- After Square and DropBox, possible decline in Snapchat valuation signals trouble for unicorns: The worth of hot technology start-ups seemed for years to go in only one direction: straight up. Now there are signs of growing unease over the dizzying valuations of some of the most richly priced private companies. The latest sign has emerged with one such favorite, Snapchat, being discounted 25 percent by one of its more recent investors, Fidelity, the mutual fund giant. Another start-up, Dropbox, the widely used file storage service, was devalued by the giant asset manager BlackRock this year. The funds’ markdowns may tap the brakes on a fast-growing market. Investors, in the hopes of getting a piece of the next Facebook or Google, have been pouring billions of dollars into young private companies. Yet the public stock market has cooled for new technology companies: witness the current effort by Square, a mobile payments company, to go public at a valuation lower than what its last private investment gave it. The moves by Fidelity and BlackRock reflect how mutual funds can create challenges for technology’s favored start-ups, just as they helped inflate valuations in the first place. Over the last few years, mutual funds fought to buy pieces of appealing venture-backed companies like Snapchat and Dropbox. The idea was that public investors wanted to own these start-ups because their value was growing faster than that of many publicly traded companies. By owning the private shares, the large mutual funds would also get to know the start-ups and be well positioned to buy their shares when they went public. As mutual fund and venture capital investors jockeyed with hedge funds and sovereign wealth funds to invest, their abundant capital pushed prices for private shares into the stratosphere. Snapchat, for example, is valued at more than $16 billion and Dropbox at around $10 billion. The biggest prize of them all, Uber, is now seeking a round of investment that would value the company at $60 billion to $70 billion. Uber’s success with that round would be a further test of investors’ appetite. The competition among investors also helped create a herd of dozens of “unicorns,” a term for private companies valued above $1 billion, coined when such a phenomenon was still considered rare. Yet unlike venture capital firms, mutual funds are legally obligated to value each of their portfolio holdings every day, including hard-to-value assets like shares in private companies, and they must report these values at least every half year. A spokesman for the Investment Company Institute, one of the largest mutual fund associations, said that the process was a “good faith determination” of what an owner could get in a sale of the asset.
- Hands-On With Facebook Notify, A Push Notification News App And Twitter Alternative: Facebook released Notify, an app for reading customizable breaking news, info, and entertainment push notifications right on your lock screen. Notify lets you select from over 70 publishers and customize your alerts to only send you news about specific companies, cities, sports teams, music genres and more. Each is sent as a push notification and shown in the Notify app’s feed for 24 hours, and can be clicked through to read an associated link. Today Notify becomes available on iOS in the US. It doesn’t offer the real-time discussion and independent voices of Twitter, but could provide an alternative for Twitter lurkers who just wanted real-time information and aren’t interested in building another audience to broadcast to. Though Notify won’t feature any ads for now, there are certainly opportunities to offer sponsored suggestions for accounts to follow. As long as Facebook can get enough of its 1.55 billion users on Notify to justify the work publishers are putting in to produce content there, it could create the real-time, urgent, high-signal information channel the News Feed could never be. I spent some time with the Notify team and played with the app myself, and here are my hands-on thoughts. What’s really special about Notify is the granularity of alerts you can get. While general Twitter accounts feature a broad range of content that might not all be interesting to you, Notify lets you subscribe only to the very specific sub-topics that are relevant. Facebook has worked with 70 launch partners to create Notify stations, including The New York Times, CNN, Huffington Post, Vanity Fair, Techmeme, Fox Sports, Epicurious, Comedy Central, Fandango, BandsInTown and The Weather Channel. Many offer both general news stations and ones with options to follow specific sub-topics. Tapping a station lets you preview its content by showing the last 20 notifications it sent. Publishers use a special interface to write notification text, select a link, and then publish or schedule their alerts. There’s also an API for programmatic distribution of weather forecasts, sports scores and other structured data. Working out these partnerships is what led to the leaks about Notify this summer from The Awl and Financial Times.
- Alibaba Sites Sold More Than $14 Billion of Goods in a Single Day: Alibaba’s consumer shopping sites sold more than $14.3 billion of products on its biggest shopping day of the year, called Singles Day, marking around a 57 percent increase over last year’s total. The total for the last 24 hours, to be precise, was $14,341,847,366.00, according to a spokesman. To give you a sense of how big this sale is, the $14.3 billion figure is just 27 percent less than the $19.6 billion worth of goods that eBay sellers sold in July, August and September combined. The number also dwarfs the $2 billion Americans spent on Cyber Monday desktop shopping in 2014.
