Daily Tech Snippet, Monday, May 2nd

• How Foursquare knew before almost anyone how bad things were for Chipotle: Chipotle announced its first loss as a public company Tuesday. But two weeks earlier, an unlikely source —the social media app Foursquare — had beat Chipotle to the punch,predicting in a blog post that the burrito maker’s sales would drop nearly 30 percent. Chipotle made it official Tuesday afternoon — reporting a drop of 29.7 percent.  The remarkably accurate prediction from a company consumers know for restaurant tips and the ability to check in at locations highlights the emerging power of the gobs of data our smartphones collect and the opportunity for savvy companies to convert that information into piles of cash. Foursquare has spent seven years collecting data and has 85 million places in its database. It describes its data trove as the “biggest foot traffic panel in the world.” Clients that buy Foursquare’s data to glean insights include retailers, real estate developers, Wall Street traders and consumer package-goods companies. Foursquare, the seven-year-old start-up, cleverly turned smartphone data into predictions on Chipotle sales that matched Wall Street analysts with far more experience in projecting the successes of businesses such as Chipotle. Last year, Foursquare used its foot-traffic data to predict how many iPhones Apple would sell on a given weekend. Foursquarepredicted sales of 13 million to 15 million. Apple then announced sales of more than 13 million.Once a handful of Foursquare users have checked in at a location, the company knows that a given location represents a certain store. If the smartphones of another Foursquare user move inside these premises — but doesn’t check in — Foursquare still knows the user was in the store. Foursquare relies on GPS data, WiFi, cell towers and beacons to pinpoint where smartphone users are. Data experts caution that there are limits to how far Foursquare can replicate its Chipotle predictions elsewhere. They say Foursquare’s success will work best at large chains. Foursquare needs a lot of data to make such predictions, so it would probably struggle to accurately predict the sales of a retailer that has only a handful of locations.Another limitation to Foursquare’s approach is the nature of a store. Chipotle lends itself to a foot-traffic analysis because customers overwhelmingly travel in person to a store to get their food. It would be more difficult to predict the sales at a business that sells a significant amount of goods online.

• Gas Delivery Startups Want to Fill Up Your Car Anywhere. Is That Allowed?: A new crop of startups are trying to make gas stations obsolete. Tap an app, and they'll bring the gas to you, filling up your car while you're at work, eating breakfast, or watching Netflix. Filld, WeFuel, Yoshi, Purple and Booster Fuels have started operating in a few cities including San Francisco, Los Angeles, Palo Alto, Nashville, Tennessee, and Atlanta, Georgia. But officials in some of those cities say that driving around in a pickup truck with hundreds of gallons of gasoline might not be safe. “It is not permitted,” said Lt. Jonathan Baxter, a spokesman for the San Francisco fire department. Baxter said if San Francisco residents see any companies fueling vehicles in the city, they should call the fire department. Yoshi, which operates in San Francisco, was surprised to hear Baxter's concerns. “We haven't talked to them. I don't know about that. It’s news to me,” said co-founder Nick Alexander. The next day, he said he believed Yoshi was following the law and that it had been careful to limit the size of their gas tanks to stay under limits outlined in the International Fire Code, a guideline followed by many U.S. states. Filld, an 18-month-old startup with thousands of customers in Silicon Valley, plans to start service in San Francisco on Monday, deploying three delivery trucks at 1 p.m. “You can never ask for permission because no one will give it,” said Chris Aubuchon, the chief executive officer at Filld. The Los Angeles Fire Department said it’s drafting a policy around gasoline delivery. “Our current fire code does not allow this process; however, we are exploring a wayhis could be allowed with some restrictions,” said Capt. Daniel Curry, a spokesman for the city’s fire department. “It’s just one of these things that nobody has really thought about before—kind of like how Uber popped up out of nowhere.” But he said it’s not a gray area: “All I can tell you at this time is it’s not allowed as per our current fire code.”

