Microsoft and Oracle link up their clouds

Microsoft and Oracle announced a new alliance today that will see the two companies directly connect their clouds over a direct network connection so that their users can then move workloads and data seamlessly between the two. This alliance goes a bit beyond just basic direct connectivity and also includes identity interoperability.

This kind of alliance is relatively unusual between what are essentially competing clouds, but while Oracle wants to be seen as a major player in this space, it also realizes that it isn’t likely to get to the size of an AWS, Azure or Google Cloud anytime soon. For Oracle, this alliance means that its users can run services like the Oracle E-Business Suite and Oracle JD Edwards on Azure while still using an Oracle database in the Oracle cloud, for example. With that, Microsoft still gets to run the workloads and Oracle gets to do what it does best (though Azure users will also continue be able to run their Oracle databases in the Azure cloud, too).

“The Oracle Cloud offers a complete suite of integrated applications for sales, service, marketing, human resources, finance, supply chain and manufacturing, plus highly automated and secure Generation 2 infrastructure featuring the Oracle Autonomous Database,” said Don Johnson, executive vice president, Oracle Cloud Infrastructure (OCI), in today’s announcement. “Oracle and Microsoft have served enterprise customer needs for decades. With this alliance, our joint customers can migrate their entire set of existing applications to the cloud without having to re-architect anything, preserving the large investments they have already made.”

For now, the direct interconnect between the two clouds is limited to Azure US East and Oracle’s Ashburn data center. The two companies plan to expand this alliance to other regions in the future, though they remain mum on the details. It’ll support applications like JD Edwards EnterpriseOne, E-Business Suite, PeopleSoft, Oracle Retail and Hyperion on Azure, in combination with Oracle databases like RAC, Exadata and the Oracle Autonomous Database running in the Oracle Cloud.

“As the cloud of choice for the enterprise, with over 95% of the Fortune 500 using Azure, we have always been first and foremost focused on helping our customers thrive on their digital transformation journeys,” said Scott Guthrie, executive vice president of Microsoft’s Cloud and AI division. “With Oracle’s enterprise expertise, this alliance is a natural choice for us as we help our joint customers accelerate the migration of enterprise applications and databases to the public cloud.”

Today’s announcement also fits within a wider trend at Microsoft, which has recently started building a number of alliances with other large enterprise players, including its open data alliance with SAP and Adobe, as well as a somewhat unorthodox gaming partnership with Sony.

Google Pay’s app adds boarding passes, tickets, p2p payments and more

Google Pay got a big upgrade at Google I/O this week. At a breakout session, Google announced a series of changes to its payments platform, recently rebranded from Android Pay, including support for peer-to-peer payments in the main Google Pay app; online payments support in all browsers; the ability to see all payments in a single place, instead of just those in-store; and support for tickets and boarding passes in Google Pay’s APIs, among several other things.

Some of Google Pay’s expansions were previously announced, like its planned support for more browsers and devices, for example.

However, the company detailed a host of other features at I/O that are now rolling out across the Google Pay platform.

One notable addition is support for peer-to-peer payments which is being added to the Google Pay app in the U.S. and the U.K.

And that transaction history, along with users’ other payments, will all be consolidated into one place.

“In an upcoming update of the Google Pay app, we’re going to allow you to manage all the payment methods in your Google account – not just the payment methods that you used to pay in-store,” said Gerardo Capiel, Product Management lead at Google Pay, during the session at I/O. “And even better, we’re going to provide you with a holistic view of all your transactions – whether they be on Google apps and services, such as Play and YouTube, whether they be with third-party merchants, such as Walgreens and Uber, or whether they’re transactions you’ve made to friends and families via our peer-to-peer service,” he said.

The company also said it would allow users to send and request money, manage payment info linked to their Google accounts, and see their transaction history on the web with the Google Pay iOS app, too.

And because I/O is a developer conference, many of the new additions were in the form new and updated APIs.

For starters, Google launched a new API for incorporating Google Pay into other third-party apps.

“Via our APIs, we’re going to enable these ready-to-pay users [who already have payment information stored with Google Pay] to also checkout quickly and easily in your own apps and websites,” Capiel said.

