive MBA from Stanford University. Inspired by the dotcom boom, he moved to the U.S. in 1997, joined video conferencing start-up Webex as a code developer, learned English, and worked his way up through cultural and language barriers to become a v.p. in engineering. He helped to build Webex over 14 years, including a $3.5 billion acquisition by Cisco Systems in 2007, and stayed on for a few years as corporate v.p. of engineering.
With the dream of starting a new, user-friendly cloud-based video service, he left Cisco in 2011 after his idea was rejected and took with him 40 Cisco engineers to start his own company, Saasabee. The start-up was renamed Zoom after early investor Scheinman came up with the name from a children’s book Zoom City he used to read to one of his kids.
When Zoom went public in April 2019, Yuan became a billionaire and his venture investors hit pay day. But as Zoom ballooned in users this year when Covid-19 spread globally, security flaws surfaced. Built for the enterprise market, Zoom was suddenly was being used by consumers to work, study and socialize, explained founder Yuan.
To deal with high-profile problems such as “zoom bombers” suddenly interrupting online meetings, Zoom put a freeze on development of any new products and set up task forces led by executives on a 90-day, fix-it plan, beginning April 1.
Among the fixes that were hastily made: introduced data routing controls so Zoom hosts can choose which data center regions (including China) their meetings use for real-time traffic; added a security icon in the meeting menu bar to secure users’ data in transit; acquired Keybase, a secure messaging and file-sharing service, to accelerate Zoom’s plan to build end-to-end encryption; embedded meeting passwords by default, and named former Facebook and Yahoo chief security officer Alex Stamos as a security consultant.
Despite such fixes, security issues still haunt Zoom. Citing security concerns, Google has banned employees from using Zoom for any business purposes. Other companies including Bank of America and Daimler AG have taken similar measures.
“Zoom has been fighting four or five Goliaths since the day it was born,” said Zoom angel investor Bill Tai. “Microsoft and Google are copying features all the time and Zoom will leave them behind in the dust,” Tai said, who added he is a big believer in the company’s proactive, transparent culture. He was the first to commit to funding Zoom’s founder after the two friends and prior co-investors in tech start-ups Treasure Data and Tango.me lunched together and discussed Yuan’s idea to make an easy-to-use, high quality video service accessible in the cloud from multiple devices. Tai hasn’t sold any shares in Zoom and proudly counts an investment return of 1,100 times from his bet.
Getting additional funding for Yuan’s start-up idea wasn’t easy but a lengthy memo by Tai finally convinced other angel investors that another video conferencing service could fill a gap in the market and compete in a crowded space against Microsoft-owned Skype and Webex.
“Skype stopped innovating and Webex will live inside Cisco,” Tai said, who added that he “never doubted that Zoom would work. The question was how big this was going to be.”
In early 2013, Zoom picked up $6 million from Maven Ventures, Yahoo co-founder Jerry Yang and his firm AME Cloud Ventures, and Qualcomm Ventures. Later that year, Horizons Ventures, the private investment unit of Hong Kong tycoon Li Ka-Shing, led a $6.5 million second investment. In 2015, Zoom raised $30 million from existing investors and Emergence Capital, then $100 million led by Sequoia Capital in January 2017 before Zoom’s IPO in April 2019 when it was already profitable.
Zoom’s 90-day fix-it plan is ending on June 30 and the while the U.S. economy is reopening, challenges for the company aren’t going away. The app marketplace that Zoom and its venture investors are working on to introduce new features and functions could give Zoom an edge it needs in this new world of online everything.
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|To: Elroy who wrote (57665)||5/30/2020 9:30:38 AM|
|From: John Carragher|
|at least it would be more secure and not be in china. we have no idea what zoom is doing with all that data.. i refuse to use zoom. doesn't google provide the same service?|
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|To: Elroy who wrote (57665)||6/2/2020 8:25:44 PM|
|From: Glenn Petersen|
|Zoom had a small competitive advantage when the pandemic hit. They were able to capitalize on that, but I don't doubt for a second that the large incumbents - particularly Microsoft - will reassert themselves. Microsoft should have owned his market when they acquired Skype. They didn't upgrade the platform fast enough. Eventually, one of the big tech firms will acquire Zoon and incorporate it into their platform|
Zoom revenue grew 169% during the quarter, and the company doubled its revenue guidance for the year
Published Tue, Jun 2 20204:10 PM EDT
Updated 2 hours ago
Jordan Novet @jordannovet
-- Zoom’s revenue growth picked up significantly during the quarter.
