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Agarwal, Ritesh Budget Travel Hotels and Travel Lodgings India Layoffs and Job Reductions Oyo (Oravel Stays Pvt Ltd) SOFTBANK Corporation Start-ups Uncategorized

Oyo Scales Back as SoftBank-Funded Companies Retreat

MUMBAI, India — Oyo, once one of India’s fastest-growing tech start-ups, is now rapidly scaling back.

In recent weeks, Oyo, a budget hospitality company, has pulled out of dozens of cities, cut thousands of hotel rooms, started laying off employees and slashed other costs as it faced pressure from its biggest investor, the Japanese conglomerate SoftBank, to curb vast operating losses.

The retreat has been swift and sweeping. In India alone, Oyo has lost more than 65,000 rooms — or about a quarter of what it had offered to travelers — since October, according to internal data from current and former employees that was reviewed by The New York Times. This month, Oyo also stopped selling rooms in more than 200 small Indian cities, according to company documents and one current employee and one former employee.

The moves come on top of more than 2,000 layoffs around the world, which Oyo began rolling out last week, according to six current and former employees. Before the cutbacks, Oyo had about 20,000 employees in 80 countries.

Oyo said some of the data obtained by The Times was inaccurate but declined to be specific. In an email to employees on Monday, Ritesh Agarwal, the company’s chief executive, said Oyo was focused on sustainable growth and profitability — which meant layoffs.

“Unfortunately, some roles at Oyo will become redundant as we further drive tech-enabled synergy, enhanced efficiency, and remove duplication of effort across businesses or geographies,” he wrote in the email.

The Economic Times, an Indian publication, first reported in December that job cuts at Oyo were coming.

Oyo’s actions are part of a broader pullback by start-ups funded by SoftBank. Armed with a $100 billion fund known as the Vision Fund, SoftBank has shoveled money into start-ups across the globe in recent years. That has given many young companies fuel to expand, often with little thought for profit.

Last year, some SoftBank-funded start-ups began running into trouble — most notably WeWork, the office space company, which failed to go public when investors began questioning its losses. WeWork ultimately ousted its chief executive and slashed its valuation to less than $8 billion from $47 billion.

WeWork’s fall led to questions about other start-ups that SoftBank had financed and whether those young firms could make money. Last month, the dog-walking service Wag underwent several rounds of layoffs before SoftBank sold its shares at a loss. The construction start-up Katerra, another SoftBank-funded company, also cut its staff.

This month, layoffs have gathered momentum at start-ups that SoftBank had invested in. The South American delivery service Rappi and the San Francisco car-sharing start-up Getaround said they were laying off employees. Zume, a company that used robots to make pizzas and had been valued at $2 billion, cut more than half of its work force. It also stopped making pizzas.

Some investors and start-ups said they were now approaching SoftBank’s Vision Fund cautiously — or, in some cases, avoiding it altogether.

“We have advised almost all of our companies to steer clear,” said Josh Wolfe, an investor at the venture capital firm Lux Capital who has been critical of SoftBank’s strategy. “Everyone else was fearful to say the emperor had no clothes.”

SoftBank declined to comment on Oyo and other start-ups in which it has invested.

Mr. Agarwal founded Oyo in 2013 to organize India’s small independent hotels into a chain. The company markets rooms online and takes a cut of each stay. Mr. Agarwal, who has become a business star in India, has said he aspired to make Oyo the world’s largest hotel chain by 2023, displacing Marriott.

But as Oyo tried to expand globally, in part pushed by SoftBank, it spent heavily on incentives to attract hotel owners and customers to its site. That resulted in losses in India, where Oyo has said it will lose money through at least 2021.

Masayoshi Son, SoftBank’s chief executive, began investing in Oyo in 2015. SoftBank and its Vision Fund now own half its stock. While Mr. Son has called Oyo a jewel of his fund and urged it to grow quickly, he has since changed his stance.

As Oyo’s losses have mounted, senior leaders at the company have told employees that SoftBank had demanded that it become profitable on a basis known as EBITDA — earnings before interest, taxes, depreciation and amortization — by mid-2020, according to current and former employees.

In another sign of SoftBank’s shifting position, Yahoo Japan, which is half-owned by SoftBank, pulled the plug in November on a Japanese apartment-rental venture with Oyo. Most of the Oyo employees involved in the Japan venture have been laid off or relocated, current and former employees said.

Oyo faces other troubles in India. On Friday, the Indian income-tax authorities visited the company’s headquarters just outside New Delhi, requesting reams of documents. The tax department and Oyo said the government was examining whether the company was properly withholding and remitting income taxes on payments to vendors.

The Times reported this month that Oyo had offered thousands of unlicensed hotel rooms and sometimes offered free rooms to government officials to deter enforcement. The Times also described how some Oyo employees worked together to commit fraud against the company.

In his email on Monday, Mr. Agarwal said the behavior described by The Times would violate the company’s code of conduct. “We take all the allegations very seriously and are looking into each and every one,” he wrote.

To stem losses, Oyo has also cut back on staff and supplies such as mineral water and cleaning fluids in the hotels it runs itself, according to the current and former employees. Oyo staff members managing some of the hotels have been instructed to save more money on electricity bills by switching off lights, elevators and even boilers for hot water, they said.

Morale has plummeted among thousands of Oyo workers globally, current and former employees have said.

Prabhjeet Singh, an Oyo business development manager who left the company in September, said employees who criticized the company ran a greater risk of losing their jobs.

“It’s a culture of silence,” he said.

Oyo’s reputation has deteriorated so much in India that other employers are reluctant to hire its former workers, said Mr. Singh, who has been unable to land another job.

“They look at me as if I’ve done a crime working at Oyo,” he said.

Vindu Goel reported from Mumbai, Karan Deep Singh from New Delhi and Erin Griffith from San Francisco.

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Away C.E.O. Is Back, Just Weeks After Stepping Down

She apologized for her management style and stepped down as chief executive. Now, she says it was a mistake to fall on her sword and is taking her job back.

Former employees of Away luggage, one of the fastest-growing retail start-ups in recent years, accused the company’s chief executive, Steph Korey, of creating a toxic culture within the company in an article published by the technology website The Verge that went viral last month.

The article included text messages that a Verge editor described on Twitter as showing Ms. Korey using the workplace messaging application Slack “as a tool to stalk and bully junior and minority employees.”

