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April 22, 2019
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Google Cloud brings on 27-year SAP veteran as it doubles down on enterprise adoption

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Thomas Kurian, the newly minted CEO of Google Cloud, used the company’s Cloud Next conference last week to lay out his vision for the future of Google’s cloud computing platform. That vision involves, in part, a hiring spree to give businesses that want to work with Google more people to talk to and get help from. Unsurprisingly, Kurian is also looking to put his stamp on the executive team, too, and today announced that former SAP executive Robert Enslin is joining Google Cloud as its new president of Global Customer Operations.

Enslin’s hire is another clear signal that Kurian is focused on enterprise customers. Enslin, after all, is a veteran of the enterprise business, with 27 years at SAP, where he served on the company’s executive board until he announced his resignation from the company earlier this month. After leading various parts of SAP, including as president of its cloud product portfolio, president of SAP North America and CEO of SAP Japan, Enslin announced that he had “a few more aspirations to fulfill.” Those aspirations, we now know, include helping Google Cloud expand its lineup of enterprise customers.

“Rob brings great international experience to his role having worked in South Africa, Europe, Asia and the United States—this global perspective will be invaluable as we expand Google Cloud into established industries and growth markets around the world,” Kurian writes in today’s announcement.

For the last two years, Google Cloud already had a president of Global Customer Operations, though, in the form of Paul-Henri Ferrand, a former Dell exec who was brought on by Google Cloud’s former CEO Diane Greene . Kurian says that Ferrand “has decided to take on a new challenge within Google.”

News Source = techcrunch.com

JD founder cautions logistics business must tighten belt

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Alibaba’s arch-foe JD.com has long prided itself on owning and controlling its logistics services: couriers are treated as in-house staff and paid a basic income. But that will end soon as costs keep piling up for the ecommerce giant.

In an internal letter sent to the staff on Monday, JD founder and chief executive Richard Liu said the company will scrap basic salary for couriers as net loss amounted to 2.8 billion yuan ($420 million) in 2018 at JD’s logistics unit.

“The main reason is we had too few orders externally and too high a cost internally,” said Liu. “You all know that the last two years have been quite difficult for the company. We have been in the loss for more than ten years. If losses continue, JD Logistics only has two years of runway left with its capital raised.”

“I don’t think any of our delivery brothers want the company to go bankrupt,” Liu added.

JD Logistics became a standalone business in 2017 and subsequently raised billions of dollars from investors. JD still owns an 81.4 percent stake in the logistics arm, which was valued at around $13.5 billion at the time it raised $2.5 billion in February 2018.

Going forward, JD Logistics will continue to pay social insurances on behalf of its couriers, whose income is now based on the number of packages they handle. Liu assured that the old basic pay accounted for just 10 percent of the delivery staff’s total income so his goal is not to cut but boost salary for them, and eventually for JD Logistics as well.

But couriers are feeling the heat. Monthly pay used to average 7,000 yuan ($1,043) to 8,000 yuan, a Shenzhen-based courier told TechCrunch. Under the new scheme, he and his regional colleagues are earning 5,000 yuan to 6,000 yuan. Liu said in the letter that it’s “up to the couriers” to vie for better salaries, but it’s unclear how they can secure more packages in practice. JD said it has no comment on the issues addressed in Liu’s letter.

JD delivery staff are assigned on a regional basis. Assuming the number of parcels that go out of a region stays relatively constant, couriers can’t do much to boost their piecework wage. Already, some couriers have devised cheats that involve mailing parcels to themselves and rejecting them at delivery in order to jack up income, TechCrunch has learned.

JD Logistics

Photo source: JD Logistics via Weibo

China’s express delivery market, like many other fledgling industries, is a relentless race that sees players offer heavily subsidized prices for customers to stay competitive. JD is going against companies like Alibaba that enlist a consortium of third-party contracted couriers rather than hiring their own to keep costs down.

JD’s fourth-quarter cost of revenues grew 20.7 percent to $16.8 billion, mainly driven by expenses related to logistics services alongside its online direct sales business, the company’s earnings report revealed. The Amazon-like service is finding ways to bulk up revenues by opening its logistics service to third-party clients as well as expanding overseas.

“It’s just a matter of time that JD will remove couriers’ minimum income. It can’t increase the price for customers, so it’s passing the cost to the couriers,” said Alex Cheong, founder and chief executive of Web2Ship, a service that enables price comparisons across different express shipping services, told TechCrunch.

