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Five stories that shook up the enterprise in 2021



There is often a mistaken impression that covering the enterprise is kind of dull when compared to the consumer side of the house, but having followed the space for a couple of decades now, I can tell you that nothing could be further from the truth.

For one thing, there’s big money in the enterprise, like Oracle buying Cerner last week for $28 billion and shaking up the healthcare vertical while they were at it, or UiPath going from obscure startup to $35 billion RPA juggernaut earlier this year, before falling back a bit after going public.

There’s intrigue, like when activist investors try to force companies to make moves they normally wouldn’t want to make, and battles for control of the board like we saw at Box this year.

There’s drama, like the three-year battle among the biggest enterprise cloud infrastructure companies in the world for the $10 billion Department of Defense JEDI cloud contract, a procurement process that had everything from lawsuits to repeated internal reviews to presidential interference.

So you can say a lot of things about the enterprise… but boring? Definitely not — and this year was no different. So I decided to close out 2021 with a look at five stories that rocked the enterprise. It’s hard to narrow 12 months of news down to the five biggest stories, but here are my choices.

The Bezos-Jassy-Selipsky musical chairs at Amazon

Perhaps the biggest news this year involved Jeff Bezos deciding to step back as CEO, taking on the chairman role. Now that in itself did not have a huge enterprise impact because Amazon is an e-commerce company, which doesn’t necessarily fall within my purview, but then there was what happened next.

That February day when Bezos made his announcement, he also indicated he had chosen his replacement, Amazon Web Services CEO Andy Jassy. He had helped build the cloud infrastructure business at Amazon into a massive business, surpassing a $64 billion run rate in the most recent quarter.

Replacing him wouldn’t be easy, but they turned to an old friend when they hired Tableau CEO Adam Selipsky to take over for Jassy. Selipsky had previously been at AWS from its inception until 2016, when he left to take over Tableau. Now it’s his job to keep the train moving. He has momentum in his favor, but competition is getting ever more fierce, and it bears watching what happens next year under Selipsky’s leadership.

Bret Taylor’s totally excellent week

One of the other top stories involved Salesforce executive Bret Taylor getting a couple of big jobs in the same week at the end of November, making for a pretty sweet week for him. For starters he was named chairman of the board at Twitter. If that weren’t enough, he was also named co-CEO at Salesforce, where he had moved rapidly up the ladder since his company, Quip was acquired in 2016 for $750 million.

While Twitter had turmoil of its own with long-time CEO Jack Dorsey stepping down and Parag Agrawal taking over, the move to co-CEO at the CRM giant was clearly the bigger news from an enterprise perspective. While The Information reported that Taylor would still be reporting to company co-founder, chairman and co-CEO Marc Benioff, the promotion put Taylor in line to be Benioff’s heir apparent should Benioff decide to step back into the chairman role in the same way that Bezos did earlier this year. Another storyline to consider in 2022 is whether Salesforce revisits its desire to buy Twitter, a move it thought of making in 2016 before walking away.

Box-Starboard Value proxy fight

Box beat back an attempt by activist investor Starboard Value to take over the board, a move that likely would have resulted in the removal of co-founder and CEO Aaron Levie, the sale of the company, or both. It was the culmination of months of drama and it made it a major enterprise story line for 2021.

Starboard Value, an activist investor, bought a 7.5% stake in the cloud content management company in 2019, which would grow to 8.8%, giving the firm considerable influence over the company. They remained quiet for a time, but last year they decided to make a move and put Box on notice that they wanted to take over the board, which resulted in a proxy battle.

Along the way, Box answered with a $500 million investment from KKR, further angering Starboard, filed a document with the SEC pushing back against Starboard’s slate of board candidates and issued their earnings report early to give voters a chance to see their latest results. As luck would have it, the company scored two decent quarters following Starboard’s action and easily won the proxy battle, leaving the status quo for now. What happens in 2022? As I wrote, perhaps it’s time for Box to make some bold moves, and use some of KKR’s money to buy some adjacent functionality.

DoD kills JEDI and announces new cloud initiative

The $10 billion, decade-long JEDI cloud contract has been drama-filled from the day it was announced in 2018. Over those years, I wrote more than 30 articles on it, so when the Pentagon decided to kill it finally this year, that was big news.