In the article, former employees — who were identified by pseudonyms — contended that Ms. Korey pushed them too hard. In one message quoted in the article, which was sent at 3 a.m., she told employees on the customer service team that they could not work from home or submit vacation requests until customer service problems she had identified were resolved. In others, she came across as passive-aggressive.

Within hours of its publication, the article had created a social media firestorm around the company, which is worth more than $1 billion in the private market with plans to go public. For a company focused on a millennial audience and a brand that seeks to evoke a sense of community, the story was viewed internally as existential.

Within 24 hours, Ms. Korey had issued a lengthy apology. “I am sincerely sorry for what I said and how I said it. It was wrong, plain and simple,” she said. “I can imagine how people felt reading those messages from the past, because I was appalled to read them myself,” she wrote. Days later, the company said that it was hiring a new chief executive and that Ms. Korey would become executive chairwoman.

The episode, the latest example of a fast-growing company run by young founders that has found itself in a crisis, was viewed within the insular world of start-ups as a swift fall for Ms. Korey, Away’s 31-year-old co-founder.

The new chief executive, Stuart Haselden, plans to start his job on Monday, having been recruited from Lululemon Athletica, the company famous for its leggings.

But there is one new, significant wrinkle: His title won’t be chief executive — he will be co-chief executive with Ms. Korey. She isn’t going anywhere. The company plans to announce the move on Monday morning.

“Frankly, we let some inaccurate reporting influence the timeline of a transition plan that we had,” Ms. Korey said in an interview last week. With some time and perspective, she said, the company’s board members decided to reverse themselves. “All of us said, ‘It’s not right.’”

The members of Away’s board say they feel as if they fell victim to management by Twitter mob.

The company now says it disputes The Verge’s reporting and has hired Elizabeth M. Locke, the lawyer who successfully brought a defamation case against Rolling Stone magazine for a story about a supposed gang rape at the University of Virginia. It is unclear whether Away plans to bring a lawsuit.

In a statement, The Verge said, “Steph Korey responding to our reporting by saying her behavior and comments were ‘wrong, plain and simple’ and then choosing to step down as C.E.O. speaks for itself.”

Sitting in a windowless conference room at the company’s SoHo headquarters, Ms. Korey, at one point nearly breaking down in tears, said that the month since the article was published had been a tough lesson about management — and herself. She was bombarded by criticism on Twitter and other social media platforms that she thought would put the company’s future in jeopardy.

“It’s very upsetting if suddenly total strangers tell you that you should get an abortion,” said Ms. Korey, who is pregnant. One user on Twitter wrote: “Imagine how she’ll treat that baby.”

In the moment, she said, she chose to take herself out of the chief executive role and make herself executive chairwoman. “I said, ‘I don’t know if the company needs a C.E.O. under fire right now,’” she said. “‘Why don’t we just accelerate our transition plan?’”

In a separate interview, Ludwig Ensthaler, a partner at the venture capital firm Global Founders Capital and the only independent director on Away’s four-member board, confirmed that it had been Ms. Korey’s decision to step down and that there was no pressure from outside investors. He added that he should not have accepted the restructuring plan she proposed in the first place.

Ms. Korey had already recruited Mr. Haselden to the company to become its president, with the promise that, after a transition period, he would be elevated to chief executive to help take the company public. When the plan changed after the Verge article was published, she said she would become executive chairwoman and Mr. Haselden the chief executive. But behind the scenes, she said, she expected both of them to operate pretty much in their original roles, just with different titles. Ms. Korey’s co-founder, Jen Rubio, will remain president and chief brand officer.

“I honestly thought that people didn’t care that much about the inner workings of Away,” she said, “Who is C.E.O. and who is executive chairman — that wasn’t something that, at a private company that’s less than four years old that sells travel products, I just didn’t think would be news and people would care.”

But, she said, it quickly became clear that her plan to remain at Away — effectively in the same role but with a new title — was not understood inside or outside the company.

“The way it became perceived it was like I stepped down and like I left the company,” she said. “I have a very external-facing role working with new vendors, working with new partners, recruiting new candidates. And without a change, it looks like they have a board director reaching out to them who doesn’t work at the company.”

Mr. Haselden said in a telephone interview that the article didn’t paint Ms. Korey as the person he knew and said her original decision to step aside “was very selfless in trying to defuse the firestorm of social media.”

“But it just created a misconception that she was exiting the business, which was never the intent,” he added. Making them both co-chief executive, he said, “will clarify how we intended to operate from the beginning.” Ms. Korey said she still planned to eventually step aside after a transition period and Mr. Haselden will become the sole chief executive.

Whether the article reflected an accurate picture of the company — The Verge has since published several updates, clarifications and corrections — it is hard to judge if Ms. Korey herself has changed.

The company provided a trove of emails from employees that suggested they loved working for her. Yet even after the Verge article appeared, employees continued to leak screenshots of Away’s Slack channels to the site, suggesting that whatever changes had been made, some people inside the company remained unhappy.

Ms. Korey said she has done a lot of soul-searching since the article was published. While she maintained that it misrepresented her behavior, she said she recognized that she had made mistakes and could improve.

“When I think back on ways I’ve phrased feedback, there have been times where the word choice isn’t as thoughtful as it should have been, or the way it was framed actually wasn’t as constructive as it could have been,” she said. “Those are not, in the eyes of our leadership and the eyes of our board, terminal, unsolvable problems.”

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At SoftBank’s Jewel in India: ‘Toxic’ Culture and Troubling Incidents

NEW DELHI — Oyo, a start-up that offers budget hotel rooms, has grown into one of India’s most valuable private companies and aims to be the world’s largest hotel chain by 2023.

But at least part of Oyo’s rise in India was built on practices that raise questions about the health of its business, according to financial filings, court documents and interviews with 20 current and former employees, as well as others familiar with the start-up’s operations. Many spoke on the condition of anonymity for fear of retaliation from the company.

Oyo offers rooms from unavailable hotels, such as those that have left its service, according to the company’s chief executive and nine of the current and former employees. That has the effect of inflating the number of rooms listed on Oyo’s site.

Thousands of the rooms are from unlicensed hotels and guesthouses, its executives have acknowledged. To deter trouble from the authorities over the illegal rooms, Oyo sometimes gives free lodging to the police and other officials, according to nine of the current and former employees and internal WhatsApp messages viewed by The New York Times.

Oyo has also imposed extra fees on hotels and declined to pay the hotels the full amounts they claimed they were owed, according to interviews with hotel owners and employees, emails, legal complaints and other documents viewed by The Times. Some hotel operators have sought to file criminal complaints against Oyo, which said it withheld payments primarily over the hotels’ customer service issues.

