Daily Tech Snippet: Wednesday, May 4

• Uber enables global e-hailing through Alipay to fend against Lyft/Didi alliance: Starting today, Uber riders from China won’t have to worry about language barriers or currency when traveling outside of the country. Now, riders will be able to pay for and hail a ride in the Alipay app in the more than 400 cities in which Uber operates. It’s an extension of Uber’s existing partnership with the company, which initially only allowed passengers in China to pay for their rides using Alipay. The move comes just a few weeks after Lyft and China’s Didi launched a similar integration that allows Didi riders to hail a Lyft in the U.S. using the Didi Chuxing (formerly Didi Kuaidi) app, and vice versa. That partnership is part of a larger global ride-hail alliance that also includes South East Asia’s Grab and India’s Ola. The clear winner in this entire situation is Alipay’s affiliate company, Alibaba. That’s because the Chinese e-commerce company is playing both sides of the fence — Alibaba is an investor in both Didi and Lyft, and Ant Financial, which operates Alipay, has had this partnership with Uber since 2014. It’s certainly true that Alibaba has a higher stake in Lyft and Didi beating out Uber, but the transportation industry isn’t a zero-sum game. Since there’s room for both sides to coexist, Alibaba can afford to put bets on Didi and Lyft, and Uber too. But Alipay may be playing favorites. According to company SVP of business Emil Michael, Uber will be the primary featured transportation app on Alipay’s platform outside of the U.S. Alipay is essentially promoting Uber to its 450 million users.

• Instagram is selling a new type of video ad: Instagram has been pushing users to create more video content. Now it’s pushing advertisers to create more video ads. Instagram announced Tuesday that it will soon roll out video carousel ads, a move that will let advertisers share up to five separate videos with one single ad purchase. Each video can be up to 60 seconds long. Instagram already sells carousel ads, the kinds of ads that let users swipe between different pages (often called cards). But video functionality wasn’t available until now. The change aligns with Instagram’s conscious push into video more broadly, a strategy reminiscent of Facebook’s video push a few years back. Instagram is adding video featuresand making video more prominent in search in hopes users will watch more of it. It’s essentially feeding people what it wants them to consume — and video can be good business. If users expect to see videos when they open Instagram, then video ads, which are typically more lucrative than static ads, won’t feel out of place. These new video ads are now in beta and will roll out to all advertisers in the “coming weeks,” according to a company spokesperson.

• Amazon, Web Giants Shift to Report Real Cost of Equity Pay: For more than a decade, technology companies doled out heaps of stock to recruit top talent -- then pretended this wasn’t a normal part of doing business by reporting profit numbers that subtracted the cost. That’s changing as the industry grows up and responds to pressure from regulators and investors. Amazon.com Inc. started breaking out stock-based compensation in the results of its different businesses in the first quarter. This is “the way we now evaluate our business performance and manage our operations,” Chief Financial Officer Brian Olsavsky told analysts after the earnings report last week. Facebook Inc. Chief Financial Officer David Wehner had a similar message. From now on, he said he’ll talk about the social network’s results and other metrics based on U.S. standards known as Generally Accepted Accounting Principles, or GAAP, which include equity-based pay costs, instead of a mix of GAAP and non-GAAP numbers. “We view it as a real expense,” he said. Some technology companies, such as Netflix Inc. and Intel Corp., already take this approach, but many don’t. If the shift to focusing on the real bottom line catches on more broadly, it could slice billions of dollars off the reported profits and official forecasts that underpin the technology sector’s lofty market valuations. Facebook stock trades at about 35 times estimated earnings over the next 12 months. Add in equity compensation expense and that price-to-earnings ratio jumps to 50, according to a Sanford C. Bernstein & Co. analysis. Amazon would trade at 122 times projected profit, rather than a multiple of 63. Using GAAP numbers, Alphabet Inc. would trade at 26 times forecast profit, versus 21 times, Bernstein estimates. The change also highlights the struggles of smaller Internet companies like Twitter Inc. and LinkedIn Corp. to generate GAAP earnings. Facebook, Amazon and Alphabet may have high stock valuations, but they are also very profitable by GAAP and non-GAAP measures. Twitter shares trade at about 36 times estimated profit, but including stock-based compensation analysts expect it to have a loss over the next 12 months, Bernstein research shows. “Some companies have been egregious with stock compensation,” Fish said, citing LinkedIn, which has relatively high equity-based pay compared to its revenue and earnings. LinkedIn shares have declined 44 percent this year, while rival social network Facebook is up 13 percent.

