Daily Tech Snippet: Monday, August 29

• China’s Murky World Where E-Commerce Meets Student Lending: Across college campuses in China, a small army of marketers is recruiting students to borrow money at interest rates many times that charged by the nation’s banks. Those without a credit history or parental approval can borrow money to buy a smartphone, pay for holidays, or get the latest sneakers through a raft of apps such as Fenqile. The market leader, whose name literally means Happy Installment Payments, has 50,000 part-time marketers across more than 3,000 universities and proudly touts the slogan “Wait no more; love what I love.” Welcome to the regulatory gray area where peer-to-peer lending meets e-commerce in China. In the last three years, tens of millions of students have taken out micro-loans with the tap of a button to buy things. Once just the realm of startups, the sector has attracted heavy hitters in China’s online industry, including Alibaba Group Holding Ltd.’s finance affiliate and JD.com Inc., which are pouring hundreds of millions of dollars into the lending model. In a nation with 37 million college students, the market is expected to reach $15 billion, according to the Beijing-based market research firm Analysys. The apps sell everything from cameras to concert tickets sourced from third-parties, charging students annualized interest rates typically above 10 percent. The loans are then packaged and sold to wealthy individuals, who find the expected return of as much as 10 percent much more attractive than the central bank’s benchmark savings rate of 1.75 percent.

• How long before Amazon forces its Indian rivals into a merger or sale? Three years into Amazon’s aggressive push in India, the country’s two home-grown e-commerce competitors are feeling the pressure. Both Flipkart and Snapdeal have raised more than a billion dollars, but have historically recorded big losses as they’ve engaged in discounting battles with each other and with Amazon. Amazon has made it clear it is willing to spend big to become the No. 1 e-commerce player in the country after failing to make a dent in another huge international market, China. Now, it seems like every week there’s a new rumor of the two homegrown players considering a merger or sale. Alibaba, which owns a stake in Snapdeal and another Indian player, Paytm, is often in the conversation. In any potential talks, however, Flipkart and Snapdeal’s frothy valuations could be a problem. Flipkart was valued last year at $15 billion while Snapdeal most recently secured a $6.5 billion valuation.

Daily Tech Snippet: Monday, June 20

• Phone Tracking, Nude Selfie IOUs See Chinese Bare All for Credit: Talkative people pay back loans. The very talkative default. Too taciturn is no good either. Also, don’t take out a loan at 4 a.m. Those are lessons from online lenders in China that are tracking people’s behavior -- via apps on their mobile phones -- and taking it into account when deciding what their credit ratings should be. Chinese consumers don’t mind handing over personal details that would spark outrage in the West, in exchange for lower interest rates. WeLab Ltd., a Hong Kong-based online lender that makes loans in China, looks at what apps people have downloaded, where they go using the phone’s GPS tracker, their social networks and their school records. It offers discounted interest rates for each extra piece of personal information that helps profile customers for credit ratings. In Hong Kong, for example, giving WeLab access to a Facebook account gets a 5 percent discount on the cost of a loan, and access to LinkedIn gets you 10 percent off, on loans with interest rates that otherwise reach as high as 20 percent. "Chinese people have no issue handing over their personal data, giving you their credit card number, giving you their bank account," said GGV Capital’s Shanghai-based managing partner Jenny Lee, whose Silicon Valley venture capital firm has invested in data-hungry tech giants such as Alibaba Group Holding Ltd. "Look at the whole internet finance sector, people are giving you their bank statement so you can do profiling." Some are perhaps over-sharing. University students desperate for cash have been sending nude photos of themselves as collateral to several online lending platforms, according to the official People’s Daily. Typically they get loans of 15,000 yuan ($2,280) -- more if they’re doctoral students or enrolled at a famous university, the report said, and at least one loan had a weekly interest rate of 30 percent. Delinquent borrowers face the threat of their naked selfies being sent to family if they don’t pay.

• Apple says iPhones still available for sale in China: Apple  said its iPhone 6 and 6 Plus were still available for sale in China after Beijing's intellectual property regulators barred their sales saying the designs had infringed a patent held by a Chinese company. "We appealed an administrative order from a regional patent tribunal in Beijing last month and as a result the order has been stayed pending review by the Beijing IP Court," Apple said in a statement on Friday. The notice, dated May 19, banning sales of certain iPhone models in Beijing was posted on a Chinese government website. The Chinese market is vital to Apple, driving more of its sales than any other region outside the United States. But the tech giant has faced greater scrutiny there in recent months, with its online book and film services blocked by Chinese regulators earlier this year. Apple historically had enjoyed favorable treatment in China, but Beijing’s crackdown on the iPhone 6 and 6 Plus is a reminder that the tech giant is not immune to the scrutiny that other U.S. tech firms have long faced in the country, said analyst Colin Gillis of BGC Partners.

Daily Tech Snippet: Wednesday, May 18

• China Quietly Targets U.S. Tech Companies in Security Reviews: Chinese authorities are quietly scrutinizing technology products sold in China by Apple and other big foreign companies, focusing on whether they pose potential security threats to the country and its consumers and opening up a new front in an already tense relationship with Washington over digital security. Apple and other companies in recent months have been subjected to reviews that target encryption and the data storage of tech products, said people briefed on the reviews who spoke on the condition of anonymity. In the reviews, Chinese officials require executives or employees of the foreign tech companies to answer questions about the products in person, according to these people. The reviews are run by a committee associated with the Cyberspace Administration of China, the country’s Internet control bureau, they said. The bureau includes experts and engineers with ties to the country’s military and security agencies. While other countries, including the United States and Britain, conduct reviews of some tech products, they usually focus on products that will be used by the military or other parts of the government that are concerned with security, and not on products sold to the general public. The Chinese reviews stand out because they are being applied more broadly, including to American consumer software and gadgets popular in China, the people briefed on the reviews said. And because Chinese officials have not disclosed the nature of the checks, both the United States government and American tech companies fear that the reviews could be used to extract tech knowledge as well as ensure that the United States was not using the products to spy. Ultimately, the reviews could be used to block products without explanation or to extract trade secrets in exchange for market access. Those secrets could be leaked to Chinese competitors or expose vulnerabilities, which, in turn, Chinese hackers could exploit. Further, tech companies are concerned that the reviews could set a precedent and that other countries will follow suit, each demanding different checks that would not only be costly but also put the companies at risk of having to hand over further secrets in exchange for market access.

• Google's launch of a carpooling service Monday marks the beginning of its seemingly inevitable entry into the ridesharing wars. The pilot program, which is being offered via Google's Waze navigation app, aims to connect commuters who need a ride with drivers who can supply one. In exchange, riders will help cover the drivers' fuel costs. Consolidating rides means fewer cars on the road — which is better for traffic congestion and the environment, according to Waze. Google's launch of a carpooling service Monday marks the beginning of its seemingly inevitable entry into the ridesharing wars. The pilot program, which is being offered via Google's Waze navigation app, aims to connect commuters who need a ride with drivers who can supply one. In exchange, riders will help cover the drivers' fuel costs. Consolidating rides means fewer cars on the road — which is better for traffic congestion and the environment, according to Waze.

• Apple CEO Makes First India Trip With Billion Phone Sales at Stake: Smartphone shipments may be sputtering in the U.S., Europe and other mature markets, but in India, there’s the prospect of a billion new device sales. It’s probably no surprise then that Apple Inc. Chief Executive Officer Tim Cook is making his first trip to the country. Cook, who begins his multiday visit on Wednesday, will unveil a development center for digital maps in Hyderabad and introduce an accelerator program for iOS developers in Bangalore, a person with knowledge of the trip said. Apple is pushing to open its first retail stores in the country, though it’s not clear whether any discussions will be part of the CEO’s agenda on this trip. The prize is more than 1 billion in smartphone sales in the next five years, according to researcher Counterpoint. As China’s market becomes more saturated and people across the globe upgrade their smartphones less frequently, Apple, Samsung Electronics Co. and other vendors are keen to sell to India’s middle class, which is projected to quadruple to 200 million by 2020. Signs of this explosive rise in consumption already emerged in the first three months of this year, when Apple reported that shipments in India grew 56 percent, even as iPhone sales declined globally for the first time ever.

• Can virtual reality translate into real profits? A growing number of U.S. companies are counting on virtual reality for real profits. With growth hard to come by amid the lethargic economy, companies ranging from snowmobile manufacturers to furniture sellers are incorporating virtual reality that so far has mostly been found in video games. Their bet: that the trendy headset-based technology can help them build sales and cut costs. Theme park operator Six Flags Entertainment Corp (SIX.N) is outfitting riders on some of its aging roller coasters with Samsung VR headsets, allowing the company to brand the rides as brand-new without having to build costly new attractions. nowmobile manufacturer Arctic Cat Inc (ACAT.O) has developed virtual reality rides that customers can use to try out new models at dealerships, while eBay Inc's (EBAY.O) StubHub is testing technology that allows fans to check out the view from different seats before buying tickets. In the most recent round of corporate earnings reports, some 38 companies - including the New York Times, GoPro, and furniture-seller Wayfair - highlighted virtual reality as a part of their business plans. That was a 375 percent jump from the 8 that did so at this time last year, according to a Reuters analysis of earnings calls transcripts. Nearly all were either consumer or technology companies, suggesting that virtual reality technology has a ways to go before becoming mainstream. Yet for all of the enthusiasm, there is little evidence that virtual reality can deliver substantial growth. here are few pure plays for investors who want to buy into virtual reality. Facebook Inc (FB.O), which paid $2 billion for its Oculus virtual reality division in 2014 and began shipping its first $599 Oculus Rift headsets in March, has the best-known virtual reality head gear, though other well-known companies including Google's parent Alphabet and Apple are rumored to be working on high-powered headsets of their own. Neither company returned requests to comment. Virtual reality is such a small part of Facebook's business that most analysts do not break out Oculus in their revenue or earnings estimates. Nor did Facebook give any numbers on how many Oculus headsets it expects to sell on its most recent earnings call. "This is very early and we don't expect VR to take off as a mainstream success right away ... but eventually we believe that VR is going to be the next big computing platform and we're making the investments necessary to lead the way there," Chief Executive Mark Zuckerberg said.

