Data Dive

Data Dive, Go Big Edition: Apple, Amazon And CloudKitchens

Data Dive: Apple, Amazon And CloudKitchens

The holiday shopping season is generally not a time of year marked by restraint or a “less is more” type of attitude. In fact, in general, a “more is more” attitude prevails – from the decorations to the lights to the proliferation of sales events, it seems the entire commerce ecosystem has adopted a “go big or go home” mantra for the last eight weeks of the decade.

Thus far, it doesn’t seem like anyone is all that interested in going home.

And while the last week had no shortage of players pushing ahead with big moves, there were three that managed to put up some pretty staggering early-season numbers.

The Apple Card’s Big Launch

Early accounts seem to indicate that the just-launched Apple-branded credit card is finding its way into customers’ hands, and into heavy use.

According to issuer Goldman Sachs, they have opened up about $10 billion in credit lines in just over month for the Apple Card. Of that $10 billion, Apple Card‌ customers had $736 million in loan balances at the end of September, according to regulatory filings. That sounds like a large number, though it is difficult to make an apples-to-apples comparison with cards issued by others, since as a general rule banks do not break out performance by individual cards. The Apple Card offers users the option to gain 3 percent cash back when paying for Apple products and services and for purchases with Uber, Uber Eats, T-Mobile, Walgreens and Duane Reade. Cardholders also get 2 percent cash back when using the card with Apple Pay, and 1 percent on all other purchases.

The fee-free card is Goldman Sachs’ latest inroad into the retail consumer business after establishing its online Marcus brand in 2016, which makes unsecured personal loans. CFO Stephen Scherr noted during the bank’s October earnings call that the firm was intentionally slowing down Marcus because of the exposure it was taking on with Apple Card.

Thus far, however, the bank seems pleased with the card’s early results. Goldman Sachs CEO David Solomon called the Apple Card “the most successful credit card launch ever” last month in an investor call.

“In three short years, we have raised $55 billion in deposits on the Marcus platform, generated $5 billion in loans, built a new credit card platform and launched Apple Card,” Solomon said on the call, adding that “we’ve been pleased to see a high level of consumer demand for the product. From an operational and risk perspective, we’ve handled the inflows smoothly, and without comprising our credit underwriting standards.”

Amazon’s Big Robotics Investment 

According to reports last week, Amazon will soon be heading to Boston to construct a $40 million state-of-the-art robotics innovation hub.

The 350,000-square-foot facility is planned for Westborough, Massachusetts, a community roughly 35 miles west of Boston. Amazon expects to open the facility in 2021 as a mixed-use corporate location that will feature offices and manufacturing space, as well as research and development labs. The new facility will be in addition to the Amazon Robotics site already operating in North Reading, Massachusetts.

Tye Brady, chief technologist at Amazon Robotics, said the new hub will speed up innovation and provide a “world-class facility, where our teams can design, build, program and ship our robots, all under the same roof.”

The move comes with substantial backing of the local government, noted Massachusetts Governor Charlie Baker, adding that he is pleased the firm is planning to “increase their substantial presence” in the state. He also threw in the obligatory plug, noting that Massachusetts has a “nation-leading innovation economy with a highly educated and skilled workforce.”

It is a plug Amazon arguably agrees with, since the company confirmed it has invested over $3 billion in the state since 2011, generating an additional 7,000 indirect jobs on top of the company’s 4,000 direct hires.

Westborough Town Manager Kristi Williams said Amazon’s presence points to the potential of attracting tech and innovation to a regional economy. “We look forward to a strong partnership with Amazon Robotics,” she said.

Travis Kalanick Rides Again With $400M In Funding 

Former Uber CEO Travis Kalanick has returned to the entrepreneurial life with a new food delivery startup called CloudKitchens. The up-and-coming competitor in the space has snapped up a $400 million investment from Saudi Arabia’s Public Investment Fund (PIF), the fund’s first investment since the murder earlier this year of Washington Post journalist Jamal Khashoggi.

The startup is based on the idea of leveraging the growing food delivery market by taking over rundown buildings near city centers and converting them into “ghost” kitchens that restaurants can rent to make food specifically for delivery. On top of offering its space to others, CloudKitchens also operates its own delivery-only eateries. The firm, with its large funding from PIF, has locations in the U.S., India, the U.K. and China, with the goal of building greater international scale.

CloudKitchens was initially funded with proceeds from the sales of Kalanick’s Uber shares to the tune of $200 million, plus another $100 million he invested in January of 2019. Including the Saudi money, the total amount raised is $700 million. Kalanick oversaw the creation of Uber Eats, which currently works with CloudKitchens.

The investment by PIF is one of the largest ever for a relatively new startup. But, of course, if one wants to take on the world early on, getting big investments is the only way to get there.

Which is not to say a sure way to get there – payments and commerce is certainly littered with players who went big when they probably should have gone home. But ‘tis the season for the big statement … and we expect several more will follow.

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