“It’s a bubble that will burst,” said Saurabh Mukhopadhyay, a former Oyo operations manager in northern India who left the company in September.

It would also be another black eye for SoftBank, which is Oyo’s biggest investor and owns half the start-up’s stock. Masayoshi Son, SoftBank’s chief executive, has hailed Oyo as a jewel of his company’s $100 billion Vision Fund, even as he recently wrote off billions of dollars on other investments like WeWork.

“This is the only company which went global at this scale from India,” Satish Meena, a senior forecaster for the research firm Forrester in New Delhi, said of Oyo. “But as of now, there are serious doubts about the business model.”

SoftBank declined to comment.

Ritesh Agarwal, Oyo’s chief executive, acknowledged in a recent interview that some of his company’s room listings included hotels that it no longer worked with. He said Oyo left those listings up and marked them as “sold out” as it tried to woo the hotels back.

Aditya Ghosh, Oyo’s head of India operations, also said in an interview that many hotels lacked required licenses, leaving them vulnerable to the occasional government raid. He denied that Oyo gave free rooms to officials.

Mr. Ghosh dismissed what he called “noise” from hotels about extra fees and nonpayment of bills. “The disagreement is about the penalties we charge on customer service failure,” he said.

He added that nearly 80 percent of Oyo’s employees had been at the company for less than a year, so training has been a challenge. “We have just grown very, very fast,” he said.

Founded in 2013 by Mr. Agarwal, then a 19-year-old student, Oyo set out to organize India’s budget hotels, which have traditionally been small, family-run enterprises. The company coaxes the hotels to become Oyo-branded destinations that list exclusively through its website; it then markets those rooms online to travelers and takes a cut of each stay. The start-up also runs some hotels itself.

Oyo is trying to expand globally and now offers more than 1.2 million rooms in 80 countries, including the United States. It employs more than 20,000 people and has raised more than $2.5 billion in funding. Mr. Agarwal has become a business star, hobnobbing with India’s prime minister, Narendra Modi.

But as Oyo has grown, its losses have mushroomed. The company expects to lose money through at least 2021, according to recent government filings. Some efforts to expand in countries like Japan have flopped.

In December, SoftBank and Mr. Agarwal put another $1.5 billion into Oyo to accelerate its expansion. The funding, negotiated over the summer, valued the company at $8 billion.

At the same time, two other big investors, Sequoia Capital and Lightspeed Venture Partners, reduced their holdings. The venture capital firms, which both hold board seats at Oyo, sold $1.5 billion of their stock — about half their stakes — to Mr. Agarwal. He borrowed money to buy the shares and paid the venture firms a price that valued Oyo at $10 billion.

Lightspeed and Sequoia declined to comment.

The current and former workers said that Oyo was never an easy place to work but that pressure increased over the last year.

Mohammad Jahanzeb Gul, who joined the start-up in January 2019 and supervised 23 Oyo properties, said that during the nine months he was there, he sometimes spent all day and night in front of a computer to meet deadlines.

“The culture is really very toxic,” he said.

Mr. Mukhopadhyay, who began working at Oyo in August 2018, said employees were under so much pressure to add new rooms that they brought hotels online that lacked air-conditioning, water heaters or electricity. He and eight others said their managers had asked them to engage in a monthly shell game of briefly inserting these unavailable properties into Oyo’s listings — complete with fake photographs — to help impress investors.

Mr. Ghosh, who left the India job this week and joined Oyo’s board, said that some hotels open in stages and that “there is no padding.”

Saurabh Sharma, who worked for Oyo from 2014 to 2018 as an operations manager, said the company sometimes deliberately withheld payments from hotel owners — a practice that half a dozen other current and former employees also described.

In some cases, they said, the start-up wanted to squeeze the hotel owners into renegotiating contracts that it deemed unprofitable. In others, Oyo wanted to save money and figured that most owners would not press for full payment.

“If 1,000 people shout, we will pay 200,” Mr. Sharma said Oyo managers had told him.

In a police complaint filed in November, Betz Fernandez, owner of the Roxel Inn in Bangalore, said Oyo owed him $49,000 and acted with “intention to cheat and cause wrongful loss” by charging him for nonexistent guests and refusing to pay the contracted minimum monthly payment. Oyo said the dispute was in arbitration.

Oyo’s oversight of its workers was also sometimes so lax that employees brazenly stole from it, said four people who were involved in the start-up’s fraud-fighting efforts.

Because Oyo hotels are popular with unmarried couples looking for places for their trysts, one scheme involved workers at properties run directly by the start-up colluding to keep the guests checked in after they left. The workers then cleaned and resold the rooms for cash to other guests and pocketed the money, the people said.

Oyo has conducted surprise raids at some properties, seizing employee cellphones and checking rooms and records for evidence, they said.

An Oyo spokeswoman said it investigates all fraud accusations and had in some instances fired employees.

Executives have also asked employees to paper over troubling incidents, some workers said.

Mr. Mukhopadhyay said that one night last June, a long-term guest at an Oyo-run property in Noida, near New Delhi, called him. She said three men had raped her in her room.

The next morning, Mr. Mukhopadhyay and another Oyo employee were summoned to the police station, where they pleaded with the guest not to register a formal complaint. Oyo’s legal team also instructed them not to tell anyone about the incident because it could hurt the company’s image, he said. The guest withdrew the complaint and moved out.

In a telephone interview, the guest confirmed Mr. Mukhopadhyay’s account. Oyo disputed some details and said any decision to file a complaint was up to the guest. The Noida police said they had no record of a complaint.

To placate the authorities over unlicensed properties, Oyo managers also gave the police and other government officials free rooms on request, current and former employees said. They said the details were recorded in dedicated WhatsApp groups, one of which The Times reviewed.

Mr. Ghosh said, “We do not encourage or involve ourselves in any kind of bribery or graft.”

Mr. Mukhopadhyay said Oyo’s growth practices contributed to his decision to leave.

“There’s something called integrity,” he said. “I can’t compromise on that.”

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The 2019 Good Tech Awards

Two years ago, I started what has become one of my favorite annual traditions. Instead of a year-end column rounding up all the dubious and objectionable things technology companies did over the last year — a true fish-in-a-barrel assignment — I highlighted some examples of “good tech.” I wanted to give kudos to the kinds of tech projects that don’t always make headlines but that improve people’s lives in tangible ways.