-- The company more than doubled its revenue guidance for the fiscal year as well.
-- Many people have flocked to Zoom in recent months to virtually meet with colleagues, classmates, friends and family members as the coronavirus has continued to spread.
Zoom reported revenue growth of 169% from the previous year in its first-quarter earnings report on Tuesday, and nearly doubled its revenue guidance for the full year, as the coronavirus pandemic drove millions of new customers to the video calling service and turned it into a household name.
Shares fell 4% in after-hours trading during the company’s earnings call, however, as it revealed higher-than-expected cloud computing costs to deal with the surge in demand.
Here’s how the company did:
Earnings: 20 cents per share, adjusted
Revenue: $328.2 million Analysts surveyed by Refinitiv had expected 9 cents in adjusted earnings per share and $202.7 million in revenue for the quarter, which ended Apr. 30. Comparing analysts’ estimates with results is not necessarily straightforward given the unpredictable effects of the pandemic during the quarter.
The company also significantly increased its guidance for the fiscal year. It now expects $1.21 to $1.29 in adjusted earnings per share on $1.78 billion to $1.80 billion in revenue. In March, it had forecast 42 cents to 45 cents in EPS on $905 million to $915 million in revenue.
Needham analyst Richard Valera called the results “incredible” in an appearance on CNBC. “Never have I seen something of that magnitude in my 20 years of covering technology.”
In keeping with its previous practices, the company did not disclose active user numbers. However, Bernstein analysts Zane Chrane and Michelle Isaacs, who have the equivalent of a buy rating on Zoom stock, estimated that the Zoom’s mobile app had 173 million monthly active users as of May 27, up from 14 million on March 4, citing data from app-analytics company Apptopia.
Zoom’s gross margin narrowed to 68.4%, from 82.7% in the previous quarter and 80.2% in the year-ago quarter, as it added computing capacity, including from Amazon Web Services, to handle the swell of new users. The greater reliance on third-party clouds led to more costs, but it was critical to the company meeting the needs of its users, finance chief Kelly Steckelberg told analysts on a Zoom call with analysts on Tuesday.
“Moving forward, as we build additional capacity in our own data centers, we expect to gain some efficiencies, bringing gross margin back toward the mid-70s in the next several quarters ahead,” Steckelberg said, adding that the company expects to increase capital expenditures for data center equipment.
Zoom gave all of its non-commissioned employees a one-time bonus worth two weeks’ pay to help them pay for costs arising from any interruptions to their work because of the pandemic, Steckelberg said.
Zoom said it had 769 customers paying over $100,000 in the trailing 12 months at the end of the fiscal first quarter, up 90% on an annualized basis, compared with 86% in the prior quarter. The company had 265,400 customers with more than 10 employees at the end of the quarter, up 354%. The growth rate in the prior quarter was 61%.
As more people have flocked to Zoom, other companies have taken notice, and people have come across security and privacy issues in Zoom’s software. At the beginning of April Zoom said it would spend the next 90 days finding and fixing problems. Also in April Facebook introduced a video-calling feature called Messenger Rooms that could work as alternative to the free version of Zoom, sending Zoom shares downward, and Verizon announced the acquisition of smaller competitor Blue Jeans.
Competition is good for consumers, said Eric Yuan, Zoom’s CEO.
The company would not resort to introducing advertisements into its calling service, Yuan said.
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|From: Glenn Petersen||6/5/2020 9:29:28 AM|
|ZoomInfo rockets over 60% in first tech IPO of Covid-19 era|
Published Thu, Jun 4 202012:58 PM EDT
Updated Thu, Jun 4 20204:34 PM EDT
Ari Levy @levynews
-- ZoomInfo priced its IPO at $21 per share on Wednesday after raising the range to between $19 and $20.
-- The tech IPO market has been dormant since the coronavirus started shutting down wide swaths of the economy in March.
-- ZoomInfo uses artificial intelligence to process data that aids corporate sales and marketing teams with customer outreach.
In the first tech IPO since the coronavirus shut down much of the U.S. economy, ZoomInfo soared more than 60% in its Nasdaq debut Thursday, underscoring investors’ ongoing appetite for high-growth subscription software companies.
ZoomInfo, not to be confused with video chat provider Zoom Video, priced its IPO at $21 on Wednesday after previously raising the expected range to $19 to $20. The stock closed up 62% at $34, valuing the company at about $13.4 billion. The offering reeled in more than $900 million.
