- U.S. evicts Russians for spying, imposes sanctions after election hacks: President Barack Obama on Thursday ordered the expulsion of 35 Russian suspected spies and imposed sanctions on two Russian intelligence agencies over their involvement in hacking U.S. political groups in the 2016 presidential election. The measures, taken during the last days of Obama's presidency, mark a new post-Cold War low in U.S.-Russian ties, which have deteriorated over differences about Syria and Ukraine. Allegations by U.S. intelligence agencies that Russian President Vladimir Putin personally directed efforts to intervene in the U.S. election process by hacking mostly Democrats have made relations even worse. It was not clear whether President-elect Donald Trump, who has repeatedly praised Putin and nominated people seen as friendly toward Moscow to senior administration posts, would seek to roll back the measures once he takes office.
- How Russia Recruited Elite Hackers for Its Cyberwar: For more than three years, rather than rely on military officers working out of isolated bunkers, Russian government recruiters have scouted a wide range of programmers, placing prominent ads on social media sites, offering jobs to college students and professional coders, and even speaking openly about looking in Russia’s criminal underworld for potential talent. In Russia, recruiters have looked well beyond the nation’s school system. Those recruits were intended to cycle through military contracting companies and newly formed units called science squadrons established on military bases around the country. As early as 2013, Sergei K. Shoigu, the Russian defense minister, told university rectors at a meeting in Moscow that he was on a “head hunt in the positive meaning of the word” for coders. In 2013, as Russia’s recruitment drive was picking up, Dmitry A. Artimovich, a soft-spoken physicist, was awaiting trial in a Moscow jail for designing a computer program that spammed email users with advertisements for male sexual enhancement products. One day a cellmate, who had been convicted of selling narcotics online, sidled up to him with some news. The cellmate said that people incarcerated for cybercrimes could get out before trial, in exchange for working for the government. Another inmate had already taken a deal, he said. “It was an offer to cooperate,” Mr. Artimovich said. “Why else would you work for the government?” he added. “The salaries are tiny. But if you do something illegal, and go to prison for eight or nine years, the F.S.B. can help you,” he said, using a Russian abbreviation for the Federal Security Service.
- How China Built ‘iPhone City’ With Billions in Perks for Apple’s Partner: A hidden bounty of benefits for Foxconn’s plant in Zhengzhou, the world’s biggest iPhone factory, is central to the production of Apple’s most profitable product. A vast, boxy customs center acts as a busy island of commerce deep in central China. Government officers, in sharply pressed uniforms, race around a maze of wooden pallets piled high with boxes — counting, weighing, scanning and approving shipments. Unmarked trucks stretch for more than a mile awaiting the next load headed for Beijing, New York, London and dozens of other destinations. The state-of-the-art facility was built several years ago to serve a single global exporter: Apple, now the world’s most valuable company and one of China’s largest retailers. The well-choreographed customs routine is part of a hidden bounty of perks, tax breaks and subsidies in China that supports the world’s biggest iPhone factory, according to confidential government records reviewed by The New York Times, as well as more than 100 interviews with factory workers, logistics handlers, truck drivers, tax specialists and current and former Apple executives. The package of sweeteners and incentives, worth billions of dollars, is central to the production of the iPhone, Apple’s best-selling and most profitable product. It all centers on Zhengzhou, a city of six million people in an impoverished region of China. Running at full tilt, the factory here, owned and operated by Apple’s manufacturing partner Foxconn, can produce 500,000 iPhones a day. Locals now refer to Zhengzhou as “iPhone City.” The local government has proved instrumental, doling out more than $1.5 billion to Foxconn to build large sections of the factory and nearby employee housing. It paved roads and built power plants. It helps cover continuing energy and transportation costs for the operation. It recruits workers for the assembly line. It pays bonuses to the factory for meeting export targets. All of it in support of iPhone production. “We needed something that could really develop this part of the country,” said Li Ziqiang, a Zhengzhou official. “There’s an old saying in China: ‘If you build the nest, the birds will come.’ And now, they’re coming.” American officials have long decried China’s support of its state-owned companies, calling the subsidies and other aid an unfair competitive advantage in a global marketplace. But the Zhengzhou operation shows the extent of China’s effort to entice overseas multinationals to set up production facilities in the country.
- China tech giant LeEco in talks on $1.4 billion support, starts e-car plant: Cash-strapped Chinese technology conglomerate LeEco is in talks on securing a 10 billion yuan ($1.4 billion) deal with an unnamed strategic investor, its listed unit said. Leshi Internet Information and Technology said in a filing to the stock exchange late Wednesday that its parent company had signed a framework agreement with the investor and the two sides were still discussing the final details. It did not disclose the identity of the investor, but the China Business News cited a source familiar with the situation as saying that it was an insurance company. LeEco has been expanding aggressively in a range of businesses including online entertainment, electric and driverless cars and smartphones, but the firm's billionaire chief executive Jia Yueting warned staff last month that it had grown too fast and was facing cash shortages. Following the cash crunch, the firm's sports broadcasting unit said it would cut 10 percent of its staff and restructure its business. This week, LeSports still owed as much as $30 million in payments to the Beijing-based Super Sports Media Group, which holds exclusive rights to broadcast English Premier League games in China.
- AppDynamics posts long-awaited IPO filing: AppDynamics has revealed its filing for a U.S. IPO. The IT company, which helps businesses like Salesforce and IBM with applications management, is targeting a $100 million offering. Despite a competitive landscape, which includes New Relic and Dynatrace, AppDynamics has shown strong revenue growth over the past year. For the nine months ending in October, revenue came in at $158.4 million, compared to $102.8 million in the same period during the year prior, driven by strong growth in subscriptions. Losses widened slightly, with the company losing $95.1 million through October versus $92.4 million in the same period the year before. This means that last year, the losses were almost as high as AppDynamics’ revenue. AppDynamics has raised more than $300 million in funding over the past eight years and its largest shareholders are Greylock Partners and Lightspeed Venture Partners, which each own 20.8 percent of the company. AppDynamics’ last known private market valuation stood at $1.9 billion. Revealing the filing right now suggests that the company is hoping to finally go public in late January or early February.
