Daily Tech Snippet: Wednesday, June 8

• Online Reviews? Researchers Give Them a Low Rating: Reviews tell us what to read next, where to eat dinner and what to order there, where to go on vacation and what doctor to call. Soon, as Google demonstrated with the introduction of its voice-activated Google Home device in May, reviews will be read aloud to you as you lie on the couch, wondering what movie to see next. But if reviews are ubiquitous, there are also persistent controversies over how many of the reviews on the internet were bought by the subject rather than written as finely reasoned opinions from a neutral party, and whether that distorts all results.But if reviews are ubiquitous, there are also persistent controversies over how many of the reviews on the internet were bought by the subject rather than written as finely reasoned opinions from a neutral party, and whether that distorts all results. In May, Yelp issued 59 new Consumer Alerts, which are notices it puts on a business’s page that it has been caught trying to pay for better reviews. Among those cited were a Beverly Hills plastic surgeon and an emergency room in Humble, Tex. Lifehacker.com recently took on Rotten Tomatoes and Metacritic, arguing their way of compiling reviews was “fundamentally flawed.” FiveThirtyEight.com reported that “men are sabotaging the online reviews of TV shows aimed at women.” (Why? Because they can.) Bart de Langhe, an assistant professor of marketing at Leeds School of Business at the University of Colorado, used to see numerical reviews online and accept them implicitly. Then, when his son was born three years ago, he needed to buy a car seat. Mr. de Langhe noticed that the seat rated lowest by Consumer Reports got a high rating on Amazon, and the one rated highest by Consumer Reports received a low rating on Amazon. The more popular seat on Amazon was also more expensive. Were reviewers, he wondered, paying more attention to things like price and brand than the objective, measurable ability of the seat to protect its occupant? With two other researchers, Philip Fernbach and Donald Lichtenstein, Mr. de Langhe began a study that compared online reviews for items like air-conditioners and car batteries with the evaluations in Consumer Reports. “Navigating by the Stars” was published in April in The Journal of Consumer Research. After analyzing 344,157 Amazon ratings of 1,272 products in 120 product categories, the researchers found “a substantial disconnect” between the objective quality information that online reviews actually convey and the extent to which consumers trust them. In other words, the consumer saw a number — 4.6 stars out of 5 — and took it much more seriously than it merited. Nearly half the time, Amazon reviewers and the Consumer Reports experts disagreed about which item in a random pair was better. Moreover, average user ratings did not predict resale value in the used-product marketplace, another traditional indicator of quality.

• Amazon to Invest Additional $3 Billion in India, CEO Bezos Says: Amazon.com Inc. will invest $3 billion more to build its business in India, bringing the company’s total pledged investment in the country since 2014 to $5 billion as it chases growth outside the U.S. Jeff Bezos, founder and chief executive officer of the Seattle-based online retailer, announced the investment Tuesday at the U.S.-India Business Council’s Leadership Summit in Washington, where Indian Prime Minister Narendra Modi spoke to executives from U.S. companies. “We have already created some 45,000 jobs in India and continue to see huge potential in the Indian economy,” Bezos said in a statement from the council. “Our Amazon.in team is surpassing even our most ambitious planned milestones.” Amazon gets most of its international revenue from the U.K., Germany and Japan. The company doesn’t break out sales from India, instead including it in a group with other international markets. Revenue from that group in 2015 reached $7.4 billion, or 6.9 percent of total sales. Amazon has targeted India as an area ripe for growth, and has been spending to challenge local e-commerce company Flipkart. Bezos said at a conference last week that Amazon is doing most of the last-mile deliveries and opening more distribution centers in India. Bezos also highlighted achievements in India in his annual letter to shareholders. They included the launch of Seller Flex, which uses Amazon sellers’ warehouses to store other products sold on Amazon, helping the company quickly expand its delivery capabilities. Amazon’s cloud computing division is also developing new infrastructure in India.

