Are robots taking our jobs?

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A brief overview of technological disruption on industries

The automation of activities via technological breakthrough is no novelty to society. It no longer strikes us as surprising the fact that pilots only steer the plane themselves for around 10% of the course, or that money is drawn from ATMs rather than from a bank teller, as opposed to what happened a few decades ago. However, as we experience AI and machine learning development at an ever-accelerated pace, the future of many industries and employment as we know it may be at stake.

Overall, economies had to adapt to maximise the value they get from the digital disruption phenomenon, but at a micro level how did businesses across industries changed? First, they transferred some of their power to consumers, making their needs the main focus of the company. Also, they changed the way they operated, shifting to a more agile and sharp way of acting, simplifying the decision-making process and making their dynamics more competitive. And lastly, firms reinvented their operating models, using advanced analytical tools in order to reduce costs and to drive revenue, while improving insights.

Recently, AI has been subject to groundbreaking discoveries, accounting for significant advances in many sectors and placing us in the middle of the fourth industrial revolution. As the world’s top enterprises strive for the best AI in order to capture its vast market (Amazon with Alexa, Apple with Siri, IBM with Watson, and countless other examples), we observe time and again a wider scope of industries that are possible to restructure and enhance via technology – healthcare, retail,  manufacturing, finance, customer service and transportation, only to name a few.

As more companies adopt artificial intelligence for revenue boost and cost reduction, global AI startup funding has been growing vertiginously over the past years. The ease with which manipulation of AI capabilities can be done allows each industry to tailor it to their value chains and, consequently, increase efficiency.

Source: McKinsey

What’s more, machine learning is also a tool increasingly more explored by corporations, from financial services to entertainment. PayPal, for instance, makes use of machine learning to analyse and compare users’ activity in order to detect legitimate and fraudulent transactions, namely money laundering. Netflix makes use of intelligent machine learning algorithms that compare viewing activity in order to make recommendations on what to binge-watch next. These sorts of tasks involve the quick analysis of big data, a task in which humans cannot compete with machines.

One of the sectors that is already being revolutionized by technology is transportation, and one does not even have to go as far as Tesla to mention automated vehicles. As Mobicascais rolls-out its first automated bus, the future of self-sufficient public transportation  is imminent. And it does not stop here: with multiple trials on autonomous ships, mining trucks and aircrafts, the only thing stopping driverless vehicles from becoming mainstream is regulation.

When it comes to manufacturing, the automotive sector is historically known for using cutting-edge technology to improve efficiency. While Industry 4.0 technology brought considerable gains in productivity, ranging from production design to quality control, being able to keep up with increasing consumer demands for more choice, it has also been able to mitigate the fear that this industry belongs to the robots. Breakthroughs in the field of robotic technology brought the so-called “co-bots”, artificial intelligent robots that are much lighter and agile – thus safer for humans to work around – and, more importantly, they are trained rather than programmed. A study conducted by the MIT in alliance with BMW found robot-human teams to be 85% more productive than either of them alone, and the manufacturing industry is responding, tending towards a common-ground future for man and machine.

By affecting industries, automation is bound to change labour. In fact, this has been a trend for decades now and the further development of AI will inevitably change the workplace and how we work, which will bring positive and negative consequences. The global impact, however, is still unknown.

In the US, since the 80s, computers have led to 3.5 million jobs destroyed, according to a McKinsey study. Nevertheless, in that same time frame, over 19 million jobs were created as a result of the personal computer, as technology increased productivity and spending power, which consequently created new demand and new jobs. Technology has changed labour, not destroyed it. As the service sector gained weight, so did the median household income, as a result of some low-paying and low-skill jobs being replaced. Also, automation led to vast improvements in terms of quality of life, hours of work as well as replacing repetitive tasks, meaning its impact extends beyond just economic indicators.

AI, machine learning and other recent technologies stand to change the labour market similarly to how computers did, although to a further degree. The World Economic Forum claims that from 2018 to 2022 automation will destroy 75 million jobs, but, as was seen previously, 133 million jobs will emerge in that period due to the same event. However, when talking of automation and job destruction, it is important to distinguish between occupations and activities. According to McKinsey, 45% of activities performed can be automated by adapting currently demonstrated technologies. When it comes to occupations that may be fully automated that figure is only 5%. This scenario is far less drastic, because the change affects primarily tasks rather than occupations themselvesNonetheless, 60% of occupations could have 30% or more of their constituent activities automated, which means the vast majority of professions will still suffer significant changes, namely job redefinition along with transformation of business processes.

The difference from previous seen automation lies in the incidence. Whereas the industrial revolution led to mainly low-skill tasks disappearing and the computer age  affected workers more in the skilled middle, such as travel agents, this time technology will also affect high-paid occupations, such as executives and physicians. Machine learning and AI’s expertise will exceed humans’ and, as a result, more demanding tasks and decisions can be automated, making even high-skill professionals subject to the phenomenon, something not seen before. As profound as these changes may seem, they will not occur all at once, instead AI will slowly move into the workplace gradually replacing humans.