- An Amazon Echo may be the key to solving a murder case: Internet-connected devices may start helping in criminal cases. Police in Bentonville, Arkansas have issued a warrant to Amazon, asking the company to hand over data from an Echo device to help prosecute a suspected murderer. James Andrew Bates, the suspect in the case, was charged with first-degree murder in November of 2015 after authorities found victim Victor Collins strangled and drowned in Mr. Bates’ hot tub. Mr. Bates told police he’d invited Collins and two other friends, Owen McDonald and Sean Henry, over to watch a football game and said he decided to go to bed about 1 a.m., leaving the victim and McDonald to hang out and drink in his hot tub. Bates has several internet-connected devices in his home, including a Nest thermostat and a Honeywell alarm system, but the key witness in the case may be his Amazon Echo, which, as per The Information, police records say could have controlled the streaming music, which was being wirelessly transmitted throughout the night using Echo’s assistant Alexa. However, it’s unclear how much data police could extract from the device or how useful that data would be in the case. Alexa is always listening through a system of seven built-in microphones but waits for you to say the “wake word” to send it commands, like asking for the weather or which music to play, according to the company. The device also streams your audio to the cloud, including a fraction of a second of audio before the wake word. Amazon has so far declined to hand over information in the case, according to court records, and the company says it will not be releasing customer information “without a valid and binding legal demand properly served on us. Amazon objects to overbroad or otherwise inappropriate demands as a matter of course.”
- Amazon calls 2016 holiday season its best ever; shares rise: Amazon.com Inc said it shipped more than 1 billion items worldwide this holiday season, which the top online retailer called its best ever, and its shares rose 1.6 percent in afternoon trade. The Amazon Echo home assistant and its smaller version, Echo Dot, topped the best-sellers list, said Jeff Wilke, chief executive of Amazon's worldwide consumer division, in a press release. Sales of voice-controlled Echo devices were nine times more than they were during last year's holiday season, the company said. Amazon likely sold between 4 million and 5 million devices this year to date with Alexa, the voice-controlled assistant on the Echo, estimated Morningstar analyst R.J. Hottovy in a research note. Shoppers can command the Echo to perform a host of tasks, from playing music to turning on Christmas lights. More than 72 percent of Amazon's customers worldwide shopped through mobile devices, the company added, and Dec. 19 was the busiest shopping day this holiday season. Other best sellers on Amazon included 72-pack Keurig K-Cups, the movie "Finding Dory," Samsung Electronics Co Ltd's Gear VR virtual reality headset and Nintendo Co Ltd's Pokémon Sun and Pokémon Moon role-playing video games, the company said.
- How Jukin Media Built a Viral-Video Empire: Founded in 2009, Jukin is a market leader in a strange new industry that is organizing and monetizing the entropy of web video. A decade ago, when viral phenomena were still opaque and full of mystery, we gazed awe-struck as “Charlie Bit My Finger” rose to fame. Jukin, since then, has systematized the riddle by acquiring clips that meet viral criteria and serving them to YouTube channels and other media outlets that might help induce a spread. The process I was watching was the same one that delivered us Pizza Rat, the video of a rodent dragging a slice down the subway stairs that went viral in 2015. Jukin researchers also discovered Peanut Butter Baby (a toddler covered head to toe in peanut butter) and the “Christopher Columbus of Brooklyn” (a white guy yelling at another white person about gentrification). If you’ve seen a funny clip on a late-night show, or “Good Morning America,” or the 11-o’-clock news, there are pretty good odds Jukin dug it up. In order to meet this demand for fresh content — a demand created by the process that supplies it — Jukin scales idle browsing to industrial proportions. A researcher, on average, watches 200 clips daily. That’s a thousand videos each week, or 50,000 per year, give or take. The company’s research is aided by proprietary software called Riff, which generates feeds based on niche viral keywords. Maybe you’ve seen 15 or 20 good videos of babies tasting lemons for the first time, or troops surprising mothers at Christmas, or dogs and parakeets becoming unlikely friends. A Jukin researcher has seen these, too, plus all the duds that never made it to your feed. Of those 200 reviewed on a typical day, perhaps three or four may be good enough to license, generally for a fee between $50 and $5,000, and often a revenue split. Researchers contact clip owners by any means necessary — usually through YouTube or Facebook but occasionally over dating sites, or wherever else they can be found. In all, the company has paid out more than $10 million in royalties to video owners.
- Rent the Runway has raised a $60 million investment led by Fidelity; The company was profitable in 2016 on revenue north of $100 million. In March, Rent the Runway CEO Jennifer Hyman told Recode, “I think you need to assume it’s impossible to raise equity financing for the next two years.” Just nine months later, Rent the Runway has closed a new $60 million equity investment led by the mutual fund company Fidelity with additional money from existing investors like Bain Capital Ventures and TCV. What changed in that time? The startup best known for its dress rental business put together a profitable year on an Ebitda basis while growing its revenue to well over $100 million. Rent the Runway also launched a new product — a $139-a-month rental subscription for everyday workwear — that accounted for more than one-fifth of total company revenue in its first year. The deal underscores a renewed focus on profitability for investors and fast-growing startups alike. Just this week, news broke that the subscription meal-kit company Blue Apron — another Fidelity portfolio company — was pausing its IPO plans to focus on widening its profit margins. The investment is another bet by Fidelity, which has also backed both Uber and Airbnb, on the so-called sharing economy. In this instance, the belief is that more women will view clothing rentals beyond dresses as the norm in the future. The valuation of this Series E investment was a “significant step up” from the $520 million valuation Rent the Runway earned when it raised a $60 million round in 2014. Hyman declined to provide more specifics on the new valuation other than that it was based on the types of metrics and multiples on which public companies are valued.
