Connect with us

Published

on

Westend61 | Getty Images

Nick Martin, co-founder and CEO of Joe Coffee, is so concerned about the state of the economy that he’s looking for ways his company can save money. One main area for cuts: software.

Martin started the Seattle-based company with his brother, Brenden, to help local coffee shops better compete with Starbucks, by making it easier for them to fulfill mobile orders, track analytics and automate their marketing.

While their 8-year-old business has held pretty steady through the economic dip that started in 2022, Martin said he’s seeing evidence that people are now buying fewer lattes than they did a year ago. Any consumer slowdown is a potentially troubling sign for Joe Coffee’s customers, and the company is proactively tightening its belt.

Martin, 38, told CNBC that Joe Coffee has reduced its number of subscriptions to HubSpot, a marketing automation software vendor, and is closely examining its spending with payment processor Stripe to see if its agreement with the company will be worth renewing.

“Every subscription we have is under a magnifying glass,” Martin told CNBC. “We have to have a really good business case to do new expenditures.”

The Martin brothers aren’t alone, based on the latest earnings reports from software businesses that serve small and medium-sized businesses (SMBs), which could be your local shoe store, a small restaurant chain or the neighborhood spa.

HubSpot, Bill Holdings, Paycom and ZoomInfo all warned investors of potential trouble on the horizon. Their comments reflect broader economic data, which shows that consumers are feeling the ongoing effects of inflation and high interest rates.

Retail sales for October fell 0.1%, underscoring pressure from higher prices. The consumer price index for last month increased 3.2% on an annual basis, according to the Bureau of Labor Statistics.

Joe Coffee founders Nick and Brenden Martin

Joe Coffee

Wall Street is on edge. While broad market indexes are up slightly since midyear, tech companies that specialize in the SMB space are hurting.

Paycom, which provides payroll and human resources software, saw its stock plunge 38% on Nov. 1, the day after the company said revenue growth in 2024 would be 10% to 12%, way below analysts’ expectations for growth above 20%.

Two days after Paycom’s drop, shares of Bill plummeted 25%. The company, whose software helps clients track and control their payables and receivables, reduced its profit and revenue guidance for 2024. Bill’s finance chief, John Rettig, said on the earnings call that the company is “operating in an environment of increasing economic choppiness and small businesses are under increasing pressure to adjust to the current realities.”

On the last day of October, ZoomInfo shares tumbled 16% on a weaker-than-expected forecast for the fourth quarter. CFO Cameron Hyzer told analysts that it “continues to be a tough world out there” for revenue retention. ZoomInfo helps sales and marketing teams track leads and customers.

HubSpot shares dropped 6.1% after its earnings report last week, though the stock has since recovered. The company’s outlook was largely in line with estimates, but growth is slowing and CEO Yamini Rangan described the environment as “choppy and challenging” with clients “continuing to optimize spend.”

“Sales cycles remain lumpy, budgets are still under scrutiny and buying urgency remains low,” Rangan said on the earnings call.

Representatives from Paycom, ZoomInfo, HubSpot and Bill didn’t respond to requests for comment. Since June 30, the stocks are down between 12% and 49%. The Nasdaq is up more than 2% over that stretch.

Fighting for the little guy

The sector of the market those companies serve is critical to the domestic economy. Over the past two decades, small businesses have accounted for 40% of U.S. gross domestic product, according to the Chamber of Commerce. They also employ 46% of the American workforce.

Jake Dollarhide, CEO of Longbow Asset Management, said results from Paycom and other SMB providers offer a window into the state of the economy.

“Anytime people don’t feel wealthy, they tend to pull back,” said Dollarhide.

The Martins know what it’s like dealing with the everyday challenges of making ends meet. Their father’s small business made sheds in their hometown of West Richland, Washington, about 200 miles southeast of Seattle, until bigger companies came into town and ran it into the ground.

“If America is really built on the backbone of small business owners, why are they the ones that never catch the break?” said Brenden Martin, Nick’s younger brother. “Why isn’t there anybody out there fighting for them? For us, that’s our primary driver.”

The Martin brothers have backgrounds in technology. They both worked at Microsoft, and Nick went from there to Zillow, while Brenden had jobs in product strategy and web development at various companies.

Zhang Peng | Getty Images

They also both loved the role coffee shops play in communities, having worked as baristas in the past, and wanted to help small cafes fend off Starbucks.

When Starbucks launched mobile ordering in 2015, Joe Coffee wasn’t yet up and running. But the brothers could see an imminent opportunity in the market.

“At first we were like, crap we missed our shot,” Brenden said. “And then we realized, well no, small businesses still need this.”

They got their big break in August 2018 at Coffee Fest, a venue for coffee brands to debut their products and services. Just before the event in Los Angeles, the Martins learned they’d received $1 million in funding, their first outside investment.

They initially built a mobile-order-only platform, but the Covid pandemic created a whole new set of demands from customers who were struggling to stay afloat. In 2021, Joe Coffee, which now has 17 employees, created a full software and payments suite for coffee shops.