• For online lenders, it’s suddenly touch-and-go:  A year ago, privately held online lenders like Prosper, SoFiand Avant looked all but certain to go public at the same unicorn valuations their venture investors had assigned them — if not higher. They were seemingly reshaping the student, consumer and small business lending business. The market they’re chasing is enormous: The U.S. consumer lending market is a $3.5 trillion business, and 22 of  the largest online marketplace platforms originated just more than $5 billion of unsecured consumer credit in 2014 and more than $10 billion in 2015. They also talked a big game. When SoFi raised a whopping $1 billion from Softbank last year, CEO Michael Cagney told Bloomberg: “I’m looking at over $1 trillion of market cap from the banks, and I think it’s all vulnerable.” Fast forward to today, and it’s online lenders that suddenly look like sitting ducks. In an SEC filing yesterday, Lending Club, which announced the surprise departure of its founder and CEO last Monday, revealed that investors who “contributed a significant amount of funding” for loans are now examining that performance “or are otherwise reluctant to invest.” For many casual observers in Silicon Valley, the first signs of trouble in the online lending category emerged in late April, when the WSJ reported that Avant made $514 million worth of new loans in the U.S. in the first quarter, a 27 percent drop from the fourth quarter of 2015. Then, two weeks ago, Prosper confirmed that it planned to cut roughly 28 percent of its staff in response to falling loan volume. And Prosper’s news came just a day after OnDeck Capital said its own first-quarter losses had more than doubled as demand for its loans began to nosedive. Of course, the kicker came last week, when Lending Club CEO Renaud LaPlanche resigned following an internal audit that turned up $22 million in loans that were sold to Jefferies yet didn’t meet the investment bank’s criteria. Smartly, some players are already looking to reimagine themselves as broader financial outfits. For example, SoFi, which began as a way for students from top universities to refinance their debt, has since branched into personal loans, wealth management and mortgages. It also said last month that it’s hoping to drum up more investor demand for the debt it originates by starting a hedge fund that will buy its own loans. Baker expects that to survive and thrive, more online lenders may need to remodel themselves into the institutions they vowed to replace, either by becoming banks, buying or selling to banks or else striking up partnerships with banks. OnDeck and JPMorgan made one such pact. Last month, JPMorgan quietly began offering online loans to its existing small-business customers using OnDeck’s technology. Indeed, there is a silver lining, and it’s that huge market opportunity. The trick for online lenders will be finding new ways to pursue it while remaining viable businesses.

Daily Tech Snippet: Tuesday, May 10

• Report claiming bias in Facebook 'trending' topics sparks social media outcry: Facebook workers have often omitted conservative political stories from the website’s "trending" list, the technology news site Gizmodo said on Monday in a report that sparked widespread comment on social media. An unnamed former Facebook employee told Gizmodo that workers "routinely suppressed news stories of interest to conservative readers," according to Gizmodo, while "artificially" adding other stories into the trending list. Facebook told Reuters on Monday that there are "rigorous guidelines in place" to maintain neutrality and said that these guidelines do not prohibit any news outlet from appearing in trending topics. Facebook did not respond directly though to questions about whether employees had suppressed conservative-leaning news. "These guidelines do not permit the suppression of political perspectives. Nor do they permit the prioritization of one viewpoint over another or one news outlet over another," a spokesperson for Facebook said. The report alarmed some social media users, with several journalists and commentators criticizing Facebook for alleged bias. "Aside from fueling right-wing persecution, this is a key reminder of dangers of Silicon Valley controlling content," tweeted journalist Glenn Greenwald. Well, you go to Hell, Facebook," tweeted Kyle Feldscher (@Kyle_Feldscher), a reporter at the Washington Examiner, a conservative-leaning publication. "For anyone who cares about press freedom, this is frightening stuff," tweeted Bloomberg Editor Bill Grueskin (@BGrueskin), with a link to Gizmodo's story.

• As Lending Club Stumbles, Its Entire Industry Faces Skepticism: Renaud Laplanche and his crew steered a 105-foot racing boat through New York Harbor one day last spring, its towering sails ripping across the water at 30 knots. An accomplished sailor and founder of Lending Club, Mr. Laplanche was hosting executives from hedge funds, Goldman Sachs and other banks — part of his effort to win over Wall Street on his plans to upend traditional banking with a faster, more democratic form of lending. He already had endorsements from Lawrence H. Summers, the former Treasury secretary, and John Mack, the former chief of Morgan Stanley, who joined his board. At Lending Club’s initial public offering in December 2014, the company was valued at over $8 billion. But on Monday, Lending Club announced that Mr. Laplanche had resigned after an internal investigation found improprieties in its lending process, including the altering of millions of dollars’ worth of loans. The company’s stock price, already reeling in recent months, fell 34 percent. The company’s woes are part of a broader reckoning in the online money-lending industry. Last week, Prosper, another online lender that focuses on consumers, laid off more than a quarter of its work force, and the chief executive said he was forgoing his salary for the year. Marketplace lenders like Lending Club have created easy-to-use websites that match consumers and small businesses, hoping to borrow a few thousand dollars, with individuals or Wall Street investors looking to lend money. Freed from the costs of brick-and-mortar branches and federal regulations requiring that they reserve money against their loans, marketplace lenders have been able to grow quickly and with fewer expenses. The process is almost entirely online, with loans approved in days rather than the weeks a traditional bank might take. While marketplace loans account for less than 1 percent of the consumer loans in the United States, a recent report by the investment bank Jefferies said that in some segments — like installment loans — the new lending companies account for more than 10 percent of the market. But in the first quarter, lenders like Lending Club, Prosper and OnDeck Capital had difficulty convincing investors that their business models are sound. Wall Street’s waning demand for loans exposed the Achilles’ heel of marketplace lending. Unlike traditional banks that use their deposits to fund loans, the marketplace companies discovered how fleeting their funding sources can be.

• Researchers say computer screens change how you think about what you read: You probably spend a lot of time staring at screens -- but all that computer time may be making you miss the big picture, new research has found. Reading something on a screen -- as opposed to a printout -- causes people to home in on details and but not broader ideas, according to a new article by Geoff Kaufman. a professor at Carnegie Mellon, and Mary Flanagan, a professor at Dartmouth.  "Digital screens almost seem to create a sort of tunnel vision where you're focusing on just the information you're getting this moment, not the broader context," Kaufman said. The article is based on a series of studies involving a total of more than 300 participants that were carried out while the two researchers worked together at Tiltfactor, a Dartmouth game design lab. The studies covered in the latest article were prompted by earlier research from Kaufman and Flanagan that found players using the iPad version of a disease prevention strategy game struggled with long-term strategy much more than those playing a physical copy of the game.

• Zenefits Was the Perfect Startup. Then It Self-Disrupted: Zenefits makes online software that automates health insurance, payroll, and other essential office drudgery—kind of a human resources version of TurboTax. It’s not a sexy idea, but with 6 million small businesses in the U.S., it’s enormously useful. The company was founded in 2013 by Parker Conrad, who realized he could streamline small businesses’ managerial needs, saving them hundreds of hours of mind-numbing paperwork—not to mention the cost of staffing an HR department—by putting everything online. Conrad was known to be a little frenzied and disorganized but fiercely intelligent. “From an investment philosophy … we look for the magnitude of the genius, as opposed to the lack of issues,” says Andreessen’s founding partner Ben Horowitz. “And in a way, [Conrad] was like the prototype.” Conrad had no background in health insurance but quickly learned the intricacies of the business as well as any veteran. “If you’re an insurance broker,” he said at the TechCrunch Disrupt conference in 2013, “we’re going to drink your milkshake.”  Then In California, they found, some of the sales team used Conrad’s macro to systematically cheat on the state’s training course, which included a section on ethics. “As far as a company doing what Zenefits has done, I don’t know that we have seen this before,” says Nancy Kincaid, press secretary for the California Department of Insurance, which has also opened an investigation. In March, Massachusetts’ division of insurance opened a third. Zenefits confirms that other states have since followed but won’t say which ones or even how many. Sacks became CEO and is guiding Zenefits through its crisis cleanup. He has banned alcohol at the office and changed the company motto from “Ready. Fire. Aim.” to “Operate With Integrity.” In February the company laid off 250 employees, including the enterprise team. Sales Vice President Blond, Semaan’s boss, and any executive or manager known to have helped disseminate the macro are also gone. Zenefits says it has self-reported the findings of its internal investigation to all 50 states and is working with those that have opened formal inquiries. Fidelity Investments, which owns a stake, has slashed its valuation of Zenefits from $4.5 billion to less than $2 billion. There are rows of empty desks at the San Francisco office; the company plans to downsize from four floors to three. The Star Wars-themed conference rooms will soon be renamed after inspirational entrepreneurs. Kegs have been replaced with cold-brew coffee. The stairwells are condom-free. Zenefits might also survive for the one reason that made its product so appealing to business owners in the first place: Shopping for health insurance remains really frustrating. The company says it now has 20,000 accounts. “As long as their problems don’t affect our company, we’ll stay,” says Todd Harmond, vice president for finance and operations of the e-book service Scribd, which uses Zenefits to offer Kaiser Permanente and Anthem health insurance plans to its 85 employees. “Unless something else goes really wrong with Zenefits, we’ll stick with them for a while,” says BlogMutt’s Yates. “It’s too much of a hassle to switch.”

