Zuck’s Efficiency Misadventure

Plus: And then there were six Alibabas ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

March 29, 2023

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TOGETHER WITH

Good morning.

More like, Announce Now, Launch Later. On Tuesday, Apple finally rolled out its long-delayed Klarna-like “buy now, pay later” competitor, the aptly named Apple Pay Later. The service was first announced in June 2022, with the stated intention of a full-on debut before the old Gregorian completely turned over.

It’s an unusual delay for the kings of Cupertino, though the company has also reportedly been pushing back the launch of its mixed-reality headset for months now. On the other hand, all that dilly-dallying could help them raise their BNPL game.

Morning Brief

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Meta’s not-so-efficient efficiency drive.

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American Gaming Association drops college deals.

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Alibaba is breaking up with itself.

Tech

Meta Tightens Belt Around Staff Bonuses

Meta staff left standing after brutal rounds of layoffs are experiencing whatever feels like the opposite of survivor’s guilt.

The company formerly known as Facebook sent a memo to managers on Monday telling them it’s cutting bonus payouts from 85% to 65% for employees who fit into the “met most expectations” bracket at their annual 2023 review, The Wall Street Journal reported. This is the latest chapter in Mark Zuckerberg’s quest for efficiency. The Meta CEO told staff in July 2022 that he would be “turning up the heat a little bit.” We shiver to think what turning up the heat a lot would look like.

Efficiency, Efficiency, Efficiency

Meta was the first of the Big Four tech companies to start slashing staff and was a harbinger of a wider trend. With macroeconomics battering every industry, the previously abundant tech job market began to wither, and in February, Zuckerberg declared 2023 to be Meta’s “Year of Efficiency.” So far, that has involved 21,000 job cuts plus the loss of perks including free laundry, which has nothing to do with whistleblowers airing all of Meta’s dirty laundry. Monday’s memo to managers said cutting bonuses was part of a “continued focus on maintaining a high-performance culture,” which fits into Zuckerberg’s new cutthroat approach to efficiency. But to employees, it might seem like an ever-so-slight U-turn.

As well as cutting some bonuses, the memo said employees will now have to undergo evaluations twice a year, rather than once. One former Meta employee told The Daily Upside that pre-pandemic, twice-annual reviews were the norm, but the company changed to once-a-year reviews in the name of… wait for it… efficiency:

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“Going from two performance cycles a year to one was sold to us as an efficiency improvement.” the former Meta employee told The Daily Upside. “So people accepted it even though it meant there were fewer opportunities to receive a promotion.“

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They added that the review process involved a lot of writing, including reviewing themselves, their manager, and 5 to 10 colleagues. “We’re talking 1,000-1,500 words for my review and my manager’s, plus 400 words for each colleague,” the former employee explained. Meta might want to rethink the James Joyce school of staff evaluation if efficiency really is its new watchword.

We Not So Happy Few: Meta staff aren’t the only tech workers whose pay packets are shrinking. Amazon has cut more jobs than any tech giant thus far, and workers that remain are in danger of having their golden handcuffs tarnished as significant chunks of their salaries are tied up in the company’s stock, a not uncommon practice in tech. The WSJ reported last month that some Amazon employees’ salaries could end up 50% lower than projected for 2023.

– Isobel Asher Hamilton

Gaming

American Gaming Association Puts a Stop to Collegiate Partnerships

(Photo credit: World Poker Tour/Flickr)

For online sportsbooks, it’s looking more like March Sadness.

The American Gaming Association will no longer allow the gambling industry to partner with colleges to promote wagering. There will also be bans on using athletes’ likenesses and certain phrases that are meant to sneakily attract first-time bettors.

Beware The Ides Of March

Today, 33 states and Washington D.C. allow sports betting, and just last year, the industry generated $7.5 billion in revenue. But with that market growth comes plenty of societal anxiety. Two million US adults struggle with a severe gambling addiction, according to the National Council on Problem Gaming, and mental health experts fear the accessibility of online sports betting will only increase that number, especially among teens. That has regulators training their sights on the marketing efforts of groups like PointsBet and Superbook.

Caesars Entertainment — the company whose commercials feature comedian JB Smoove as Julius Caesar — has partnerships with Michigan State University and Louisiana State University. In early 2022, LSU received plenty of flack after the school sent out a blast email, offering students — some of whom were not even old enough to gamble — a promotional signup code that rewarded new Caesars Sportsbook accounts with $300 following an initial first-time bet of $20.

The new AGA code intends to foster a more wholesome image for gambling:

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For years, student-athletes and the National Collegiate Athletic Association clashed over whether players could enter into endorsement deals, but in 2021 the NCAA finally allowed it. So while players can now sell branded clothing, sign autographs, and appear in broadcasts and video games for money, the new AGA rule still would prevent them from entering into contracts with the gambling industry.

