Daily Tech Snippet: Monday, May 23

• To halt smartphone slide, Samsung rewrites playbook: From the way it chooses smartphone components to the models it brings to market, Samsung Electronics (005930.KS) has undergone a painful process of breaking from its past to reverse a slide in its handset business. For example, the world's largest smartphone maker agonized over camera specs for its flagship Galaxy S7 until the last moment - ultimately defying industry convention by opting for fewer pixels in exchange for improved autofocus features and low-light performance, a move that contributed to early success. It also pared back its product line-up, overcoming internal resistance, enabling it to streamline production, an executive said. The handset business has now stabilized, and had its best profit in nearly two years in January-March, though historically low smartphone industry growth still leaves Samsung looking for the "next big thing". After peaking in 2013, a sharp drop in mobile profits exposed Samsung as slow to adjust to the changing market: its budget devices were overpriced and unappealing versus Chinese offerings, and the 2014 version of its Galaxy S flopped. That prompted a cull among executives and stoked investor worries Samsung might not be able to recover as rivals including Apple, Huawei  and Xiaomi gained market share at its expense. There was no sweeping, across-the-board fix. Rather, Samsung embarked two years ago on an overhaul that included a shift from a phone-for-all-needs approach towards a line-up that emphasized economies of scale. It revamped design, using metal frames and curved screens, and gave high-end features such as organic light-emitting diode (OLED) screens to its low- and mid-tier products. The product cull paid off; the revamped models helped Samsung recover in big markets such as India. "There was a feeling the sheer number of phones in the market was confusing for customers," said a Samsung India executive, declining to be identified as he was not authorized to speak with the media.Samsung's Kim says his focus now is on premium-end smartphones - those costing $600 and above - where not all industry players have the muscle to compete.

• Selling Uber Shares May Be Tougher Than You Think: SharesPost Inc., a broker of private technology stocks, approached investors with what seemed like an alluring offer: a potential investment in a fund that would hold Uber Technologies Inc. shares. In exchange for exposure to the high-flying ride-hailing startup, they were asked to part with at least $100,000 each and agree to hold the stake until the company goes public or gets acquired, with no vote in business decisions or visibility into its operations or finances. But SharesPost said it called off the proposed deal. The plan was to purchase as much as $10 million in preferred shares from Uber’s most recent round of financing and package them in an investment fund to be sold at a premium, according to offering documents obtained by Bloomberg. SharesPost said it wouldn’t pursue the transaction, citing a “lack of investor interest.” “It became clear that the minimum funds would not be collected for this deal, and as a result, the sales team began to inform interested clients of this fact,” Greg Berardi, a spokesman for SharesPost, wrote in an e-mail. The erstwhile offering shows the complexity of giving investors the chance to gain shares in a startup that wants to tightly control who gets a sliver, no matter how small. Like many startups, Uber limits sales of its shares. Such transactions can distort a company's valuation, leave control in the hands of unknown investors and result in tax liabilities for the company, its employees and other shareholders. Uber declined to comment on the SharesPost proposal, but a spokeswoman said when Uber learns of potential unauthorized shares on the market, the company contacts the people involved. SharesPost's role in share sales has drawn regulatory scrutiny. The broker settled with the Securities and Exchange Commission in 2012 to resolve claims that the online marketplace for private-company shares acted as an unregistered broker. SharesPost paid $80,000 and Greg Brogger, then the company’s president, paid $20,000, without admitting wrongdoing. Brogger is now SharesPost’s chief executive officer and chairman, and the company is registered with the SEC. SharesPost's spokesman called the 2012 settlement “completely irrelevant to a 2016 fund that never got off the ground.” Speaking to a Silicon Valley audience in March, SEC Chair Mary Jo White cautioned that secondary transactions could amplify “errors or misconceptions in valuation.” She highlighted the lack of transparency in such deals as cause for concern. For the proposed Uber transaction, the documents said a fund managed by a member of SharesPost’s board of directors would buy the shares at a 2 percent premium to their price in last year’s funding round, which valued the company at $62.5 billion, and then resell them for 5 percent more. It’s unclear where the SharesPost fund would acquire the Uber stake from. VC Experts, a private-market research firm, estimated that the transaction would give Uber an implied valuation of more the $70 billion.