ZoomInfo’s technology helps corporate sales and marketing teams with customer outreach, integrating with sales software tools from Salesforce, Oracle, Microsoft and others. The company says it has more than 15,000 customers across all industries and estimates that it’s going after a $24 billion market opportunity.
Even with businesses across the country closed, unemployment skyrocketing and gross domestic product expected to plunge by more than 40% in the second quarter, cloud software companies have largely weathered the storm and, in many cases, even benefited. Twilio, ServiceNow, Okta and Coupa have all bounced back dramatically from the initial Covid-19 plunge and are now trading near record levels.
While ZoomInfo’s revenue rose by over 40% in the first quarter, the company said in its prospectus that it faces headwinds from the coronavirus in the form of “slowed growth or decline in new customer demand for our platform and lower demand from our existing customers for upgrades within our platform.” The company said it closed all of its offices because of Covid-19 and plans to keep employees working from home in the second quarter and possibly beyond.
ZoomInfo, in its current form, was created in 2019 when DiscoverOrg acquired Zoom Information and was rebranded as ZoomInfo. Henry Schuck co-founded DiscoverOrg in 2007, and became CEO of the combined entity after the transaction closed. TA Associates and Carlyle Group, which were principal investors in DiscoverOrg, are the largest shareholders in ZoomInfo.
Revenue for the combined entities increased 39% last year to $336 million and 42% in the first quarter to $103.6 million. The company recorded a first-quarter net loss of $5.9 million.
Zoom Video has been perhaps the biggest tech winner since employees left the office for the home. The stock has more than tripled this year, and the company said this week that customer growth surged by more than 350% in the fiscal first quarter from a year earlier.
ZoomInfo is a very different kind of company, but it did highlight the other Zoom as a customer in its prospectus.
“ZoomInfo has become an essential tool for Zoom Video’s sales representatives to penetrate new and international markets, and today 90% of the Zoom Video sales team uses the ZoomInfo platform,” the filing said.
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|To: Glenn Petersen who wrote (57667)||6/7/2020 2:32:00 PM|
|From: Glenn Petersen|
|Microsoft Takes On Zoom and Slack in a Battle for Your Work Computer |
The tech giant sees Teams, its group conferencing and collaboration software, as critical to its future
By Aaron Tilley
Wall Street Journal
June 2, 2020 10:39 am ET
When New York City’s education department ordered teachers to stop using Zoom videoconferencing for classes in April, because of security concerns, Microsoft Corp. MSFT 2.34% seized the moment.
A team of 50 Microsoft staffers worked around the clock with administrators and teachers across New York’s school district, the nation’s largest, to convert them to Microsoft Teams, the company’s rival conferencing and collaboration software. Microsoft also gave the district expedited access to features that made Zoom so instantly popular, such as the ability to show more people on the screen at once and a raise-your-hand button.
Microsoft counted more than 110,000 Teams users inside the district a month later, when the department allowed Zoom access again.
The pandemic has supercharged a battle over the future of business computing, pitting Microsoft against a growing list of rivals. More is at stake than chatting over video calls. Chief Executive Satya Nadella has hailed Teams as critical to Microsoft’s future, in essence, a new operating system that would serve as a hub for the company’s more famous products such as Word, Excel and PowerPoint.
Years of market-share jockeying have been compressed into months with so many white-collar workers operating from home. Tens of millions of additional people are now using Teams and other products from companies including Zoom Video Communications Inc., Slack Technologies Inc. and Alphabet Inc.’s Google.
Some rivals say Microsoft has deployed sharp-elbowed business tactics reminiscent of an earlier era, when its Windows operating system dominated the software market—putting pressure on startups by copying product features, seeding doubt about competitors to potential customers and bundling its software to gain an edge.
“They want to kill us, as opposed to have a great product and make customers happy,” Slack CEO Stewart Butterfield said.
Microsoft said it was focused on working with rather than inhibiting competitors, including thousands of partners who integrate with Microsoft services.
That said, since the pandemic, “the world has changed,” said Jared Spataro, corporate vice president for Microsoft 365, which encompasses Teams. “We intend to compete and win.”
Global weekly downloads of business apps like Teams on smartphones surged from around 33.7 million in early October to 80 million in mid-April, according to data tracker App Annie. Videoconferencing app downloads have reached 50 million a week, from five million, during roughly the same period.
In April, Microsoft reported that Teams had grown to 75 million daily users, more than double its early March figure. On one day, it logged 4.1 billion meeting minutes.
“As Covid-19 impacts every aspect of our work and life, we’ve seen two years’ worth of digital transformation in two months,” Mr. Nadella said in April, when Microsoft reported stronger-than-expected earnings.