I’ll admit, handing out awards for good technology in 2019 feels a little like congratulating Godzilla for not destroying all of Tokyo. There was plenty of bad tech news to write about this year: Facebook’s foibles, Amazon’s aggression, SoftBank’s stumbles. But to me, the tech industry’s very public shortfalls make celebrating its quieter successes even more important. The tech industry, after all, is not a monolith, and many engineers and entrepreneurs work on projects that help society. So here, with no further ado, are this year’s winners.

To OpenAQ, for educating us about the air we breathe.

Air pollution is a vastly underestimated problem. Polluted air is linked to one in eight deaths worldwide, and studies have shown that bad air quality can cause cognitive impairment in young people and increase the risk of dementia and Alzheimer’s disease in the elderly. But until recently, there was no good source of air quality data that researchers and activists could rely on.

Christa Hasenkopf, an atmospheric scientist, decided to fix that. She and a software developer started OpenAQ, an open-source platform that collects air quality data from governments and international organizations in a single place and makes it free and accessible. Want to know how the nitrogen dioxide levels in Hyderabad, India, compare with those in Kampala, Uganda? OpenAQ can tell you. Want to build an app that alerts people in your city when air quality dips below a healthy threshold? You can do that, too.

The company says it has processed 188 million air quality measurements this year, making it a powerful weapon for policymakers, environmental groups and concerned citizens trying to clean up the air.

To DynamiCare Health, Biobot Analytics and Pear Therapeutics, for using tech to address the opioid crisis.

Few public health problems in the United States have proved as intractable as the opioid epidemic. But in 2019, three Massachusetts start-ups used technology to chip away at it.

DynamiCare Health, based in Boston, has built a mobile app meant to help keep recovering users of opioids and other drugs on the wagon. The app — already in use in eight addiction treatment systems across the country — allows users to test their breath and saliva remotely, check into group meetings and therapy sessions, and earn money on an electronic debit card by meeting their sobriety goals.

Biobot, a company started by two graduates of the Massachusetts Institute of Technology, analyzes sewage samples to determine the opioid use levels in a given neighborhood. (Opioid use leaves telltale byproducts called metabolites, which can be chemically detected in urine.) Once this data is collected, public health officials can use it to set priorities for treatment programs, detect spikes in use in a neighborhood and monitor the effectiveness of prevention programs over time.

Pear Therapeutics, another Boston outfit, makes “digital therapeutics” — essentially apps that use cognitive behavioral therapy techniques to help recovering addicts stick with their treatment programs. Its anti-opioid program, Reset-O, was cleared by the Food and Drug Administration late last year and can now be prescribed by doctors in conjunction with other treatments.

To Lemontree, Goodr and Propel, for helping feed the hungry.

Lemontree, a nonprofit food-delivery app based in New York, was started by Alex Godin, an entrepreneur who sold a workplace collaboration start-up to Meetup several years ago. The company sells Blue Apron-style meal kits to low-income families for $3 apiece. Meal kits are packed by volunteers, and they can be bought with food stamps.

Goodr, described by its founder, Jasmine Crowe, as a “food delivery app in reverse,” is a platform based in Atlanta that helps save some of the 72 billion pounds of food wasted in the United States every year and give it to people in need. Restaurants sign up on the site to have their excess food picked up and donated to local nonprofits and homeless shelters. Goodr operates in six cities, including Chicago, Miami and Philadelphia, and says it has diverted 2.1 million pounds of food and provided 1.8 million meals since 2017.

Propel, a Brooklyn start-up, is the creator of Fresh EBT, a popular app that helps low-income users manage their food stamps and other benefits. After doing battle with a larger government contractor last year, Propel recovered this year and says more than two million households use it every month.

To Pinterest, for taking a stand against social media toxicity.

When you think of Pinterest, you probably picture mood boards, D.I.Y. hacks and mommy-bloggers. But the social network spent much of 2019 doing the kinds of tough, principled work that its bigger rivals often neglected.

In August, the company announced that users searching for vaccine-related information would be shown results from authoritative sources like the World Health Organization and the Centers for Disease Control and Prevention, rather than being led down rabbit holes filled with misinformation. The company also introduced a “compassionate search” experience, which offers mental health advice and exercises to users whose behavior indicates they might be feeling anxious or depressed, such as people who search for things like “sad quotes” or who look up terms relating to self-harm. And in December, Pinterest joined other wedding websites in announcing that it would limit the promotion of wedding venues that were once slave plantations.

Pinterest hasn’t always operated flawlessly. But while its competitors were giving grandiose speeches and supplicating at the White House, the company’s content-moderation choices stood out as an example of a social network with a moral compass.

To Big Tech’s climate activists, for pressuring executives to walk the walk.

In a year when climate change was the subject of mass global demonstrations, Silicon Valley’s silence could have been deafening. Tech companies like Amazon, Microsoft and Google count fossil fuel companies and anti-environmental groups among their customers — a fact that doesn’t sit well with some employees. Those employees made their dissatisfaction known this year, joining climate strikes and walkouts and publicly calling on their own executives to do more to fight climate change.

In April, more than 4,200 Amazon employees sent an open letter to Jeff Bezos, the company’s chief executive, urging him to end the company’s contracts with oil and gas companies and commit to ambitious carbon-reduction goals. Amazon later announced a plan to become carbon neutral by 2040.

To Gypsy Guide, for enlightening my summer road trip.

If I’m being honest, the best app I used in 2019 wasn’t TikTok or some new A.I.-powered facial recognition app. It was Gypsy Guide, a simple, understated app that gives guided audio tours of national parks and other tourist destinations. The app uses your phone’s GPS to track your route through a park, and it narrates relevant facts as you drive past them. My wife and I drove through Yellowstone and the Grand Tetons this summer, and Gypsy Guide (which could really use a new name) quickly became our car soundtrack.

Gypsy Guide is not the slickest app in the world, and it’s not making anyone a billionaire. But it kept us entertained for hours, and it taught me things I wouldn’t have known. (Did you know that a concave depression in a mountain caused by a glacier’s erosion is called a “cirque”? Me neither.) It was a good reminder that not every tech start-up has to address some deep, existential need to be worthwhile. There are simpler pleasures, too.

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Where Are the Tech Zillionaires? San Francisco Faces the I.P.O. Fizzle

SAN FRANCISCO — Seven months ago, the Four Seasons in San Francisco sent out a news release announcing the glad tidings that would come soon: New residences for the new money.