The benefit to those developers who add Google Pay support is an increase in conversion rates and faster monetization, he noted.

Plus, Google added support for tickets and boarding passes to the Google Pay APIs, where they joined the existing support for offers and loyalty cards.

This allows companies such as Urban Airship or DotDashPay to help business clients distribute and update their passes and tickets to Google Pay users.

“It shows an even stronger commitment on Google Pay’s part to make the digital wallet a priority,” Sean Arietta, founder and CEO of DotDashPay, told TechCrunch, following the presentation. “It also reinforces their focus on partners like DotDashPay to help build connections between consumers and brands. The fact that they are specifically highlighting a complete experience that starts with payments and ends with an NFC tap-to-identify, is really powerful. It makes the Google Pay story now complete,” he added.

Urban Airship was also touting the changes earlier this week, via a press release.

“We help businesses reinvent the customer experience by delivering the right information at the right time on any digital channel, and mobile wallets fill an increasingly critical role in that vision,” Brett Caine, CEO and president of Urban Airship, said in a statement. “Google Pay’s new support for tickets and boarding passes means customers will always have up-to-date information when they need it most – on the go.”

Some of Google’s early access partners on ticketing include Singapore Airlines, Eventbrite, Southwest, and FortressGB, which handles major soccer league tickets in the U.K. and elsewhere.

In terms of transit-related announcements, Google added a few more partners who will soon adopt Google Pay integration, including Vancouver, Canada and the U.K. bus system, following recent launches in Las Vegas and Portland.

The company also offered an update on Google Pay’s traction, noting the Google Pay app just passed 100 million downloads in the Google Play store, where it’s available to users in 18 markets worldwide.

Soon, Google said it will launch many of the core features and the Google Pay app globally to billions of Google users worldwide.

Snap’s CFO is out and a veteran Amazon exec is taking his place

Snap Chief Financial Officer Drew Vollero is going to be leaving his post at the Snapchat parent company next week and will be replaced by Amazon VP of finance Tim Stone, according to financial documents filed with the SEC today.

Vollero was the company’s first CFO and has presided over Snap finances since joining less than three years ago. Since going public a little over one year ago, Snap has endured some rather turbulent times on Wall Street.

After opening at $24, the company’s lackluster user growth numbers and ruthless competition from Facebook has left the company trading below $11 currently. This follows a particularly rough quarterly earnings report last week that saw user growth crawl and left the stock price diving.

Stone comes aboard after a whopping 20 years at Amazon, where he was most recently employed as the company’s VP of finance. When Stone joined Amazon, the stock price was hovering above $6; it’s now trading above $1,600, so it sounds like he’s doing pretty well. Nevertheless, Snap is giving him $20 million in RSUs and a base salary of $500,000, so it sounds like the good times are continuing.

“I am deeply grateful for Drew and his many contributions to the growth of Snap,” CEO Evan Spiegel said in a statement. “He has done an amazing job as Snap’s first CFO, building a strong team and helping to guide us through our transition to becoming a public company. The discipline that he has brought to our business will serve us well into the future. We wish Drew continued success and all the best.”

The formula behind San Francisco’s startup success

Why has San Francisco’s startup scene generated so many hugely valuable companies over the past decade?

That’s the question we asked over the past few weeks while analyzing San Francisco startup funding, exit, and unicorn creation data. After all, it’s not as if founders of Uber, Airbnb, Lyft, Dropbox and Twitter had to get office space within a couple of miles of each other.

We hadn’t thought our data-centric approach would yield a clear recipe for success. San Francisco private and newly public unicorns are a diverse bunch, numbering more than 30, in areas ranging from ridesharing to online lending. Surely the path to billion-plus valuations would be equally varied.

But surprisingly, many of their secrets to success seem formulaic. The most valuable San Francisco companies to arise in the era of the smartphone have a number of shared traits, including a willingness and ability to post massive, sustained losses; high-powered investors; and a preponderance of easy-to-explain business models.

No, it’s not a recipe that’s likely replicable without talent, drive, connections and timing. But if you’ve got those ingredients, following the principles below might provide a good shot at unicorn status.