Among Microsoft’s rivals, Zoom said in April it had 300 million daily participants across its paid and free services—a broader measure than Microsoft’s unique 75 million daily users—up from 10 million at the end of last year. In March, halfway through its quarter, Slack said it saw a 40% increase in customer growth compared with the prior two quarters.
More deep-pocketed rivals are also in the fray. Facebook Inc. launched a group videochat feature in April called Messenger Rooms. On April 29 Google said it was making its videoconferencing tool, Google Meet, free to all. Peak daily use of Google Meet is up 30 times from the start of the year, the company said, now surpassing 100 million daily meeting participants.
Microsoft’s Teams software gives it a hook to lure and keep customers for its broader portfolio of services based in the cloud, where companies increasingly store their data and run applications.
Business from its cloud services has helped propel the company to a market cap of more than $1 trillion in April 2019—becoming the third company to do so, after Apple Inc. and Amazon.com Inc. In recent months, Microsoft has been trading places with Apple as the highest valued company in the world.
Annual revenue grew from more than $86 billion in 2014, when Mr. Nadella took over, to more than $125 billion in 2019, largely driven by its commercial cloud business.
Videoconferencing quickly became the killer app of the coronavirus era, which put Zoom, a nine-year-old company run by former Cisco executive Eric Yuan, more directly in the crosshairs for Teams.
Microsoft accelerated development of new videoconferencing features to better compete, Microsoft Teams head Jeff Teper said.
It announced real-time noise suppression in its conference-call function to reduce background sounds from keyboards or home vacuum cleaners. It introduced custom backgrounds, a feature popular among Zoom users. And it deployed special support for prominent customers, including the National Football League, which used the software to run the 2020 draft.
Zoom CEO Eric Yuan, center, at the opening bell during the company's IPO in April 2019. Photo: Victor J. Blue/Bloomberg News
One of the appeals of Zoom is that it showcases as many as 49 people at once on a screen—and Microsoft has also scaled up how many people can be visible during Teams meetings at the same time. Teams currently shows up to nine participants on a single screen, even when meetings involve as many as 250 members. That is being increased to 49 on screen at once, Mr. Spataro said.
Zoom declined to comment.
Microsoft has had an especially intense feud with Slack, which operates a group messaging platform that it has also tried to position as a hub for cloud apps.
Slack, launched in 2014, grew out of efforts to build a videogame company. The game wasn’t a hit, but the code the San Francisco-based company wrote to help employees communicate proved useful.
Within a couple of years, Slack had become one of Silicon Valley’s buzziest startups. Its potential to replace email with online chat was its main selling point, but Mr. Butterfield also has said Slack can serve as a portal to other software systems, with links to Twitter Inc.’s social-media messaging tool or business software from Salesforce.com Inc.
In 2015, Microsoft approached Slack about a takeover, but Slack said no, according to a person familiar with the talks. Microsoft declined to comment on the matter.
Slack CEO Stewart Butterfield at the opening bell during the company's IPO in June 2019. Photo: Michael Nagle/Bloomberg News
When Microsoft launched Teams in November 2016, Mr. Butterfield responded with a sarcastic, open-letter newspaper ad. “Dear Microsoft, Wow. Big News!” it read. “We’re genuinely excited to have some competition.”
Ben Canning, a former product manager for Microsoft Teams who is now vice president at Bellevue, Wash.-based collaboration software company Smartsheet Inc., said that in designing Teams, Microsoft essentially matched some popular Slack features to make shifting to its software intuitive. Slack “threatened to become the place where people spent the bulk of their time,” he said. “We recognized that team collaboration was something that Microsoft had not done a great job with.”
Microsoft approached potential customers, telling them Slack lacked security and compliance features companies would need, said Mr. Canning, who was in product development and worked closely with the sales team. The Microsoft pitch was that customers could integrate those functions on their own or simply adopt Teams, where they were included, he said.
Last July, a few weeks after Slack’s stock-market debut, Microsoft issued a press release saying Teams had reached more than 13 million daily active users, topping Slack’s roughly 10 million figure. The numbers Microsoft issued, Mr. Butterfield said, didn’t accurately compare with Slack’s active user counts. He also said Microsoft issued the release to undermine investor and customer confidence in his company. But Slack was stuck in a quiet period, unable to respond.
Microsoft released an updated set of user numbers, similarly showing Teams ahead, a few months later in November, ahead of Slack earnings. Slack’s stock dropped 10% that day.