“In China, the only thing [courier companies] can play is the volume game. There’s this mentality that as volume goes up, companies will get more efficient, and costs will lower. But growth is actually slowing,” Cheong warned.

The income restructuring at JD’s logistics arm comes amid a widespread layoff across the parent company to remove low-performers, or what Liu labeled as “slackers.” JD is namechecked as one of China’s internet companies working 9 am to 9 pm, 6 days a week, or “996”, a demanding schedule that has prompted an online protest.

JD denied that it practices the “996” routine though it sees itself as “a competitive workplace that rewards initiative and hard work” which is consistent with its “entrepreneurial roots,” a JD spokesperson told TechCrunch earlier.

The ecommerce titan has long promoted its in-house logistics arm as offering “quality” service, so it remains to see how the removal of basic income will affect couriers’ morale. But one thing is for sure. Under the piece rate system, JD knows its exact labor cost per unit and avoids paying for employees’ idle time.

News Source = techcrunch.com

Startups Weekly: Lessons from a failed founder

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I sat down with Menlo Ventures partner Shawn Carolan this week to talk about his early investment in Uber. Menlo, if you remember, led Uber’s Series B and has made a hefty sum over the year selling shares in the ride-hailing company. I’ll have more on that later; for now, I want to share some of the insights Carolan had on his experience ditching venture capital to become a founder.

Around when Menlo made its first investment in Uber, Carolan began taking a step back from the firm and building Handle, a startup that built tools to help people be more productive. Despite years of hard work, Handle was ultimately a failure. Carolan said he shed a lot of tears over its demise, but used the experience to connect more intimately with founders and to offer them more candid, authentic advice.

“People in the valley are always achievement-oriented; it’s always about the next thing and crushing it and whatever,” Carolan told TechCrunch. “When [Handle] shut down, I had this spreadsheet of all the people who I felt like I disappointed: Seed investors who invested in me, all the people at Menlo and my friends who had tweeted out early stuff. It was a long spreadsheet of like 60 people. And when I started a sabbatical, what I said was I’m going to go connect with everyone and apologize.”

Today, Carolan encourages founders to own their vulnerabilities.

“It’s OK to admit when you’re wrong,” he said. “Now I can see it on [founders’] faces, I can see when they’re scared. And they’re not going to say they’re scared but I know it’s tough. This is one of the toughest things that you’re going to go through. Now I can be there emotionally for these founders and I can say ‘here’s how you do it, here’s how you talk to your team and here’s what you share.’ A lot of founders feel like they have to do this alone and that’s why you have to get comfortable with your vulnerability.”

After Handle shuttered, Carolan returned to Menlo full time and made the firm a boatload of money from Roku’s IPO and now Uber’s. Anyway, thought those were some nice anecdotes that should be shared since most of our feeds are dominated by Silicon Valley hustle porn.

Want more TechCrunch newsletters? Sign up here. Ok, on to other news…

IPO corner

Funds on funds on funds

There were so many fund announcements this week; here’s a quick list.

Extra Crunch

Lots of great new exclusive content for our Extra Crunch subscribers is on the site, including this deep dive into the challenges of transportation startup profits. Plus: When to ditch a nightmare customer, before they kill your startup; The right way to do AI in security; and The definitive Niantic reading guide.

Lawsuits

Sinema, that one MoviePass competitor, has run into its fair share of bumps in the road. TechCrunch’s Brian Heater hopped on the phone with the startup’s CEO this week to learn more about those bumps, why its terminating accounts en masse, a class-action lawsuit its battling and more.

Photo by Stephen McCarthy / RISE via Sportsfile

Startup capital

Battlefield!

TechCrunch’s Startup Battlefield brings the world’s top early-stage startups together on one stage to compete for non-dilutive prize money, and the attention of media and investors worldwide. Here’s a quick update on some of our BF winners and finalists:

#Equitypod

If you enjoy this newsletter, be sure to check out TechCrunch’s venture-focused podcast, Equity. In this week’s episode, available here, Crunchbase News editor-in-chief Alex Wilhelm, myself and Phil Libin, the founder of Evernote and AllTurtles, chat about the importance of IPOs. Plus, in a special Equity Shot, Alex and I unpack the Uber S-1.