Daily Tech Snippet: Tuesday, January 19, 2016

• Social media ‘buy buttons’ are n't off to a great start, but they might still be big: In the past year, there’s been a flurry of experimentation with “buy buttons,” a way for social-media sites to allow users to purchase cocktail dresses, throw blankets, candle-making kits and sundry other items from retailers without leaving the social network. Pinterest launched “buyable pins” in June, the same month Instagram released its similar “shop now” feature. Those offerings joined ongoing tests by Facebook and Twitter for similar ­functionality. The rush by tech giants and retailers to join the buy-button arms race would suggest that these businesses see money-making potential. And given how much time people spend on social media — an estimated 1 of every 5 minutes spent on a mobile phone in the United States is on Facebook or Instagram, for example — it would be logical to assume that these buy buttons are bringing retailers a blast of online sales. But this holiday season, social channels accounted for 1.8 percent of overall online sales, according to data from Custora, whose software platform is used by many retailers. That’s just a tiny sliver of purchases, and it’s not even growing: In 2014, Custora found that social media led to 1.9 percent of sales during the same time period. But even if buy buttons have not had an explosive launch, experts say they could prove to be a crucial solution to some of retailers’ biggest online shopping problems. Right now, stores are seeing a massive “conversion gap” on mobile devices, meaning that there has been a surge in the number of people browsing sites from mobile devices, but only a small share of them are actually making purchases. In studies, shoppers frequently say they don’t buy on their smartphones because it is a hassle to enter payment information and go through a checkout process on the small screen. Buy buttons could also help retailers re-create the idea of the impulse buy for the online era. On the web, a shoppers’ journey so often begins with a search in Amazon or Google for a specific item. That has made it hard for retailers to do what they’ve long done in stores with elaborate window displays and sweet treats near the checkout counter: Persuade you to buy something eye-catching on a whim.

• Son's SoftBank Vision at Risk as Sprint Goes From Bad to Worse: The acquisition of Sprint Corp. was supposed to help Masayoshi Son realize his vision of transforming SoftBank Group Corp. into the world’s most-valuable company. Instead, the 2013 deal has become his biggest setback so far, dragging down SoftBank shares and cutting into the billionaire’s wealth. SoftBank tumbled yesterday to its lowest level since the Sprint deal closed 2 1/2 years ago. Son’s fortune has shrunk by $3.2 billion over the past 12 months, according to the Bloomberg Billionaires Index, as the Japanese company’s stock plunged. SoftBank paid $22 billion for a controlling stake in the No. 3 U.S. wireless operator at the time. That investment has lost $7.3 billion in value, according to SoftBank, and Sprint is now the No. 4 carrier.  At the same time, a slowdown in China brought down shares of Alibaba Group Holding Ltd., SoftBank’s biggest holding, by 22 percent last year. “There will always be fans of SoftBank, it’s just at this moment in time, no one cares --it’s out of fashion,” said Andrew Clarke, director of trading at Mirabaud Asia Ltd. in Hong Kong. “They have too many concerns about Sprint and Alibaba because those shares are being crushed.”

• Upstarts Are Leading the Fintech Movement, and Banks Take Heed: Ryan Craine hates carrying cash and finds writing checks to be a headache. He doesn’t do much of either anymore — he mostly uses his smartphone to pay for things. Mr. Craine, a 28-year-old tech support worker in Washington, D.C., uses Apple Pay at the stores and restaurants that accept it. About 20 times a month, he turns to Venmo, a digital wallet for transferring money from one person to another, to pay his share of rent, meals, groceries and utility bills. To refinance his student loans last year, he went to an online lending start-up, Earnest. Mr. Craine’s money choices point to the millennial-led shift toward new digital financial services, a change in behavior that threatens to upend the consumer banking industry. The popularity of the services has left the major banks rushing to adapt, even as they have regained their footing after the financial crisis. Americans in their 20s and early 30s, analysts say, offer a glimpse of tomorrow’s banking market. “Their relationship with the financial system is very different — it’s an electronic one, on their smartphones,” said Mark Zandi, chief economist at Moody’s Analytics. “That can and will be very disruptive to the banking system.” Money is pouring into so-called fintech start-ups. And major technology companies — Apple, Google, Amazon, Facebook and Samsung — are all entering consumer banking, typically starting with digital payment apps. Investment worldwide in start-ups focused on retail banking markets rose to nearly $6.8 billion in 2015, according to CB Insights, a research firm. That is more than triple the $2.2 billion in 2014. In 2010, 40 percent of Americans with bank accounts visited a physical branch once a week, while only 9 percent made a mobile transaction weekly, according to survey research by Javelin Strategy and Research. By 2014, the percentage reporting weekly visits to bank branches fell to 28 percent, while the weekly mobile banking share tripled, to 27 percent.

• WhatsApp drops $1 subscription, studies making businesses pay: The world's most popular messaging service, WhatsApp, is dropping its token $1 fee still levied on some users as it experiments with making businesses pay to reach their customers, Chief Executive Jan Koum said on Monday. In addition, the Facebook-owned communications service expects in the coming months to offer complete encryption of messages, in a move to ensure the privacy of user conversations that is likely to draw further criticism from some governments. The authorities in the United States, Britain and elsewhere say the growing prevalence of encryption on services such as WhatsApp and Apple's iMessage, hamstring their ability to monitor criminal suspects or thwart militant plots and have threatened to pass new laws to block these changes. WhatsApp, the service that offers free text, picture and video messages, has been slowly working to develop end-to-end encrypted communications services for more than a year. It has already introduced full encryption for users on Android phones. "We are a couple of months away from calling it done," Koum said, noting that once completed, WhatsApp will represent the world's largest service offering completely private messaging. "Soon we will be able to talk more about this," he said. Once fully introduced, WhatsApp will be the largest encrypted communications service in the world, he noted.

Daily Tech Snippet: Wednesday, November 18

• Earnest, Fueled by Growth in Student Loans, Raises $275 Million: At the start of this year, Earnest was an intriguing but small entrant in an emerging field of start-ups using new tools of data and software to analyze credit risk and make consumer loans. Its loans were typically a few thousand dollars for things like relocation expenses and professional training. But today, the lender, based in San Francisco, is growing at a torrid pace, and on Tuesday it announced a $275 million round of debt and equity to fund further expansion. Already this year, Earnest has made 50 times as many loans as last year, and it is lending from $2 million to $5 million every day, said Louis Beryl, a co-founder and chief executive. In this round, $75 million is equity investment, and $200 million is debt funding. The debt portion is led by New York Life. The new financing brings the total raised by Earnest, founded in 2013, to $325 million. Earnest now employees 165 people, up from 30 at the start of this year. Mr. Beryl says he plans to hire about 200 more employees over the next year, especially technical people like software engineers, data scientists and user-experience designers. The long-term goal, he said, is to “build a platform for the next generation of consumer financial services.” The financial service that has carried Earnest so far is refinancing student loans, which it began at the end of January. It is by far the largest part of the company’s business, and Earnest’s success points to the opportunity in services to ease the burden on the nation’s debt-laden students and recent graduates. Student loan debt is more than $1.2 trillion, growing by about 10 percent a year. Student loans are held by 40 million Americans. Earnest is focusing on the more indebted recent graduates. The size of its average refinancing loan is $70,000. The start-up says the average saving, on its refinanced loans, is $18,000, typically over 10 years. Other online lenders, like SoFi and CommonBond, have also done well in the market for refinancing student loans. But Earnest says its approach is particularly data-intensive, which it says allows it to tailor rates to individual circumstances. It asks its customers for digital links to their bank, credit card and retirement and investment accounts, and information on all their loans. “They are willing to share their data for a better consumer finance experience,” Mr. Beryl said. Earnest says it has read-only access to the information. It pledges not to store personal data or sell it. Earnest has made individual loans of more than $250,000. Traditional credit scoring, Mr. Beryl said, tends to punish high student debt loads. But such Earnest borrowers, he said, are in fields like brain surgery and dental surgery, where education is lengthy and costly. “These are people with great jobs, great educations and great earning potential,” he added. Earnest borrowers average a bit over 30-years-old — young people with slender credit histories and thus charged higher rates by traditional banks. Mr. Beryl said Earnest has had no delinquency problems on its student refinancing loans. And Mr. Beryl, 34, is one of those prompt-paying customers. Having attended Princeton, Harvard Business School and Harvard‘s Kennedy School of Government, he had $100,000 in student loans at the start of the year. He has paid down some, but still holds student loan debt, he said.