Microsoft said it provides accurate metrics on active Teams usage, and disputed the notion that it released usage figures to undermine the competition. “Our disclosure decisions are driven by hitting key metrics, alignment to our earnings cycle, or proximity to key events like Inspire, one of our biggest events of the year, not in response to competitors,” Mr. Spataro said in an emailed statement.
Todd McKinnon, chief executive of Okta Inc., the workplace tool that helps companies provide secure access to cloud-based software for employees, said Microsoft sales representatives have offered to cover the engineering costs for customers to migrate from Okta to its version. That engineering bill, he said, could reach $1 million for some users.
Microsoft declined to comment on the issue.
Microsoft was perhaps the biggest winner in the personal-computer revolution with the 1985 launch of Windows, which became the most successful piece of software ever sold.
Bill and Melinda Gates enter a federal courthouse in April 2002 during the Microsoft antitrust case. Photo: The Washington Times/ZUMA PRESS
In the 1990s, the U.S. government sued Microsoft on antitrust grounds for allegedly using the dominance of Windows to stifle competition in the burgeoning browser market. The two sides ultimately settled, but Microsoft was slow to take advantage of the internet’s arrival and largely fumbled the shift to mobile devices a decade or so later.
Since becoming CEO in 2014, Mr. Nadella has sought more partnerships than Microsoft has in the past, including with rivals like Oracle Corp. and Google. Although Washington has targeted the competitive practices of other big tech companies, Microsoft has largely escaped scrutiny.
However, officials working for House Antitrust Subcommittee Chairman David Cicilline, a Democrat from Rhode Island, have started asking Microsoft competitors about the software giant’s business practices. A spokesman for Mr. Cicilline’s office declined to comment.
Microsoft includes Teams for companies that pay for Office 365, which includes Word, Excel and PowerPoint. While Slack and Zoom have free versions, paid versions with the features most businesses want start at $6.67 per person a month on Slack, and $14.99 per host a month on Zoom. Mr. Teper said when he was appointed to run Teams in January, the job came with orders from Mr. Nadella to integrate more Microsoft products.
Microsoft says bundling serves customers’ needs. “The thing we heard customers value the most is the ability to chat, meet, call and collaborate all in a single experience,” Mr. Spataro said. “You don’t have to pull together Slack, Zoom, Dropbox or perhaps Google apps.”
Mr. Nadella spoke during the company’s annual Build developers conference, held online, last month. Photo: Kyodo News/Getty Images
Cosmetics giant L’Oréal SA abandoned more stand-alone tools and adopted Teams in part because of the bundled features, said its Americas division chief information officer, Michael Kingston. “Microsoft has been smart about how they integrate Teams into rest of their productivity platform,” Mr. Kingston said.
Microsoft raced to add users attending virtual classes in schools during the pandemic. The 125,000 students in Duval County, Fla., almost overnight became Teams users, as did students at Italy’s historic University of Bologna.
The New York school district was already a Microsoft customer for Office 365 applications, but it wasn’t widely using the free features of Teams. Instead, many teachers were using Zoom.
Zoom’s surging popularity triggered a spate of security problems, including a phenomenon called Zoombombing, in which people gain unauthorized access to a meeting and hijack the event, prompting Mr. Yuan to apologize in early April.
In a Microsoft blog post days later, Mr. Spataro declared: “We safeguard your privacy by design.”
Write to Aaron Tilley at email@example.com
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|From: Glenn Petersen||7/19/2020 12:58:27 PM|
|The Next Phase of the Retail Apocalypse: Stores Reborn as E-Commerce Warehouses|
As the demand for in-person shopping diminishes, landlords, startups and retailers are converting abandoned stores into online fulfillment centers
By Christopher Mims
Wall Street Journal
July 18, 2020 12:01 am ET
When Litisha Thomas heard through the gossip mill that the shuttered Sam’s Club where she’d worked for 11 years might be reopening in her rural North Carolina hamlet, she immediately jumped on an internet job board to see if it was hiring. It was, but this wasn’t a conventional reopening.
Sam’s Club, the discount shopping club named for the founder of Walmart Inc., WMT -0.35% was changing how it does business. The retail giant’s subsidiary converted the entire building, which reopened in April 2019, into an e-commerce fulfillment center, where orders from samsclub.com shoppers throughout the southeast are picked, packed and placed on trucks that take them to other shipping hubs.
Litisha Thomas is back working at the Sam’s Club building where she had been employed for over a decade. These days, it’s a fulfillment center.PHOTO: LITISHA THOMAS
Ms. Thomas—who’d previously driven a forklift as an overnight receiving associate at the Sam’s Club in Lumberton, N.C., population 20,000—is back behind the wheel of a forklift, though now she’s a manager overseeing eight other employees.