• Google, Fiat Chrysler to partner on self-driving minivans: Alphabet Inc's Google unit and Fiat Chrysler Automobiles NV have agreed to work together to build a fleet of 100 self-driving minivans in the most advanced collaboration to date between Silicon Valley and a traditional carmaker, the companies said Tuesday. The deal marks the first time that Google has worked directly with an automaker "to integrate its self-driving system, including its sensors and software, into a passenger vehicle," the companies said in a statement on Tuesday. Google and Fiat Chrysler engineers will work together to fit Google's autonomous driving technology into the Pacifica minivan. Some engineers for both companies will work together at a facility in Southeast Michigan, where Fiat Chrysler has its major North American engineering center, the companies said. Google said it is not sharing proprietary self-driving vehicle technology with Fiat Chrysler, however, and the vehicles will not be offered for sale to the public. The agreement between Google and Fiat Chrysler comes as rival technology and auto companies are accelerating efforts to master the complex hardware and artificial intelligence systems required to allow vehicles to pilot themselves.

• Match Group revenue beats as Tinder attracts more paid users: Dating website operator Match Group Inc reported better-than-expected quarterly revenue on Tuesday, as its popular dating app Tinder attracted more paying users. The company's shares rose 7.3 percent to $11.98 in after-hours trading. Match Group, which also owns Match.com and OkCupid, gets bulk of its revenue from membership fees and paid features. The company said its average paid-member count jumped 36 percent to 5.1 million in the first quarter ended March 31, also helped by the acquisition of PlentyOfFish. Match Group, majority owned by media mogul Barry Diller's IAC/InterActiveCorp, agreed to buy Vancouver-based PlentyOfFish for $575 million in July last year. Tinder surpassed 1 million paid members during the quarter. The Dallas-based company's dating business, its biggest, which includes apps such as Tinder, recorded a 24 percent rise in revenue to $260.4 million. Total revenue rose 21.4 percent to $285.3 million. Revenue from the company's non-dating business, which includes educational websites Princeton Review and Tutor.com, was flat at $24.9 million. Up to Tuesday's close of $11.16, Match Group's shares had fallen 7 percent since the company went public in November.

Daily Tech Snippet: Thursday, November 19

• Square prices shares at 52% discount to last valuation in disappointing turn to long-awaited IPO: sources: Mobile payments company Square Inc priced shares at $9 late on Wednesday, according to people familiar with the matter, further discounting the company's valuation before it begins trading Thursday morning. Square has raised $243.5 million in its Wall Street debut, about $80 million less than expected. The price set on Wednesday puts Square's market capitalization at $2.9 billion, a 52 percent drop from the $6 billion valuation it had earned at its last private funding round. San Francisco-based Square, led by CEO Jack Dorsey, earlier this month set a price range of $11 to $13, well below the $15.46 per-share price of its most recent private financing. The steeper discount to $9 - a 42 percent drop from what investors were willing to pay a year ago - suggests widespread uncertainty about the profitability of the payments industry and the future of Square itself, which has seen slowing revenue growth. "The way that Square was valued as a private company is they were just going to disrupt everything and change payments," said Andrew Chanin, CEO of PureFunds, an exchange-traded fund for mobile payments companies. "And the reality is not that." Compounding concerns is Dorsey's dual role running Twitter Inc., a social media company struggling for a turnaround. Founded in 2009, the company started as a way for small businesses to accept credit card payments through mobile devices. It has evolved to a suite of small business services, relying on partnerships with companies such as Apple and Visa. The valuation cut triggered a ratchet, or protection investors wrote into previous funding rounds, that requires Square to sell several million additional shares. Square will begin trading Thursday on the New York Stock Exchange under the symbol "SQ". Square is one of the most prominent "unicorns," or private companies valued at $1 billion or more, to plan a public debut this year. Many have held up Square as an example of how fleeting - and at times nonsensical - private market valuations can be. There are more than 140 "unicorns" globally.