All in all, additionally to affecting companies financially, automation will deeply affect workers financially, because as labour becomes a less important factor in production, a majority of citizens may find the value of their labour insufficient to pay for a socially acceptable standard of living, which will require society to come up with solutions to prevent a part of the population from falling behind. AI and machine learning are successful as long as they create value for human lives. To safeguard human labour from becoming obsolete and inequality from increasing, it is vital that governments take an active role when it comes to defining policy. While it is important to stimulate investment in R&D, it is crucial to adopt a “humans first” position. Although it may be difficult to predict in which direction technological disruption may point towards, it will surely be impossible to go back from it, so legislation must be shaped in a way that advances in technology focused solely on corporate profit and disregard human capital are forfeit.

Sources: McKinsey, Statista, MarketLine, Forbes

Written by Diogo Alves, Lourenço Paramés and Tiago Rebelo

Scientific revision: Patrícia Cruz

BioNTech and Pfizer: Project “Lightspeed”

Almost one year after the beginning of the Covid-19 outbreak in Europe, we finally start seeing some light at the end of the tunnel.

The first COVID-19 case in Europe was registered on the 24th of January and everything points out to the fact that the patient zero was a German citizen. Now, a new year is closer and it’s also a German company which is leading the race in the development of a vaccine that could bring the pandemic to an end. The company is BioNTech, a biotechnology firm based in Mainz.

After the SARS-CoV-2 genetic sequence being made public in the 12th January 2020, BioNTech initiated the project “Lightspeed”. As the name indicates, the goal was to develop an efficient vaccine in the fastest way possible. Furthermore, on the 17th of March the German company announced a collaboration with the American multinational pharmaceutical Pfizer. Ironically, this company, located on the other side of the Atlantic Ocean, based on New York, was also founded by two German cousins, Charles Pfizer and Charles Erhart.

On the 18th of November, the joint venture between BioNTech and Pfizer started collecting results. The phase 3 of the study regarding the vaccine elaborated by both firms was announced to meet all the primary efficacy endpoints and demonstrated a 95% efficacy against Covid-19. In the sequence of this promising developments, it was submitted an emergency application on the 30th of November to the European Medicines Agency (EMA) in order to get the approval so that the vaccine can be used in Europe. EMA reported that, if there was enough data, by 29th of December this assessment would be completed.

However, Pfizer and BioNTech are not alone in this race and they face the competition of the partnership between Oxford and AstraZeneca and of Moderna, which submitted its application to EMA on the 1st of December. Since the starting of the pandemic, the race for the vaccine, and the consequent normality, brought the attention of several politicians eager to claim their role in solving an epidemic. Therefore, one of the most sensitive issues on the development of the vaccine has been who was funding the BioNTech and Pfizer vaccine. The US vice-president Mike Pence attributed the success of this joint venture to the public-private partnership created by the US administration to accelerate drug development. However, influential media, such as Bloomberg, had noticed that the funding came through BioNTech, the German partner, who received 377 million euros from Angela Merkel’s government.

What makes BioNtech’s vaccine so unique?

For decades has the science community argued between the clear worthiness of investment and a supposed utopian illusion of messenger RNA, or mRNA. Alongside with Moderna, this joint venture is now starting to commercialize the first ever mRNA vaccine, something that scientifically had always made sense, but until last November, had never been granted any approval by the Food and Drug Administration (FDA). 

But What Is mRNA? Unlike conventional vaccines, which consist of injecting dead or weakened forms of the virus so that the immune system learns to fight it and usually take years of research and analysis, RNA vaccines are focused on delivering the virus’ genetic code into our immune system, instead of the virus itself, in the hopes of triggering a response based on anti-bodies able to fight this pathogen. This process, besides having a much more optimal logistical basis, it also takes away part of the time constraint the world is facing today, with positive cases showing no sign of slowing down. However, one big variable is still being questioned at this point, which is for how long can this vaccine provide you immunity? Based on the research and estimates available at this point, it is still uncertain of how long will the vaccine provide the desired immunity. Most likely it will wane over time, but it is unknown the amount of immunity retained in order to guarantee protection.

How will the vaccines get to consumers?

Vaccines have started to roll out, but its distribution will take months. Mass vaccination is expected to start only in 2021, because despite being the fastest vaccine to be developed in human history, it still needs to be delivered to billions of people under strict storage requirements for precaution. Countries face a four-by-four challenge: a vaccine arriving at four times the pace and requiring delivery at four times the scale.

At this moment several countries have given emergency approval, with the UK being the first country vaccinating people outside trials on December the 8th for certain groups, including people who work in care homes and health care workers at high risk. Pfizer and BioNTech have also gained approval in the US, where more than a hundred thousand people have been vaccinated, including the Vice-President Mike Pence as well as other senior officials. In the EU, the joint venture was approved by the European Commission on December 21st.

BioNTech has started mass producing the vaccine in its facilities in Mainz, Germany, with a target of 100 million vaccines in 2020, however recent information suggests the company cut back the target to 50 million doses. Using Pfizer and BioNTech’s facilities across the US and Europe, including the manufacturing site in Marburg which BioNTech acquired a from Novartis this September, the joint venture believes it can produce 1.35bn doses by the end of next year, although Pfizer will be in charge of most of manufacturing and shipping.

The vaccine will be distributed from Pfizer’s centres in the US, Germany, and Belgium, from where the 300 million doses ordered by the EU will be shipped.  It will then be transported in purposely built boxes, packed with dry ice and equipped with GPS tracking, capable of maintaining the vaccines at -75 degrees Celsius. The suitcase sized transport boxes are reusable and can keep up to 5,000 doses of the vaccine at the right temperature for 10 days.  Once it arrives at vaccination centres, the vaccine can survive up to five days at temperatures between 2 and 8 degrees Celsius.