For Joe Coffee’s business to work, its technology has to create almost immediate revenue and profit gains for its customers, which are already operating on tight budgets. The company doesn’t charge a recurring subscription, but only a percent of each transaction.

‘Nice to have’

Nick Martin cited higher borrowing costs as a main reason that Joe Coffee has reduced the number of software products it buys. The company now has roughly six software subscriptions, down from 12 to 15, accounting for 3% to 5% of operating expenses, down from around 8%, he said.

Decisions on what to get rid of are based on whether a product is a “nice to have” or is essential to business operations.

“Can we get away with just doing this in a spreadsheet?” he said. That’s how the company decided which HubSpot services to cut. Joe Coffee is still a HubSpot subscriber but is paying for fewer seats and fewer tools, Martin said.

As for Stripe, which is privately held, Joe Coffee is looking for other payment processors that have lower fees, Martin added.

Stripe said it doesn’t comment on specific customers.

Las Vegas Grand Prix CEO on the challenge of bringing a Grand Prix to Vegas
Xero will remain focused on core segments such as small businesses: CEO

Don’t miss these stories from CNBC PRO:

Continue Reading

Technology

Elon Musk’s X temporarily down for tens of thousands of users

Published

on

By

Elon Musk's X temporarily down for tens of thousands of users

Elon Musk looks on as U.S. President Donald Trump meets South African President Cyril Ramaphosa in the Oval Office of the White House in Washington, D.C., U.S., May 21, 2025.

Kevin Lamarque | Reuters

The Elon Musk-owned social media platform X experienced a brief outage on Saturday morning, with tens of thousands of users reportedly unable to use the site.

About 25,000 users reported issues with the platform, according to the analytics platform Downdetector, which gathers data from users to monitor issues with various platforms.

Roughly 21,000 users reported issues just after 8:30 a.m. ET, per the analytics platform.

The issues appeared to be largely resolved by around 9:55 a.m., when about 2,000 users were reporting issues with the platform.

Read more CNBC politics coverage

X did not immediately respond to CNBC’s request for comment. Additional information on the outage was not available.

Musk, the billionaire owner of SpaceX and Tesla, acquired X, formerly known as Twitter in 2022.

The site has had a number of widespread outages since the acquisition.

The site experienced another outage in March, which Musk attributed at the time to a “massive cyberattack.”

“We get attacked every day, but this was done with a lot of resources,” Musk wrote in a post at the time.

This is breaking news. Check back for updates

Continue Reading

Technology

Companies turn to AI to navigate Trump tariff turbulence

Published

on

By

Companies turn to AI to navigate Trump tariff turbulence

Artificial intelligence robot looking at futuristic digital data display.

Yuichiro Chino | Moment | Getty Images

Businesses are turning to artificial intelligence tools to help them navigate real-world turbulence in global trade.

Several tech firms told CNBC say they’re deploying the nascent technology to visualize businesses’ global supply chains — from the materials that are used to form products, to where those goods are being shipped from — and understand how they’re affected by U.S. President Donald Trump’s reciprocal tariffs.

Last week, Salesforce said it had developed a new import specialist AI agent that can “instantly process changes for all 20,000 product categories in the U.S. customs system and then take action on them” as needed, to help navigate changes to tariff systems.

Engineers at the U.S. software giant used the Harmonized Tariff Schedule, a 4,400-page document of tariffs on goods imported to the U.S., to inform answers generated by the agent.

“The sheer pace and complexity of global tariff changes make it nearly impossible for most businesses to keep up manually,” Eric Loeb, executive vice president of government affairs at Salesforce, told CNBC. “In the past, companies might have relied on small teams of in-house experts to keep pace.”

Firms say that AI systems are enabling them to take decisions on adjustments to their global supply chains much faster.

Andrew Bell, chief product officer of supply chain management software firm Kinaxis, said that manufacturers and distributors looking to inform their response to tariffs are using his firm’s machine learning technology to assess their products and the materials that go into them, as well as external signals like news articles and macroeconomic data.

“With that information, we can start doing some of those simulations of, here is a particular part that is in your build material that has a significant tariff. If you switched to using this other part instead, what would the impact be overall?” Bell told CNBC.

‘AI’s moment to shine’

Trump’s tariffs list — which covers dozens of countries — has forced companies to rethink their supply chains and pricing, with the likes of Walmart and Nike already raising prices on some products. The U.S. imported about $3.3 trillion of goods in 2024, according to census data.

Uncertainty from the U.S. tariff measures “actually probably presents AI’s moment to shine,” Zack Kass, a futurist and former head of OpenAI’s go-to-market strategy, told CNBC’s Silvia Amaro at the Ambrosetti Forum in Italy last month.

Read more CNBC tech news

“If you wonder how hard things could get without AI vis-a-vis automation, and what would happen in a world where you can’t just employ a bunch of people overnight, AI presents this alternative proposal,” he added.