• Match Prices Its IPO at Bottom of Proposed Range as Tinder CEO Breaks Quiet Period Rule with a Bizarre Interview ("Models Beg Me For Sex") Match has priced its IPO at $12 per share, raising $400 million . The company will begin trading on the Nasdaq tomorrow, under the ticker symbol ‘MTCH.’ The $12 per share is at the bottom of the anticipated $12 to $14 proposed price range and gives the company a market cap of roughly $2.9 billion. Square, which is also going public tomorrow, just priced its IPO at $9, below the $11 to $13 price range. Match owns a group of dating companies, including OkCupid and the infamous Tinder. That particular subsidiary came under fire today after its leader gave a bizarre interview that may have broken SEC-mandated “quiet period” rules. Tinder CEO Sean Rad: Models Beg Me for Sex:, Dick Pics Aren’t Cool: Tinder’s parent company, the IAC-owned Match Group, is going public tomorrow. As the most attractive and valuable part of the company, it makes sense that Tinder’s CEO, Sean Rad, is talking to media outlets to drum up excitement for the IPO. This morning, a fresh Tinder PR disaster dropped in the form of an interview with journalist Charlotte Edwardes in the London Evening Standard. In it, Rad talks about the number of women he’s slept with (“Is 20 low?”), confuses the word sapiosexual for sodomy and condemns fame-hungry journalists. It makes sense that Rad would say some really, really stupid things in an interview. Rad was the dude who mishandled a sexual misconduct scandal (and the resulting lawsuit) that led to the exit of co-founder and CMO Justin Mateen last year. Rad stepped down as CEO last November, but got a second chance at the top job after his successor, former Microsoft exec Chris Payne, was canned in the wake of a memorable Twitter meltdown. The interview is very long and there are many different great parts. Below is perhaps the best selection from it (here’s another one: “I do not condone penis pictures — that is just not who I am”). I’m sure it will inspire a lot of confidence in investors looking to buy Match Group stock tomorrow: He’s desperate to impress on me how gallant he is, citing the fact that a “supermodel, someone really, really famous” has been “begging” him for sex “and I’ve been like, no.” She’s “taunted” him, he says, and “called me a prude.” “She’s one of the most beautiful women I’ve ever seen but it doesn’t mean that I want to rip her clothes off and have sex with her. Attraction is nuanced. I’ve been attracted to women who are …” he pauses “… well, who my friends might think are ugly. I don’t care if someone is a model. Really. It sounds clichéd and almost totally unbelievable for a guy to say this, but it’s true. I need an intellectual challenge.” He continues: “Apparently there’s a term for someone who gets turned on by intellectual stuff. You know, just talking. What’s the word?” His face creases with the effort of trying to remember. “I want to say ‘sodomy’?”

• How Amazon’s Long Game Yielded a Retail Juggernaut: Shares of Jeff Bezos’s company have doubled in value so far in 2015, pushing Amazon into the world’s 10 largest companies by stock market value, where it jockeys for position with General Electric and is far ahead of Walmart. There is a simple explanation for Amazon’s rise, and also a second, more complicated one. The simple story involves Amazon Web Services, the company’s cloud-computing business, which rents out vast amounts of server space to other companies. Amazon began disclosing A.W.S.’s financial performance in April, and the numbers showed that selling server space was a much bigger business than anyone had realized. Deutsche Bank estimates that A.W.S., which is less than a decade old, could soon be worth $160 billion as a stand-alone company. That’s more valuable than Intel. Yet the disclosure of A.W.S.’s size has obscured a deeper change at Amazon. For years, observers have wondered if Amazon’s shopping business — you know, its main business — could ever really work. Investors gave Mr. Bezos enormous leeway to spend billions building out a distribution-center infrastructure, but it remained a semi-open question if the scale and pace of investments would ever pay off. Could this company ever make a whole lot of money selling so much for so little? As we embark upon another holiday shopping season, the answer is becoming clear: Yes, Amazon can make money selling stuff. In the flood of rapturous reviews from stock analysts over the company’s earnings report last month, several noted that Amazon’s retail operations had reached a “critical scale” or an “inflection point.” They meant that Amazon’s enormous investments in infrastructure and logistics have begun to pay off. The company keeps capturing a larger slice of American and even international purchases. It keeps attracting more users to its Prime fast-shipping subscription program, and, albeit slowly, it is beginning to scratch out higher profits from shoppers.