• Latest Craze for Chinese Parents: Preschool Coding Classes: Wu Pei began teaching her 6-year-old son to code this year, thinking he’d enjoy learning a skill that might boost his future job prospects in an increasingly digitized world. Now, she runs classes in Nanjing, China, and is helping more than 100 parents introduce their children to coding. The 35-year-old former computer programmer with Foxconn Technology Group is tapping growing demand from parents intent on preparing their preschoolers for a world in which Oxford University researchers predict half the jobs in some countries may be eliminated by robots and computers. Similar classes are taking off across China. Reynold Ren has taught about 150 primary school-age children in Beijing to use Scratch, a project developed by the MIT Media Lab and Arduino, which enables users to create interactive objects such as robots. In Hong Kong, about 2,500 students have taken courses that Michelle Sun runs at her First Code Academy. “Teaching the next generation coding is something that should be elevated to a strategical national importance,” said Wang Jiulin, the Xi’an-based creator of Kidscode.cn, a website that shares free information and courses. “Even today, the majority of programmers in China can only perform very basic-level tasks and there’s huge demand for top notch coders.”  

• Lyft executive says on track to hit $1 billion in gross revenue: Ride-hailing app Lyft, Uber's biggest competition in the United States, expects to reach $1 billion in gross annual revenue, the company's co-founder told Reuters. Hitting a $1 billion run rate suggests privately owned Lyft has increased market share in some U.S. cities, despite competition from Uber, a larger and better-financed ride-hailing app. Lyft's net revenue was estimated at $130 million in 2014, according to company financial documents cited by Bloomberg. By comparison, Uber's gross bookings are projected to rise to $10.84 billion this year and $26.12 billion the next, according to a presentation for potential investors seen by Reuters earlier this year. Based on those figures, Uber's 2015 net revenue would be $2 billion. Lyft, founded in 2012, calculated its $1 billion run rate from its gross bookings in October, when the company made about $83 million off of 7 million rides. That did not include Halloween, Zimmer said, which will be counted in November's figures and is one of the ride-hailing industry's busiest nights of the year. Lyft has more than a 40 percent market share in San Francisco, its hometown, and in Austin, Texas, Zimmer said. The majority of rides in San Francisco and New York City are through the Lyft Line service, a carpool feature that brings several passengers together to share a car, Lyft co-counder and Chief Executive Logan Green said last week. However, Lyft's continued growth also hinges on its ability to tap investors for money. A recent pullback in late- and mid-stage investing and the cooling IPO market are expected to make capital tougher to raise for high-priced companies.

• Microsoft sheds reputation as easy mark for hackers:  Microsoft was once the epitome of everything wrong with security in technology. Its products were so infested with vulnerabilities that the company’s co-founder, Bill Gates, once ordered all of Microsoft engineers to stop writing new code for a month and focus on fixing the bugs in software they had already built. But in recent years, Microsoft has cleaned up its act, even impressing security specialists like Mikko Hypponen, the chief research officer for F-Secure, a Finnish security company, who used to cringe at Microsoft’s practices. “They’ve changed themselves from worst in class to the best in class,” Mr. Hypponen said. “The change is complete. They started taking security very seriously.” Microsoft estimates that it now spends more than $1 billion a year on security-related initiatives, including acquisitions. It acquired three security start-ups in the last year alone, and the number of security employees at the company increased 20 percent during that time. Soon after he became Microsoft’s chief executive in February 2014, Mr. Nadella instituted a monthly meeting with security leaders from across the company. They meet to discuss industry trends and analyze threats. He also altered how Microsoft watched the Internet for hacker attacks, an effort that had been splintered among different product groups and other divisions within the company. Microsoft now pays hackers more when they find and turn over a security hole.

Daily Tech Snippet: Monday, July 27

• Archived snippets are here, and MP3 versions are here

• Yelp Cries Foul at Google’s Mobile App Ad Declaration: Those ads that splash on your phone, nudging you to install an app? You know the ones. Earlier this week, Google released an internal study showing that these app download “interstitials” were not merely obnoxious but ineffective, hindering the intended goal of encouraging app installation. Google said it was retiring them and asked the mobile Internet to do the same. Some were pleased. Some were not. Firmly in the latter camp is Jeremy Stoppelman, Yelp CEO and frequent Google sparring partner. On Friday, he pointed to the study and cried hypocrite. Here’s the background: Google’s test paired the full-page ads against subtler banner promotions on mobile websites. Nine percent of mobile users tapped through to the app from the first ads, while 69 percent ran away from the site. With the second version, Google reported an uptick of 17 percent in traffic to the app. Innocuous enough. But Stoppelman is not just accusing Google of a double standard (running its own app ads while nixing others). Behind his beef is the suspicion, percolating in the mobile industry now, that Google is trying to replicate its Web search position with apps. In the past year, Google has pushed aggressively to index the entirety of the app world, while positioning itself, through deep-linking features like the upcoming Now on Tap, as the facilitator. And with Google as facilitator, that leaves less room for other app go-betweens, a la Yelp. It doesn’t help Google’s case here that the interstitial study relied on its own Google+ social app, a Google application that, to be kind, is not terribly in demand.


• Using Algorithms to Determine Character: A company in Palo Alto, Calif., called Upstart has over the last 15 months lent $135 million to people with mostly negligible credit ratings. Typically, they are recent graduates without mortgages, car payments or credit card settlements. Those are among the things that normally earn a good or bad credit score, but these people haven’t been in the working world that long. So Upstart looks at their SAT scores, what colleges they attended, their majors and their grade-point averages. As much as job prospects, the company is assessing personality. “If you take two people with the same job and circumstances, like whether they have kids, five years later the one who had the higher G.P.A. is more likely to pay a debt,” said Paul Gu, Upstart’s co-founder and head of product. “It’s not whether you can pay. It’s a question of how important you see your obligation.” The idea, validated by data, is that people who did things like double-checking the homework or studying extra in case there was a pop quiz are thorough and likely to honor their debts. Analytics, meet judgment of people. “I guess you could call it character, though we haven’t used that label,” said Mr. Gu, who is 24. The same personality dynamic holds for people go to great schools or have top grades. Douglas Merrill, the founder and chief executive of ZestFinance, is a former Google executive whose company writes loans to subprime borrowers through nonstandard data signals. One signal is whether someone has ever given up a prepaid wireless phone number. Where housing is often uncertain, those numbers are a more reliable way to find you than addresses; giving one up may indicate you are willing (or have been forced) to disappear from family or potential employers. That is a bad sign. Zest recently branched into “near prime” borrowers, who have either fallen from the prime category or risen from subprime. The question is why these people have changed categories, and Zest tries to figure out if a potentially reliable borrower has had some temporary bad luck, like a one-time medical expense. “‘Character’ is a loaded term, but there is an important difference between ability to pay and willingness to pay,” said Mr. Merrill. “If all you look at is financial transactions, it’s hard to say much about willingness.”


• Facebook and Other Tech Giants Expand Internet Access in Africa: Africa has become a hotbed of experimentation by big American technology companies as well as local start-ups. In addition to Facebook’s efforts, which included developing a Swahili language version of Facebook, Google, Microsoft and IBM have all been promoting tech projects on the continent. Google, for example, has built a high-speed, fiber-optic Internet network in Kampala, Uganda. But unlike the similar Google Fiber project in major American cities, Google doesn’t offer the service, called Project Link, directly to Ugandans but instead sells access cheap on a wholesale basis to local Internet providers. The result was a sharp drop in the price of Internet access in Kampala as new entrants competed with the traditional carriers to offer services. Microsoft has been supporting various projects to transmit Internet signals via “white spaces,” which are basically unused portions of the television broadcast spectrum. On Friday, the company announced that it was working with the United States government’s Overseas Private Investment Corporation to provide financing to Mawingu Networks to build solar-powered Internet access stations across rural Kenya using white spaces technology. And IBM said on Saturday that it would begin a formal program to assist entrepreneurs in Nairobi’s iHub innovation and collaboration space. And Africa seems to have brought a bit of kumbaya to the traditional tech rivals. “It’s the one place where I have seen Microsoft and Google and Facebook as allies,”


• Facebook partnership a boon for video technology firm Bidalgo: Facebook marketing partner Bidalgo targets a tripling in sales in 2015 as its new technology to automate the process of making personalized online video advertising benefits from Facebook's growing share of the video market. Facebook is becoming a leader in the video market as users prefer to watch video ads over static images, said Peleg Israeli, general manager of Bidalgo's Israeli operations. Videos are expensive to make and an advertiser usually makes only one or two versions. The Bidalgo executive said his company's technology, called ADaptation, can automatically turn one video into as many versions as needed, so that targeted audiences will see images they respond to most. For example, a German audience might see a German flag in one video while users in France will see their flag. Automated videos will give Facebook an advantage over Google's YouTube, as Facebook's core technology can identify users "in the most accurate way". U.S.-Israeli Bidalgo's technology targets mobile app and game developers, who have been quick to adopt mobile advertising. Clients include online gaming firm 888 Holdings and Zynga. Bidalgo, which has 40 employees, has been profitable for about a year, with a target of $100 million in sales this year, Israeli said. It competes with San Francisco-based Ampush and Boston-based Nanigans. Companies wishing to advertise on Facebook must bid for users that they wish to see their advertising. Bidalgo's algorithms test an ad against multiple audiences to understand which segments are relevant and what is the right price the advertiser should offer.