First you conquer, then you earn

Losing money is not a bug. It’s a feature.

First, lose money until you’ve left your rivals in the dust. This is the most important rule. It is the collective glue that holds the narratives of San Francisco startup success stories together. And while companies in other places have thrived with the same practice, arguably San Franciscans do it best.

It’s no secret that a majority of the most valuable internet and technology companies citywide lose gobs of money or post tiny profits relative to valuations. Uber, called the world’s most valuable startup, reportedly lost $4.5 billion last year. Dropbox lost more than $100 million after losing more than $200 million the year before and more than $300 million the year before that. Even Airbnb, whose model of taking a share of homestay revenues sounds like an easy recipe for returns, took nine years to post its first annual profit.

Not making money can be the ultimate competitive advantage, if you can afford it.

Industry stalwarts lose money, too. Salesforce, with a market cap of $88 billion, has posted losses for the vast majority of its operating history. Square, valued at nearly $20 billion, has never been profitable on a GAAP basis. DocuSign, the 15-year-old newly public company that dominates the e-signature space, lost more than $50 million in its last fiscal year (and more than $100 million in each of the two preceding years). Of course, these companies, like their unicorn brethren, invest heavily in growing revenues, attracting investors who value this approach.

We could go on. But the basic takeaway is this: Losing money is not a bug. It’s a feature. One might even argue that entrepreneurs in metro areas with a more fiscally restrained investment culture are missing out.

What’s also noteworthy is the propensity of so many city startups to wreak havoc on existing, profitable industries without generating big profits themselves. Craigslist, a San Francisco nonprofit, may have started the trend in the 1990s by blowing up the newspaper classified business. Today, Uber and Lyft have decimated the value of taxi medallions.

Not making money can be the ultimate competitive advantage, if you can afford it, as it prevents others from entering the space or catching up as your startup gobbles up greater and greater market share. Then, when rivals are out of the picture, it’s possible to raise prices and start focusing on operating in the black.

Raise money from investors who’ve done this before

You can’t lose money on your own. And you can’t lose any old money, either. To succeed as a San Francisco unicorn, it helps to lose money provided by one of a short list of prestigious investors who have previously backed valuable, unprofitable Northern California startups.

It’s not a mysterious list. Most of the names are well-known venture and seed investors who’ve been actively investing in local startups for many years and commonly feature on rankings like the Midas List. We’ve put together a few names here.

You might wonder why it’s so much better to lose money provided by Sequoia Capital than, say, a lower-profile but still wealthy investor. We could speculate that the following factors are at play: a firm’s reputation for selecting winning startups, a willingness of later investors to follow these VCs at higher valuations and these firms’ skill in shepherding portfolio companies through rapid growth cycles to an eventual exit.

Whatever the exact connection, the data speaks for itself. The vast majority of San Francisco’s most valuable private and recently public internet and technology companies have backing from investors on the short list, commonly beginning with early-stage rounds.

Pick a business model that relatives understand

Generally speaking, you don’t need to know a lot about semiconductor technology or networking infrastructure to explain what a high-valuation San Francisco company does. Instead, it’s more along the lines of: “They have an app for getting rides from strangers,” or “They have an app for renting rooms in your house to strangers.” It may sound strange at first, but pretty soon it’s something everyone seems to be doing.

It’s not a recipe that’s likely replicable without talent, drive, connections and timing.

list of 32 San Francisco-based unicorns and near-unicorns is populated mostly with companies that have widely understood brands, including Pinterest, Instacart and Slack, along with Uber, Lyft and Airbnb. While there are some lesser-known enterprise software names, they’re not among the largest investment recipients.

Part of the consumer-facing, high brand recognition qualities of San Francisco startups may be tied to the decision to locate in an urban center. If you were planning to manufacture semiconductor components, for instance, you would probably set up headquarters in a less space-constrained suburban setting.

Reading between the lines of red ink

While it can be frustrating to watch a company lurch from quarter to quarter without a profit in sight, there is ample evidence the approach can be wildly successful over time.