Transport box  (source: BBC)

Transport box (source: BBC)

The nanoparticles present in the vaccine, which provide an increase in its effectiveness, are the cause of the strict temperature requirements. Other vaccines, as the one developed by the Oxford university and AstraZeneca, which resort to adenovirus rather than mRNA, do not require freezing, but approval is only projected for next year. The ease of transport and the consequent lower costs means this alternative could be used for mass vaccination in many developing countries, whereas Pfizer/BioNTech and Moderna’s vaccines will most likely be used for groups of risk who require a faster solution.

So, what does the future holds on for us? As the first vaccination phase takes its initial steps in the West, questions about a countdown to normal life has finally started. Supposing everything goes in accordance with expectations, US specialists predict May to be the month of “new normality” where the herd’s immunity threshold is reached but, of course, in a far-fetched scenario where all the Supply Chain’s structure is not mismanaged in that course of time. Until then, it is still fair to say that the use of masks and constant disinfection is going to be our greatest shield against the Covid-19 pandemic.

Sources: Financial Times, Bloomberg, MarketLine, McKinsey, Pfizer, New York Times, UK Government, Federal Drugs Administration, SIC Notícias, BBC, Sábado 

LVMH Acquisition of Tiffany & Co. “The Wolf in Cashmere Sports New Jewelry at Last”

In November 2020, LVMH announced it reached an agreement to acquire the US Jeweler Tiffany & Co for a record breaking $16,2 B. Almost a year has passed and the deal has not been completed, the two companies have been back and forth on the negotiations, involving lawsuits in courts and the French government.

The companies behind the drama

LVMH Moët Hennessy Louis Vuitton SA, commonly known as LVMH, is a French multinational firm, based in Paris, France. The firm was created through a $4 billion merger, in 1987, of fashion house Louis Vuitton with Moët Hennessy. LVMH is the world’s leading luxury goods seller, controlling around 60 subsidiaries that each handle a small number of prestigious brands, 75 in total. The subsidiaries are often managed independently, under the umbrellas of six branches: Fashion Group, Wines and Spirits, Perfumes and Cosmetics, Watches and Jewelry, Selective Distribution, and Other Activities. The oldest of the LVMH brands is wine producer Château d’Yquem, which dates its origins back to 1593. The company also owns luxury retailers, including a majority stake in DFS Group Ltd., a group of duty-free stores, and Sephora. The company sought to expand and diversify in the late 1990s through several acquisitions.

Tiffany & Co., commonly known as Tiffany’s, is an American luxury jewelry and specialty retailer, based in New York City. Tiffany’s is known for its luxury goods, particularly its diamond and sterling silver jewelry, but their offering also includes china, crystal, stationery, fragrances, water bottles, watches, personal accessories, and leather goods. It markets itself as an intermediary of taste and style. Tiffany & Co. was founded in 1837 by the jeweler Charles Lewis Tiffany and became famous in the early 20th century under the artistic direction of his son Louis Comfort Tiffany. The company operates retail outlets in the Americas, Asia-Pacific, Japan, Europe and the United Arab Emirates. Tiffany’s operates 326 stores globally in countries such as the United States, Japan, and Canada, as well as Europe, the Latin America, and Pacific Asia regions.


Why Tiffany & Co.?

LVMH, the largest player in the luxury goods market, had been looking to grow its “hard luxury” segment for some time, seeing a perfect contender in Tiffany & Co., a leading brand in jewelry manufacturing, in a period of significant M&A activity. Despite the drama around the acquisition, the operation is still the largest ever luxury deal, giving the French group led by billionaire Bernard Arnault a greater presence in its smaller segment.

LVMH is already the market leader in the “soft luxury” market, composed of clothing, leather goods, bags, and accessories, with this segment representing almost 40% of total revenue. However, the group has a smaller presence in the jewelry market, the so-called “hard luxury”, the deal would double LVMH’s size in this segment from $4,72 B to over $9 B.


The deepening of the presence in the jewelry market will increase the group’s capacity to compete with other leading players such as Richemont, Chow Tai Fook Jewellery Group, Signet Jewellers, and Pandora, in one of the fastest-growing categories in the personal luxury goods sector.

Tiffany’s network of over 300 stores across the globe would complement LVMH’s Watches & Jewelry division of 75 stores. Furthermore, the American company has greater presence in the United States, a market LVMH looks to consolidate, and among Asian consumers. In fact, Mr. Arnault believes Tiffany & Co. “would fit perfectly within LVMH’s portfolio of brands”.

The luxury market has been growing consistently, having greatly accelerated in 2019 driven by a stronger growth of the US and Chinese markets, with the Chinese market representing the most rapidly growing proportion of the global luxury goods market, due to the expansion of an aspirational middle class. Nevertheless, the industry has seen difficulties in expanding in recent years because of changing consumer patterns, particularly among younger generations who tend to prefer experiences and services, such as travelling and dining, in comparison to luxury goods.

 Also, because of the pandemic, global demand has shrunk, the luxury market is no exception as demand is expected to drop by 30% in 2020, with a recovery that could take years. Horizontal integration can be seen as a way to strengthen the brand ahead of the storm.