Daily Tech Snippet: Monday, July 20

• Here is an MP3 version of this snippet

• Apple Waits as App Developers Study Who’s Buying Its Watch: In the months surrounding the much-ballyhooed release of the Apple Watch, Apple managers courted Facebook in the hopes that the social networking giant would make a software application for the new gadget. Facebook was not persuaded. Three months after the watch’s release, there is no Facebook app tailored for it. Adam Mosseri, who oversees Facebook’s news feed, said the social network had been studying the Apple Watch but had not figured out how to deliver a good Facebook experience — including the news feed’s stream of posts, photos and videos — on such a small screen. The lack of support from Facebook — and from other popular app makers like Snapchat and Google, which also do not have apps for Apple Watch — underscores the skepticism that remains in the technology community about the wearable device. That puts the watch, Apple’s first new product since the iPad in 2010, in something of a Catch-22: The companies whose apps would most likely prompt more people to buy the device are waiting to see who is buying it and how they use it. Another challenge with the Apple Watch software system is that apps have to process all the data on the iPhone and then beam it to the watch, limiting what the Apple Watch apps can do. The next version of the software, which will be released in the fall, will remedy this by letting developers write apps that run directly on the watch, relying on the iPhone mostly for the Internet connection. That doesn’t mean the Apple Watch lacks apps. Apple released the device in April with more than 3,000 apps — far more than the 500 that were available for the iPhone when the App Store opened in 2008. Yet only five of the 20 most popular free iPhone apps in the United States have versions for the Apple Watch, according to data from App Annie, an analytics firm. And the number of apps for the watch, which now stands at about 7,400, is growing at a slower rate than the explosive uptick of apps that were produced for iPhones and iPads in their early days. While the number of apps for the watch jumped 142 percent in the first three months, that compared to 437 percent for the iPhone and 200 percent for the iPad, according to data provided by App Annie.


• Tesla Offers New ‘Ludicrous Mode’: Zero to 60 in 2.8 Seconds: Tesla Chief Executive Officer Elon Musk introduced a new “Ludicrous Mode” for the dual-motor version of the Model S during a call on Friday, allowing the all-electric sedan to go from zero to 60 miles per hour in 2.8 seconds. The upgrade costs an additional $10,000 for new buyers and results in a 10 percent acceleration improvement. The hold music before the conference call began was a loop of the rap song Beast Mode by Ludacris. Tesla will also offer Ludicrous Mode for its coming Model X SUV, which will probably clock in at zero to 60 mph in 3.3 seconds, according to Musk. “We haven’t tested it yet, so that’s just a guess,” he said. “That’s mad for an SUV, obviously.” Here’s how Tesla squeezed out the extra juice to go from insane to ludicrous. The limiting factor for acceleration during the first 30 mph is traction—basically getting the wheels to stay connected to earth. Tesla had already solved that engineering roadblock. The limiting factor when accelerating from 30 mph to 60 mph, on the other hand, is pulling enough current from the battery pack.


• Google Adds a Record $60 Billion to Its Stock in One Day: The search-engine giant added $65 billion to its market capitalization today, more than the size of Hewlett-Packard Co. The surge, following earnings that topped analyst estimates, is the biggest one-day gain in value ever for a U.S. company, according to data compiled by Standard and Poor's Dow Jones Indices. Apple held the previous record, with a $46.4 billion surge in April 2012. Google’s rally pushed the Mountain View, California-based company further ahead of Microsoft Corp. in rankings of the world’s biggest companies, sending its value to about $468 billion compared with the software giant’s $377 billion. The shares are up 26 percent in five days, the biggest one-week advance since it went public in 2004. Thursday’s report marked the first time since 2013 that Google has announced quarterly adjusted earnings per share higher than expectations. Chief Financial Officer Ruth Porat, who joined the company in May, also signaled plans to bring more restraint to spending at the Internet search giant.


• Etsy Surges Most Since IPO on Mention in Google Revenue Call: Etsy surged the most since it went public, after Google said the online artisan marketplace is seeing a boost in traffic from mobile-search results. Etsy gained 31 percent to $21.98 at the close in New York, the biggest climb since its IPO on April 16. The shares had increased 5.2 percent from the stock’s debut through Thursday’s close. Brooklyn-based Etsy, a platform where sellers offer homemade and vintage items ranging from jewelry to wall art, has been trying to boost sales after its first-quarter net loss widened. Google’s “deep links,” which redirect users to mobile applications when they click results from a Web search, could help Etsy lure more shoppers to its marketplace.“Developers like Etsy are already seeing a boost in traffic as a result of deep linking,” Omid Kordestani, Google’s chief business officer, said on an earnings phone call Thursday. Etsy’s sudden spike may be creating what’s called a short squeeze -- meaning traders who were betting against the company have to cover their positions at the higher price, leading to swings in the stock.


• China central bank issues guidelines on internet finance development: The central bank called on the government to support internet firms in setting up platforms for expenditures and loans, crowdfunding, the sale of financial products and other financing platforms. It called for broadening channels of financing and supporting private investment funds to back the internet finance industry. The bank also recommended tax breaks for qualifying small enterprises including start-ups, saying that provincial level governments should increase their support for those companies.


• Indian PC market dips as smartphone, tablet sales rise: PC market in the country has declined for the first time to 10.6 million units, falling over 10 per cent, on account of growing consumer preference for smartphones and tablets, industry body MAIT today said. According to MAIT-IMRB report, desktop and notebook market cumulatively stood at 11.8 million units in 2013-14. Smartphone market in 2014-15 grew 33 per cent to 69.6 million units, while phablets and tablets grew 527 per cent (50.8 million) and four per cent (3.4 million units) respectively. In revenue terms, the PC market declined to Rs 21,058 crore in 2014-15 from Rs 25,117 crore in the previous fiscal. For smartphones and tablets, the revenue was up 88 per cent to over Rs 65,815 crore in 2014-15 from Rs 34,900 crore a year ago. “The growth is expected to continue in 2015-16 with smartphones expected to grow 27 per cent, phablets 65 per cent and tablets 16 per cent,” he said. During the year 2014-15, server sales registered a growth of 30 per cent over the last financial year at 1,82,727 units. The overall size of Indian ICT hardware market, which comprises printers, servers and computers among others, stood at USD 15.87 billion, showing a growth of 23.98 per cent over the previous year.

Daily Tech Snippet: Tuesday, June 30

• Here is an MP3 version of this snippet.

• Amazon looks to offer loans to sellers in eight countries including India: Amazon.com will start a business loan program for small sellers in the United Kingdom on Tuesday and is looking to launch it this year in seven more countries including India. Until now, the e-retailer has offered the service only in the United States and Japan. Amazon Lending, founded in 2012, plans to offer short-term working capital loans in other countries where it operates a third-party, seller-run marketplace business. The countries are Canada, France, Germany, India, Italy, Spain and China, where credit is becoming a key factor in competing for new vendors and grabbing market share. The service is on an invite-only basis and is not open to all sellers on Amazon's platform. Amazon said it can safely offer loans based on internal data and because it takes loan payments out of the sales proceeds it pays sellers. Amazon offers three- to six-month loans of $1,000 to $600,000 to help merchants buy inventory. It makes money on interest and takes a cut of all sales on its marketplace, which now account for about 40 percent of total Amazon site sales. Amazon said it has offered hundreds of millions of dollars in loans since 2012, with more than half of its sellers opting for a repeat loan. Sellers interviewed by Reuters and writing on Amazon forums cited interest rates on Amazon loans ranging from 6 percent to 14 percent, in line with loans from banks and business credit cards. Stephan Aarstol, chief executive of Tower Paddle Boards, an Amazon seller, said he has taken four loans from the company starting in March 2014 because of the speed and simplicity of the process. It took him five days to get his first loan.


• Microsoft Said to Exit Display Ad Business, Cut 1,200 Jobs: Microsoft is shutting down its Web display advertising business and handing operations over to AOL and AppNexus, a person with knowledge of the matter said. About 1,200 jobs at Microsoft will be impacted, with some positions to be moved to AOL and AppNexus. Some people will be offered other positions at Microsoft, while other jobs will be cut, the person said.