Seattle’s Amazon is probably the poster child for this strategy. Jeff Bezos, recently declared the world’s richest man, led the company for more than a decade before reporting the first annual profit.

These days, San Francisco seems to be ground central for this company-building technique. While it’s certainly not necessary to locate here, it does seem to be the single urban location most closely associated with massively scalable, money-losing consumer-facing startups.

Perhaps it’s just one of those things that after a while becomes status quo. If you want to be a movie star, you go to Hollywood. And if you want to make it on Wall Street, you go to Wall Street. Likewise, if you want to make it by launching an industry-altering business with a good shot at a multi-billion-dollar valuation, all while losing eye-popping sums of money, then you go to San Francisco.

Equity podcast: Stocks swing after earnings for Tesla, Apple, Spotify, Snap

It was another big week for earnings on “Equity,” TechCrunch’s podcast about venture capital and the tech business. But this week, it wasn’t all good news.

Spotify stumbled after its first quarterly report since joining the stock market. Tesla shares were down after Elon Musk’s unusual earnings call. Snap hit a record low after failing to gain traction with its redesign.

Apple, however, surprised Wall Street when iPhone sales didn’t disappoint. We also recapped the successful IPOs for DocuSign and Smartsheet.

Our special guest this week was M.G. Siegler, general partner at GV (formerly Google Ventures). In a previous life, he wrote for TechCrunch.

We also had TechCrunch editor Connie Loizos, who will be helping out with the show now that I’m leaving. Yes, that’s right, I’m sad to say that it’s my last episode of “Equity.”

I’ve accepted a new opportunity that I’m excited about (announcing it soon), but I will miss the fun times we’ve had on the show.

Somehow we’ve managed to have over a million downloads since launching “Equity” in March of last year. Thank you for tuning in!

And don’t worry, the show will go on. The remaining “Equity” crew will keep you informed.

If you haven’t subscribed already, check it out on iTunes and pretty much every other podcast platform.

Amazon halts Seattle expansion over city tax proposal

Even as Amazon continues to grow at a staggering rate, it is pumping the brakes on its long-planned hometown expansion. The retail giant threw down the gauntlet this week when it announced that it would stop construction on a new building because of a proposed city tax.

The new law is designed to address Seattle’s housing crunch, charging large companies $500 per head. The proposal is pretty clearly aimed at Amazon’s own expansion, and the company is taking the move to heart, potentially abandoning construction on a new building and just moving into a pre-existing space instead.

A spokesperson for the company told The New York Times that it’s “evaluating options” and has “paused all construction planning,” pending the results of the vote. The move apparently caught Seattle city council off guard, ahead of the May 14 vote.

“I’m deeply concerned about the impact this decision will have on a large range of jobs — from our building trades, to restaurant workers, to nurses, manufacturing jobs and tech workers,” the city’s mayor Jenny Durkan told the paper. “At the same time, our city must urgently address our homelessness and affordability crisis and lift up those who have been left behind.”

It’s hard not to see echoes of San Francisco’s own housing and homelessness crises in the rise of Seattle’s tech industry. And while $500 a head would be a drop in the bucket for Amazon, the company clearly understands its leverage as the city’s largest employer. The move comes as various cities around North American have tripped over themselves to house Amazon’s second headquarters. Wherever the company ultimately lands seems likely to sweeten the deal with some manner of corporate tax cut.

Amazon, meanwhile, is facing scrutiny from a number of angles, including, notably, the president, who has called out the company’s shipping deals as part of a larger, ongoing feud with Washington Post owner Jeff Bezos.

Apple says it will return $100B to investors with a massive new program after a strong Q2

Apple ended up with a pretty decent report for its second quarter, beating analyst expectations on most of its metrics — but it is making a huge move in terms of returning capital to investors.

The company said it is announcing a new $100 billion buyback program and increasing its dividend by 16%. That means that Apple investors are going to get more of an opportunity to snap up the value the company has created over time as it’s continued to grow significantly. While Apple in the past several months a lot of the momentum that carried it to a market cap nearing $1 trillion, the company’s stock has still risen around 80% in the past two years. Not surprisingly, the stock today is soaring (by Apple standards) in extended trading, with shares rising nearly 5% after the report.