News Source = techcrunch.com

Disney shares are up after the big reveal of its streaming service

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Investors seem to think that Disney is on the right track with its plans for the new streaming service, Disney+.

On the heels of yesterday’s announcement of the streaming service’s November 12 launch date and slate of programming, Disney’s stock price is currently up 9% to $127.23 in morning trading on the New York Stock Exchange.

Ending months of speculation about what would and wouldn’t be included in a streaming package from the mouse house, yesterday’s “investor day”, satisfied public market investors that Disney’s run at the current king of streaming video, Netflix, would be credible.

Netflix shares were down slightly in morning trading, around 3.5% — or roughly $13 — to $354.50.

For stock market watchers, the big question was going to be pricing and on that front, Disney’s service didn’t disappoint. Although the streaming offering from Disney’s entertainment juggernaut was more about moving cash out of one pocket instead of another for most American consumers, as Matthew Ball, a media analyst and the former head of strategy at Amazon Studios, pointed out on Twitter.

American households already spend around $2.8 billion per year renting and buying Disney video — averaging around $24 per year for every household or 40 million annual subscriptions, Ball wrote.

While the market may be setting up the new entertainment landscape as a Netflix versus Disney battle there are important differences between the two and both are likely to thrive in the new era of streaming entertainment.

The companies that are most likely to be challenged by the streaming offerings from Netflix and Disney are AT&T’s Warner Media and CBS/Viacom .

Within Warner Media, layoffs and restructuring in the wake of the company’s acquisition by AT&T, along with the end of the network’s mega-hit “Game of Thrones”, could have serious consequences on its ability to compete as the company rolls out its own (partially ad-supported) streaming service.

Meanwhile, CBS and Viacom are still reeling from the scandal that brought down chief executive Les Moonves — although Viacom’s acquisition of PlutoTV gives the company some breathing room with a free streaming video and on demand option.

As paid services proliferate, the walls around intellectual property will only grow higher. Entertainment companies are all going to vie for more exclusive offerings and that means artists and creators will win as these companies pay more for quality entertainment that they can make exclusively to lock in subscribers. It’ll be a delicate dance between monetizing intellectual property on other platforms and keeping things behind a gate to bring in customers.

Especially as deep-pocketed companies like Apple and Amazon have their own designs on streaming entertainment.

Right now, investors and consumers seem to think that a Disney+ subscription is definitely worth the price of admission. How many other tickets consumers are willing to pay for is another question.

News Source = techcrunch.com

African e-commerce startup Jumia’s shares open at $14.50 in NYSE IPO

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Pan-African e-commerce company Jumia listed on the New York Stock Exchange today, with shares beginning trading at $14.50 under ticker symbol JMIA. This comes four weeks after CEO Sacha Poignonnec confirmed the IPO to TechCrunch and Jumia filed SEC documents.

With the public offering, Jumia becomes the first startup from Africa to list on a major global exchange.

In an updated SEC filing, Jumia indicated it is offering 13,500,000 ADR shares, for an opening price spread of $13 to $16 per share, representing 17.6 percent of all company shares. The IPO could raise up to $216 million for the internet venture.

Since the original announcement (and reflected in the latest SEC docs), Mastercard Europe pre-purchased $50 million in Jumia ordinary shares.

The IPO creates another milestone for Jumia. The company became the first African startup unicorn in 2016, achieving a $1 billion valuation after a funding round that included Goldman Sachs, AXA and MTN.

There’s a lot to breakdown on Jumia’s going public. The company is often dubbed the “Amazon of Africa,” and like Amazon, Jumia comes with its own mixed buzz. Jumia’s SEC F-1 prospectus offers us more insight into the venture, and perhaps any startup from Africa, thus far.

About Jumia

Founded in Lagos in 2012 with Rocket Internet  backing, Jumia now operates multiple online verticals in 14 African countries. Goods and services lines include Jumia Food (an online takeout service), Jumia Flights (for travel bookings) and Jumia Deals (for classifieds). Jumia processed more than 13 million packages in 2018, according to company data.

Jumia’s original co-founders included Nigerian tech entrepreneurs Tunde Kehinde and Raphael, but both departed in 2015 to form other startups in fintech and logistics.

Starting in Nigeria, the company created many of the components for its digital sales operations. This includes its JumiaPay payment platform and a delivery service of trucks and motorbikes that have become ubiquitous with the Lagos landscape. Jumia has extended this infrastructure as an e-commerce fulfillment product called Jumia Services.