- WTF is a liquidation preference? Let’s walk through the basics. Broadly, a liquidation preference determines who gets what when a company is liquidated. This can mean when a company is merged, when it’s sold, when there’s a change of control of the company or when there’s a wind-down. In all of these scenarios, a company’s liquidator looks at the company’s secured and unsecured loan agreements, along with who owns preferred versus common stock. (Preferred shares are what VCs typically buy to ensure that they’re repaid ahead of holders of common shares.) Everyone on the company’s cap table is ranked after that, and the liquidator distributes the proceeds of a sale accordingly. Consider the wind-down scenario. Let’s say a company raised both venture capital and venture debt — a loan. Say that as time went on, it began falling behind on its debt payments, and that its VCs decided it was a losing proposition to continue funding the company. If there was any capital remaining — say the company hadn’t burned through every last bit of its funding, or say some money was made from a sell-off of its remaining assets, like its intellectual property — its investors would be paid before anyone at the company saw a nickel. When the outcome is much better, the same thing basically happens — though who gets how much and when grows more complicated with every new round of funding a company raises. The reason: When investors make a liquidation preference a condition for investing in a startup, they do it in order to claim their part of the profits first. But later-stage investors can demand liquidation preferences that ensure they get paid before earlier investors, too. It’s kind of like a layer cake. They can also demand that they get paid back more than the standard of one times their money back. Why would startups agree to these seemingly onerous terms? Well, sometimes, they don’t have any choice. They take the terms, or they go out of business. Sometimes, startups wanting unicorn status will agree to the terms for a richer valuation, thinking it will attract press, customers and employees. Whether it’s worth the gamble takes time to play out. But certainly, things can get ugly when these same companies get sold rather than go public (a process that converts everyone’s shares to common shares). It’s uglier still when they sell for less than expected, the investors take their cut, and there’s little to nothing left for founders and employees. Not every deal involves liquidation preferences. You don’t typically see them in early-stage deals. You don’t seem them in deals where a company has been created by a founder whom VCs trip over themselves to fund. But they do start to appear as a company matures. (For some context, in recent quarters, senior liquidation preferences have been showing up in between 25 and 35 percent of deals, according to the law firm Fenwick & West, which studies these things.)
- Snapchat buying Israeli augmented reality start-up Cimagine: report: Messaging app Snapchat is buying Israeli augmented reality startup Cimagine Media for an estimated $30-$40 million, marking Snapchat's first acquisition in Israel, the Calcalist financial daily reported on Sunday. Cimagine developed True Marketless Augmented Reality – technology that allows users to virtually place furniture and appliances they wish to purchase in the space of their home, on their mobile devices, at the click of a button. Cimagine will become Snapchat's research and development center in Israel and is expected to rapidly expand its workforce from its current 20 employees, Calcalist said. The company's highly-skilled team is probably the main reason for the acquisition, rather than its technology, Calcalist said. The company was founded in 2012 and has raised a few million dollars. Venice, California-based Snapchat is expected to go public as early as March with a valuation of as much as $25 billion.
- Start-Ups Seek to Take Some of the Pain Out of Moving: Adam Pittenger, who has moved six times in six years, shares his home in Hoboken, N.J., with his girlfriend and a roommate. With his frequent firsthand experience as a guide, he started a company this year to help make moving less of a chore. His company, called Moved, is one of several that hope to shake up the nearly $17 billion moving industry with new technology and on-demand services. Meanwhile, traditional moving companies are coming up with their own innovations as more consumers prefer to conduct their business on computers and smartphones. Through a mobile app that incorporates chat features, Moved can help customers through a laundry list of responsibilities: selling furniture, donating goods, ordering boxes, changing addresses and finding packing, moving and storage services. Moved’s “concierge” services — locating and coordinating with service providers — are free; customers pay for what they use. Moved makes money through referral fees from its partners, which it says are vetted.
- U.S. companies want to play China’s game. They just can’t win it. Netflix has a nifty new China strategy: Skip it. Facebook’s China charm offensive, which included Mark Zuckerberg studying Mandarin, has yielded little. Google’s search business and Twitter remain blocked. LinkedIn and Microsoft censor — and still, neither is a major player in China’s online space. Amazon.com is sputtering along against the Chinese e-commerce giant Alibaba. After great initial success, Apple is being overtaken by local upstarts. For some highflying U.S. Internet businesses, the China dream is fading; for others, it looks radically different from what they had hoped. California’s Internet companies once dreamed of liberating China with technology, thinking that the system of censorship known as the Great Firewall would inevitably crumble like the Berlin Wall, paving the way for their advance in the world’s most populous nation. But President Xi Jinping has tightened, rather than loosened, control of the Internet and increased restrictions on foreign companies. Six years after Google retreated from China’s search-engine business over censorship and hacking concerns, U.S. firms seem more willing than ever to play the Communist Party’s game — they just can’t win it. Even if they can gain a foothold, which is hard enough, there is practically no way they will be able to overtake the Chinese companies that have comfortably established themselves.