Despite LVMH’s growing collection of brands, regulators have not seen the deal as harmful for consumers, the European Competition Authority says there is no danger of monopolization or restriction of consumer choice. In fact, the acquisition will not alter the competitive structure of the market, because of the low market concentration. LVMH will still face competition from several other manufacturers of luxury goods, including Cartier, Van Cleef & Arpels, Richemont, among others.


Turbulent negotiations:

LVMH acquiring the American luxury jeweler for a colossal $16.2bn seemed like a “too good to be true” offer coming from the French billionaire, dubbed “the wolf in cashmere” – and it was so. The offer based on an EBITDA ratio of 17, over 50% greater than Tiffany’s 10-year average at the time, was not going to stand as the COVID-19 pandemic promised a possible 35% contraction in 2020 in the luxury market, predicted by Bain consultants, with Tiffany’s earnings closely trailing that downturn, according to the S&P Global.

 When the deal was first struck, the $135 per share (37% premium at the time) supported the added value brought by Tiffany & Co, notwithstanding the closure of major markets, namely China. However, when the lockdown reached Europe, investors began to jitter, dropping Tiffany’s share price to around $114. With 35 years of experience in the luxury industry, Arnault knew that this was his opportunity to alter the deal’s terms, despite the air-tight prenup signed by both parties and the costs of backing out ($575M).

Negotiation turbulence climaxed in early September, when LVMH threatened to pull out of the deal, following a request from the French foreign minister, Jean-Yves Le Drian, to delay the deal. Tension between Paris and Washington arose, after US President, Donald Trump, imposed customs duties on certain French luxury goods, following the French’s adoption of digital services taxes. LVMH’s CFO, Jean-Jacques Guiony, stated they were prohibited from closing the deal, and uninterested in lengthening the lock-stop date, resulting in Tiffany’s share price dropping by 8.4%, to $111.67.

Nevertheless, Tiffany & Co was determined to follow through. It filed a lawsuit against LVMH claiming the conglomerate was merely attempting to strong-arm the jeweler into dropping the agreed merger price, consequently breaching the transaction agreement. LVMH hit back with a suit claiming Tiffany’s “catastrophic” performance following the pandemic indicated dismal prospects for the future. Ad interim, predictions on the deal resulted in stock price fluctuations for Tiffany & Co.

Final offer

Conflict between the giants ended with the French luxury group agreeing to pay a total of $15.8bn, at $131.5 per share – a haircut of $425M, less than 3%, of the original price. Moreover, Tiffany’s would have to pay shareholders a dividend of $0.58 per share. All lawsuits were settled. Though LMVH’s course of action seems extreme for such a modest price cut, ultimately it was able to bulk up on watches and jewelry, boosting its portfolio in the “hard luxury goods”.

Whether Bernard Arnault suffered from buyer’s remorse or went from the “wolf in cashmere” to the “lamb in lycra”, and despite the hiccups brought about by governmental intervention, legal conflict and pandemic-induced economic slowdown, this marks the largest deal ever in the luxury industry.

Sources: Financial Times, Marketline, Statista.

Tiago Rebelo -  Tiago Rebelo Nuno Sampayo -  Nuno Sampayo

Diogo Almeida - Diogo Almeida

Regulating Big Tech

To which degree should technology influence our human experience? Some believe this question to be only ethical and philosophical, yet, nowadays, this discussion is shifting from existential fields and stepping into economical ground.

Economic theory tells us monopolies hurt consumers, as these end up paying higher prices otherwise would under a competitive environment. Governments often intervene when consumers are harmed or when unfair competition takes place. This was the case when in 1909, the US Government sued Standard Oil under the Sherman Act, leading to its breakup into 34 independent companies. Undoubtedly, a resembling situation is on an eminent stand regarding Big Tech enterprises and their evident market abuse, leading to economic distortions.

Big Tech companies are seen as today’s monopolies, the winner takes all nature of the tech industry has given the Big Five – Microsoft, Amazon, Apple, Facebook and Alphabet – an incentive for abuse of power, as well as an edge over the competition by allowing to use their platform power to promote other services or eliminate potential rivals through acquisitions. Furthermore, the internet has made regulators’ job increasingly difficult because a new currency has emerged, data.

Source: Statista

Source: Statista

Consequently, combining the rise of the technology market with data becoming the most valuable asset on earth, the concern is becoming tangible and several institutions have expressed their worries. Now, the question is if and how regulatory entities should intervene. Different approaches have been taken by distinct institutions yet, three main possible responses have been on discussion: tighten up laws to allow enforcers to better enact them; enforce already existing antitrust rules; or creating new regulatory parameters in order to stop the rise of power of market players – a more extreme solution.

Indeed, a new regulation paradigm is in the works, one that focuses not only in the price paid by consumers, considering many of the services are provided free of charge, but  a more value-based understanding of the real exchange that takes place.

This brings us to another concern about the current self-regulating environment in the Tech industry, privacy. Although big steps have been taken in ensuring the protection of users’ data, improper use, leaks and unlawful data collection are still too common, leaving a sense of insecurity and distrust for tech companies.

These concerns have been left unanswered, in part, due to the enormous political influence the tech sector has, especially in the US. Tech giants spend millions of dollars lobbying US officials. A good example is the effort in maintaining the famous Section 230 of the Communications and Decency Act.