Last quarter Apple CFO Luca Maestri said the company expected to be “net cash neutral” over time, signaling that it might start returning more capital to shareholders through its dividend and share buyback programs. That’ll be important for the company, which thanks to the tax bill last year will be able to repatriate a significant amount of the cash it holds outside of the U.S. These kinds of returns are pretty common with larger companies that generate a ton of cash — Apple already had some buyback programs in place, for example — but investors have always dinged Apple for not deploying its massive pile of cash.

From August 2012 to March 2018, Apple has returned around $275 billion in capital to Wall Street. That included a collective $200 billion in share repurchases. Apple has had some of these programs in place, but this is still a substantial addition to its capital return plans.

The rest of the line was a pretty solid beat on expectations Apple’s services revenue continues to grow as it looks to create a steady additional revenue stream. All that’s important too, of course, but the big news here is the set of buybacks. Here’s the bottom line:

  • Q2 Revenue: $61.1 billion, compared to analyst estimates of $60.86 billion. Apple projected between $60 billion and $62 billion. It’s an increase of 14% year-over-year.
  • Q2 Earnings: $2.73 per share, compared to analyst estimates of $2.60 per share.
  • Q2 iPhone shipments: 52.2 million units sold, compared to Wall Street estimates of 51.9 million iPhones sold.
  • Q2 Greater China revenue: $13 billion, up 21% year-over-year.
  • Q3 Gross Margin estimate: Between 38% and 38.5%
  • Q3 Revenue estimate: Between $51.5 billion and $53.5 billion
  • Q2 iPad shipments: 9.1 million units
  • Q2 Mac shipments: 4.1 million units
  • Q2 Services revenue: $9.2 billion, up 31% year-over-year

That big capital return program is likely to keep investors happy for some time while it continues to sort out its new iPhone lineup. Last year, the company released the iPhone X — which was widely praised, but also carried a substantial $999 price tag for the cheapest model. Apple has worked to create programs to pay for those phones over time, but it’s still an extremely high ticket price. That’s especially true internationally, where consumers might not tolerate high prices for those phones. As a result, the reception on Wall Street was pretty muted, and Apple seems to have to figure out some other way to restart that iPhone growth engine.

Toward the end of last year, it seemed like Apple was inching closer to being a company with a market cap over $1 trillion. That’s a completely symbolic number, but nonetheless would be a significant milestone for the iPhone maker that looks to figure out what a next-generation smartphone looks like. Apple’s stock has by no means been in a tailspin, but it hasn’t really done anything either as expectations start to drop a bit following the launch of the iPhone X.

SoFi founder Mike Cagney is back with a new startup and $50 million in funding

Mike Cagney, who was ousted last summer from the lending company he founded, is back with a new startup and a whole lot of funding from at least one of his previous investors.

According to a new report in Bloomberg, Cagney, who earlier this year formed a new lending startup called Figure, has raised $50 million to grow the company, which plans to use the blockchain to facilitate loan approvals in minutes instead of days.

According to the company’s site, its lending products will include home equity lines of credit, home improvement loans and home buy-lease back offerings for retirement.

The round was led by DCM Ventures and Ribbit Capital and included participation from Mithril Capital Management, Cagney confirmed to Bloomberg.

Ribbit Capital in Palo Alto, Calif., has been leading investments in the world of fintech and digital currencies from its founding nearly six years ago. Others of its many bets include the online consumer lending company Affirm and Point, a startup that buys equity in U.S. homes.

Mithril, co-founded by Peter Thiel, prides itself on funding companies that take time to build, with funds that have longer investing timelines than do most traditional venture vehicles.

The cross-border firm DCM Ventures, meanwhile, is perhaps the most interesting participant in this round. The reason: Back in 2012, DCM began investing in Social Finance, or SoFi, the company that Cagney founded previously.

It isn’t uncommon for VCs to invest in founders with whom they’ve worked before, of course. And SoFi — which initially focused on refinancing student loans, today provides personal and mortgage loans and wealth management services, and appears to be pushing further into bank-like services — has grown by leaps and bounds since its August 2011 launch.