- Blue Apron Put IPO Plans on Hold to Focus on Financials: Meal-kit delivery company Blue Apron Inc. has put preparations for an initial public offering on hold, people familiar with the matter said, delaying selecting bankers while it focuses on improving its financial metrics. After starting to interview banks in September to advise on the IPO, Blue Apron has pushed back formally hiring underwriters until some time next year, said the people, who asked not to be identified because the details aren’t public. Even with more than $800 million in annual revenue this year, the company has struggled to improve profit margins as much as management wanted in the face of more competition, the people said. A stronger performance is needed to support the $3 billion valuation that the company was targeting in an IPO. This month, Blue Apron competitor HelloFresh AG took a haircut on its private valuation when raising new cash. The Berlin-based company is now valued at about 2.09 billion euros ($2.18 billion) including new money raised -- about 20 percent less than 15 months ago. Plated, a smaller rival, is worth less than $200 million, one of the people said. Those valuations will be on investors’ minds when evaluating a potential Blue Apron IPO, the people said.
- Uber removes its self-driving cars from San Francisco roads: Uber has removed its self-driving cars from San Francisco streets after California regulators cracked down on the week-old program because the company had not obtained a permit to test the vehicles. The California Department of Motor Vehicles said on Wednesday it revoked the registration of 16 Uber self-driving cars after a battle with the ride-services company. The agency had demanded that Uber comply with regulations requiring a permit to test self-driving cars on public roads - just as 20 other auto and technology companies have done. Uber said it was not obligated to have a permit because its vehicles require monitoring by a person in the car. California defines autonomous vehicles as having the capability to drive "without the active physical control or monitoring of a natural person." Uber has argued that its cars are not able to drive without a person monitoring them - a driver and an engineer are in the front seats to take over frequently in situations such as a construction zone or pedestrian crossing - so the law does not apply. Uber's defiance was met with threats of legal action from the DMV and the state attorney general. The DMV told Uber it can continue its self-driving pilot if it obtains the permit. Agency director Jean Shiomoto said in a letter sent to Uber on Wednesday that she would "personally help to ensure an expedited review and approval process," which she described as "simple and straightforward." It is not yet clear whether Uber will apply for the permit or simply bring the self-driving cars to another state.
- Alibaba Again Named ‘Notorious Market’ in Blow to Overseas Push: Alibaba has again been labeled a haven for knockoffs with an embarrassing return to a U.S. blacklist for fakes just four years after getting its name removed. The U.S. Office of the Trade Representative on Wednesday restored Alibaba’s Taobao to its lineup of “Notorious Markets,” citing an unacceptably high level of reported counterfeiting and piracy. The Hangzhou-based company said it was disappointed in the decision. While Alibaba has argued it’s doing all it can to combat fakes, Asia’s biggest Internet company now finds itself on the same list as torrent website Pirate Bay and flea markets in Brazil and Nigeria. The decision damages Alibaba’s credibility in the U.S., where its shares trade and it’s trying to cultivate relationships with retailers, brands and entertainment companies. Alibaba suggested its new designation could have been influenced by politics. “Our results speak for themselves,” Alibaba President Mike Evans said in a statement. “Unfortunately, the USTR’s decision leads us to question whether the USTR acted based on the actual facts or was influenced by the current political climate.”
- Russian Cyberforgers Steal Millions a Day With Fake Sites: In a twist on the peddling of fake news to real people, researchers say a Russian cyberforgery ring has created more than half a million fake internet users and 250,000 fake websites to trick advertisers into collectively paying as much as $5 million a day for video ads that are never watched. The fraud, which began in September and is still going on, represents a new level of sophistication among criminals who seek to profit by using bots — computer programs that pretend to be people — to cheat advertisers. The scheme exploited known flaws in the system of digital advertising, including the lack of a consistent, reliable method for tracking ads and ensuring that they are shown to the promised audience. The spoofed outlets include a who’s who of the web: video-laden sites like Fox News and CBS Sports, large news organizations like The New York Times and The Wall Street Journal, major content platforms like Facebook and Yahoo, and niche sites like Allrecipes.com and AccuWeather. Although the main targets were in the United States, news organizations in other countries were also affected. To carry out the operation: The Methbot forgers first took numeric internet addresses they controlled and falsely registered them in the names of well-known internet service providers. The forgers then associated the addresses with 571,904 bots designed to mimic human web surfers. The perpetrators connected the bots to the automated advertising networks that sell unsold ad space for thousands of websites. A bot would pretend to visit a website like CNN.com, and the ad networks would conduct a microsecond bidding war against one another to show a brand’s video ad. But instead of going to the real CNN, the bot’s web browser would go to a fake site that nobody could see, and the ad would play there. Finally, the system would report fake data to the ad networks and advertisers to convince them that humans had watched the ad on the real content site. The thieves then collected payment for the ads.
- BlackBerry's Bet on Software Over Handsets Begins to Pay Off: BlackBerry Ltd. boosted its fiscal 2017 earnings outlook and posted a profit in the third quarter, showing the company’s bet on moving more into software and completely away from handsets is paying off. Fiscal third-quarter earnings per share, excluding some items, were 2 cents, compared with analysts’ average estimate of a loss of 1 cent. BlackBerry said it now expects to post a profit for the full year, up from a prior range of break even to a five-cent loss, according to a statement Tuesday. Shares rose as much as 4.4 percent, the biggest intraday gain in two months. They were up 1.2 percent to $7.80 at 1:26 p.m. in New York. Total revenue declined and missed estimates, but the profit numbers and forecast show BlackBerry’s transition to a higher-margin software company from ailing smartphone maker is hitting Chief Executive Officer John Chen’s targets. The adjusted profit margin was almost 70 percent of revenue, its highest ever. “I don’t consider ourselves in a turnaround anymore,’’ Chen told reporters at the company’s headquarters in Waterloo, Ontario. “We’ll make money this year. Nobody believed us in the beginning.’’