Builders were hoisting glass and steel into a 43-story tower where residents would have their own on-staff wine concierge, plus Blue de Savoie French marble, German milled Poggenpohl cabinetry and Dornbracht fixtures. The building’s $49 million penthouse would be the most expensive in San Francisco.

“Just in time for the coming wave of I.P.O. millionaires in San Francisco,” the Four Seasons said, promising “an elevated sales experience” to cater to “this new class of buyers.”

But then the wave of tech initial public offerings — the one that was supposed to mint San Francisco’s new ultra rich — fizzled. The stock of Uber, the ride-hailing giant, has dropped nearly 30 percent since the company went public in May. Lyft shares are down nearly 40 percent. Pinterest and Slack have declined, too.

San Francisco has been left as a slightly more normal town of tech workers who got rich-ish, maybe making a few hundred thousand dollars. But that doesn’t go far in a city where the median cost of a single family home is about $1.6 million.

“Everyone that came back post-I.P.O. seemed to be the same person. I didn’t see any Louis Vuitton MacBook case covers or champagne in their Yeti thermos,” said J.T. Forbus, a tax manager at Bogdan & Frasco in San Francisco.

Private wealth managers are now meeting with a chastened clientele. Developers are having to cut home prices — unheard-of a year ago. Party planners are signing nondisclosure agreements to stage secret parties where hosts can privately enjoy their wealth. Union organizers are finding an opportunity.

Everyone had gotten too excited, and who could blame them? The money was once so close: A start-up that coordinated dog walkers raised $300 million. The valuations of the already giant ride-hailing behemoths had nearly doubled again. WeWork, a commercial real estate management start-up that owned very little of its own real estate, was valued at $47 billion.

Towers rose across San Francisco to house the money. The marble was polished. The bathroom floors were warm. The private pools were being filled.

“The world has changed in a year,” said Herman Chan, a real estate broker with Sotheby’s International. “We expected an upward trajectory at least, and it really kind of deflated. These companies aren’t dying but the cultural zeitgeist, that momentum of I.P.O.s, is gone. You don’t even hear anyone talking about it anymore.”

The developers who had fought the odds of regulation and zoning to build their glass residences in the sky had timed their units to the I.P.O.s. But on a recent visit with the Four Seasons sales team, they acknowledged that techie wealth was not what they were seeing. Interest was mostly coming from overseas buyers, young heirs to foreign fortunes and older executives looking for city pieds-à-terre, they said.

Also in time for the wave that was not a wave are more luxury towers: The Avery, The Harrison, 181 Fremont, The Mira.

“The definition of luxury is scarcity, and there’s so many now,” Mr. Chan said. “Nowadays, my buyers are getting a contingency period and inspectors. Things you would never ask for before. There’s not 10 offers on a house anymore.”

Case in point: A full-floor apartment in San Francisco’s poshest neighborhood of Pacific Heights was listed at $21.6 million and advertised that “a sommelier-worthy wine cellar awaits 1,500 of your most prized bottles.” But more than a year later and after a $5 million price cut, it is still on the market.

Prices for the top 5 percent of San Francisco area real estate listings — the cream of the crop — rose 7 percent between 2017 and 2018. This year, they have fallen more than 1 percent, according to data prepared for The New York Times by the real estate listing service Zillow.

The malaise has spread south into Silicon Valley. A $10.8 million home listing in the town of Portola Valley, Calif., was slashed to $5.7 million. The median sale price for a nearby home in San Jose, Calif., has dropped 10 percent in a year to just under $1 million, according to data from Zillow.

Before the tech I.P.O.s, Deniz Kahramaner, then a real estate data analyst with the property brokerage Compass, had rallied packed rooms of real estate agents and investors about the bonanza that lay ahead. He had charts and estimates of thousands of new millionaires raising the average price of single family homes in San Francisco above $5 million.

Now, he is more muted. “The I.P.O. cash-out hasn’t played out as I mentioned in my original presentation,” he said.

Mr. Kahramaner added, hopefully, that it was still early. “People need more time,” he said.

Instead of yachts, tech workers are funding more mundane ventures like college savings plans.

“This year brought a lot of people back to reality,” said Ryan S. Cole, a private wealth adviser at Citrine Capital, a wealth management firm in San Francisco. “We’ve had a lot of people fund 529 plans for their kids. Pretty boring stuff.”

Some private wealth managers said they were actually somewhat relieved.

“At the end of the day, it’s funny money until it’s realized,” said Jonathan DeYoe, another private wealth adviser. “I’ve got Uber and Lyft clients that are disappointed. It’s a different house now. It’s a different school situation for the kids. But they’re still by and large in good places. No one’s impoverished.”

And so workers who thought they would upgrade from Allbirds to Berluti shoes are remaining, after all, in the Allbirds.

As some rank-and-file tech workers realize they might not get rich from company stock, the allure of working long hours without comparable real money pay is also wearing thin, said labor organizers. They have found traction this year in an industry long resistant to unions.

“The incentives to take the licks that you do are in the hope of some sort of big payoff down the road,” said Paul Thurston, who focuses on unionizing San Francisco tech workers and is the organizing director at the International Federation of Professional and Technical Engineers.

Now, “the engineers and the app designer and the developers are going to be treated a lot more like the employees that they are rather than like partners, which is what they’re told pre-I. P. O.,” he said.

Jonathan Wright, the organizing director of Engineers and Scientists of California, said he was in talks to unionize the workers of several big tech companies.

“There’s a promise: you work 100 hours a week, you sleep under your desk, and then you’ll be rewarded with the wealth of Bezos,” Mr. Wright said. “That mythology has been fading for years. The day of the unicorn is over.”

Where there is new wealth, it’s coming from the older tech companies like Apple and Alphabet, whose stocks this year have soared. And some fortunes are still being made from the I.P.O.s. While Uber’s shares have fallen, the company’s co-founder, Travis Kalanick, has sold off more than $2 billion in stock, according to securities filings.

“Especially with things like Uber, almost all the I.P.O. wealth was going to a couple of people,” said Kalena Masching, a Redfin agent in San Jose. “They are not looking to buy a standard house here.”

Another bright spot: female-led companies, with more becoming unicorns in 2019 than any other year, according to Aileen Lee, the venture capitalist who coined the phrase “unicorn” to refer to a private company valued at $1 billion or more.

And post-I.P.O. parties are happening. They are just secret — and phone-free.