• Uber Bonds Term Sheet Reveals $470 Million in Operating Losses on $415 Million in Revenue: Uber is telling prospective investors that it generates $470 million in operating losses on $415 million in revenue, according to a document provided to prospective investors. The term sheet viewed by Bloomberg News, which is being used to sell $1 billion to $1.2 billion in convertible bonds, doesn’t make clear the time period for those results. The document also touts 300 percent year-over-year growth. Investors in this round will be able to convert the notes at a compounded 11.5 percent discount if the company sells shares on the public market, the document shows. The bonds mature in 2022, with an 8 percent annual return if held through maturity. Uber aims to complete the deal by Tuesday, according to the document. The car-booking startup has been on a spree to raise cash. Uber is negotiating a $2 billion credit line from a group of Wall Street banks, a person with knowledge of the situation said last week. Earlier this year, it raised $1.6 billion in convertible debt from Goldman Sachs wealth-management clients, which valued the company at $40 billion. “These are substantially old numbers that do not reflect business activities today,” Uber spokeswoman Nairi Hourdajian said in an e-mail. Hourdajian declined to say why the numbers are being used to promote a current funding round.


• Uber to Acquire Mapping Technology and Know-How From Microsoft: Uber will acquire a portion of Microsoft’s maps technology and extend employment offers to around 100 engineers on Microsoft’s mapping team. Uber would not discuss the terms of the acquisition, which will bring it a data site outside Boulder, Colo., as well as cameras, image-analysis software and a license to the intellectual property. Although most Uber services rely on digital maps, much of its interest in mapping is focused on how to improve its carpooling service, UberPool. While Uber relies heavily on mapping technology from Apple, Baidu and especially Google, the company has taken strides to bring as much mapping expertise in-house as possible. Microsoft said the deal on Monday was part of a broader strategy to focus on its core products.


• The Apple Watch Hasn't Killed Fitbit: Two months after the Apple Watch launch, the leading wrist-based fitness tracking company is doing just fine. The Apple Watch was expected to be a disaster for companies like Fitbit. It hasn’t been. While Fitbit’s sales dipped as anticipation for Apple’s smartwatch grew, the company has bounced back this spring and appears to be doing just fine, according to data provided exclusively to Bloomberg by Slice Intelligence. After Apple’s monster first week, Fitbit products have actually outsold Apple Watches, according to Slice. Slice collects data from the e-mailed receipts of about 2.5 million people. Over the past year, Fitbit has outsold the rest of the fitness tracking market combined (excluding Apple). While the entire industry saw a bump during last year’s holiday season, companies such as Jawbone, Garmin, and Samsung saw their wearable sales decline quickly after Christmas. Fitbit’s never dropped to their pre-holiday levels, and began ramping up again this spring. People are seeking out Fitbit products specifically. When people buy Fitbit products online, the most common place they’re doing it is on the company’s own website. More than 43 percent of Fitbit sales take place on Fitbit.com, slightly edging out Amazon, which accounts for 40 percent of online sales of Fitbit devices. Apple Watch's and Fitbit's consumer bases don’t overlap much. Fitbit is tightly focused on fitness. Apple pitches its product as a more general-use device. There's also a significant difference in price, with Fitbit devices ranging from $60 to $250 and the Apple watch starting at $350 and going straight up to ridiculous. According to Slice, less than 5 percent of people who bought a Fitbit since the end of 2013 have also purchased an Apple Watch. For now, it seems like there’s room in wearable computing for both companies—but maybe not anyone else.


• Quikr is reportedly in talks to acquire Housing.com: Online classifieds firm Quikr is in talks to acquire real estate portal Housing.com.When contacted, co-founder and CEO of Housing.com Rahul Yadav confirmed the news but only to retract it later. SoftBank had invested in the promising online realty startup close to $90 million in December 2014 valuing the company around $270 million. SoftBank is said to have initiated talks with the potential acquirer Quikr, which has been looking to strengthen its newly launched property sales vertical QuikrHomes by way of inorganic expansion. The sale efforts seem to have been initiated by its investors as they are trying to salvage their investment in the company.


• With New Budgeting Tools, AWS Makes It Easier For Developers To Manage Costs: Amazon today announced two new tools that make it easier for developers to control their expenses on its AWS cloud computing platform. The first tool, called Budgets, allows AWS users to define a monthly budget for their AWS cost. As the name implies, this means you can now set up a budget for all of your AWS spending, or set up a specific budget for just the EC2 service, for example. Then, when you get close to exceeding your monthly budget — or when your forecasted cost exceeds 100 percent — AWS will send you an alert. In addition, AWS is launching a new tool for its Cost Explorer service today that tries to forecast monthly cost up to three months into the future. This service can look at data on an aggregate level, but more interestingly, it can look at specific services, tags, availability zones, purchase options and API operations. Given that there is probably some variability in how you use AWS in a given month, the service will also show confidence intervals for its prediction. Estimating AWS cost is something of an arcane art, which is only complicated by Amazon’s granular pricing structure. The more complex the app you’re hosting on AWS, the harder it gets to figure out how much it’ll cost to run it on Amazon’s service (which also makes it hard to compare AWS cost to other cloud platforms). These new services will hopefully make it a bit easier to at least keep track of AWS cost without having to resort to third-party tools.

Daily Tech Snippet: Monday, June 29

• Here is an MP3 version of this snippet

• ZestFinance and JD.com announce a joint venture to provide a consumer credit scoring service in China, rivaling Alibaba's offering: The venture, JD-ZestFinance Gaia, will initially be used to assess credit risk and offer installment loans for purchases on JD.com, which has 100 million active customers and generates yearly revenue of $20 billion. The venture intends to eventually offer the credit-analysis service to corporate customers throughout China. JD.com is also making a minority investment in ZestFinance, though the companies would not disclose the size of the investment or the valuation of the start-up. There is a lot of enthusiasm for the data science approach to credit analysis, and venture funding is flowing into this emerging field. The promise is that high-tech tools can give greater depth and detail to the basic principle of banking: know your customer. Start-ups in the field, beside ZestFinance, include Affirm, Earnest, Elevate and LendUp. The start-ups’ methods vary, as do the data sources they tap. But their algorithms sift through data that can include a person’s social-network connections, web-browsing habits, how they fill out online forms and their online purchases. The software looks for patterns and correlations: digital signals that help assess an individual’s willingness and ability to repay. China’s leaders are seeking to stimulate consumer spending to make its economy less dependent on industrial exports. Expanding consumer credit is part of the formula, and the government is allowing private companies, like JD.com, to innovate. JD-ZestFinance Gaia and competitor Sesame Credit, part of Alibaba-affiliated Ant Financial Services Group, hope to use the e-commerce sites' vast swathes of shopping data to turn out a reliable credit risk score.


• This Driver in China Explains How He Is Helping Rip Off Uber: James Li was unhappy with his pay as a security guard in Shanghai so he started driving on weekends for Uber. He’s almost tripled his pay -- in part by scamming the company. Li, an alias since he feared retribution if his real name was made public, is taking advantage of Uber’s efforts to break into the China market. The U.S. car-booking company is spending millions on free rides and driver bonuses, betting the cash will help train China drivers and market Uber services to customers. Instead, people like Li have figured out how to cash in on Uber’s largesse without giving anyone a ride. He’s part of a cottage industry that has developed so drivers can use modified smartphones and software to place fake bookings and trick Uber into paying out cash for phantom trips. While there are no reliable estimates on how prevalent the scams are, interviews with Uber drivers, equipment vendors and reviews of postings on dedicated online forums suggest at least some of the $1 billion that Uber has pledged to spend to expand the service in China this year is being siphoned off by fake bookings. To create a fake trip, an Uber driver has essentially two options, according to drivers interviewed by Bloomberg. The first is a do-it-yourself option where the driver buys a hacked smartphone that can operate with multiple phone numbers and therefore multiple Uber accounts. Drivers use one number to act as a rider and request a lift, and then accept the trip as a driver with another phone number. The second option involves working with other scammers over the Internet. If a driver doesn’t have a hacked phone, he can go into one of several invitation-only online forums and request a fake fare from professional ride-bookers. These bookers are referred to as “nurses” because they use specially tailored software to put an “injection,” or location-specific ride request near the driver. The driver, or “patient,” then makes the trip while the booker monitors remotely, confirms the journey was made and then pays Uber when the trip is complete. The nurse gets a small fee, usually about $1.60, and the reimbursement for the fare from the patient. The driver in turn collects the fare and a driver bonus that can be three times the fare from Uber, which thinks it is building brand awareness by giving away free rides. The drivers interviewed by Bloomberg spoke of a cat-and-mouse game with Uber and the fear of being caught. A recent software upgrade has made it more difficult to successfully game the system, they said.


• Intuit Lays Off 399 Employees In Company Realignment: Intuit has confirmed to TechCrunch that it has laid off 399 people, or just under 5 percent of the company’s roughly 8,000 employees, in a re-alignment of the company. Patrick Barry has also stepped back from leading Demandforce, though he remains an employee of Intuit. In the past year, Intuit’s stock has risen more than 28 percent, and the company is currently worth more than $28 billion based on its market cap. Intuit is best known for its tax preparation services like TurboTax and financial services like QuickBooks. In January the company partnered with Uber and Stripe to help those on-demand workers keep track of their finances. The tools help workers quickly figure out what their tax bills and write-offs will be for work-related expenses. In January, Intuit also bought ZeroPaper, a startup that offers online accounting services for small businesses, as it began to take an interest in Brazil. It also bought a payroll services startup Acrede in December this year.