• Goldman Says to Buy Apple Because It's Becoming a Services Company: It's time to stop thinking of Apple as a hardware company and start thinking of it as a service company. At least, that's what Goldman Analyst Simona Jankowski and her team are telling clients as they add the stock to their "conviction buy" list and call for a price of $163 in the next 12 months.  "We expect that over the next year, the focus will shift from unit growth (which is slowing given a maturing smartphone market) to installed base monetization and recurring revenues (“Apple-as-a-Service”). Apple’s model has already tilted that way with its new iPhone 6s installment plans, and we see the upcoming TV service as a powerful next step." Due to Apple's large and loyal customer base, the team argues that there is a "significant multi-year opportunity" for the tech giant to boost monetization. Jankowski's team estimates that over 90 percent of those purchasing iPhones are repeat customers, which will make it much easier for Apple to become a service-like company, especially as it launches a TV service. The timing might prove perfect for a foray into the TV space as well, with Goldman pointing towards acceleration in cord cutting as millennials are more apt to use what it refers to as "over-the-top media consumption," and the skinny bundles such as Sling TV and Vue become more common. "Theoretically, Apple could transition other products to installment plans as well, and charge customers a monthly bill that also includes its other services such as Apple TV and Music. We think a potential live TV service from Apple would be a key enabler of this transition to an “Apple-as-a-Service” business model." The shift to a service model could prove to dramatically increase Apple's average revenue per user (ARPU). Jankowski estimates that Apple's current ARPU would be $42 operating with a service business model.

• As Lyft Seeks $500M in New Funding, Leaked Lyft Financials Show the Struggles of Being No. 2 Behind Uber: In the first half of the year, the ride-sharing company generated less revenue, lost more money, and added fewer customers than projected in February. Ride-sharing pioneer Lyft is heading back to the fundraising till, but its numbers may not look that rosy to investors. The company lost $127 million in the first half of 2015 on $46.7 million in revenue, according to private fundraising documents obtained by Bloomberg. Lyft, the second-biggest U.S. ride-hailing service, is raising roughly $500 million as the company burns through tens of millions of dollars a month, according to a fundraising presentation compiled by Credit Suisse. It highlights tepid financial performance at Lyft and reveals that the company has repeatedly underperformed its own expectations. In the first half of the year, Lyft generated less revenue, lost more money, and added fewer customers than projected in February. The numbers suggest Lyft has had to burn through cash as it chases growth in a competitive industry. The willingness to spend big on growth is a costly strategy that’s becoming increasingly common in Silicon Valley. Public market investors have expressed concern about the high valuations of private technology companies recently. Fidelity Investments, BlackRock, and others wrote down their stakes in some startups this year.In the first half of 2015, Lyft spent $96.1 million on marketing. That’s more than twice Lyft’s net revenue during the same period. In one document, Lyft promotes its ability to attract new drivers and riders, even as it does so at a sizable loss. Customer discounts represent a big portion of Lyft’s marketing costs. This year, Lyft has also purchased billboards in New York’s Times Square and on Market Street in San Francisco, in addition to paying drivers big bonuses.

Daily Tech Snippet: Tuesday, November 10

• With a Mobile Website Like an App, Flipkart Takes a Swipe at Apple: India’s e-commerce start-up Flipkart has worked with Google to make a new mobile website that could eliminate the need for apps, in a move that takes a swipe at Apple’s grip on the mobile experience. On Monday, Flipkart unveiled the website, which it created with the Google team that focuses on the mobile web browser Chrome. The two made a site that supports push notifications, the ability to search for and read information while offline, location-based data and access to hardware features like a smartphone’s camera. While such features have long been available in apps that people download to their phones, they typically have not been prevalent on mobile websites. Flipkart plans to show other companies what it took to build the website — including the hurdles it had to overcome and the weaknesses it found — at Google’s Chrome Developers Conference this month. Google’s parent company is Alphabet.