- Facebook dumps Bing search results as it gets serious about search: Facebook has stopped including results from Microsoft's Bing search engine on its social networking site. The move, confirmed by a company spokesperson, comes as Facebook has revamped its own search offerings, introducing a tool on Monday that allows users to quickly find past comments and other information posted by their friends on Facebook. The decision may reflect the increasing importance that Facebook sees in Web search technology, a market dominated by rival Google Inc (GOOGL.O). Facebook and Microsoft have a longstanding relationship dating back to Microsoft's $240 million investment in Facebook, for a 1.6 percent stake in the company, in October 2007. As part of that deal, Microsoft provided banner ads on Facebook's website in international markets. Facebook stopped using Microsoft banner ads in 2010 as it moved to take more control of its advertising business. But Facebook, during that same time, expanded its use of Microsoft Bing search results to international versions of its service.
- Baidu said to buy stake in Uber, Boosting App in China: Baidu Inc. (BIDU) is buying a minority stake in Uber Technologies Inc., giving the car-booking company a boost as it expands in China, according to a person familiar with the matter. Uber will receive cash and non-cash assets, including Baidu’s online resources as owner of China’s biggest Internet search engine, the person said, asking not to be identified as the matter is private. The investment may be worth as much as $600 million, China National Radio reported earlier. Uber is expanding in China and hiring in 14 cities, according to a July 1 LinkedIn post. Uber has been targeting customers willing to pay a premium for the luxury of tracking the vehicle’s approach, not handling local cash and finding daily newspapers and a Wi-Fi access inside the car.
- Alibaba's efforts to position 12/12 as another Singles Day (focused on Taobao) seem to have met with only mixed success: Alibaba has tried hard to position Double 12 as a similar shopping bonanza to Singles Day. Last year, it promoted the day heavily on Taobao and flooded other online and offline channels with advertisements. Taobao bought most of the internet portal traffic, and “12/12” signage saturated billboards and bus stops. After stressing that the nature of December 12 is different from November 11, Alibaba has kept the traffic and revenue results from the past two Double 12s on the down-low. The lack of numbers released has led many to believe that Double 12’s results didn’t live up to Alibaba’s initial expectations. The reason for the underwhelming sales? Hard to say for sure, but there are many theories. First off, it’s been just a month since Singles Day. Retailers’ inventory and consumers’ budgets may not be sufficient enough to take part in the 12/12 extravaganza. Also, it’s possible that the two-thirds of Taobao retailers that didn’t take part in Double 12 ran out of inventory or turned to offline sales channels for the rest of the holiday shopping season. Retail logistics make it harder for smaller companies on Taobao to be as flexible on price as the big dogs on Tmall. They also can’t offer up the same kinds of amazing bargains Chinese consumers are now accustomed to.
- Hints that Whatsapp is expanding to the web: It looks like WhatsApp might be bringing its messaging service to the web. The rumors started shortly after the the co-founder of rival messaging app Telegram, Pavel Durov, told TechCrunch that he thought WhatsApp was working on a web version “since they tried to hire our web dev.” While WhatsApp has yet to make any official mention of a web version of its popular messaging app, a recent discovery by the team at AndroidWorld.nl appears to back up Durov’s suspicions. Hidden inside the code of a recent WhatsApp update is the mention of “WhatsApp Web.” It’s still not definite proof, but it certainly looks like the WhatsApp team is at least exploring some sort of web functionality.
- India startup action: Bangalore-based Blowhorn offers an online marketplace focused on last mile logistics services: Mithun Srivatsa, director of operations, Walmart Labs, co-founded Blowhorn, an online marketplace for last mile logistics services, along with his classmate from NIT Nagpur Nikhil Shivaprasad (CTO), in November 2013. “Currently, mini-truck drivers suffer from inefficient utilisation, sometimes not getting a booking for a load to carry for a day or more. At the same time, consumers have ever-increasing needs to move things around the crowded streets of India’s major metros. We bring them together seamlessly,” said Srivatsa, CEO of Blowhorn. The Bangalore-based startup claims to be receiving a lot of demand from people buying from online classifieds sites like OLX and Quikr, as well other second hand goods groups on social media. The firm charges Rs 600 for the first hour and pro-rated every 10 minutes thereafter. Last month, the startup had raised an undisclosed amount in seed funding from impact investor Unitus Seed Fund, with participation from Tim Draper, founder and managing partner of Draper Associates. While the space is new and unexplored in India, there are examples of such startups globally. In Asia, Hong Kong-based GoGoVan provides similar services and has presence in Singapore and Taiwan, besides its home city.