• The Mouth Is Mightier Than the Pen: New research shows that text-based communications may make individuals sound less intelligent and employable than when the same information is communicated orally. The findings imply that old-fashioned phone conversations or in-person visits may be more effective when trying to impress a prospective employer or, perhaps, close a deal. In the first of a series of experiments presented in the paper, the researchers recruited 18 MBA. candidates from Booth. The students were asked to prepare a brief pitch to a prospective employer — a roughly two-minute proposal that the researchers recorded on video. Separately, the researchers recruited 162 people who were visiting the Museum of Science and Industry in Chicago to evaluate these pitches. Some of these museum-goers watched the video, a second group listened to the audio without watching the video, and a third group read a transcript of the pitch. What the researchers found was that the evaluators who heard the pitches — whether in the audio or video version — “rated the candidates intellect more highly” than those who read the transcript, the paper reported. Those who listened or watched also rated the candidates more likable and, critically, more employable. The results are said to validate and expand upon previous research showing that the cadence and intonation of voice allows listeners to do a better job of gauging a person’s thoughts than the same information communicated in writing.

Daily Tech Snippet: Friday, June 26

• Here is an MP3 version of this snippet

• Marketers Will Drool Over Facebook’s New Signup Ads That Auto-Fill Your Email Or Number: Businesses desperately want your email address, but it’s annoying to enter it on mobile. Cue Facebook’s latest News Feed ads. A marketer can buy an ad asking for you to sign-up for a newsletter or request a sales call, and with two-taps you can auto-fill your email address, phone number, or other info you’ve registered with Facebook. Facebook is testing these “Lead Ads” with a small group of businesses around the world to gain feedback before considering rolling them out. Google has tested similar contact form ads for years, but they always required users to manually enter their info. To make Facebook’s ads privacy-friendly, Facebook won’t just hand your info over. You have to click the call-to-action button like “Subscribe,” and then “Submit” your info once you’ve reviewed what was auto-filled. Users can edit that info inside the ads, and businesses only get what’s voluntarily submitted. From there, advertisers can only use the data in accordance with a mini-privacy policy they embed in the ad, and can’t resell it to anyone else. Rather than ads that lead you offsite to fill out sign-up forms, it’s pulling that experience into the News Feed, so when you’re done, you keep right on social networking. Removing the click away and manual data entry could drastically boost conversion rates on these kinds of ads, making them easier to sell at higher prices.


• Alibaba affiliate launches Internet bank for small enterprises: Alibaba's financial affiliate launched on Thursday Internet bank MYbank, targeting the small- and medium-sized Chinese enterprises that have struggled to obtain credit from major financial institutions. MYbank, which is 30-percent owned by Alibaba-linked Ant Financial Services Group, has 4 billion yuan ($644 million) of registered capital and will offer loans of up to 5 million yuan. It will only be able to take in deposits when regulators approve a facial recognition technology that allow its customers to remotely open bank accounts, an Ant Financial spokeswoman told Reuters. MYbank follows in the footsteps of Alibaba arch-rival Tencent Holdings Ltd, which began trial operations of its WeBank, China's first online bank, in January. Credit conditions have remained tight for SMEs, despite a series of policy easing, as banks avoid the companies worst hit by an economic slowdown. State-owned banks have also avoided customers such as farmers and smaller businesses because of the difficulties in assessing their credit worthiness and they have little to offer as collateral.


• Clashes Erupt Across France as Taxi Drivers Protest Uber: Irate taxi drivers blocked roads, burned tires and attacked drivers who they thought were working for Uber, the ride-hailing company, during a day of protests Thursday that disrupted Paris and slowed traffic to a crawl. Fights broke out on streets, a couple of cars were burned and travelers were frustrated all over Paris and in major cities elsewhere in France, where the labor battle snarled several cities’ streets. “Economic terrorism” is the favored term of Parisian taxi drivers for Uber’s lower prices, flexible hours and the way it is operating outside French law. In France the UberPop service is illegal. It allows anyone who wants to become a driver to sign up without a professional chauffeur license and to pick up fares through the Uber smartphone app. Other Uber services are permitted under strict conditions, and the company is contesting the constitutionality of parts of the law limiting UberPop. The company has instructed its drivers to keep working. The French interior minister, Bernard Cazeneuve, who met Thursday evening with the taxi unions, deplored the violence, but saved his most angry words for Uber. He said the company behaved with “arrogance” in its flouting of French law and declared that “the government will never accept the law of the jungle,” referring to Uber’s stark form of competition.


• Amazon wants the Echo to be your personal robot butler: Amazon's fuller ambitions for the Echo and its Alexa cloud-based voice software have become a little clearer. The company announced Thursday that it is opening up the system to developers, so that anyone can design their own programs to work with the sleek cylindrical in-home assistant. The company announced that its new developer's kit will make it easy for programmers to work with the device, even without previous knowledge of how to work with voice-recognition systems. That means amateur and professional developers alike can make programs for themselves. That means they could make custom commands for smart appliances such as thermostats and sprinklers, or custom programs that work with Web sites so you can get news updates fed to your Echo. It also means Amazon's set up the Echo to potentially be the central point from which you run your whole life. The Echo itself can't vacuum your home, but it could theoretically tell your vacuum when to start going. It may not do your dishes, but it can prompt your dishwasher to fire up as well. So while it won't be your robot maid, it could theoretically be your robot butler. Earlier this week, Amazon began selling the Echo widely -- it had previously been an invite-only device. Those moves set Amazon up a little more solidly as a competitor to Apple and Google, which have also laid out ambitions to create hubs for the smart homes of the future. Earlier this week, Apple released a new set of home-related prompts that will work with its Siri voice assistant for individual smart devices -- "turn on the coffee maker" -- as well as for groups of smart devices. So you can tell Siri to "turn off the upstairs lights," for example, if you want to save a little energy while your family is gathered in the living room.


• IBM Pushes Networking and Research to Catch Rivals in the Cloud - Mulls India Data Center: IBM will expand the networking services available through its SoftLayer cloud technology, trying to catch up with deep-pocketed rivals. IBM researchers and engineers are now making regular trips to SoftLayer’s headquarters in Dallas to discuss product plans and get educated about cloud operation, said Marc Jones, SoftLayer’s chief technology officer. Increasing cloud revenue is critical for IBM. It has tried to boost sales for operations like cloud computing and data analytics but that hasn’t been enough to make up for declines in longstanding operations -- such as services and hardware -- and revenue lost from divestitures. The initiative comes almost two years after the Armonk, New York-based company acquired SoftLayer for $2 billion to help IBM compete against Google, Microsoft and Amazon. SoftLayer also plans to open a data center in Sao Paulo, Brazil, and is looking at a location in India.


• Uber growing 40% month-over-month in India: Uber’s Asia Head: Uber may have had its share of challenges in the Indian market, but the ride sharing app has been growing at over 40 per cent month-over-month here. In fact, Bangalore and Kolkata are some of the fastest growing cities for Uber globally, Eric Alexander, Head of Business, Asia, Uber told Techcircle. The team at Uber India has their work cut out. The regulatory overhang over Uber, which started after a passengers’ sexual assault by an Uber driver in December, continues to play out. It has been facing ban calls in Delhi and other places. Earlier, it came under the RBI scanner over its payment system which automatically debited a user’s credit card after a ride.


• Amazon Puts a Store on Wheels, Continues to Flirt With Physical Retail: Amazon continues to explore new ways to bridge the gap between online and offline retail, even if the most recent example seems stunt-ish. The company today is introducing the Amazon Treasure Truck in Seattle, which will carry a limited quantity of one product each day that shoppers can order on Amazon’s app and then collect from the truck at a designated pickup location. The company said the truck will feature hard-to-find, heavily discounted or limited edition products and food, ranging from paddle boards to beach bikes to steak — yes, steak. The Treasure Truck introduction comes as Amazon flirts with physical retail: Amazon product vending machines have popped up in some airports, and a recent patent application lays out a vision for a new kind of technologically advanced retail store.

Daily Tech Snippet: Thursday, May 7

• Facebook's Oculus to sell virtual reality headsets for consumers from early 2016. Virtual reality technology company Oculus said it would start shipping the much-awaited consumer version of its Rift headset in the first quarter of 2016. Pre-orders for Rift will start later this year, Oculus, which Facebook Inc bought for $2 billion last year, said. Previous versions of the VR headset, available since 2012, were aimed at developers to make games and run tests. The consumer version was widely expected sometime this year. "In the weeks ahead, we'll be revealing the details around hardware, software, input, and many of our unannounced made-for-VR games and experiences coming to the Rift," the company said on a blog post.

• Apple Is Planning Another Big Bond Sale: Apple Inc. is planning to sell bonds in the iPhone maker’s fourth multi-billion dollar offering since 2013 as it borrows to return capital to shareholders while preserving its cash holdings abroad. The company will issue the securities in as many as seven parts today, with the longest-dated bonds maturing in 30 years, according to a person with knowledge of the offering. Proceeds will back stock repurchases, capital expenditures, acquisitions and debt repayment, said the person, who asked not to be identified because of a lack of authorization to speak publicly. Apple may sell the bonds due in 2045 at a yield of 1.5 percentage points more than similar-maturity Treasuries and 10-year notes at a 1.10 percentage-point premium, said the person. The company is also planning to issue fixed and floating-rate notes maturing in two and five years and a seven-year fixed-rate bond. The Cupertino, California-based company has issued the equivalent of $40.35 billion of bonds since April 2013, including the $17 billion it sold in what at the time was the biggest corporate-bond offering ever. The company may also sell its first yen bonds and has arranged a series of fixed-income investor calls starting Thursday, Goldman Sachs, one of the underwriters of that offering, said in an e-mailed statement. A sale would be the first in the Japanese currency for Apple, according to data compiled by Bloomberg.