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Also, sportsbooks can no longer use the oxymoronic term “risk-free” to describe promotional bets as there is a lot of fine print behind that offer. Often used as a first-time bonus, a “risk-free” bet means if you lose, the sportsbook covers you. But only some organizations offer actual withdrawable cash upon a loss, while big names like FanDuel and Unibet pay you back in site credit or another free bet with very specific caveats. That’s about as “risk-free” as a weekend in Bakhmut.

“The code is so important because many sports fans are underage, and we also know that people who gamble on sports have higher rates of gambling problems,” Keith Whyte, the executive director of the NCPG, told the Associated Press.

Enough, Peyton: While the AGA is looking to reign in sports betting advertisements, one New York Congressman wants to do away with them entirely. Last month Democrat Rep. Paul Tonko introduced the slyly-named “Betting on our Future Act,” calling sites like DraftKings and FanDuel “predatory.” The gaming industry recognizes the obvious financial ramifications of not being able to advertise on any type of electronic communication, but if that means one less place for the Manning family to pretend to be comedians, we might all be better for it.

– Griffin Kelly

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Robots Are Sparking Change In The $19.4B Joint Surgery Market

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With 100,000+ failed joint replacements annually, Monogram believes it has an answer to this l issue.

Up to 50% of all joint replacements are expected to involve robots by 2030, and Monogram is working to pioneer a more precise and personalized alternative to the hacksaws and bone cement dominating the market today.

While the $19.4B joint replacement market has been bogged down by limited competition, Monogram is hoping to spark a transition from the manual, one-size-fits-all standard to robotic, AI, and 3D-printing technologies.

The goal is joint implants that fit perfectly and last a lifetime – and this team has already successfully demonstrated their surgical robots in a medical setting in front of 5000+ people.

Invest in Monogram before their planned Nasdaq listing.

E-Commerce

Alibaba to Split into Six Different Entities

One of China’s biggest tech companies is embracing a “let a hundred flowers bloom” approach to corporate expansion.

On Tuesday, e-commerce giant Alibaba announced its intention to split its massive privately-owned empire into six discrete entities, with each potentially seeking separate public listings. It’s a stark reversal from a yearslong effort to create an all-in-one megacorporation.

Return of the Ma

This is a season of renewal for Alibaba. The company’s reclusive and often regime-critical billionaire co-founder Jack Ma returned to his home country this month for the first time in roughly a year. And after Beijing’s multiyear crackdown on tech giants, which included a $2.8 billion fine on Alibaba for alleged anti-competitive practices, many expect tensions to ease. That gives Alibaba an opportunity to shift gears and reorganize.

With increased competition in the e-commerce space (thanks to rivals JD.com, Pinduoduo, and the rise of live-shopping on ByteDance’s China-based TikTok equivalent, Douyin) and a squeeze on its cloud computing business during an economic slowdown, a restructuring may be just what Alibaba’s various divisions need to stay a step ahead of both competitors and regulators:

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The conglomerate will be divided into six groups: Chinese e-commerce, global e-commerce, cloud computing, media and entertainment, digital mapping and food delivery, and logistics. Each will have its own CEO, the ability to raise external capital, and the freedom to seek an IPO.

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Alibaba Group, meanwhile, will become a holding company overseen by chairman and CEO Daniel Zhang. Think Google’s evolution into Alphabet — only if IPOing YouTube or cloud services became a priority.

“This transformation will empower all our businesses to become more agile, enhance decision-making and enable faster responses to market changes,” Zhang said in a letter to employees seen by The Wall Street Journal.

Afterstocks: Alibaba’s listings in Hong Kong and New York will go unchanged, sources told WSJ — and traders so far are loving the news. Shares on the NYSE closed up some 14% on Tuesday. Maybe breaking up isn’t so hard to do after all.

– Brian Boyle

Extra Upside

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Sláinte: Guinness and Johnny Walker maker appoints Debra Crew as first female CEO.

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EV revolution: EU passes law to ban CO2-emitting cars by 2035.

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This hot-off-the-presses whitepaper just might be the most important thing you read all year. Axios Pro gathered the who’s who of VC, PE and M&A to share perspectives on the current economic cooldown and dealmaking environment. Then Axios’ industry-leading journalists put all this data and analysis into context, giving you key industry trends and takeaways in media, fintech, retail and more on a silver platter. Download this report to learn what dealmakers are saying about the potential for recession and how you can prepare.*

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Just For Fun

Where’d it go?

Snowfall.

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