“no provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider”

— Section 230 of the Communications and Decency Act

The controversial law essentially takes responsibility of some illegal contents away from tech companies, being particularly relevant in the 2020 US Presidential Elections, due to scrutiny over hate speech protection, political biases, and misinformation. In addition to the social and political effects, the power of Big Tech has also made US markets less competitive.

EU has taken big steps in holding Big Tech accountable

Figure 1 - EU Competition Commissioner Margrethe Vestager

Figure 1 – EU Competition Commissioner Margrethe Vestager

EU is already taking action and discussions are taking place in regard to limiting the power of these Tech Giants. As a matter of fact, EU regulators are working in order to establish a “Hit list” composed of up to 20 large companies that would be subject to more restrictive and regulatory measures than those applied to smaller competitors, with the main purpose of restraining their market power. The criteria for inclusion on the list (as well as the precise number of companies to make the list) is still under discussion, but it is likely to revolve around market share of revenues and number of users.

Additional measures include the grant of free-access to competitors, namely the sharing of data with its rivals, as well as the power to force these companies to change business practices considered harmful to consumers or unfair to its competitors without requirement of a full investigation or any finding attesting that they have broken the law. Furthermore, these new rules intend to restrict the companies´ liberty to pre-define their own services by default on consumers´ gadgets (such as is the case of Google apps on smartphones), as well as setting a preference for their own services in browser search results.

Should these measures prove to be insufficient, Brussels also concedes that more extreme ones may be taken against these Tech Giants under special circumstances, such as the power to exclude them from the market altogether, forcing them to sell part of their units or even ultimately breaking them up.

These proposals are likely to integrate the new legal framework concerning digital services that is expected to be published in the forthcoming new Digital Services Act, consisting of an update of the e-Commerce Directive adopted in 2000, in order to accommodate for the on-going incremental technological changes that we have been subject to in the past 20 years.

Also, in a joint document sent to the European Commission, France and the Netherlands suggested EU Authority should have the power to control the market position of some large tech platforms.

“Our common ambition is to design a framework that will be efficient enough to address the economic footprint of such actors on the European economy and to be able to ‘break them open’”

— France and Netherlands in the joint document sent to the European Commission

Nonetheless, these are only small examples of a conversation that is far to be finished and whose end is not nearby.

Overall, while these measures denote a strong concern of the European countries regarding the constraining of the power of platforms that are perceived to be acting as “gatekeepers”, it is still yet to be seen whether these changes will be effective or sufficient to prevent them from exploiting their powers. Moreover, it is important to highlight that most of these companies that are being targeted are US Giants, making it so these measures will probably be badly received by many of them, causing additional friction between Europe and the US.

The US still lives in a self-regulating environment

Figure 2 - Mark Zuckerberg, CEO of Facebook Inc. testifying before US Congress

Figure 2 – Mark Zuckerberg, CEO of Facebook Inc. testifying before US Congress

In recent years, the USA has become increasingly conscientious over the impact tech companies have on consumers and politics. The government has also started acting, with the Department of Justice soon releasing a landmark lawsuit against Google for illegally invading the privacy of its users, the biggest in the past twenty years. Also, a recent damming 449-page congressional report by the House Judiciary Committee accuses Big Tech of abusing their market power “by controlling access to markets, these giants can pick winners and losers throughout our economy. They not only wield tremendous power, but they also abuse it by charging exorbitant fees, imposing oppressive contract terms, and extracting valuable data from the people and businesses that rely on them”. The report suggests restructuring the business model of some companies and breaking them apart, similarly to what happened to Standard Oil, in what seems to be the biggest threat ever posed to corporate power.

Republicans disagree on some of the proposals, nevertheless it is commonly believed more resources to enforce the existing laws are needed. However, the GOP is more concerned over the alleged social media bias against conservative ideas, although there has been no evidence whatsoever.

Although there is consensus on the need for regulation, we are still uncertain on how it will come, and the November Election will be key to understanding which side will have its way.

Sources: Financial Times, European Commission, Federal Communications Commission, United States House of Representatives, New York Times, Reuters, CNBC, Statista

Tiago Rebelo - Tiago Rebelo Matilde Mota - Matilde Mota

João Caetano - João Caetano Inês Lindoso - Inês Lindoso

Snowflake, the special one (Part I)

Snowflake, the cloud data platform based out of San Mateo, California, achieved worldwide notoriety following its record-breaking IPO which resembled some of the dotcom IPO’s of the early 2000’s, as well as raising over $3 billion in a busy week for the IPO industry, with several other eye-catching newly listed companies, namely Unity, the 3D game development platform, and Disrupt, the first ever online IPO.

The cloud data company more than doubled its market capitalization in its first session on NYSE and managed to get the interest of iconic investor Warren Buffet, who does not fancy tech stocks.

Snowflake Inc. provides a cloud-based data platform. The company’s platform enables customers to store and consolidate data in a single location (data warehousing), generate meaningful business insights, build data-driven applications, and share data with other parties.

How it all started…

Snowflake Inc. was founded in 2012 by three data warehousing specialists, the French-born Benoit Dageville, President of Product Division, and Thierry Cruanes, Chief Technical Officer, together with Marcin Zukowski, Vice-President of Engineering, later joined by investor Bob Muglia, who took up the role of CEO from 2014 to 2019.