• Modi’s Mini-Shuttle Set to Blast Into Elon Musk’s Race for Space: India is set to launch a scale model of a reusable spacecraft on Monday, a project that in time could pit the nation against billionaires Jeff Bezos and Elon Musk in the race to make access to space cheaper and easier. The winged vessel -- one-fifth of full size -- is due to blast off on a rocket from Sriharikota base on the southeastern coast, reach an altitude of 70 kilometers (43 miles) and glide back at supersonic speeds to Earth for a splashdown in the Bay of Bengal, the Indian Space Research Organisation said.India put a probe into Mars orbit in 2014 for just $74 million, demonstrating a combination of technological capability and low costs that chimes with the goal of more frequent space travel being championed by Musk’s Space Exploration Technologies Corp. and Bezos’s Blue Origin LLC. Both companies seek to curb costs by making rockets reusable and are conducting test launches more often.India plans to spend about 75 billion rupees ($1.1 billion) on its entire space program in the year through March 2017, a fraction of the yearly $19-billion-dollar budget of the National Aeronautics and Space Administration in the U.S.  The reusable space vehicle is supposed to provide a cost-effective and reliable option for operations such as launching satellites, according to the Indian space agency. Mock-upson government websites resemble the long-defunct NASA space shuttles.The nation remains about eight years away from a full-scale version of the reusable space vehicle, and still has to cross the hurdle of steering the vessel safely back to land rather than water, according to the Indian space agency. Musk’s SpaceX in December pulled off a soft, vertical touchdown after the two-stage rocket propelled its payload. Less than month earlier, Bezos sent one of his test rockets to the edge of space and landed it safely back on Earth. "India has to start somewhere, sometime," Lele said. "That time is now."

• Start-Ups Once Showered With Cash Now Have to Work for It: The balance of power is shifting across tech start-up land. Not long ago, entrepreneurs had the upper hand. With investors eager to get a piece of the next Uber or Airbnb, entrepreneurs often just lifted their little fingers to get financing. Some investors let the entrepreneurs choose their own terms, while others gave multimillion-dollar paydays to start-up founders long before their companies were a success. Now investors have the advantage. Instead of venture capitalists begging to be allowed to invest, entrepreneurs are coming to them begging for cash. Investors are exerting their newfound power by asking more questions about a start-up’s prospects and taking more time to invest. Some are pushing for management changes or for financing terms that would help cushion any losses they might face. “Venture capitalists are putting founders through everything short of a proctology exam before they invest,” said Venky Ganesan, a partner at Menlo Ventures, a Silicon Valley venture capital firm. The changing balance of power is evident in the numbers. Venture capitalists have put less money into start-ups in the United States in the last two quarters, according to the National Venture Capital Association; funding dropped 11 percent to $12.1 billion in the first quarter from a year earlier. With a smaller capital pie, entrepreneurs have to work harder for a piece. Investors have also been better able to negotiate financing terms that benefit them. According to a survey from the law firm Fenwick & West, investors of richly valued start-ups have been getting more provisions such as guaranteed payouts and minimum investment gains. Such terms are still relatively rare, but tend to become more common after the number and size of deals decline, said Barry Kramer, a Fenwick & West partner. Above all, investors are no longer paying any price to invest in a start-up. Since the beginning of this year, about 30 companies have had to settle for lower valuations than they previously received when they raised money, according to the research firm CB Insights. That is nearly as many as in all of 2015. “Investors have materially more time to do diligence than before,” said Ben Ling, a partner at venture capital firm Khosla Ventures. “Across our portfolio, even for the best companies, fund-raising is a longer process.”