• Sovereign wealth funds throw funding lifeline to tech ventures: A succession of funding deals by deep-pocketed sovereign wealth funds have thrown a life preserver to some of the world’s biggest private tech firms whose high valuations have come under scrutiny in the past year. Saudi Arabia and other Gulf States along with state-backed investors in Singapore and China have ploughed money into hot tech investments such as ride-sharing company Uber  and Chinese Internet giant Alibaba and its private affiliates. With overall funding for start-ups slowing down by a third to $25.5 billion in the last two quarters, according to data from CB Insights, high-profile ventures are turning to government funds or institutional money to create "private IPOs" rather than to venture capitalists or chancing public listings. These capital injections have helped to keep valuations high as other tech ventures such as those of cloud storage service Dropbox or Indian takeaway food ordering app Zomato have been marked down by some earlier backers. Saudi Arabia's Public Investment Fund said last week it invested $3.5 billion in Uber, Silicon Valley's most highly valued private company. At $62.5 billion, the car-sharing firm is worth more than the stock market capitalizations of automakers BMW or GM and close to VW, Daimler and Ford. Also last week, Singapore's two big government investors bought $1 billion of Alibaba Group shares, while in April, China Investment Corp, took part in a $4.5 billion round in Alibaba's financial services affiliate ANT Financial with other investors, marking the largest ever funding round in a fintech firm. Saudi Arabia's $3.5 billion stake in Uber was the largest ever single private investment in a tech company while the Kuwait Investment Authority took the lead this year in a $165 million private equity funding for struggling U.S. wearable devices maker Jawbone, one of seven tech and healthcare ventures it has made in the last two years. Qatar Investment Authority invested in Uber and Indian ecommerce firm Flipkart in 2014. Norway’s $865-billion fund, the world’s largest sovereign wealth investor, is a major backer of publicly traded tech stocks such as Apple Inc (AAPL.O), but it can only invest in an unlisted company in the final run up to a public offering. Restrictions on private investments mean it passed on an offer from Facebook (FB.O) to invest several years ago.

• The unsexiest trillion-dollar startup: Steve Jobs went ballistic when public shipping manifests leaked the existence of the iPhone 3G. That’s about the only time something exciting happened in the freight forwarding business. The circulatory system of the global economy is a trillion-dollar industry, yet no one really talks about it, or builds tech for it. That’s what makes freight such a massive disruption opportunity for a startup likeFlexport.  Transparency begets data, which begets efficiency. Smarter shipping shrinks the physical world the way faster internet shrinks the digital one. New businesses emerge. High bandwidth connections paved the way for Netflix. Now Flexport could make meatspace merchants as nimble as Amazon. With $26.9 million in funding, Flexport grew the volume of goods it ships by 16X this year. Y Combinator president Paul Graham says “Flexport is one of that small handful of startups that are going to change the world.” Freight might finally be getting the weight of attention it deserves. Stick with me. Anything weighing over 150 kilos can’t be sent like a parcel through the postal service. It qualifies as freight, and can require several separately owned vehicles to deliver it across land, sea, or air from its source like a factory to a destination like a retail store. To get the best deal on each leg of the journey and handle the hand-offs through customs, freight forwarding services serve as an organizational logistics layer. They have direct relationships with carriers like truck owners and massive shipping container boats. But like I said, it’s an unsexy business, so until recently, freight forwarding was still being done with a jumble of Excel, email, fax, and paper manifests shipped around the world. That made it extremely tough to spot overspending or snags in supply chains. That is, until Flexport indexed all the available carriers into a searchable database in its free software for organizing and tracking shipments. In 2016 it’s moved freight to or from 64 countries for over 700 clients like Ring and Le Tote, with a $1.5 billion annual run-rate of merchandise value shipped. There’s 2.4 million toys and 412,000 pieces of glassware currently in transit on the Flexport platform. Its investors include First Round, Founders Fund, Felicis, GV (Google Ventures), Box Group, Bloomberg Beta, and Ashton Kutcher. That’s quite an ascent considering Petersen admits “I didn’t learn what the term ‘freight forwarder’ meant until a year into starting the business.”