But Cagney was forced out of the company last summer, not long after a sexual harassment lawsuit was filed by a former employee who claimed he’d witnessed female employees being harassed by managers and was fired after he reported it.

Another former employer who’d worked at the company’s office in Healdsburg, Calif., told The New York Times that her work environment had been akin to a “frat house,” with employees “having sex in their cars and in the parking lot.” That same story, based on conversations with 30 then-current and former employees, also reported that Cagney himself had raised questions with staff because of his own behavior, including bragging about his sexual conquests.

Evidently, DCM and Figure’s other backers were able to brush aside concerns about anything of the sort happening again at Figure. (We’ve reached out to Cagney and Figure’s investors for more information and hope to have more for you soon.)

Employees are also signing up for Figure with the belief, ostensibly, that Cagney is well-positioned to create another financial services juggernaut. According to Bloomberg, Figure has already quietly assembled a team of 56 people. Among its new hires is the former chief risk officer of LendingHome, Cynthia Chen, and the former chief legal counsel of PeerStreet, Sara Priola.

DNC launches tech marketplace for Democratic candidates

The Democratic National Committee is trying to help Democrats regain the pole position as the tech-savviest political party in the U.S.

After getting Trumped in the 2016 election (pwned on security, data analysis and at the polls), the DNC is launching I Will Run, a marketplace for software, services and training to upgrade the campaigns of Democratic candidates.

Announced today by Sally Marx, the tech program manager for the DNC, the new marketplace will have a host of tech tools that campaigns can use to get off the ground, manage their progress and ensure easy outreach to voters.

A profusion of political services have sprung up in the months since Donald Trump took the presidency. Energized technology developers (on the whole a pretty left-leaning bunch) tuned in to politics, turned on new services and (in some cases) dropped out of their careers at high-profile shops like Google, Facebook and other Bay Are behemoths to join the political circus — or at least build tools for it.

“[We’ve] heard repeatedly from candidates and campaign staff that they are unsure what tools are out there, and simultaneously feel as if they are being fed too much information by vendors,” says Marx. “On the other hand, many of these innovators are not always reaching campaigns effectively  –  some state parties and campaigns, therefore, are in the dark about some of the innovative new technology that they should know about. And, finally, we’ve been in touch with funders and supporters who want to boost the progressive tech ecosystem, but aren’t clear on where those opportunities are.”

The marketplace, which Marx writes is explicitly for Democratic campaigns, is a curated compilation of tools used by campaigns and tools tested by DNC-funded case studies.

One of the companies already on the platform is the secure messaging service, Wickr, which has been working with campaigns from both parties to secure their communications. Wickr’s one of around 56 companies and nonprofits that are listed on the site in one of six categories: digital (which is crazy general), finance, research, security, training organizations and voter outreach.

The DNC tech team will also use the site to coordinate training, volunteers and pricing for Democratic campaigns. They’re piloting the program in states like Nevada, Arizona, Washington, Texas, Florida, Massachusetts and Iowa.

For campaigns interested in seeing what wares I Will Run has on offer, the DNC tech team is taking its show on the road with a whistle-stop tour at DNC events so state parties and campaigns can demo the tech.

Amazon up 7% following earnings beat

Amazon reported first-quarter earnings after the bell on Thursday, sending shares up 7% in after-hours trading after its significantly better-than-expected report.

The company reported earnings per share of $3.27, well above the $1.26 that analysts had been expecting. This worked out to $1.6 billion in net income, up from $724 million last year.  Revenue was $51.04 billion, above the $49.78 billion that Wall Street forecast and a 43% increase from the same time last year.

The growth was driven by its Amazon Web Services (AWS) cloud computing business, which was up 49% year-over-year, accounting for $5.4 billion in revenue.

“AWS lets developers do more and be nimbler, and it continues to get even better every day,” said CEO Jeff Bezos, in a statement. “That’s why you’re seeing this remarkable acceleration in AWS growth, now for two quarters in a row.”

Amazon also saw strong growth at home, up 46% in North America across its businesses.

Shares closed at $1,517.96 on Thursday. The company has a market cap of $735 billion.