Many high-flying technology startups, including a number of multibillion-dollar “unicorns,” are struggling to break even, let alone make money. But Airbnb miraculously turned a profit in the second half of last year, according to a report by Bloomberg—and expects to remain profitable (excluding certain expenses) for the rest of this year.
It sounds like a fairy-tale ending to a hopeful tale of disruption done right. The company started as a kooky idea for renting out blow-up mattresses to college students and became an industry-crushing titan, with a market cap equal to that of the Marriott hotel chain.
Millions of people who have used Airbnb sing its praises and say staying in someone’s home is a lot more inviting than renting a hotel room—and often cheaper too. But cities in which Airbnb has become popular aren’t nearly as welcoming, and more than a few have passed laws designed to crack down on short-term rentals, including New York and London.
Airbnb has been trying to find a middle ground, offering to collect tax revenue and place caps on the number of properties that hosts can rent. But it’s not clear if any of these offers will be accepted. And there will be costs regardless, in the form of lost bookings: The Financial Times says new rules could cost Airbnb to $400 million in London alone.
In a nutshell, it feels as though the freewheeling days of low-cost Airbnb growth could be coming to an end, to be replaced by a higher-cost future of dealing with unfriendly regulators and laws in multiple jurisdictions across the country and around the world. And that could put a cap on the company’s profits for the foreseeable future.
| Mathew Ingram | |
| @mathewi | |
| mathew.ingram@fortune.com |
BITS AND BYTES
Toshiba confirms it wants a buyer for part of its memory business. The Japanese conglomerate's CEO said the company hopes to raise at least part of the billions it needs to offset a $6 billion writedown for its nuclear business by selling up to 20% of its NAND flash memory division. The operation is second in sales only to the one run by Samsung Electronics. Toshiba needs to pull this off by the end of March to avoid wiping out shareholder equity. (Reuters, New York Times)
Microsoft will continue spending $1 billion per year on cybersecurity. It needs to make this investment to remain competitive in cloud computing. That amount doesn't include what it's willing to spend on acquisitions. (Reuters)
Why Verizon is contemplating a megamerger with a cable company. It has considered 10 possible merger partners, including Charter, reports Bloomberg. The rationale? It needs more wired infrastructure to create faster, cheaper, and ultimately more reliable networks that can support everything from phone calls to TV shows to websites. Buying a cable company could get Verizon there quicker. (Fortune)
Here's one potential downside of incorporating a startup in Delaware. A judge there recently ordered Utah software company Domo, last valued at $2 billion, to open up its books so that an ex-manager, Jay Biederman, could figure out how to value his stock options. Domo fought the request, at one point suing him for defamation. But it turns out that Delaware's corporate law is one of the few that gives shareholders the right to look at a private company's books, if they have justification. (Wall Street Journal)
Tesla sues former employee for trying to poach people from its self-driving car team. The electric vehicle maker accused Sterling Anderson and his business partner, former Googler Chris Urmson, of trying to hire at least a dozen engineers working on its Autopilot technology for their own venture. (Fortune)
Is this the first outside investment for one of Alphabet's big bets? Singapore investment Temasek Holdings is pouring $800 million into Alphabet's life sciences startup to help it expand in Asia. Verily's projects include sensor-laden contact lenses and software for helping diabetes patients share information with their doctors. (Wall Street Journal)
AN EARNINGS CHEAT SHEET
A barrage of financial reports were issued Thursday evening after the stock market close. Here are some highlights:
- Google's parent Alphabet shoots for the moon, by growing at a faster clip than expected in its fourth quarter, with bets like the Pixel smartphone and cloud services contributing to that; but expenses are also mushrooming quickly.
- Microsoft CEO Satya Nadella had optimistic things to say about the personal computer business, based on second-quarter corporate sales for Windows 10. Its cloud business is booming, although its new LinkedIn division lost $100 million.
- Intel's data center business carries the day, but its PC business also stabilized, underscoring Microsoft's results.
- PayPal reports a merry holiday quarter, especially for its Venmo person-to-person payments app—where transaction volumes surged 126% to $5.6 billion.
- VMware is talking up its next billion-dollar business, a product called NSX that pools networking hardware like routers and switches and allows them to be reconfigured and managed using software.
THE DOWNLOAD
When thinking about artificial intelligence, don't forget the people. Businesses that adopt AI to help with jobs like automating call center activity must also consider giving employees education and training so that those who are displaced by innovation can still work.
That’s one of the takeaways from Accenture’s annual report published Thursday about technology trends. In short, companies should realize that innovation can cause human pain and that they should do something to minimize it. Fortune's Jonathan Vanian reports on how business leaders might go about pulling that off.
IN CASE YOU MISSED IT
New Ericsson CEO Says Tough Decisions Lie Ahead, by Aaron Pressman
Fake News Definitely Isn't Hurting Facebook's Stock, by Jeff Bukhari
Amazon Quietly Ventures Into Ocean Freight Business, by Julia Zorthian
Uber's Travis Kalanick and Airbnb's Brian Chesky Used to Have a Running Dinner Date, by Polina Marinova
Walmart Layoffs Hit E-Commerce Division, by Erin Griffith
Facebook Makes Login Way More Secure, by Robert Hackett
ONE MORE THING
Your smartphone camera can now help you read Japanese. It took a while, but the language is finally supported by Word Lens, a two-year-old feature in the Google Translate app that lets people point their phones at foreign writing for an instant translation. (Fortune)
MARK YOUR CALENDAR
Spark Summit: Data science and engineering at scale. (Feb. 7-9; Boston)
IBM Connect 2017: Redefine work with Watson. (Feb. 20-23; San Francisco)
CIO Leadership Forum (West): Strategy in the age of digital disruption. (Feb. 26-28; Phoenix)
Microsoft Envision: Drive digital transformation. (Feb. 28-March 2; Los Angeles)
Marketing Nation Summit: Marketo's annual event for digital marketers. (April 23-26; San Francisco)
Pure//Accelerate: The future of data storage. (March 6-8; San Francisco)
Gartner Data & Analytics Summit: Strategies for generating business value. (March 6-9; Grapevine, Texas)
Google Cloud Next: Products and perspectives for developers and customers. (March 7-10, 2017; San Francisco)
CIO Leadership Forum (East): Strategy in the age of digital disruption. (March 19-21; Hollywood, Fla.)
IBM Interconnect: Tap into advanced cloud technology. (March 19-23; Las Vegas)
Enterprise Data World: Become a data-driven business. (April 2-7; Atlanta)
Open Networking Summit: Discussion on the future of open source communications technology. (April 7-9; Santa Clara, Calif.)
MuleSoft Connect: Connect apps, data and devices. (April 18-20; San Francisco)
JiveWorld: Strategies and technologies for workplace collaboration. (May 1-3; Las Vegas)
Apttus Accelerate: Perspectives on automating the "quote-to-cash" process. (May 2-4; San Francisco)
Collision: A tech conference created by the organizers of Europe's Web Summit. (May 2-4; New Orleans)
Build: Microsoft's annual conference for software developers. (May 10-12; Seattle)
Google I/O: Alphabet's annual developer conference. (May 17-19; Moutain View, California)
Signal: Twilio's annual developer confab. (May 24-25; San Francisco)
Cisco Live: Education for technology innovators. (June 25-29; Las Vegas)
This edition of Data Sheet was curated by Heather Clancy.
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