- Uber's Loss Exceeds $800 Million in Third Quarter on $1.7 Billion in Net Revenue: Even as Uber Technologies Inc. exited China, the company's financial loss has remained eye-popping. In the first nine months of this year, the ride-hailing company lost significantly more than $2.2 billion, according to a person familiar with the matter. In the third quarter, Uber lost more than $800 million, not including its Chinese operation. Uber's loss in the first quarter of this year was about $580 million, according to the person. By the second quarter, the loss significantly exceeded $800 million, including China. At the same time, the company's revenue has continued to grow even after leaving the world's most populous country. Uber generated about $3.76 billion in net revenue in the first nine months of 2016 and is on track to exceed $5.5 billion this year, said the person, who asked not to be identified because the information is private. Even in the U.S., Uber's home market, the company continues to lose money. After turning a slight profit in the in the first quarter of this year, Uber lost $100 million in the U.S. in the second quarter. The loss increased in the third quarter, the person said. Lyft, Uber's largest U.S. competitor, has promised investors that it will keep its losses below $150 million a quarter.
- France is going to let drones start delivering the mail: The French postal service will soon start a new drone delivery program to carry parcels on a set nine-mile route following approval from the French aviation regulatory authority. It’s just an experiment for now, not a fully launched program, and will only operate once a week. But it is the first time a federal postal service will use drones to deliver on a regular route. The DPDgroup, a subsidiary of the French national postal service, has been perfecting its drone delivery project since 2014 in the south of France, working in partnership with Atechsys, a French drone company. In September 2015, the drone delivery project demonstrated its aircraft could fly in complete autonomy carrying a package weighing over three pounds a distance of nearly nine miles. Last Tuesday, Amazon released a video of its first customer drone delivery in the British countryside. And in China, online retailer JD.com started the trial of its drone delivery program in November with a fleet of 30 drones that ferry orders to locations in rural China outside of Beijing, as well as Jiangsu, Shaanxi and Sichuan provinces, according to the South China Morning Post.
- Building a Community, and an Empire, With a Gay Dating App in China: MA BAOLI was accustomed to secrets. By day, he was a police officer in northern China with a wife and a knack for street chases. By night, he led a life as a gay man, furtively running a website for gay people across China at a time when many were viewed as criminals and deviants. For 16 years, Mr. Ma kept his secret, worried that coming out would mean expulsion from the police force and estrangement from his family. Then in 2012, his superiors at a police department in Qinhuangdao, a coastal city in Hebei Province, uncovered his website and he resigned. His job lost, his family struggling to accept his sexuality, Mr. Ma set out to turn his passion for connecting gay people into an empire. He created Blued, now China’s most popular gay dating app with an estimated value of $600 million and more than three million active daily users, about as many as Grindr, a popular gay dating app in the United States. Mr. Ma said he was optimistic that long-entrenched stereotypes were fading in China and that within two decades, the country would embrace ideas like same-sex marriage. He quoted his idol, the Alibaba.com founder Jack Ma, in describing both the challenge of building a successful start-up in China and the struggles of the gay-rights movement. “When I’m at my most painful moments,” he said, “I remember what Jack Ma said: ‘Today is hard, tomorrow will be worse, but the day after tomorrow will be sunshine.’ ”
- Airbnb seeks to raise an additional $153 million: Airbnb on Friday authorized the sale of up to $153 million in equity to investors, according to venture capital database CB Insights, which obtained the company's financial filing. The funding is an extension of a round in September, when Airbnb raised more than $555 million, according to financial filings. Investors have valued the company at $30 billion. The price per-share for the sale is $105, up from the $93.09 share price the company commanded in its 2015 financing round, according to CB Insights.
- Nintendo Tumbles as Super Mario Run Game Debuts to Tepid Reviews: Nintendo Co. dropped in Tokyo as the debut of Super Mario run was met by lukewarm reviews. The stock tumbled 4.4 percent as of 10:36 a.m. on Monday, bringing its losses since the game’s debut last week to 8.4 percent. Nintendo’s partner DeNA Co., which helped with the game’s development, has dropped 12.4 percent in the same period. The title, which for now is only available for Apple Inc. devices, had nearly 50,000 reviews in the U.S. App Store, with an average rating of two and a half stars out of five. That’s among the lowest for apps at the top of download rankings and below other popular smartphone games like Clash Royale or Candy Crush Saga. Nintendo has been criticized for the cost of the game, which is free to download and play the first three levels but costs $10 for the full version. “Investor expectations were very strong,” said Hideki Yasuda, an analyst at Ace Research Institute. “There are a lot of people writing on the App Store that Super Mario Run isn’t very fun. Perhaps expectations were too high.”
- Verizon Explores Lower Price or Even Exit From Yahoo Deal: Verizon Communications Inc. is exploring a price cut or possible exit from its $4.83 billion pending acquisition of Yahoo! Inc., after the company reported a second major e-mail hack affecting as many as 1 billion user accounts, according to a person familiar with the matter. While a Verizon group led by AOL Chief Executive Officer Tim Armstrong is still focused on integration planning to get Yahoo up and running, another team, walled off from the rest, is reviewing the breach disclosures and the company’s options, said the person, who asked not to be identified discussing private information. Yahoo shares fell as much as 6.5 percent to $38.25, the biggest intraday decline since February. Verizon rose less than 1 percent to $52.07.