The company set out to create the first data platform fully envisioned for the cloud, rather than traditional on-premise data warehousing. The benefits rely on the possibility for corporations to fully mobilise the data they can access from internal and external sources, orders of magnitude faster than previously possible.

Since its inception in 2012, the company raised $1.4B until its Series G round earlier this year, among the most important Venture Capital firms to have invested in Snowflake are Sutter Hill Ventures, which held more than 20 percent of its shares before the offering, Sequoia Capital and Redpoint. Another key investor is Berkshire Hathaway, the company led by Warren Buffet purchased $320m from the company’s previous CEO Bog Muglia, in addition to a $250m stake alongside the flotation. Much of the money raised was burned buying market share, and although the company records triple digit revenue growth, the same cannot be said for profits as it continues reporting losses.

In 2019, Frank Slootman , the man who coined the term data cloud, joined as new CEO with the mission to take Snowflake public, with him brought the experience of having led two companies’ IPO, ServiceNow and Data Domain, both in the cloud computing segment. Slootman was also expected to focus on large customers, helping snowflake take on bigger rivals such as Amazon, Microsoft and Oracle, at which he has been successful.

Data Warehouse Software Market Share. Source: IDC, Bloomberg Intelligence

Data Warehouse Software Market Share. Source: IDC, Bloomberg Intelligence

The Business Model…

Data is becoming paramount to business success and the explosion of data collected worldwide is allowing for rich insights. Data has been compared to oil, and snowflake is to data what a refinery is to oil. When choosing where to store and manage large amounts of data, companies have historically done so on premise, investing large amounts in on-premise infrastructure. The improvement in communications technology is enabling data to be transferred, stored, and manipulated in the cloud, at a low cost, and the adoption of cloud services is therefore accelerating.

Legacy on premise appliance providers such as Oracle, Teradata and HP Enterprise are set to lose market share to Snowflake due to these trends, as they suffer from a series of problems which Snowflake solves, the main problem being data silos, a collection of data that is held by one group in a particular location and is therefore not easily accessible to other groups, resulting in the same data being stored many times in different locations. Legacy databases are expensive to maintain, difficult to use, don’t allow for seamless data sharing, require investment if volume of data is significantly increased and it is hard to implement a multi-cloud, cross region, data management strategy.

Snowflake is threatened mainly by other cloud services providers such as Microsoft Azure (MSA) and Amazon Web Services (AWS), although it can also be complementary to these providers, acting as the single data warehouse that shares the data to be analysed by data analytics applications offered by AWS or MSA.

Snowflake, like other cloud-based platforms, offers services ranging from data storage and processing, to accessible computing power, while making the most of technology in relation to computer resources, facilitating decision-making and providing solutions to issues each one of their users may encounter. However, as the success of its initial public offering (IPO) may indicate, they are set apart by key characteristics that enhance users’ experience.

An indispensable advantage, in the cloud-based platform’s possession, is the fact that it optimizes its clients’ performance in relation to their costs while using their platform. That is, through the separation of data storage to its computational capabilities, it is able to scale up or down (add or remove information) when necessary, in order to ensure no irrelevant information is being considered when complex objectives are being pursued. Given Snowflake charges for storage based on terabytes stored per month, and computation on a per-second basis, the fact that they’re separate appeals to firms who do not partake heavily in both activities, as they are able to only pay for what they use, as opposed to bundled services offered by competition.

Furthermore, another advantage of keeping storage and compute separate is data sharing. In other words, users can share their data with entities that are Snowflake customers as well as those who are not, in real time. This is particularly relevant for those who are accustomed to share data through File Transfer Protocol (FTP), for Snowflake provides a competitive service which is more efficient yet better protected and audited.

Finally, its unique, patented multicluster architecture which addresses concurrency issues is a big pro for the company, when compared to its competitors. It ensures queries from one virtual warehouse never clash with ones being carried out in another virtual warehouse, therefore users never have to wait for other loading processes to be completed before they find what they need.

Snowflake’s vision of the “Data Cloud” is also a differentiating factor from their competitors.  Their focus on allowing their customs and partners to share data with each other creates a powerful network effect. The more customers adopt our platform, the more they can share data with, or receive data from, other Snowflake customers, partners, and data providers. For example, on the 18th of March 2020, Starschema Inc made its Covid-19 epidemiological data available on Snowflake’s data marketplace. Hundreds of Snowflake customers then used this data to analyse the impact of the outbreak.

Coming up for Snowflake…

Though Snowflake’s future is uncertain, and it is operating at a lossmaking pace, it has also raised $3.4 billion with the IPO. The cloud-based storage firm’s financial statements are making a stride in a favourable direction, with the last quarter’s revenues of $133 Million (121% of its revenues this time around last year), and its losses are curtailing. Besides the numerical indications of possible prosperity, it is a firm that is perfectly placed in space and time, as firms transfer from on-premise data to cloud data storage.

Despite competition not being null, Snowflake has other industry giants invested in their service – the likes of Nike, Apple, CapitalOne, among several others. Moreover, it enjoys solid relations with the 3 largest cloud providers in the US (Amazon’s AWS, Microsoft’s Azure and Google Cloud Platform). In addition to that, they boast a customer retention rate of 158%, suggesting their existing clients are spending 58% more than previously.