From the start, conventional wisdom said that it was Amazon’s contract to win. There were complaints that the RFP was written with Amazon in mind, but in the end it was Microsoft that won the deal. Amazon went to court though, stating that the previous president had directly interfered with the procurement process because of his personal dislike for Amazon CEO Jeff Bezos, who also happens to own The Washington Post newspaper. Amazon also argued that it should have won on merit.

Regardless, it succeeded in convincing a judge to put the project on hold in February 2020. It would never restart, and the DoD decided to move on to a new project in July, stating that technology had changed since 2018 (which is true) and wisely deciding to go with a multi-vendor approach with its new initiative, instead of the winner-take-all approach it had pursued with JEDI.

Dell spins out VMware

When Dell bought EMC in 2015 for $67 billion (later amended to $58 billion), it was the largest deal in tech history, and another doozy of a story to follow and write about over the years. VMware was always the crown jewel of the deal, and so enterprise reporters like me kept a close eye on what Dell was going to do with it. For a long time it stood pat, but it was a huge story in the early part of the year when it announced it was spinning out the company in a deal valued at $9 billion.

It seemed a little light perhaps given the amount of money that’s still on the books for the EMC deal. What happens next year? Could someone make a run to acquire VMware now that it’s free of Dell? Dell remains a major shareholder and still has plenty of debt left over from that EMC deal, so it is definitely something to watch in 2022.

It’s hard to choose just five because inevitably I’ve left out some worthy storylines. What would you have included? Leave a comment and let me know.


The market has changed, but super-voting shares are here to stay, says Mr. IPO



Yesterday, the ride-sharing company Lyft said its two co-founders, John Zimmer and Logan Green, are stepping down from managing the company’s day-to-day operations, though they are retaining their board seats. According to a related regulatory filing, they actually need to hang around as “service providers” to receive their original equity award agreements. (If Lyft is sold or they’re fired from the board, they’ll see “100% acceleration” of these “time-based” vesting conditions.)

As with so many founders who’ve used multi-class voting structures in recent years to cement their control, their original awards were fairly generous. When Lyft went public in 2019, its dual-class share structure provided Green and Zimmer with super-voting shares that entitled them to 20 votes per share in perpetuity, meaning not just for life but also for a period of nine to 18 months after the passing of the last living co-founder, during which time a trustee would retain control.

It all seemed a little extreme, even as such arrangements became more common in tech. Now, Jay Ritter, the University of Florida professor whose work tracking and analyzing IPOs has earned him the moniker Mr. IPO, suggests that if anything, Lyft’s trajectory might make shareholders even less nervous about dual-stock structures.

For one thing, with the possible exception of Google’s founders — who came up with an entirely new share class in 2012 to preserve their power — founders lose their stranglehold on power as they sell their shares, which then convert to a one-vote-per-one-share structure. Green, for example, still controls 20% of the shareholder voting rights at Lyft, while Zimmer now controls 12% of the company’s voting rights, he told the WSJ yesterday.

Further, says Ritter, even tech companies with dual-class shares are policed by shareholders who make it clear what they will or will not tolerate. Again, just look at Lyft, whose shares were trading at 86% below their offering price earlier today in a clear sign that investors have — at least for now — lost confidence in the outfit.

We talked with Ritter last night about why stakeholders aren’t likely to push too hard against super-voting shares, despite that now would seem the time to do it. Excerpts from that conversation, below, have been lightly edited for length and clarity.

TC: Majority voting power for founders became widespread over the last dozen years or so, as VCs and even exchanges did what they could to appear founder-friendly. According to your own research, between 2012 and last year, the percentage of tech companies going public with dual-class shares shot from 15% to 46%. Should we expect this to reverse course now that the market has tightened and money isn’t flowing so freely to founders?

JR: The bargaining power of founders versus VCs has changed in the last year, that’s true, and public market investors have never been enthusiastic about founders having super voting stock. But as long as things go well, there isn’t pressure on managers to give up super voting stock. One reason U.S. investors haven’t been overly concerned about dual-class structures is that, on average, companies with dual-class structures have delivered for shareholders. It’s only when stock prices decline that people start questioning: Should we have this?

Isn’t that what we are seeing currently?

With a general downturn, even if a company is executing according to plan, shares have fallen in many cases.

So you expect that investors and public shareholders will remain complacent about this issue despite the market.