- GitHub Is Building a Coder’s Paradise. It’s Not Coming Cheap: The VC-backed unicorn startup lost $66 million in nine months of 2016, financial documents show. Though the name GitHub is practically unknown outside technology circles, coders around the world have embraced the software. The startup operates a sort of Google Docs for programmers, giving them a place to store, share and collaborate on their work. But GitHub Inc. is losing money through profligate spending and has stood by as new entrants emerged in a software category it essentially gave birth to, according to people familiar with the business and financial paperwork reviewed by Bloomberg. The rise of GitHub has captivated venture capitalists. Sequoia Capital led a $250 million investment in mid-2015. But GitHub management may have been a little too eager to spend the new money. The company paid to send employees jetting across the globe to Amsterdam, London, New York and elsewhere. More costly, it doubled headcount to 600 over the course of about 18 months. GitHub lost $27 million in the fiscal year that ended in January 2016, according to an income statement seen by Bloomberg. It generated $95 million in revenue during that period, the internal financial document says. Sitting in a conference room featuring an abstract art piece on the wall and a Mad Men-style rollaway bar cart in the corner, GitHub’s Chris Wanstrath says the business is running more smoothly now and growing. “What happened to 2015?” says the 31-year-old co-founder and chief executive officer. “Nothing was getting done, maybe? I shouldn’t say that. Strike that.” “The whole product road map, we have all of our shit together in a way that we’ve never had together. I’m pretty elated right now with the way things are going,” says Wanstrath. “We’ve had a lot of ups and downs, and right now we’re definitely in an up.” Also up: expenses. The income statement shows a loss of $66 million in the first three quarters of this year. That’s more than twice as much lost in any nine-month time frame by Twilio Inc., another maker of software tools founded the same year as GitHub. At least a dozen members of GitHub’s leadership team have left since last year, several of whom expressed unhappiness with Wanstrath’s management style. GitHub says the company has flourished under his direction but declined to comment on finances. Wanstrath says: “We raised $250 million last year, and we’re putting it to use. We’re not expecting to be profitable right now.”
- Yahoo Says 1 Billion User Accounts Were Hacked: Yahoo, already reeling from its September disclosure that 500 million user accounts had been hacked in 2014, disclosed Wednesday that a different attack in 2013 compromised more than 1 billion accounts. The two attacks are the largest known security breaches of one company’s computer network. The newly disclosed 2013 attack involved sensitive user information, including names, telephone numbers, dates of birth, encrypted passwords and unencrypted security questions that could be used to reset a password. Yahoo said it is forcing all of the affected users to change their passwords and it is invalidating unencrypted security questions — steps that it declined to take in September. It is unclear how many Yahoo users were affected by both attacks. The internet company has more than 1 billion active users, but it is not clear how many inactive accounts were hacked. Yahoo said it discovered the larger hacking after analyzing data files, provided by law enforcement, that an unnamed third party had claimed contained Yahoo information.
- Meitu Makes Muted Debut in H.K.’s Biggest Tech IPO Since 2007: Chinese selfie-apps developer Meitu Inc. stood little changed from its offer price Thursday, a less-than-stellar debut for the biggest initial public offering since the start of a program that made it easier for mainland investors to buy and sell stocks in Hong Kong. Meitu’s IPO was also the biggest coming-out party for a tech company since 2007, when Alibaba.com Ltd. listed. Its shares stood at HK$8.50 at 9:49 a.m. local time, unchanged from an offer price that was already at the bottom of a marketed range. Meitu now has a valuation of HK$35.9 billion ($4.6 billion). The company, which runs apps including Meitu, Meipai and BeautyPlus, is ratcheting up a presence in overseas markets to lure more people beyond the existing 456 million monthly active users. Beauty Plus currently has more than 160 million users including in Japan, Indonesia and India. It will develop more localized features for people in the U.S., including tools that make people look tanned in their photos, said Cai.
- Google Parent Company Spins Off Self-Driving Car Business: Google’s parent company, Alphabet, said on Tuesday that its autonomous vehicle project was spinning off from its research lab X and would operate as a stand-alone company under the name Waymo. Alphabet’s decision to spin out Waymo is a signal that the company thinks its self-driving technology has advanced beyond research project status and is ready for commercialization. Autonomous vehicles are a hotly contested field of technology, pursued by other tech giants, promising upstarts and traditional automakers — all who see the potential of self-driving cars to upend the automobile industry. Advancements in sensor technology coupled with breakthroughs in machine learning — the ability of computers to learn from vast amounts of data and improve over time — mean driverless cars (essentially supercomputers on wheels) could become a regular sight on the roads over the next few years. The challenge for Google is to devise a successful strategy for making money from self-driving cars. Unlike Uber, it doesn’t have a ride-hailing service that can generate fares — at least not yet. And unlike Tesla or other automakers, it doesn’t have an auto manufacturing background to build cars or a network to sell them. Creating its own car would also require a significant investment to build a factory and establish a supply chain. It could work with automakers to supply autonomous driving systems — akin to how Google provides the Android operating system software to smartphone manufacturers. However, car companies are apprehensive about losing control of that crucial technology to Google. “Google has struggled to find a way to come to market,” said Roger Lanctot, an associate director at research firm Strategy Analytics. “We’ve come to the point where Google needs a return.”
- Why Google, Microsoft and Amazon Love the Sound of Your Voice: Not so long ago, voice recognition was comically rudimentary. An early version of Microsoft's technology running in Windows transcribed "mom" as "aunt" during a 2006 demo before an auditorium of analysts and investors.Speech recognition must get much better if we are to speak naturally to our gadgets. So the tech industry is vacuuming up all the conversations it can.So Amazon, Apple, Microsoft and China's Baidu have embarked on a world-wide hunt for terabytes of human speech. Microsoft has set up mock apartments in cities around the globe to record volunteers speaking in a home setting. Every hour, Amazon uploads Alexa queries to a vast digital warehouse. Baidu is busily collecting every dialect in China. Then they take all that data and use it to teach their computers how to parse, understand and respond to commands and queries. The challenge is finding a way to capture natural, real-world conversations. Even 95 percent accuracy isn't enough, says Adam Coates, who runs Baidu's artificial intelligence lab in Sunnyvale, California. "Our goal is to push the error rate down to 1 percent," he says. "That's where you can really trust the device to understand what you're saying, and that will be transformative."