Jumia has also opened itself up to Africa’s traders by allowing local merchants to harness Jumia to sell online. The company has over 80,000 active sellers on the platform using the company’s payment, delivery, and data-analytics services, Jumia Nigeria CEO Juliet Anammah told TechCrunch a previously.

The most popular goods on Jumia’s shopping site include smartphones, washing machines, fashion items, women’s hair care products, and 32-inch TVs, according to Anammah.

Jumia an African startup?

Like Amazon, Jumia brings its own mix of supporters and critics. On the critical side, there are questions of whether it’s actually an African startup. The parent for Jumia Group is incorporated in Germany and current CEOs Jeremy Hodara and Sacha Poignonnec are French.

On the flipside, original Jumia co-founders (Kehinde and Afeodor) are African. The company is headquartered (and also incorporated) in Africa (Lagos), operates exclusively in Africa, pays taxes on the continent, employs 5,128 people in Africa (page 125 of K-1), and the CEO of its largest country operation (Nigeria) Juliet Anammah is Nigerian.

The Africa authenticity debate often shifts into questions of a Jumia diversity deficit, which is of course important from Silicon Valley to Nairobi. The company’s senior management and board is a mix of Africans and expats. Golden State Warriors basketball player and tech investor Andre Iguodala joined Jumia’s board this spring with a priority on “diversity and making sure the African culture is in the company,” he told TechCrunch.

Can Jumia turn a profit?

The Jumia authenticity and diversity debates will no doubt roll on. But the biggest question—the driver behind the VC, the IPO, the founders, and the people buying Jumia’s shares—is whether the startup can generate profits and ROI.

Obviously some of the world’s top venture investors, such as Jumia backers Goldman, AXA, and Mastercard, think so. But for Jumia skeptics, there are the big losses. The company has generated years and years of losses, including negative EBITDA of €172 million in 2018 compared to revenues of €139 that same year.

To be fair to Jumia, most startups (e-commerce startups in particular) rack up losses for years before getting into the black. And operating in a greenfield sector in Africa—where it had to create much of the surrounding infrastructure to do B2C online sales—has presented higher costs for Jumia than e-commerce startups elsewhere.

On the prospects for Jumia’s profitability, two things to watch will be Jumia’s fulfillment expenses and a shift to more revenue from its non-goods-delivery services, which offer lower unit costs and higher-margins. Per Jumia’s SEC F-1 index (see above) freight and shipping make up over half of its fulfillment expenses.

So Jumia has not turned a profit but its revenues have increased steadily, up 11 percent to €93.8M (roughly $106.2 million) in 2017 and up again to €130M (or $147 million) in 2018. If the company boosts customer acquisition and lowers fulfillment costs—which could come from more internet services revenue and platform investment with IPO capital—it could close the gap between revenues and losses. This reflects the equation for most e-commerce startups. With the IPO Jumia will have to publish its first full public financials in 2019, which will provide a better picture of profitability prospects.

Jumia’s IPO and African e-commerce?

There’s is, of course, a bigger play in Jumia’s IPO. One connected to global e-commerce and the future of online retail in Africa.

Jumia going public comes as Africa’s e-commerce landscape has seen its share of ups and downs, notably several failures in DealDey shutting down and the distressed acquisition of Nigerian e-commerce hopeful Konga.com.

As for the big global names, Alibaba has talked about Africa expansion, but for the moment has not entered in full.

Amazon  offers limited e-commerce sales on the continent, but more notably, has started offering AWS services in Africa.

And this week, DHL came on the scene launching its Africa eShop platform with 200 global retailers on board, in partnership with MallforAfrica’s Link Commerce fulfillment service.

Competition to capture Africa’s digitizing consumer markets—expected to spend $2 billion online by 2025, according to McKinsey—could get fierce, with more global entries, acquisitions, and competition on fulfillment services all part of the mix.

And finally, the outcome of Jumia’s IPO carries weight even for its competitors. “Many things, like business decisions and VC investments across Africa’s e-commerce sector are on on hold,” an African e-commerce exec told TechCrunch on background.

“Everyone’s waiting to see what happens with Jumia’s IPO and how they perform,” the exec said.

So the share-price connected to NYSE ticker sign JMIA could reflect not just investor confidence in Jumia, but investor confidence in African e-commerce overall.

News Source = techcrunch.com

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