The building in which she works looks about the same on the outside, but inside, instead of wide aisles filled with shoppers pushing carts, its floor-to-ceiling shelves are packed more densely than ever with goods being picked by employees and shuttled to conveyor belts.
Despite the lack of shoppers and cash registers, total employment is actually up: Previously the store employed 164 workers, about a quarter of them part time, says Ms. Thomas. Now there are nearly 300 full-time employees across three shifts.
Welcome to the next phase of the “retail apocalypse.” This conversion—which Sam’s Club has also completed for five other big-box stores throughout the country—is part of a burgeoning trend in which retail spaces of all sizes are being converted into e-commerce fulfillment centers. The global pandemic may have turbocharged the shift from bricks-and-mortar retail to online shopping, but the rate of conversion of retail into industrial spaces has been accelerating for years, says Matthew Walaszek, associate director of industrial and logistics research at CBRE Group Inc., the world’s largest commercial real-estate services firm by revenue.
A just-completed CBRE analysis found that since 2017, 60 new retail-to-industrial conversion projects have entered at least the preplanning stage, out of a total of 94 such projects completed or in progress in the past decade. Projects begun or completed since 2017 transformed 14 million square feet of former retail space into 15.2 million square feet of industrial space, most of it for e-commerce distribution. That’s still a relatively small proportion of the 14.5 billion square feet of industrial real estate in the U.S.
Ohi clients can make deliveries to customers in Manhattan in a matter of hours, a key advantage as demand for quick delivery increases.PHOTO: MALIKE SIDIBE FOR THE WALL STREET JOURNAL
“We wouldn’t say [these conversions] are moving the needle quite yet, but it’s a trend that has legs and we’re going to see this expand into the foreseeable future,” says Mr. Walaszek.
Warehousing startup Ohi is certainly counting on it. The company operates, or provides operational software for, micro-warehouses for e-commerce fulfillment ranging in size from a few hundred to a few thousand square feet in 80 cities across the U.S.
One of its locations is in former office space on West 38th Street in Manhattan’s Garment District. That’s unusual—e-commerce fulfillment hubs are typically in suburbia, occupying up to a million square feet. Ohi’s warehouses are used by both well-established brands and small direct-to-consumer ones aiming to reach relatively well-off consumers in cities. These startups use Ohi’s fulfillment centers to store their goods close to consumers, allowing for same-day delivery, says the company’s founder and chief executive, Ben Jones.
E-commerce warehouses are appearing in places they’ve rarely been seen before. The Ohi facility, on West 38th Street, used to be an office.PHOTO: MALIKE SIDIBE FOR THE WALL STREET JOURNAL
Ohi CEO Ben Jones in his office in midtown Manhattan.PHOTO: MALIKE SIDIBE FOR THE WALL STREET JOURNAL
Brands using Ohi’s warehouses include Olipop, which advertises its “prebiotic sparkling tonics” as healthy alternatives to soda.
“We ship nationally from Montana, but at the mercy of FedEx and UPS, ” says Steven Vigilante, Olipop’s growth marketing manager. Moving New York City customer delivery to Ohi’s Manhattan fulfillment center cut average shipping costs in half and delivery times from 1 to 2 weeks to as little as two hours, he adds.
Between these two extremes are medium-size retailers catering to middle-income Americans, many of which are looking to add e-commerce fulfillment to their existing stores. A number of big grocery chains across the globe, including Albertsons Cos., Wakefern Food Corp. and France’s Carrefour SA, fall into this category. They are using or planning to use almost fully automated micro-fulfillment warehouses either within existing stores or in adjacent retail spaces, says Max Pedró, co-founder and president of Takeoff Technologies, which provides them with automated systems.
Takeoff’s 10,000-square-foot micro-fulfillment centers hold the portion of a typical grocery store that represents most of its sales, or around 15,000 different item types. They make extensive use of robotics and automation to retrieve groceries from shelves, and so require little in the way of human labor to operate until the final stages of each order.
These automated systems are meant to assemble and pack orders more efficiently than employees roaming aisles or visiting stockrooms, and keeping the fulfillment center next to the store has additional benefits, notes Mr. Pedró. Both can be resupplied from the same trucks, staff can move between the two as demand shifts between them, and their proximity to customers can save retailers some delivery costs.