In recent years, there haven’t been a lot of examples where entrenched management is doing things wrong. There have been cases where an activist hedge fund is saying, “We don’t think you’re pursuing the right strategy.” But one of the reasons for complacency is that there are checks and balances. It’s not the case where, as in Russia, a manager can loot the company and public shareholders can’t do anything about it. They can vote with their feet. There are also shareholder lawsuits. These can be abused, but the threat of them [keeps companies in check]. What’s also true, especially of tech companies where employees have so much equity-based compensation, is that CEOs are going to be happier when their stock goes up in price but they also know their employees will be happier when the stock is doing well.

Before WeWork’s original IPO plans famously imploded in the fall of 2019, Adam Neumann expected to have so much voting control over the company that he could pass it along to future generations of Neumanns.

But when the attempt to go public backfired — [with the market saying] just because SoftBank thinks it’s worth $47 billion doesn’t mean we think it’s worth that much —  he faced a trade-off. It was, “I can keep control or take a bunch of money and walk away” and “Would I rather be poorer and in control or richer and move on?” and he decided, “I’ll take the money.”

I think Lyft’s founders have the same trade-off.

Meta is perhaps a better example of a company whose CEO’s super-voting power has worried many, most recently as the company leaned into the metaverse.

A number of years ago, when Facebook was still Facebook, Mark Zuckerberg proposed doing what Larry Page and Sergey Brin had done at Google but he got a lot of pushback and backed down instead of pushing it through. Now if he wants to sell off stock to diversify his portfolio, he gives up some votes. The way most of these companies with super voting stock are structured is that if they sell it, it automatically converts into one-share-one-stock sales, so someone who buys it doesn’t get extra votes.

A story in Bloomberg earlier today asked why there are so many family dynasties in media — the Murdochs, the Sulzbergers — but not in tech. What do you think?

The media industry is different from the tech industry. Forty years ago, there was analysis of dual-class companies and, at the time, a lot of the dual-class companies were media: the [Bancroft family, which previously owned the Wall Street Journal], the Sulzbergers with the New York Times. There were also a lot of dual-class structures associated with gambling and alcohol companies before tech firms began [taking companies public with this structure in place]. But family firms are nonexistent in tech because the motivations are different; dual-class structures are [solely] meant to keep founders in control. Also, tech companies come and go pretty rapidly. With tech, you can be successful for years and then a new competitor comes along and suddenly . . .

So the bottom line, in your view, is that dual-class shares aren’t going away, no matter that shareholders don’t like them. They don’t dislike them enough to do anything about them. Is that right?

If there was concern about entrenched management pursuing stupid policies for years, investors would be demanding bigger discounts. That might have been the case with Adam Neumann; his control wasn’t something that made investors enthusiastic about the company. But for most tech companies — of which I would not consider WeWork — because you have not only the founder but employees with equity-linked compensation, there is a lot of implicit, if not explicit, pressure on shareholder value maximization rather than kowtowing to the founder’s whims. I’d be surprised if they disappeared.

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Tesla brings back European referral program as end of Q1 nears



Tesla is bringing back its referral program to Europe, a strategy that taps into the brand loyalty of customers as it seeks to preserve market share and boost sales before the first quarter of 2023 closes.

The referral program follows Tesla’s move to reduce prices in a variety of markets, including Europe, China and North America.

Starting Tuesday in Europe, new Tesla buyers can receive 100 so-called “Loot Box Credits” when referred by a current Tesla owner, who will get 2,000 credits for the referral. If the referred customer takes delivery before March 31, 2023, they’ll get a bonus of 5,000 free Supercharging kilometres, and the referrer will get 10,000 credits. Those credits can be redeemed for software upgrades, up to 10,000 kilometers of free Supercharging “and more.”

Tesla has never used traditional advertising, so the company has historically used its referral program to get its loyal customer base to promote vehicles. Those rewards have changed over the last few years. At certain points, owners could win rewards like having a photo of their choosing launched into deep space orbit, an invite to an upcoming Tesla event, or even free new Roadsters to owners who accumulated enough referrals.

Tesla realized such extravagant rewards were starting to eat into profits, so in 2019 the automaker paused the program and came back with a more reasonable one that gives the referral giver and receiver 1,000 miles of free Supercharging each.