Nagendra Bandaru, managing partner and global head of technology services at Indian IT giant Wipro, said clients are using the company’s agentic AI solutions “to pivot supplier strategies, adjust trade lanes, and manage duty exposure dynamically as policy landscapes evolve.”

Wipro says it uses a range of AI systems — both proprietary and supplied by third parties — from large language models to traditional machine learning and computer vision techniques to inspect physical assets in cross-border transit.

‘Not a silver bullet’

While it preferred to keep company names confidential, Wipro said that firms using its AI products to navigate Trump’s tariffs range from a Fortune 500 electronics manufacturer with factories in Asia to an automotive parts supplier exporting to Europe and North America.

“AI is a powerful enabler — but not a silver bullet,” Bandaru told CNBC. “It doesn’t replace trade policy strategy, it enhances it by transforming global trade from a reactive challenge into a proactive, data-driven advantage.”

AI was already a key investment priority for global firms prior to Trump’s sweeping tariff announcements on April. Nearly three-quarters of business leaders ranked AI and generative AI in their top three technologies for investment in 2025, according to a report by Capgemini published in January.

“There are a number of ways AI can assist companies dealing with the tariffs and resulting uncertainty.  But any AI solution’s success will be predicated on the quality of the data it has access to,” Ajay Agarwal, partner at Bain Capital Ventures, told CNBC.

The venture capitalist said that one of his portfolio companies, FourKites, uses supply chain network data with AI to help firms understand the logistics impacts of adjusting suppliers due to tariffs.

“They are working with a number of Fortune 500 companies to leverage their agents for freight and ocean to provide this level of visibility and intelligence,” Agarwal said.

“Switching suppliers may reduce tariffs costs, but might increase lead times and transportation costs,” he added. “In addition, the volatility of the tariffs [has] severely impacted the rates and capacity available in both the ocean and the domestic freight networks.”

WATCH: Former OpenAI exec says tariffs ‘present AI’s moment to shine’

Former OpenAI exec says tariffs 'present AI's moment to shine'

Continue Reading

Technology

Amazon’s Zoox robotaxi unit issues second software recall in a month after San Francisco crash

Published

on

By

Amazon's Zoox robotaxi unit issues second software recall in a month after San Francisco crash

A Zoox autonomous robotaxi in San Francisco, California, US, on Wednesday, Dec. 4, 2024.

David Paul Morris | Bloomberg | Getty Images

Amazon‘s Zoox robotaxi unit issued a voluntary recall of its software for the second time in a month following a recent crash in San Francisco.

On May 8, an unoccupied Zoox robotaxi was turning at low speed when it was struck by an electric scooter rider after braking to yield at an intersection. The person on the scooter declined medical attention after sustaining minor injuries as a result of the collision, Zoox said.

“The Zoox vehicle was stopped at the time of contact,” the company said in a blog post. “The e-scooterist fell to the ground directly next to the vehicle. The robotaxi then began to move and stopped after completing the turn, but did not make further contact with the e-scooterist.”

Zoox said it submitted a voluntary software recall report to the National Highway Traffic Safety Administration on Thursday.

A Zoox spokesperson said the notice should be published on the NHTSA website early next week. The recall affected 270 vehicles, the spokesperson said.

The NHTSA said in a statement it had received the recall notice and that the agency “advises road users to be cautious in the vicinity of vehicles because drivers may incorrectly predict the travel path of a cyclist or scooter rider or come to an unexpected stop.”

If an autonomous vehicle continues to move after contact with any nearby vulnerable road user, it risks causing harm or further harm. In the AV industry, General Motors-backed Cruise exited the robotaxi business after a collision in which one of its vehicles injured a pedestrian who had been struck by a human-driven car and was then rolled over by the Cruise AV.

Zoox’s May incident comes roughly two weeks after the company announced a separate voluntary software recall following a recent Las Vegas crash. In that incident, an unoccupied Zoox robotaxi collided with a passenger vehicle, resulting in minor damage to both vehicles.

The company issued a software recall for 270 of its robotaxis in order to address a defect with its automated driving system that could cause it to inaccurately predict the movement of another car, increasing the “risk of a crash.”

Amazon acquired Zoox in 2020 for more than $1 billion, announcing at the time that the deal would help bring the self-driving technology company’s “vision for autonomous ride-hailing to reality.”

While Zoox is in a testing and development stage with its AVs on public roads in the U.S., Alphabet’s Waymo is already operating commercial, driverless ride-hailing services in Phoenix, San Francisco, Los Angeles and Austin, Texas, and is ramping up in Atlanta.

Tesla is promising it will launch its long-delayed robotaxis in Austin next month, and, if all goes well, plans to expand after that to San Francisco, Los Angeles and San Antonio, Texas.

— CNBC’s Lora Kolodny contributed to this report.

WATCH: Tesla’s decade-long journey to robotaxis

Tesla's decade-long journey to robotaxis

Continue Reading

Trending