- Silicon Valley VCs are growing wary of on-demand delivery: Led by Sequoia and another blue-chip Silicon Valley firm - Kleiner Perkins Caufield & Byers - venture investors have poured at least $9 billion into 125 on-demand delivery companies over the past decade, including $2.5 billion this year, according to a Reuters analysis of publicly available data. But that torrent of money has slowed to a relative trickle in the last half of this year, and many VCs have lost faith in a sector that once seemed like the obvious extension of the success of ride-services juggernauts such as Uber.The bulk of this year's investment - about $1.9 billion - came in the first half of the year. Only $50 million has been invested so far in the fourth quarter, the Reuters analysis found. Several prominent Silicon Valley venture capitalists said in interviews that they now believe many delivery startups could fail, leaving investors with big losses. Venky Ganesan, of Menlo Ventures, said the sector has no clear way to cut costs or boost revenue. "You can’t raise prices on consumers, and you can't cut labor costs," he said. "The core unit economics didn't make sense." Dalton Caldwell, a partner at Y Combinator - the prestigious tech incubator that birthed a number of delivery startups - was also skeptical, though he thought companies with top-notch operational capabilities could succeed. Many delivery startups, he said, "make the assumption that once you get bigger, things will get easier, and that's wrong. There is driver churn, operations people that cost money, more support costs."
- Designing a Safer Battery for Smartphones (That Won’t Catch Fire): Mike Zimmerman likes to shock his guests by using a hammer to drive a nail through a solid polymer lithium metal battery. Nothing happens — and that’s a good thing. Mr. Zimmerman’s battery is a new spin on lithium-ion batteries, which are widely used in products from smartphones to cars. Today’s lithium-ion batteries, as anyone who has followed Samsung’s recent problems with flammable smartphones may know, can be ticking time bombs. The liquids in them can burst into flames if there is a short circuit of some sort. And driving a nail into one of them is definitely not recommended. With that in mind, Mr. Zimmerman’s demonstration commands attention. His Woburn, Mass., start-up, Ionic Materials, is at the cutting edge of an effort to design safer batteries. The company is working on “solid” lithium polymer batteries that greatly reduce their combustible nature.“My dream is to create the holy grail of solid batteries,” Mr. Zimmerman said. After four years of development, he believes he is nearly there and hopes to begin manufacturing within the next two years. Ionic Materials is one of a new wave of academic and commercial research efforts in the United States, Europe and Asia to find safer battery technologies as consumers demand more performance from phones and cars. In the last year, Seeo and Sakti, rival United States solid polymer battery makers, have been acquired by the German industrial firm Bosch and the British vacuum maker Dyson.
- Bose gets into the hearing aid headphone business: When you’ve got a punny name as good as “Hearphones” (no Google, I did not mean “headphones”) in the chamber, you owe it to the world to deliver product. For Bose, the emerging space of hearing-assisting headphones was the perfect place for that fun bit of word play. The company’s newly unveiled earbuds seem to occupy a similar spot as a number of emerging bits of hardware, including Nuheara’s IQbuds, which we described as a cross between a headphone and a hearing aid when we saw them a while back. Ditto for the Hear One and Sony’s MDR-1000x noise canceling headphones, which were unveiled back at IFA. Bose didn’t do a big announcement this time out, like it did with its new pairs of QuietComforts earlier in the year, instead opting for a soft unveiling, along with some in-person trials, which are running between now and the 15th at its Framingham, Massachusetts headquarters.
- ESPN, one of Disney’s most popular brands, has investors really worried: ESPN was thrust into the spotlight in November when the ratings company Nielsen predicted the sports juggernaut would lose 621,000 cable subscribers that month. Nielsen estimated the sports network would lose another 555,000 subscribers in December. The staggering losses have led to calls by analysts for Disney to spin off or sell the beleaguered network, which has lost 9 million subscribers in three years, according to company filings. The challenges ahead are not unique to ESPN. The pay-TV industry as a whole has seen may consumers trim back their cable subscriptions in favor of online video services — or, fed up with the rising cost of TV, forgo cable altogether. "There's an underlying theme of the bundle being the problem," said Gene Kimmelman, president of the consumer advocacy group Public Knowledge. "People don't want to pay for what they don't want to get." But ESPN remains one of the world's most profitable sports networks, and its struggles raise troubling questions about the entire TV ecosystem. Long considered the linchpin of the traditional bundle, live sports is often what compels viewers to stay with their cable provider rather than cut the cord. But as more consumers defect in the face of growing cable bills, what is happening at ESPN could end up affecting channels up and down the lineup. And for Disney, one of the world's most powerful media companies, the problems at ESPN risk dampening the success of its other brands, such as Star Wars, Marvel Studios and Pixar. ESPN and its siblings, such as ABC, account for the biggest chunk of Disney's business by far, pulling in $24 billion in revenue this fiscal year. The company's next biggest segment, theme parks, made $17 billion.
- Automaker Honda invests in ride-hailing service Grab: Southeast Asian ride-hailing service Grab said on Monday it had secured an investment from Japanese automaker Honda Motor Co as part of a deal to collaborate on its motorbike-hailing service, in the latest auto industry tie-up of its type. Grab, the biggest rival to ride-sharing service Uber Technologies Inc [UBER.UL] in Southeast Asia, raised $750 million in a funding round in September. A source familiar with the matter said the round valued Grab at more than $3 billion.