Finally, according to research carried out by the world’s premier global market intelligence firm, IDC, within 3 years, the cloud market will be valued at 84 Billion US Dollars, promising room for growth for existing firms, with Snowflake definitely not being an exception.

Customer Base, Growth. Source: IDC, Bloomberg Intelligence

Customer Base, Growth. Source: IDC, Bloomberg Intelligence

If you enjoyed reading about Snowflake, make sure to check out Finance Team’s article on their IPO coming out on October 2nd 


From the conference room to Zoom: the future of remote working

Telecommuting, or remote working, has been frowned upon by employers for many years, who feared unsupervised workers would be much less efficient. However, developments in teleconference and telework technology and, most importantly, the constraints imposed by the coronavirus outbreak, have brought forward a great increase in the remote workers count, and key takeaways from the situation include a boost in employee productivity and reduction in fixed costs for firms, which not only mitigated the fears of employers, but also anticipated a shift in strategic and operational paradigms for firms.

Global crises are historically known to alter societal behaviours, namely on consumption and organizational levels, ultimately altering the path of history. The Black Death, the most fatal pandemic recorded in human history, which is estimated to have killed nearly half of the European population in the 14th century, is credited to have dismantled feudalism, as serfs (peasants) searched for higher wages due to labour shortages.

Rosie the Riveter Inspired women to serve in World War II Rosie the Riveter Inspired women to serve in World War II

Another example is that of World War II when, due to the allocation of a significant share of the male population to war efforts, women were encouraged to enter the workforce, and such effects persisted in the aftermath. COVID-19 is no different, and while changes in consumption habits may only be temporary, this might be the beginning of a new era for employment in general.

From companies’ perspective, it is not only expected, but necessary, an increased focus on reconfiguring the work space to promote safety, as well as on enhancing working-related software, de-risking their supply chains and raising efforts for crisis preparedness. What’s more, a survey conducted by PwC unveiled that 49% of companies plan to make remote work discretionary for positions that allow them to do so, 40% intend to accelerate automation and new ways of working and 26% want to reduce real estate footprint. The latter finding means that this transition in work ethic is likely to hamper office real estate, as firms opt for smaller office spaces or none at all as their workforce transits to their own homes.

Regarding efficiency gains, there is no consensus on how productivity is affected at home. Despite some studies suggesting that teleworking leads to a substantial decrease in productivity, sometimes as much as 45%, there is no clear evidence of such, as there are external factors at play, for instance the conditions of the workplace. In fact, the impact on productivity depends, in part, on the nature of the characteristics of occupations and the nature of tasks, as more creative duties are likely to experience a positive impact, while more dull, repetitive ones are likely to be negatively affected.


Regardless of the possible impact on productivity, the current crisis changed both employees and employers’ perception over teleworking and its benefits.  A survey conducted during the pandemic showed 82% of employees in offices would like to telework one or more days a week after the Covid-19 crisis (Colliers, 2020), implying the experience has been positive. Furthermore, 74% of companies say they intend to formally implement telework (Gartner, 2020), meaning companies are also satisfied with the new working conditions.

In these times of great uncertainty, it seems as if one thing is certain:

the working experience will not be the same even when normality returns.

According to researcher Christopher Kent, work routines and rhythms will most likely be restructured, shifting from the general workday structures of a 9 to 5 towards a more objective-based workday, managed by deadlines and check-ins. Furthermore, the technological developments that enhanced and allowed companies to continue its operations should not be set aside, but integrated and internalized. Now that the majority of companies have already gone through the painful process of adaptation of these tools, it is important that firms take the most out of them even after the crisis has gone by. Lastly, business leaders and managers must be wary of changes in policy and regulations in the work environment in order to prevent future crises like the one we are currently experiencing, while ensuring viable forms of staff surveillance shall telecommuting persist.

Sources: McKinsey, PwC, BCG, Lavola, Forbes

Lourenço Paramés - Lourenço Paramés Tiago Rebelo - Tiago Rebelo Diogo Alves - Diogo Alves

The Portuguese Environment for Startups

Portugal lists as one of the European countries most severely hampered by the 2008 global recession. Following the austerity measures implemented in 2011 as a consequence of the country’s economic precarity, unemployment boomed and triggered all-time high emigration in the following years, particularly among younger and highly qualified people, leading to the so-called brain drain. This phenomenon greatly dampened Portugal’s more innovative sectors, making the country lag other economies regarding innovation, and consequently the startup ecosystem.

More recently, in 2016, the Portuguese government implemented StartUp Portugal, a startup acceleration initiative aimed at rejuvenating the country’s industries, boosting economic growth and fostering foreign investment, as well as creating an international hub for innovation.

Still in 2016, Prime Minister António Costa announced in the first edition of Web Summit in Lisbon a €200M fund to co-invest alongside VCs (venture capital) in local startups and foreign enterprises that reallocate to Portugal. Moreover, this event alone (which has been contractually ensured to remain in the country until 2028) has been creating fiscal revenue of over €45M and stimulating venture capital injection into local initiatives. This resulted in venture capital investments of around €44M in that year which, despite not being comparable to the vast majority of the top entrepreneurial countries, was a big increase from the €29M in 2015.