“We’re signing a lot more nondisclosures,” said Jay Siegan, who curates party entertainment for corporate tech clients. “A year ago, people would set up social media stations at the party, signs with the hashtag for Instagram. Now we have clients asking guests to check their phones at the door or using those Yondr bags.

These are pouches used to lock phones en masse at concerts and events where someone might be tempted to record.

However, in public, the tech world is all about reflection and self-critiquing after the year that was.

The I.P.O. disappointment has gotten so extreme that two Silicon Valley techies are setting out to do what few have done before: Make fun of themselves.

David Cowan, a venture capitalist with Bessemer Venture Partners, which invested in Lyft, and Michael Fertik, the founder of Reputation.com, are launching an online talk show called “The Bubble Report.” It will feature interviews with other tech executives. The point, they hope, is to poke fun at Silicon Valley from within Silicon Valley.

Mr. Cowan, either in character or just being very honest, decried the falling stock prices of newly public tech companies as victims of cruel Wall Street analysts.

“It should be against the law for unscrupulous analysts to assess stocks based on cash flow and profit, to impugn a company based on eight lines of a financial report,” he joked. “Imagine how much more value we’d have in the stock market if we got rid of that arcane thinking.”

Mr. Fertik said his inspiration to mock his industry came in part from realizing how far from reality it had all gotten.

“I want people to understand that Silicon Valley is a deeply religious place that thinks of itself as agnostic,” he said. “It has some of the strengths and many of the frailties of organized religion.”

For now, most people are waking up to find they are still on Earth. This is good news for those in San Francisco who mostly viewed the tech exuberance as bad news: housing rights activists, first-time home buyers, and renters.

“We are excited by any resetting of Bay Area rents that bring them down from their artificially inflated high,” said Fred Sherburn-Zimmer, the executive director of Housing Rights Committee, which fights against evictions. “Eventually all bubbles burst.”

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Uber in Talks to Sell Its Food-Delivery Business in India

SAN FRANCISCO — Uber is in advanced discussions to sell its food-delivery business in India, according to two people with knowledge of the plans, as the company moves to stem its losses.

The ride-hailing company is nearing a deal to sell its Uber Eats service in India to Zomato, an Indian food-delivery service, said the people, who spoke on condition of anonymity because they were not authorized to do so publicly. The sale could be announced as early as this week, they said.

A spokesman for Uber declined to comment. The talks were earlier reported by TechCrunch, which said a deal would value the India business of Uber Eats at $400 million.

Dara Khosrowshahi, Uber’s chief executive, has been trying to pare back money-losing businesses to prove to investors that the company can turn a profit. Investors have agitated both in public and behind the scenes for Uber to clean up its balance sheet since it went public earlier this year.

Uber’s initial public offering in May was a disappointment, with the company’s shares immediately plunging as investors questioned how much money the ride-hailing service loses. That event marked a turn in sentiment around high-profile-but-unprofitable tech start-ups, many of which had burned cash for years in the pursuit of growth. WeWork, another highly valued start-up, later shelved its plans for an I.P.O. as private investors cut the company’s valuation to a fraction of its former worth.

Investors have recently homed in on several issues at Uber, according to two people briefed on the conversations. Those include continued regulatory challenges around the world — most recently, transportation authorities said they would not extend Uber’s taxi license in London, one of its biggest markets — and ballooning expenditures.

Some investors have privately grumbled that Uber also paid too much for Careem, a Dubai-based ride-hailing and delivery company that Uber announced this spring it would acquire for $3.1 billion.

According to two people familiar with the matter, investors have also privately complained to Mr. Khosrowshahi about the expense of its Advanced Technologies Group, which develops self-driving vehicles. No decisions have been made about the unit, these people said, which has more than 1,000 full-time employees.

While Uber Eats has been a bright spot for revenue growth, the company has offered subsidies and free promotional offerings to gain new users, which has been expensive. In a conference call with investors last month, Mr. Khosrowshahi said his plan for Uber Eats was to take first or second place in every city it operates.

“If we can’t make it to that level, we’ll look to dispose or we’ll get out of the market,” he said at the time.

In India particularly, Uber Eats has struggled to sign up restaurants, diners and delivery agents in a brutally competitive market where Zomato and other delivery start-ups like Swiggy are well established. Uber has had to offer heavy incentives to lure customers there.

In September, Uber also announced that it was pulling its Eats business out of South Korea, where the company faced stiff competition from local start-ups.

Mr. Khosrowshahi has previously retreated in ride-hailing in Southeast Asia, where the company faces difficulties competing. In 2017, under then-chief executive Travis Kalanick, Uber pulled out of China, where the company was burning billions of dollars. That same year, Uber largely withdrew from Russia.

Mike Isaac reported from San Francisco and Katie Benner from Washington. Vindu Goel contributed reporting from India.

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Prime Leverage: How Amazon Wields Power in the Technology World

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Credit…Nolan Pelletier

Software start-ups have a phrase for what Amazon is doing to them: ‘strip-mining’ them of their innovations.


SEATTLE — Elastic, a software start-up in Amsterdam, was rapidly building its business and had grown to 100 employees. Then Amazon came along.

In October 2015, Amazon’s cloud computing arm announced it was copying Elastic’s free software tool, which people use to search and analyze data, and would sell it as a paid service. Amazon went ahead even though Elastic’s product, called Elasticsearch, was already available on Amazon.

Within a year, Amazon was generating more money from what Elastic had built than the start-up, by making it easy for people to use the tool with its other offerings. So Elastic added premium features last year and limited what companies like Amazon could do with them. Amazon duplicated many of those features anyway and provided them free.

In September, Elastic fired back. It sued Amazon in federal court in California for violating its trademark because Amazon had called its product by the exact same name: Elasticsearch. Amazon “misleads consumers,” the start-up said in its complaint. Amazon denied it had done anything wrong. The case is pending.

Not since the mid-1990s, when Microsoft dominated the personal computer industry with Windows, has a technology platform instilled such fear in competitors as Amazon is now doing with its cloud computing arm. Its feud with Elastic illustrates how it brandishes power in that technical world.

While cloud computing may appear obscure and geeky, it underlies much of the internet. It has grown into one of the technology industry’s largest and most lucrative businesses, offering computing power and software to companies. And Amazon is its single-biggest provider.