- Andreessen in hot water for texts he sent Zuckerberg: Facebook’s board was sued earlier this year, with investors alleging that their interests were not adequately represented when Zuckerberg was permitted to sell most of his shares and still retain voting control of the company. And now court filings uncovered by Bloomberg show that texts sent by board member Marc Andreessen are being used to suggest that he was protecting Zuckerberg instead of shareholders. Private messages sent during conference calls from Andreessen to Zuckerberg, such as “this line of argument is not helping” and “now we’re cooking with gas,” have given some investors the impression that he was coaching the CEO instead of negotiating with him. The board appointed a committee last year to represent investor concerns because the proposed stock sale could dilute their voting power. Andreessen was on the committee and has been accused of neglecting his fiduciary duties.
- Inmarsat switches to Arianespace for satellite launch after SpaceX delays: British satellite company Inmarsat will switch to using Arianespace from rival SpaceX to launch a new satellite to provide broadband connectivity to air passengers, it said on Thursday. The S-band satellite had been scheduled to launch with technology billionaire Elon Musk's SpaceX but Inmarsat said setbacks to SpaceX's launch schedule prompted it to turn to Arianespace instead. Inmarsat said on Thursday that European-owned Arianespace will launch the S-band satellite in mid-2017. SpaceX has been forced to delay December rocket launches until January as an investigation continues into why one rocket burst into flames on September 1. SpaceX has a backlog of more than 70 missions for NASA and commercial customers, worth more than $10 billion.
- With LinkedIn, Microsoft Looks to Avoid Past Acquisition Busts: Microsoft announced on Thursday that it had completed its $26.2 billion acquisition of LinkedIn, the social network for professionals. There are ample reasons to be skeptical that the deal, the biggest by far in Microsoft’s history, will pay off. First, the company has not had a great track record with this sort of thing. Two of Microsoft’s largest acquisitions — the digital advertising firm aQuantive and the mobile unit of Nokia — were disappointments that eventually led to the company writing off nearly the entire value of the deals, more than $13 billion in all. Still, the Microsoft of 2016 is different from the unfocused giant of the past that lurched from deal to deal with wild-eyed ambitions of catching rivals like Google and Apple. It has a new chief executive who has made a series of smaller deals that have shown positive results. The company’s stock is trading at record highs. A key difference in the way Microsoft has approached the deal is the degree of independence it plans to give LinkedIn. It will not weave LinkedIn, which is based in Silicon Valley, into one of its existing product lines, nor will it treat it like a disconnected business. Mr. Weiner will remain LinkedIn’s chief executive. “Neither one of us is a Pollyanna,” said Mr. Weiner. “We both know that acquisition integrations are challenging.” A good model inside Microsoft is the company’s $2.5 billion purchase in 2014 of Mojang, the developer behind Minecraft, which has continued to grow under Microsoft’s ownership, retaining key employees along the way. Mr. Nadella and Mr. Weiner said they had also looked to Facebook’s success in acquiring companies like the photo-sharing service Instagram, while granting them autonomy. “I absolutely think of LinkedIn as our Instagram,” Mr. Nadella said. So determined was Mr. Nadella to get off on the right foot that he emailed an unusual request to Mr. Weiner a few days after the announcement of their deal in June. He asked Mr. Weiner to take the lead on an integration team responsible for merging their two companies, a responsibility that normally falls to an executive at the acquiring company. “I had to read it at least twice,” Mr. Weiner said. “I did a bit of a double take.”
- Pebble confirms it’s shutting down, devs and software going to Fitbit: RIP Pebble… The wearable maker that pioneered wrist-based notifications before Apple and many others waded into the smartwatch space has confirmed it’s closing its doors as an independent entity. Late last month rumors emerged that Fitbit was set to acquire Pebble — with our sources telling us the price-tag was between $34 million and $40M, a figure they said “barely” covered the startup’s debts. Although the company avoided an explicit confirmation of the rumor by tweeting a shrug emoji until now. So really it sounds like it’s only a matter of time before Pebble wrist-wear reaches the end of the functionality road — with whatever lifespan left now up to Fitbit to determine. Warranty support for Pebble devices has already been withdrawn, according to the blog post. While the Pebble 2, which only started shipping earlier this month, has now been canceled — with no more orders being accepted or fulfilled. Kickstarter backers whose rewards have not yet been fulfilled are slated to get a full refund within 4-8 weeks as a chargeback to their credit cards. Anyone who returned a Pebble device before December 7 will also get a refund, according to the post. In terms of what exactly Fitbit is acquiring, Migicovsky writes that “many” Pebble staff will be joining Fitbit to work on wearable software platforms. The focus of the acquisition looks firmly to be software.
- Airbnb Turns the Volume Down on Its Fights With Regulators Everywhere: Airbnb has reached that moment in a brash young startup's life where it decides it's in its best interest to acknowledge the existence of rules.Airbnb has always operated under a cloud of legal uncertainty as it battled city governments over how to regulate its network of short-term rental properties. The company has been kicking it into high gear to clear the situation up in recent days. On Wednesday, it released a report laying out its approach to local regulations, trying to capitalize on a weeklong stretch in which it agreed to enforce limits on rentals in London and Amsterdam, dropped a lawsuit against New York City, and praised new rules in New Orleans as a potential nationwide model. The report released today mostly restates the arguments that Airbnb has made in the past. Airbnb acknowledges that rules will vary from city to city. In general, it says it wants to collect taxes, and will help cities enforce limits on how many nights per year people can rent out their homes on the platform. It continues to push back against the idea that hosts should have to register their apartment with city officials, but suggests ways that cities can make the process less onerous. The moves over the last week mark a shift in Airbnb's priorities, putting a stable regulatory landscape ahead of the move-fast-and-break-things approach that got it to this point. It's also a major de-escalation for a company that spent the last several months suing governments in some of its most important markets. At some point it needed to start getting along with regulators in order to prepare for an eventual IPO, although until recently it seemed to be hoping to enjoy the free-for-all for a bit longer.