Indeed, a report conducted by Startup Europe Partnership stated that the Portuguese startup ecosystem is growing twice as fast as the European average. The cases of unicorns Farfetch, the online luxury retail platform, the cloud-based call-centre software Talkdesk or the low-code platform for private application creation Outsystems, reiterate the fertility of the Portuguese soil for the creation of valuable global market conquerors.

This month, the American startup accelerator Techstars partnered up with Semapa Next, in order to invest and enhance ten Portuguese newly founded companies that are bringing digital transformation to the areas of Industrial & Environmental Tech and Smart Transportation. This program clearly depicts how accelerators and venture-capital investors are increasingly focusing their efforts on startups that seek competitive advantage through the development of innovative technologies. Among the chosen are “Apres”, a data-driven company that focuses on providing AI solutions to enterprises, and “Qsee”, which devotes itself to the development of advanced analytics to address critical challenges in quality and productivity throughout the production process of firms.

Today, Portugal has a more developed entrepreneurial ecosystem and as a result is becoming a hub for innovation and startups, ranking at #31 on the Global Innovation Index. This progress is a consequence of factors such as Education, Expertise, and Support. The startup ecosystem benefits from a qualified workforce, as well as high quality Universities, with special focus on business and science, also emphasising on entrepreneurship. In fact, Portuguese universities such as Nova SBE, Universidade Católica SBE and Instituto Superior Técnico are ranked amongst the best in their areas of expertise.

Furthermore, partnerships between universities and their respective sectors, which provide students with a more “hands-on” experience, benefit not only students, but also startups, especially those in the growth stage, as more often than not they need access to specialist knowledge, which they lack in-house.

When it comes to support for startups, Portugal is characterised by a great number of initiatives. The number of incubators and accelerators, for instance, has grown to more than 150 throughout the country. They prove to be successful as well: the Lisbon Challenge was named as one of the top accelerators in Europe, and incubators like Startup Lisboa are also key players. Besides the typical startup amenities, there is a wide offer of services for starting and growing companies, ranging from co-working spaces and support services for intellectual property and product development. Consequently, Lisbon is listed in the top 5 best performing startup communities in Europe.

Despite the support in non-financial resources, the country still lacks monetary investment. Difficulty in raising funds helps to explain the higher percentage of startups in the earlier stages of development and the fewer in more advanced stages, in comparison with the European average.

Distribution of startups by development stage, 2018. Source: Statista

Distribution of startups by development stage, 2018. Source: Statista

So far, remarkable improvements have been observable in the startup ecosystem in Portugal, but there is still a long way to go until we reach the same level of entrepreneurship development as our European peers. Venture capital is a valuable source of investment for newly founded companies and, as of 2019, Portugal was still ranked at the bottom (out of 28 countries) in VC funds raised per capita, at only $4 per capita, This value doesn’t even come close to the $771 per capita raised by Luxembourg. In terms of job creation, on average, each Portuguese startup employs 8.8 people, when the European average is 12.8. This fact may compromise the growth of the national enterprises.

Evaluating the stage of development of Portuguese recently-founded companies, the majority of them (51.3%), are in the “Startup stage”, meaning they have completed a marketable product or service and report first revenues/users, and that is the most prominent stage of development for a large proportion of European countries. It is also noticeable that there are still many companies in early stages of development, the “Seed stage”, which accounted for 16.7% of the startups in 2018. These values follow the European trend.

5 startups to look out for

This atmosphere has resulted in a myriad of exciting innovation. As a result, Tech5 was created, with the aim of serving as a community for the most promising startups in Europe and Israel. Each year, the top 5 startups of each participating country are chosen  and brought to Founders Day, an event that brings these companies, top-tier investors and global press altogether. The criteria for selection are based on performance, investment rounds, growth, media coverage and social impact, among other factors. This year’s finalists were:

  • (founded in 2018, raised $120k): with resort to satellite imagery, AI and computing power, provides an in-depth analysis of natural resources to companies, in order to ensure a sustained and productive exploration of such resources. From their platforms, they are able to provide insights on growth predictions, harvesting analysis, plagues, damages, predictions on short and long-term impacts, as well as asset monitoring and much more.

  • Barkyn (founded in 2017): an e-commerce website focused on man’s best friend. The platform allows for the creation and purchase of food adapted solely for each dog’s needs with the aid of an expert. Moreover, online veterinary appointments are also a feature of the startup.

  • DefinedCrowd (founded in 2015, raised $12.9M): DefinedCrowd is an artificial intelligence service to train and accelerate data through a combination of human-in-the-loop procedures and machine-learning techniques.

  • Jscrambler (founded in 2014, raised $2.3M): the startup serves the purpose of bringing security solutions for webpages and apps, ensuring tailor-made decisions based on data extraction to ensure maximum compatibility, performance and protection.

  • SWORD Health (founded in 2013, raided $14.1M): the first digital therapist ever, this program allows for physical therapy to be performed at home, while ensuring real-time feedback from the digital therapist and analysis of the rehabilitation process from clinical teams.


Despite Portugal’s initial setback, due to the community and government’s hard work, what was once the country’s Achilles heel is now one of its most attractive factors. The startup ecosystem improved considerably, more and more money is being invested and, consequently, that hard work is beginning to show results. As the country starts to roll out its first unicorns, the future looks promising…

Sources: “An overview of the Portuguese Entrepreneurship Ecosystem”, Halbe & Koenraads. Financial Times, Startup Europe Partnetship,, OECD, Tech5, Statista.