Last November, Tesla launched a revamped referral program in the U.S., which gives out credits that can be put towards the purchase of Tesla solar products, like the Solar Roof and Solar Panels. Tesla also launched a program in China called Treasure Box, where owners get credits that can be used towards the purchase of accessories like vehicle chargers, t-shirts or shot glasses.

The move in Europe suggests that Tesla is trying to hold onto, or even grow, its market share dominance. Tesla was the most popular EV brand in Europe last year, with the Model Y and Model 3 topping the ranks at 138,373 and 91,257 sales, respectively. Following behind were the Volkswagen ID.4 with 68,409 unit sales, the Fiat 500 electric with 66,732, and the Ford Kuga plug-in hybrid EV with 55,018 sales, according to Inside EVs.

While Tesla was the most popular EV brand in Europe last year, it actually falls behind the large multi-brand OEMs. Volkswagen Group, which includes brands like Audi and VW, actually has the largest market share of plug-in EVs with 20.6%. Stellantis, BMW Group and Hyundai follow with 14.6%, 10.5% and 10.1%, respectively. Mercedes and Tesla are tied at around 9% share.

As of this week, Tesla has finally hit production capacity of 5,000 vehicles per week at its Berlin gigafactory — a milestone CEO Elon Musk had originally promised for the end of 2022. While production numbers don’t equal sales, it’s possible that the increased production in Europe could help the automaker maintain its position and gain even more market share in the future.

The referral program isn’t the only move Tesla has made to boost sales, particularly before it reports quarterly earnings. In January, Tesla cut prices for Model 3 and Model Y vehicles in the U.S. and Europe by 20%. Earlier this month, the automaker slashed Model S and Model X prices in the U.S. as well.

In December 2022, Tesla also provided up to $7,500 discounts for vehicles purchased and delivered before the end of the year in the hopes of attracting buyers who might otherwise wait for the new year when Inflation Reduction Act incentives would kick in.

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Pinterest brings shopping capabilities to Shuffles, its collage-making app



Pinterest announced today that it’s testing ways to integrate Shuffles collage content into Pinterest, starting with shopping. Shuffles, which is Pinterest’s collage-making app, launched to general public last November. To use Shuffles, users build collages using Pinterest’s own photo library or by snapping photos of objects they want to include with their iPhone’s camera. The iOS-only app is available in the U.S., Canada, Great Britain, Ireland, Australia and New Zealand.

Shuffles will now have all of the shopping capabilities as regular pins. Users will be able to tap individual cutouts used in collages, see the brand, price, and other product metadata along with similar products to shop.

“Unlike typical product exploration, Shuffles bring an interactivity that makes the experience inspirational and fun,” the company said in a blog post. “Gen-Z is curating fresh, relevant content alongside their peers, which is quickly making for a marketplace of trendy, shoppable ideas. The high density nature of Shuffles, which can include layers of product cutouts from multiple Pins, allows consumers to dig deeper and also connect to other Shuffles that include the same Pins. As we look ahead to how consumer behavior is evolving, we’re testing ways of integrating Shuffles collage content into Pinterest, starting with shopping.”

Although Shuffles surged to become the No. 1 Lifestyle app on the U.S. App Store in August when it was invite-only, the app’s popularity has since declined. By bringing shopping capabilities to Shuffles, Pinterest is likely looking for ways to retain users on the standalone app.

Image Credits: Pinterest

Pinterest also announced that it’s exploring a new takeover feature for advertisers called “Pinterest Premiere Spotlight” that prominently showcases a brand on search. The company says the feature is designed give advertisers a new way to reach users on Pinterest.

The company says 97% of top searches on Pinterest are unbranded, which means users typically don’t type a brand name into their searches on the platform. This gives brands the opportunity to be discovered as they help consumers go from discovery to decision to purchase, Pinterest says. In the coming months, the company planes to offer additional ways to help brands connect with shoppers.

Pinterest also shared some new stats about its Catalogs offering, which lets brands upload their full catalog to the platform and turn their products into dynamic Product Pins. The company says it has seen a 66% increase in retailers setting up shop by uploading or integrating their digital catalogs on its platform, along with 70% growth in active shopping feeds year over year globally.

As part of its most recent earnings release, Pinterest revealed that its platform now has 450 million monthly active users globally, a 4% jump year-on-year. Pinterest has been focused on enhancing the shopping experience on its platform over the past few years, and said during its earnings call that it wants to make every pin shoppable, including videos.

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