Many big retailers, including Walmart, Target Corp. and, in its forthcoming grocery stores, Amazon. com Inc., are taking a related but distinct approach: shipping directly from stores. Even stores that have begun offering curbside pickup amid the pandemic are, in a way, becoming part of the trend.
Each business that decides retail space might be better used for filling e-commerce orders does so for its own reasons, but two intersecting trends play a big role. Retail stores and shopping centers were closing on account of declining foot traffic even before the pandemic, as e-commerce continued gobbling bricks-and-mortar retail market share like Pac-Man chomping ghosts. Since March and the beginning of stay-at-home orders in the U.S., the trend has only accelerated.
E-commerce has created more jobs than the closing of bricks-and-mortar locations has taken away in recent years, according to one study. Above, prepping for a delivery at Ohi.PHOTO: MALIKE SIDIBE FOR THE WALL STREET JOURNAL
Meanwhile, rents for e-commerce fulfillment and other industrial spaces are climbing due to that surging demand. The gap between higher retail rent and lower warehousing rent is closing, says CBRE’s Mr. Walaszek.
Office space can also be converted into micro-fulfillment centers, and Ohi has set up at least one of its small fulfillment warehouses in what was once office space. As companies reconsider whether they ever want their employees to return to offices, more of this kind of real estate could also be available.
As Americans shift from buying things in-store to buying them online, all of those goods have to be shipped from somewhere. The faster we demand they get to us, the closer they have to be stored, which necessitates more e-commerce warehouses than ever, and in places they’ve rarely been seen before, such as city centers.
One economist who has looked at these trends has concluded something surprising: When you include all the jobs in fulfillment, delivery, and related roles, e-commerce has created more jobs between 2007 and January 2020 than bricks-and-mortar retailers lost, says Michael Mandel, chief economic strategist at the Progressive Policy Institute, a think tank. Since January, employment in this sector has fallen, but Dr. Mandel believes that as consumer spending recovers, so will employment in this area.
While it’s easy to see these trends as broad abstractions, they’re also why Ms. Thomas—a mother of two living in a small southern town—has a job, and a pay raise.
Every day, she goes to the same building she worked in for over a decade before it closed in January 2018. There are some differences. The sign says Samsclub.com instead of Sam’s Club, she says, and the parking lot is full of tractor-trailer trucks. Inside, things have changed more. There’s more merchandise, new conveyor belts, a shipping area. “Sometimes I’ll catch myself walking the floor and picturing what it used to be,” she adds.
Sam’s Club customers are still shopping with the company—it’s just that, like so many of us, they’re now doing it from home. If trends continue, then in terms of jobs, real estate, consumption patterns, supply chains and land use, as Lumberton, N.C. goes, so goes the nation.
—For more WSJ Technology analysis, reviews, advice and headlines, sign up for our weekly newsletter.
Write to Christopher Mims at firstname.lastname@example.org
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|From: Glenn Petersen||7/29/2020 8:18:49 AM|
|ByteDance investors value TikTok at $50 billion in takeover bid, sources say|
PUBLISHED WED, JUL 29 20207:45 AM EDT
Reuters via CNBC.com
-- Beijing-based ByteDance is considering a range of options for TikTok amid pressure from the United States to relinquish control of the app, which allows users to create short videos with special effects and has become wildly popular with U.S. teenagers.
-- Privately held ByteDance has received a proposal from some of its investors, including Sequoia and General Atlantic, to transfer majority ownership of TikTok to them, sources told Reuters.
-- It has also fielded acquisition interest in TikTok from other companies and investment firms, the sources said.
Some investors of TikTok’s parent company ByteDance seeking to take over the popular social media app are valuing it at about $50 billion, significantly more than peers such as Snap Inc, according to people familiar with the matter.
Beijing-based ByteDance is considering a range of options for TikTok amid pressure from the United States to relinquish control of the app, which allows users to create short videos with special effects and has become wildly popular with U.S. teenagers. The app’s success has helped turn ByteDance into one of only a handful truly global Chinese conglomerates.
The Committee on Foreign Investment in the United States (CFIUS), a U.S. government panel which reviews deals by foreign acquirers for potential national security risks, has raised concerns about the safety of the personal data that TikTok handles under its Chinese owner, Reuters has previously reported.
Privately held ByteDance has received a proposal from some of its investors, including Sequoia and General Atlantic, to transfer majority ownership of TikTok to them, the sources said. It has also fielded acquisition interest in TikTok from other companies and investment firms, the sources said.
The investors’ bid values TikTok at 50 times its projected 2020 revenue of about $1 billion, according to the sources. By comparison, Snap is valued at 15 times its projected 2020 revenue, at about $33 billion, according to data provider Refinitiv.