• Affirm, consumer lending start-up raises $275M to lend to young borrowers using data science: Affirm is adding $275 million in debt and equity to accelerate its growth plans. The big Series B funding round is a vote of confidence by investors in one of the more ambitious entrants into the emerging field of financial technology. The firm is at the forefront of start-ups trying to use the new math of data science to more accurately assess credit risk than traditional scoring, which relies heavily on a person’s credit history. Conventional techniques, the new lenders say, do not do a good job of predicting the default risk on people with limited credit histories, like young people and recent immigrants. Traditional credit analysis tools, they add, tend to overly punish borrowers for single missteps such as a missed student loan payment or falling behind on medical debt. Affirm is building its business by focusing on lending to the millennial market, those under 35 years of age. They tend to have thin credit histories, and surveys show they generally have a lowly opinion of banks. “We’re building a financial technology company for the next generation,” said Max Levchin, the chief executive of Affirm, who was a co-founder of PayPal. To date, Affirm’s main product is a credit-card alternative for online merchants — installment loans from three months to a year. To seek a loan, an applicant provides a few items of personal information — name, cellphone number, birth date and the last four digits of the person’s Social Security number. Then, Affirm’s algorithms pore through all kinds of data from credit bureau reports to social networks. Affirm’s technology makes the underwriting decision almost immediately. More than 100 online merchants have signed up with Affirm, which has made more than $100 million in loans. Merchants using Affirm, the company says, report 20 percent higher sales, reflecting the appeal of Affirm’s alternative to credit cards. The tryout phase for the two-year-old company’s technology, Mr. Levchin said, is over. “We’ve come of age, so we want to have the resources to expand,” he said. New products, Mr. Levchin said, are part of the plan, including a credit-card offering.

• SAP Takes SuccessFactors and Concur to the Cloud: The new integration is being offered as a sort of “multi-tenant” business, akin to the public clouds of Amazon Web Services or Microsoft Azure, only for a set of fewer, but more high-level, functions. What that means is that it will be possible for customers of SAP, along with independent software developers, to make software applications that can take data from different elements of their business and build new kinds of information services. Both Ariba and SuccessFactors were independent online software companies that SAP purchased to hasten its transition from selling packaged software to a rental model. The features and data from another SAP acquisition, Concur, which does travel procurement and management, will also be integrated into S4 in the near future. Cloud-based revenue in the first quarter of the year was about $564 million, up 129 percent from a year ago. That was still a relative sliver of the $5 billion in total revenue the company scored, but total revenue was up 22 percent.

• India Start-up Action: Logistic services firm Delhivery raises $85M to ride on India’s ecommerce boom: Riding on the back of an ecommerce boom, India-based logistics service Delhivery raised a series D round of US$85 million led by Tiger Global Management. Last year, the company received US$35 million from Multiples Alternate Asset Management, Nexus Venture Partners, and Times Internet Limited. These investors have also participated in this round. This has so far been the biggest deal for an ecommerce support venture in India. Delhivery has a range of proprietary commerce technologies that they’ve built in-house to tackle logistics problems. The company has over 10,000 employees in more than 200 cities along with nearly a million square feet of warehousing space in 11 fulfilment centers. It handles over 3 million monthly transactions for 70,000 merchants and 1,500 ecommerce companies. With the funding, it plans to tap into India’s rural market and build 2.5 million square feet fulfilment centers. The startup aims to expand its reach four-fold. Delhivery is also expected to invest heavily in expanding the senior management team. It has recently appointed Sandeep Barasia, senior partner of Bain and Company and Suraju Dutta, ex-FedEx executive, as managing directors.

• IBM and Facebook in Marketing Partnership: Personalized marketing — the product pitch or message that really hits its target, the right person at the right time — is the much-discussed ideal in advertising and sales. The truth is that personalized marketing is, well, mostly marketing today. With modern tools of data analysis, it is becoming increasingly possible to identify customer groups in smaller segments than the big demographic buckets of the past, which filtered by age, gender, income and place of residence. But smaller audiences are still a long way from personalized marketing. On Wednesday, IBM and Facebook are announcing a partnership to take a step closer to the ideal. The partnership stems from how the companies bring complementary strengths to the lucrative business of data-fueled marketing. IBM’s data analytics business caters to major retailers and big consumer product brands. And Facebook, the social networking giant, does too. IBM’s data scientists do a lot of social media and sentiment analysis, but not with the vast laboratory of human behavior and preferences that Facebook has. The partnership is intended to combine data that marketers have on customers — like purchase behavior, responses to a marketer’s email campaigns and call center inquiries — with Facebook data including likes, comments and complaints. IBM’s data analytics will then be used to help big brands find and communicate with more finely targeted audiences on Facebook. Mr. Chandlee called this “personalization at scale.” And the insights gleaned from analyzing Facebook and other data should also help companies better target consumers in other marketing channels, such as ads on the web and email programs. Facebook will also be the first company to join IBM’s new Commerce ThinkLab. The new lab is a collaborative setting for applied research involving teams from major consumer brands and retailers, IBM industry experts and data scientists, and teams from Facebook as well. For IBM, the Facebook partnership is the most recent alliance the enterprise technology company has forged with consumer-focused technology companies, notably Apple and Twitter .

• Two Retail Veterans Take Aim at Amazon’s E-Commerce Reign: In the last few months, two retail veterans have been working on companies that explore these different avenues of breaking into online commerce. Ron Johnson, who, with Steve Jobs, created Apple’s lucrative physical stores, has been working on something out of left field — a selective online store called Enjoy, which, for no additional cost, will send an expert to hand-deliver tech products and spend an hour helping people set up and learn to use their new things. The service, Mr. Johnson said, is a smartphone-era take on his past at Apple — an effort to create the friendliness of an Apple Store in people’s homes and offices. Then there’s Marc Lore, an e-commerce veteran who in 2010 sold his company, Quidsi, to Amazon for about $550 million. Mr. Lore’s new service, Jet.com, represents a frontal assault on Amazon. Mr. Lore has raised more than $200 million — a staggering sum before even opening up shop — to create a nationwide e-commerce giant to compete with Amazon on selection, service and, especially, price. Jet’s promise is simple and, if the company can keep it, potentially momentous: to offer the absolute lowest price on just about everything, from paper towels to oatmeal to tennis rackets, guaranteed. Enjoy is starting small. The company, which has raised around $30 million from investors, is starting out in just the San Francisco Bay Area this week and in New York City next Wednesday. Enjoy does not compete with Amazon on selection; it offers only about a dozen or so high-margin tech products for sale, among them laptops, GoPros, drones and, in an exclusive deal, smartphones and tablets purchased from AT&T. Mr. Johnson believes that by limiting selection, Enjoy can offer free delivery and setup. Because it only needs to stock high-end products, the company hopes to squeeze enough out of each purchase to cover delivery and personal consultation. Enjoy is in stark contrast with Jet, which, when it opens to the public in early July, does not aim to start small. Right out of the gate, it makes a huge promise: “You should never find an item that’s more expensive on Jet than anywhere else,” Mr. Lore told me this week. Mr. Lore says he believes he can keep that promise thanks to an unusual business model. Like Costco, Jet will charge an annual membership fee, in this case $49.99. That fee is intended to free Mr. Lore from making any profit on each item — and thus pass all potential savings to customers. Right now, Jet is working well enough to bolster Mr. Lore’s basic claim — on dozens of items I searched for, Jet was cheaper, sometimes unbelievably so, than Amazon, Walmart or anywhere else online. For instance, a 40-pack of Duracell AA batteries on Amazon sells for $16.99. On Jet, the same pack is $13.70. If you add more items to your cart, Jet reduces the cost further. So, by ordering the batteries as part of a larger cart, I cut the price down to just under $11, about a third less than Amazon’s price. I noticed this effect on multiple orders across a wide range of household staples I usually order, from cooking oil to aluminum foil to shampoo to baby diapers. Jet’s sticker prices are low, but when I created large carts, the prices shrank even more. My child’s diapers, ordered in bulk, cost me 21 cents each, compared with 29 cents at Amazon. Still, there are some disadvantages: Jet’s fastest items ship in two days, slower than Amazon’s next- or same-day shipping, and a huge number of its goods ship in three to five days. It also does not offer an Amazon Prime-like free shipping service; you pay $5.99 for all orders under $35, after which your order ships free. These limitations suggest that Jet is going after an audience that’s different from Amazon’s — one that is less affluent, less hooked on impulse buying and more interested in discounts. “For most households, the proposition of paying $50 to Jet and saving $200 for the year, that’s a no-brainer thing,” Mr. Lore said. Over the holidays, Amazon sold a record $29.3 billion in merchandise, more than many large e-commerce companies combined. But Americans spent around $1.2 trillion in the same period, meaning that Amazon accounted for just 2 percent of our purchases. In other words, there’s lots of room for new ways to get Americans shopping online.