• Why is Facebook doing so well? Facebook reported yet another quarter of strong user growth, in marked contrast to Twitter, which has been eking out only very modest growth recently. In fact, over the past year Facebook’s monthly active users grew by roughly two-thirds the size of Twitter’s entire base. This wasn’t a one-off — Facebook has grown by over 150 million users year on year for the past four years at least, and growth has actually accelerated recently: Predictably, the strongest growth has been in the least mature markets — Asia and Facebook’s “Rest of World” geographic segments led the charge, with more than 75 million new users each over the past year, while North America and Europe added fewer users (but still grew decently). That reemphasizes the importance of Facebook’s efforts to grow usage in those emerging markets and, hence, projects like Free Basics (recently shut down in India) and its other connectivity projects. So far, though, it seems to be doing just fine in these countries.  Average revenue per user is also growing strongly across the board, led by the U.S. and Canada, where annual ARPU is approaching $50. Other regions have far lower ARPU — the rest of the world combined has an annual ARPU of just $7. That overall ARPU growth multiplied by the user growth is driving phenomenal overall revenue growth. And, because that growth requires a much more modest increase in costs, it’s also driving margin expansion. Revenue grew by 52 percent year on year for the second quarter in a row, and operating margin was up 11 points year on year. Just as a reminder, that revenue is almost all coming from ads at this point — the FarmVille era is well and truly over at this point, and payments are a tiny fraction of total revenue for Facebook today. One of the hardest things to get at in Facebook’s results is the role of Instagram. The app has been serving up ads for some time now, and management has been talking up the benefits in general terms for several quarters. But it doesn’t break out metrics other than monthly active users (400 million at last count). In addition, Instagram users are excluded from the MAU count Facebook reports and on which it bases its ARPU calculations, even though Instagram revenue is included in ARPU. As such, there’s a little misdirection going on, in that Facebook is including Instagram in the numerator but not the denominator here. There is, to be sure, a good chance that many Instagram users are also Facebook users, so there’s not too much double counting, but I do wonder how much of the growth in ARPU is from Facebook monetizing Instagram better. From a perspective of internal threats to success, Facebook is placing some biggish bets on future projects like virtual reality (through Oculus) and research and development into new forms of connectivity, both projects outside its core business, and therefore both potential distractions and financial sinkholes. But the scope of these efforts seems to be modest in the context of Facebook’s overall business, and its margins aren’t suffering yet. Government action on Free Basics, as we’ve already seen in India, is another possible threat, but a modest one at this point, and one few other governments seem willing to take on for now.  Perhaps the biggest threat of all is that platform owners like Apple and Google end up owning the next round of devices and platforms in the same way they have smartphones, despite Facebook’s VR investments, and steadily squeeze out third parties they perceive as a threat. Facebook seems aware of this possibility, and has invested not just in VR as a potential future interface but also an increasingly OS-like presence on smartphones.
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• According to its cofounder and CEO Snapchat is mainly “a camera company”:   Despite all of its new bells and whistles… and the billions of videos, ads, and effects that have been added to the service, Snapchat chief executive Evan Spiegel still thinks of the new media juggernaut he’s created as “a camera company”. While Snapchat Stories may be the feature that brings the company the revenue model it needs to validate its $16 billion valuation, and while the ephemeral messaging feature may be what initially attracted the hordes of millennials sending digital ephemera to each other billions of times a day, Spiegel says that the camera itself remains Snapchat’s unifying feature. Snapchat opens to the camera, Spiegel said. Chat is available to the left of the camera, and Stories is available to the right of the camera. That not only differentiates it from other social media products, but allows Snapchat to straddle the line between the defining features of several of them. “The beautiful thing is it sort of sits in the middle, but more importantly it opens to the camera,” Spiegel said. “The thing that feeds a social network is content… Similarly with communication… So in our view, when you take a snap and you choose this path between talking to your friends or adding it to your Story we end up with this harmony where both of these businesses feed themselves. I don’t think it’s one or the other.” In a way, even the company’s movement into filters, stickers, and lenses such as face swap are further extensions of the original thesis of Snapchat as a photographic communication tool. “Now you can put the way you feel… in the moment you’re experiencing. For us that’s just the beginning of some fun, creative tools,” he said.