It is unclear whether ByteDance’s founder and CEO, Yiming Zhang, will be satisfied with the offer. ByteDance executives recently discussed valuation projections for TikTok that exceed $50 billion, one of the sources said.
TikTok is growing rapidly as it rakes in more cash from advertising, and its management team expects to achieve $6 billion in revenue in 2021, one of the sources said. ByteDance, which owns other apps including TikTok’s Chinese counterpart, Douyin?, has set itself a revenue target for 2020 of about 200 billion yuan ($28 billion), Reuters has previously reported.
ByteDance was valued at as much as $140 billion earlier this year when one of its shareholders, Cheetah Mobile Inc, sold a small stake in a private deal, one of the sources said.
If a deal for the whole of TikTok cannot be reached, ByteDance is exploring divesting only TikTok’s U.S. operations, one of the sources said. It is not clear what such a deal would be worth and what ties TikTok in the United States would maintain with its global operations.
There is no certainty that ByteDance will agree to any deal, the sources said. It is pushing ahead with structural changes that will further ringfence the U.S. business of TikTok from its global empire, the sources added. These changes could include a new holding company for TikTok and an independent board, one of the sources said, cautioning that no decision has been made. The company has already separated TikTok operationally from its other apps through dedicated teams.
The sources requested anonymity because the deliberations are confidential.
ByteDance, General Atlantic and Sequoia declined to comment, while Cheetah Mobile and a CFIUS spokeswoman did not respond to requests for comment.
Target of U.S. lawmakers
As relations between the United States and China deteriorate over trade, Hong Kong’s autonomy, cyber security and the spread of the novel coronavirus, TikTok has emerged as a flashpoint in the dispute between the world’s two largest economies.
Last week, the U.S. Senate Committee on Homeland Security and Governmental Affairs unanimously passed a bill that would bar U.S. federal employees from using TikTok on government-issued devices. It will be taken up by the full Senate for a vote. The House of Representatives has already voted for a similar measure.
President Donald Trump and top administrations officials have said they are considering a broader ban on TikTok and other Chinese-linked apps.
ByteDance acquired Shanghai-based video app Musical.ly app in a $1 billion deal in 2017 and relaunched it as TikTok the following year. About 70% of the equity capital ByteDance has raised from outside investors has come from the United States, according to one of the sources.
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|To: Glenn Petersen who wrote (57667)||9/1/2020 5:47:01 PM|
|From: Glenn Petersen|
|Zoom is now among the 20 most valuable U.S. tech companies, with a market cap higher than IBM and more than twice as large as that of VMware. |
Zoom’s stock surges 41% after earnings beat, adding over $37 billion in market cap
PUBLISHED TUE, SEP 1 20204:34 PM EDT
Ari Levy @LEVYNEWS
-- Zoom is now worth more than IBM and AMD after its stock rally on Tuesday.
-- The company reported better-than-expected revenue and earnings for the second quarter.
-- mCEO Eric Yuan now owns a stake worth about $20 billion in the company he founded nine years ago.
Zoom shares soared 41% on Tuesday, lifting the video-conferencing software company’s market cap to $129 billion after revenue and earnings blew past analysts’ estimates.
The rally added $37 billion of market value to Zoom, which went public in April 2019 and was worth about $16 billion after its initial day of trading. The company has been perhaps the biggest corporate beneficiary of the coronavirus pandemic, as employers across the globe have turned to the video chat technology to stay connected with staffers, customers and partners.
Revenue in the period surged 355% to $663.5 million, topping the $500.5 million average estimate of analysts, according to Refinitiv. Adjusted earnings per share of 92 cents more than doubled analysts’ estimates for profit or 45 cents a share. Zoom’s net income for the period was more than triple its profit for the last six quarters combined.
The number of customers producing $100,000 or more in annual revenue for Zoom more than doubled from a year earlier to 988. CEO Eric Yuan highlighted Exxon, Activision and ServiceNow on the earnings call.
“With the pandemic persisting, we are committed to work hard and are humbled by our role of enabling communications worldwide during this challenging time,” Yuan said.
Zoom also raised its guidance for the full 2021 fiscal year. Revenue will be $2.37 billion to $2.39 billion, implying 282% growth in the middle of the range, topping the average analyst estimate for sales of $1.81 billion.
Zoom is now among the 20 most valuable U.S. tech companies, with a market cap higher than IBM and more than twice as large as that of VMware.
-- CNBC’s Jordan Novet contributed to this report
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