• Match Is Seeking $3.1 Billion Value in I.P.O.: The Match Group is seeking a valuation of about $3.1 billion as it prepares for an initial public offering. The company, which owns the online dating brands OkCupid and Tinder, said on Monday that it planned to sell 33.3 million shares for $12 to $14 apiece. Those terms indicate an offering size of $433 million and a market valuation of $3.1 billion at the midpoint. In setting these terms, Match begins a roadshow, meeting with investors who will help the company set an official I.P.O. price in a few weeks, based on demand. The media conglomerate that owns Match, IAC/InterActiveCorp, whose chairman is Barry Diller, has been acquiring a number of dating sites over the last few years. As the online-dating industry increased in popularity, legacy sites like Match.com started facing more competition from free models like OkCupid. Mr. Diller’s strategy was to build scale by acquiring a portfolio of brands – now 45 in all – and eventually spin them off under the Match umbrella.

• Google Offers Free Software in Bid to Gain an Edge in Machine Learning: A race is underway toward the future of computer technology with advances in a branch of artificial intelligence known as machine learning. Machine-learning software is trained to handle vast amounts of data, and then learns as it goes, often on its own. Machine learning has been around for a long time, and it has been a crucial technology in the success of Internet giants like Google, Amazon and Facebook — used in the development of search, ad targeting and product recommendations. But in the last few years, machine learning has made huge improvements in computer vision, language translation and speech recognition, largely by applying the techniques of deep learning, which is inspired by theories about how the brain recognizes patterns. Every major technology company is investing aggressively in artificial intelligence and machine learning. And not just computer companies. Last Friday, Toyota announced it would spend $1 billion for research and development on artificial intelligence in the United States over the next five years. Google announced on Monday a bold step to establish its leadership in the field of machine learning, accelerate the pace of innovation in the field and potentially strengthen its business. It is making the software of its new machine-learning system, TensorFlow, which was developed over years, open-source code. The software will be freely available for outside programmers to use and modify.

• How Pinterest Got the Full Attention of Ad Agency Execs: Better features for marketers and consumers: Pinterest is getting serious about becoming a formidable digital advertising player, and agency executives are taking notice. "What Pinterest has accomplished in the last nine months is the most evolution of any platform," said Chris Tuff, evp and director of business development and partnerships at 22Squared. For comparison, Tuff said it took Facebook four and a half years to build the same kind of sophisticated ad tools that Pinterest is pitching. On Monday, the site launched a search feature that uses photos to comb through millions of product images. For example, someone looking at a picture of a table can zero in on finding similar tables by tapping on the Pin to start a search result without typing a word. Up until now, people have only been able to search on Pinterest with text queries. Marketers won't be able to buy visual search ads like they've been able to with text search ads, which debuted in early 2014. Pinterest hasn't said whether visual search ads were part of its future plans, but that scenario seems likely. The visual-search move should prove popular to users—which will help maintain marketers' attention for the Pinterest ad products that currently exist. In January, Pinterest opened its Promoted Pins advertising business to all U.S. advertisers. Then in May, the San Francisco-based company started offering more targeting and video promos.

• Rackspace Announces Better-Than-Expected Q3 Results, Including Revenue of $509M, Plans $350M Debt Offering: Following the bell, Rackspace announced its third-quarter financial results, including revenue of $509 million and earnings per share of $0.26. The market had expected Rackspace to report $0.20 in per-share profit off revenue of $503.08 million. Down nearly four points in regular trading, the company has swayed both positive and negative following its earnings announcement; investors, it seems, are not entirely sure at the moment how to parse the results. The company’s top line expansion clocked in at 10.7 percent, compared to the year-ago quarter. On the product side of things, Rackspace recently announced, and I’ll quote here to avoid butchering the truth, “Carina, A Hosted Environment For Running Docker Containers.” It has been rumored that Rackspace could entertain the possibility of going Full Dell, and heading private.