Amazon has used its cloud computing arm — called Amazon Web Services, or A.W.S. for short — to copy and integrate software that other tech companies pioneered. It has given an edge to its own services by making them more convenient to use, burying rival offerings and bundling discounts to make its products less expensive. The moves drive customers toward Amazon while those responsible for the software may not see a cent.

Even so, smaller rivals say they have little choice but to work with Amazon. Given the company’s broad reach with customers, start-ups often agree to its restrictions on promoting their own products and voluntarily share client and product information with it. For the privilege of selling through A.W.S., the start-ups pay a cut of their sales back to Amazon.

Some of the companies have a phrase for what Amazon is doing: strip-mining software. By lifting other people’s innovations, trying to poach their engineers and profiting off what they made, Amazon is choking off the growth of would-be competitors and forcing them to reorient how they do business, the companies said.

All of this has fueled scrutiny of Amazon and whether it is abusing its market dominance and engaging in anticompetitive behavior. The company’s tactics have led several rivals to discuss bringing antitrust complaints against it. And regulators and lawmakers are examining its clout in the industry.

“People are afraid that Amazon’s ambitions are endless,” said Matthew Prince, chief executive of Cloudflare, an A.W.S. competitor that protects websites from attacks.

A.W.S. is just one prong of Amazon’s push to dominate large swaths of American industry. The company has transformed retailing, logistics, book publishing and Hollywood. It is rethinking how people buy prescription drugs, purchase real estate and build surveillance for their homes and cities.

But what Amazon is doing through A.W.S. is arguably more consequential. The company is the unquestioned market leader — triple the size of its nearest competitor, Microsoft — in the seismic shift to cloud computing. Millions of people unknowingly interact with A.W.S. every day when they stream movies on Netflix or store photos on Apple’s iCloud, services that run off Amazon’s machines.

Jeff Bezos, Amazon’s chief executive, once called A.W.S. an idea “no one asked for.” The service began in the early 2000s when the retailer struggled to assemble computer systems to start new projects and features. Once it built a common computer infrastructure, Amazon realized other companies needed similar capabilities.

Now companies like Airbnb and General Electric essentially rent computing from Amazon — otherwise known as using the “cloud” — instead of buying and running their own systems. Businesses can then store their information on Amazon machines, pluck data from them and analyze it.

For Amazon itself, A.W.S. has become crucial. The division generated $25 billion in sales last year — roughly the size of Starbucks — and is Amazon’s most profitable business. Those profits enable the company to plow money into many other industries.

In a statement, Amazon said the idea that it was strip-mining software was “silly and off-base.” It said it had contributed significantly to the software industry and that it acted in the best interest of customers.

Some tech companies said they had found more customers through A.W.S.; even some companies that have tangled with Amazon have grown. Elastic, for instance, went public last year and now has 1,600 employees.

But in interviews with more than 40 current and former Amazon employees and those of rivals, many said the costs of what the company was doing with A.W.S. were hidden. They said it was hard to measure how much business they had lost to Amazon, or how the threat of Amazon had turned off would-be investors. Many spoke on the condition of anonymity for fear of angering the company.

In February, seven software chief executives met in Silicon Valley and discussed bringing an antitrust lawsuit against the giant, said four people with knowledge of the gathering. Their grievances echoed a complaint by vendors who use Amazon’s shopping site: Once Amazon becomes a direct competitor, it is no longer a neutral party.

The C.E.O.s did not press forward with a legal action, partly out of concern that the process would take too long, the people said.

Now regulators are approaching some of Amazon’s software rivals. The House Judiciary Committee, which is investigating the big tech companies, asked Amazon in a September letter about A.W.S.’s practices. The Federal Trade Commission, which is also investigating Amazon, has questioned A.W.S. competitors, according to officials at two software companies who were called in but were not authorized to discuss the matter.

What Amazon is doing to software start-ups is unsustainable, said Salil Deshpande, founder of Uncorrelated, a venture capital firm.

“It has intercepted their monetization, it has forcibly wrestled control of software from their owners and it has siphoned customers to its own proprietary services,” he said.

When Amazon Web Services began last decade, Amazon was struggling to turn a consistent profit. A service to provide computing power seemed like a distraction.

Yet start-ups embraced A.W.S. They saved money because they did not need to buy their own computing equipment, while spending only on what they used. Soon more companies flocked to Amazon for computing infrastructure and, eventually, the software that ran on its machines.

In 2009, Amazon established a template for accelerating A.W.S.’s growth. That year, it introduced a service for managing a database, which is critical software to help companies organize information.

The A.W.S. database service, an instant hit with customers, did not run software that Amazon created. Instead, the company plucked from a freely shared option known as open source.

Open-source software has few parallels in business. It is akin to a coffee shop giving away coffee on the hopes that people spend on milk or sugar or pastries.

But open source is a tried and true model nurtured by the software industry to get technology to customers quickly. A community of enthusiasts often springs up around the shareable technology, contributing improvements and spreading the word about its benefits. Traditionally, open-source companies later earn money for customer support or from paid add-ons.

Technologists initially paid little attention to what Amazon had done with database software. Then in 2015, Amazon repeated the maneuver by copying Elasticsearch and offering its competing service.

This time, heads turned.

“There was a company that built a business around an open-source product that people like using and, suddenly, they have a competitor using their own stuff against them,” said Todd Persen, who started a non-open-source software company this year so there was “zero chance” that Amazon could lift his creations. His previous start-up, InfluxDB, was open source.

Again and again, the open-source software industry became a well that Amazon turned to. When it copied and integrated that software into A.W.S., it didn’t need permission or have to pay the start-ups for their work, creating a deterrent for people to innovate.

That left little recourse for many of these companies, which could not suddenly start charging money for what was free software. Some instead changed the rules around how their wares could be used, restricting Amazon and others who want to turn what they have created into a paid service.

Amazon has worked around some of their changes.

When Elastic, now based in Silicon Valley, shifted the rules for its software last year, Amazon said in a blog post that open-source software companies were “muddying the waters” by limiting access to certain users.

Shay Banon, Elastic’s chief executive, wrote at the time that Amazon’s actions were “masked with fake altruism.” Elastic declined to make Mr. Banon available for an interview.

Last year, MongoDB, a popular technology for organizing data in documents, also announced that it would require any company that manages its software as a web service to freely share the underlying technology. The move was widely viewed as a hedge against A.W.S., which does not openly share its technology for creating new services.

A.W.S. soon introduced its own technology with the look and feel of MongoDB’s older software, which did not fall under the new requirements.

