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The talk everywhere is suddenly of recession and quite appropriately how every player in the economy, from individuals in their careers to executives at their companies, will be affected.
The technology industry is now mature and realistic enough not to believe in its own economic exceptionalism. A recession would slam tech as much as or more than everyone else. New York Times columnist Ross Douthat in a smart column primarily about the political impact of a downturn had one astute paragraph about Silicon Valley. What he calls the “venture-capital subsidy” to American consumers will dry up, Douthat writes. He attributes to The Atlantic’s Derek Thompson the observation that WeWork, Uber, and DoorDash will lose $13 billion this year. That’s only possible if their investors—first VCs and then public market investors—keep funding their red ink.
But common sense and the hard truth of history suggest that VCs risking other people’s money look heroic in upturns and turn tail faster than any in downturns. Read Sequoia Capital’s famous “R.I.P.” presentation from 2008 to understand the mentality. Today’s leading investors and entrepreneurs either have never lived through a recession or were at much smaller operations during the last one, nearly a decade ago. Ideas that seem really good when there’s money to burn suddenly seem foolish when there isn’t. By all means read this outstanding feature on WeWork if you’re contemplating investing in its IPO. If ever there were an idea and an inexperienced entrepreneur that haven’t been tested by an economic contraction, WeWork and its dreamer CEO, Adam Neumann, are it.
Walmart understands the impact of the economy as well as any U.S. company. Its CEO also is reflective on Walmart’s effect on society. Doug McMillion spoke about this recently with Fortune’s Brian O’Keefe. (Welcome back, Brian!)
Many thanks to the ensemble of Fortune journalists who subbed for me the last two weeks. I hope you enjoyed their dispatches as much as I did.
On Twitter: @adamlashinsky
Interesting dinner conversations. President Donald Trump said Apple CEO Tim Cook “made a very compelling argument” during a recent dinner about the iPhone-maker losing a competitive edge against rival Samsung, because the South Korean tech giant won’t be subject to the same tariffs, Bloomberg News reported. “It’s tough for Apple to pay tariffs if it’s competing with a very good company that’s not,” Trump said to reporters.
These massive funds won’t raise themselves. Technology investment firm SoftBank has found an unusual way to help raise funds for its second Vision Fund, according to The Wall Street Journal. The Japanese firm will lend $20 billion to its employees, including CEO Masayoshi Son, who will then buy stakes in its colossal new Vision Fund.
Holding Texas ransom. At least 20 government agencies in Texas have been hit by a coordinated ransomware attack, in which criminals plant malicious code onto government servers—typically through phishing schemes, The Dallas Morning News reported. It’s unclear which government agencies were impacted or how hackers were able to carry out their attacks.
A little taste of Airbnb’s financials. Online home rental service Airbnb handled $9.4 billion in total booking value in its first quarter, according to Reuters, citing an unnamed source. The company, which reportedly plans to go public in the first half of next year, booked 91 million nights, the article said, leading to the surge in total booking value.
The next time you see propaganda on Instagram. Instagram users will now be able to flag content they believe is misinformation through a new feature that will roll out to all users by the end of August, CNN reports. The new feature is similar to another one from parent company Facebook, which lets users flag questionable content that they consider offensive or “false information.”
FOOD FOR THOUGHT
Where does Slack go from here? Former Greylock Partners investor Kevin Kwok wrote an essay explaining the challenges Slack faces now that the workplace messaging service’s shares are publicly traded. The company pitches itself as the nucleus businesses communications, with its messaging service acting as an “air traffic control system” between employees who work in multiple business apps. But newer workplace apps now have messaging or collaboration features, reducing the need for Slack except for in emergencies, Kwok writes:
A new generation of functional apps have risen, with messaging and collaboration built directly into them as first parties. And with them it becomes increasingly clear that Slack isn’t air traffic control for every app, it’s 911 for when they fail.
Slack is the 911 for whatever isn’t possible natively in a company’s productivity apps. And though it’s improving, there are still many structural cracks. Slack is current best solution for filling these cracks. But it doesn’t fix the cracks themselves, improved processes and productivity apps are needed for that.
IN CASE YOU MISSED IT
Apple’s iPhone 11 Is Coming. Here’s When It May Be Unveiled By Don Reisinger
Google’s Hate Speech Detection A.I. Has a Racial Bias Problem By Jonathan Vanian
BEFORE YOU GO
Small town revivals. Much has been written about the rapid growth of e-sports, in which professional video game players compete in real-life tournaments that are often broadcast to huge audiences. Now, tech site VentureBeat reports that small towns worldwide, including Katowice, Poland, are building “e-sports meccas” in order to jump-start their local economies by hosting gaming tournaments.
Every year, teams fly in from North America, South America, Asia, Africa, and Europe to compete for esports fame and a $1 million prize pool. To an outsider, it is genuinely bewildering to be in a minor Polish municipality, with a population of 294,000, surrounded by twentysomethings and teenagers who ate a layover in Frankfurt in order to watch the action live. (As you may expect, there aren’t a lot of international airlines that fly direct to Katowice.)