That experience was top of mind this year when Dev Ittycheria, MongoDB’s chief executive, attended the dinner with the heads of six other software companies. Their conversation, held at the home of a Silicon Valley venture capitalist, shifted to something drastic: whether to publicly accuse Amazon of behaving like a monopoly.

At the meal, which included the heads of the software firms Confluent and Snowflake, some of the C.E.O.s said they faced an uneven playing field, according to the people with knowledge of the gathering. No complaint has materialized.

“A.W.S.’s success is built on strip-mining open-source technology,” said Michael Howard, chief executive of MariaDB, an open-source company. He estimated that Amazon made five times more revenue from running MariaDB software than his company generated from all of its businesses.

Andi Gutmans, an A.W.S. vice president, said some companies wanted to be “the only ones” to make money off open-source projects. He said Amazon was “committed to making sure that open-source projects remain truly open and customers get to choose how they use that open-source software — whether they choose A.W.S. or not.”

By the time A.W.S. held its first developer conference in 2012, Amazon was no longer the only big player in cloud computing. Microsoft and Google had introduced competing platforms.

So Amazon unveiled more software services to make A.W.S. indispensable. In a speech at the event, Andy Jassy, the head of A.W.S., said it wanted to “enable every imaginable use case.”

Amazon has since added A.W.S. services at a blistering pace, going from 30 in 2014 to about 175 as of December. It also built in a home-field advantage: simplicity and convenience.

Customers can add new A.W.S. services with a single click and use the same system to manage them. The new service is added to the same bill and requires no extra permission from a finance or compliance department.

In contrast, using a non-Amazon service on A.W.S. is more complicated.

Today when a customer logs onto A.W.S., they see a home page called the management console. At the center is a list of about 150 services. All are A.W.S.’s own products.

When someone types “MongoDB,” the search results do not fetch information for MongoDB’s service on A.W.S.; it instead suggests an offering from Amazon that is “compatible with MongoDB.”

Even after a customer has selected a non-Amazon option, the company sometimes continues pushing its own product. When someone creates a new database, they are presented an ad for Amazon’s own technology called Aurora. If they pick something else, Amazon still highlights its option as “recommended.”

Mr. Gutmans said A.W.S. worked closely with many companies to integrate their offerings “as seamlessly as possible.”

Amazon’s A.W.S. developer conference is now one of the world’s biggest technology events, drawing tens of thousands of people to Las Vegas every year.

The highlight is a speech from Mr. Jassy where he showcases new services. Because a new A.W.S. feature often spells hardship for some start-up, the presentation has earned the nickname “The Red Wedding,” a bloody event in a “Game of Thrones” episode.

“Nobody knows who is going to get killed next,” said Corey Quinn of the Duckbill Group, who helps companies manage their A.W.S. bills and writes a newsletter called “Last Week in A.W.S.

At last year’s conference, Amazon unveiled a new tool — Amazon CloudWatch Logs Insights — to help customers analyze information about its services.

Daniel Vassallo, a former A.W.S. software engineer who helped develop the product, said executives wanted to go after the market, but were worried it would look like Amazon was targeting a company called Splunk, which offers a similar tool and is also a major spender with A.W.S.

So Amazon previewed its new product to Splunk before the conference and agreed not to announce it during Mr. Jassy’s speech, Mr. Vassallo said.

“They weren’t particularly happy. Who would be?” Mr. Vassallo, who left Amazon in February, said of Splunk. “But we still went ahead and did it anyway.”

Splunk said it had a “strong partnership” with A.W.S. and declined to comment further.

Amazon has also created rules for its developer conference. Companies that pay tens of thousands or hundreds of thousands of dollars for a booth said they must submit their banners, pamphlets and news releases to Amazon for approval.

According to an A.W.S. document from August explaining marketing guidelines for companies it works with, Amazon bans certain words or phrases, such as “multi-cloud,” the concept of using two or more cloud platforms. An Amazon spokesman said it had stopped this practice.

Companies are also instructed to strike claims about being “the best,” “the first,” “the only,” “the leader,” unless substantiated by independent research.

Redis Labs was founded in 2011 in Tel Aviv, Israel, to build a business around managing a free software called Redis, which people use to organize and update data quickly. Amazon soon offered a competing paid service.

While that created a formidable rival to Redis Labs, Amazon’s move also validated Redis technology. The start-up has since raised $150 million, exemplifying the can’t-live-with-can’t-live-without relationship that many software companies have with Amazon.

Former Redis Labs employees estimate that Amazon generates as much as $1 billion a year from Redis technology — or at least 10 times more revenue than Redis Labs. They said Amazon also tried to poach its staff and undercut it with hefty discounts.

A.W.S. offers a discount to customers who commit to spending at least a certain amount with it, but it does not treat money spent on A.W.S.’s own services and rival services equally. Spending on outside services counts as only 50 cents on the dollar toward the balance. And discounts do not apply to non-Amazon products, according to A.W.S. customers.

If a customer still chooses Redis Labs through A.W.S., Redis Labs is required to kick back around 15 percent of its revenue to Amazon.

At one point, Amazon’s attempts to hire Redis Labs employees became so aggressive that executives removed some online biographies of its technical staff, said the former employees. A Redis Labs spokesman said the start-up had no recollection of that.

Some Redis Labs executives considered bringing an antitrust action against Amazon this year, the former employees said. Others balked because 80 percent of the start-up’s revenue came from customers on A.W.S.

“It was a love-hate relationship,” said Leena Joshi, a former vice president of marketing at Redis Labs. “On one hand, most of our customers ran on A.W.S. so it was in our interest to be tightly integrated with them. At the same time, we knew they were taking away our business.”

Redis Labs declined to comment on its revenues or A.W.S. actions. It said Amazon offered “important services.”

Not every company views A.W.S. as a threat. Ali Ghodsi, chief executive of Databricks, a San Francisco start-up that uses artificial intelligence to analyze data, said A.W.S. salespeople have lifted sales of his company’s products.

“I don’t see them using shenanigans to stop us,” he said.

But Saket Saurabh, chief executive of Nexla, a 14-person start-up in Millbrae, Calif., said he had reservations about Amazon.

In August, Amazon began a service for processing and monitoring data that competes with Nexla. Investors warned him about sharing too much information with the giant.

Mr. Saurabh went ahead anyway and signed his company up to work with Amazon in September. The reason? Amazon’s giant sales teams can give Nexla access to a vast audience.

“What choice do we have?” he said.