- SoftBank shrinks U.S. office, hurt by its Sprint investment, marking end of failed T-Mobile bid: Japan's SoftBank Corp (9984.T) will soon downsize its Silicon Valley offices, people with knowledge of the matter said, signaling the company won't revive efforts to buy T-Mobile U.S. Inc
Rural consumers accounted for ~10% of Alibaba’s US$9.3B Singles Day haul, washing machines, wool and down coats in top 10 items: Alibaba VP Wang Yulei said at the event that the top ten products China’s rural residents bought via Alibaba’s online marketplaces this Singles Day were, in order of popularity: Mobile phones Flatscreen TVs Boots Wool coats Women’s down coats Men’s down coats Low-top shoes Bedsheets/sets Facial skin products Washing machines According to Wang, there are some significant differences between that and the urban top ten list, on which flatscreen TVs rated lower and washing machines didn’t rate at all, among other differences.
Snapchat is getting into p2p payments; linking audience identity information to (currently anonymous) Snapchat might be the rationale: Snapchat doesn’t ask for your real name, but its on the debit card you use for its new peer-to-peer payments feature Snapcash. That could prove very lucrative for the ephemeral messaging service. To use the feature for sending friends money that launched today, users connect their debit card to their Snapchat accounts through a partnership with Square Cash. The real names, addresses, and account information associated with those debit cards could potentially be cross-referenced with databases of personal information to give Snapchat a much better idea of who users are and what ads they might want to see.
Rocket Internet in Asia: Jabong H1 GMV $81M (195% Y/Y), Lazada H1 GMV $91M (202% Y/Y): Rocket Internet’s first earnings report since its October IPO on the Frankfurt Stock Exchange revealed: Jabong H1 GMV up 195% Y/Y to US$81 million; Orders grew 171% to 3.2 million, no data for active users. EBITDA loss US$0.129K slightly worse than the loss in H1 2013. Lazada H1 GMV (US$91.4 million), up 202% Y/Y. 1.8 million orders from its 1.4 million active users. Rocket Internet explains that Lazada is shifting from a direct sales model (shipping from its own warehouses) to a marketplace model for third-party merchants. As a result, revenue may suffer. But for now, revenues are stronger than last year, with H1 2014 already amounting to EUR 47.3 million (US$59.2 million), which is 83% of the total 2013 net revenues. EBITDA was negative EUR 40 million (US$50 million). Zalora, which sells clothing in 10 Asian nations: H1 GMV US$70.1 million (44% Y/Y), 1.5 million orders, 1.2 million active users during H1. Revenues US$55 million. EBITDA loss US$41.9 million (more than halved since the whole of 2013).
Single's Day Stats for Alibaba: GMV US$9.3 billion (up 60% Y/Y from last year’s full-day tally of US$5.8 billion). Mobile accounted for 42.6% of GMV (up from 21% last year). Orders: 278.5 million. Top brands: Xiaomi in top spot (Xiaomi sold 720K smartphones in 10 hours), Huawei second, and Haier third. Japan’s Uniqlo was next up in fourth place. Discounts were steep: Merchants were pressured to discount by at least 50%, or to the lowest point in the last 60 days, else face steep drops in listings rank.
Caveat: GMV may have been (heavily) inflated by a 'Pre-Sales Initiative' this year: Alibaba is employing what it calls a "pre-sale initiative", under which merchants advertise products at their discounted Singles' Day price from as early as Oct. 15. Tmall lets customers put down a deposit for the order but only allows merchants to process the full payment and ship the products on Nov. 11. The company said it had used such a scheme since 2012, since it helps merchants plan the logistics of shipping such large volumes of goods. Merchants said this year it was used much more widely, and was aimed at boosting Alibaba's figures. "This is a way they can actually count that volume all transacted in one day," said one online store manager who asked not to be named in case it damaged his business. "They've never done a company-wide policy like this." Merchants said Alibaba ensures discounts are genuine by having vendors discount their products from their lowest price within the 60 days before and after Singles' Day.
Lenovo's results were disappointing (Q2 rev: $10.5B, net income $262M), and company said hypergrowth in China smartphone sales is ending: Lenovo’s sales in the quarter were $10.5 billion, compared with the $11.3 billion average of 16 analyst estimates compiled by Bloomberg. Second-quarter net income rose 19 percent to $262.1 million, beating the $259.8 million average of 12 analyst estimates compiled by Bloomberg, as Yang took advantage of Lenovo’s expanding scale to boost profit at more than twice the pace of sales Lenovo fell to third in China, trailing Xiaomi and Samsung, according to researcher Canalys. Smartphone sales in China are projected to hit 426 million units this year, compared with about 214 million two years ago, according to a forecast from International Data Corp. Lenovo Group Ltd. (992) said the era of “hypergrowth” is over in China’s smartphone market after the company reported its slowest sales growth in six quarters. Shares fell to their lowest since June 24 on an intraday basis after Lenovo’s revenue rose 7.2 percent in the three months ended September, the smallest increase since March 2013 and missing analysts’ estimates.
Amazon's AWS business is slowing, facing commoditization and increasing competition from Microsoft and Google:Sales growth at AWS has been declining. AWS is categorized in Amazon’s financial statements in “North America, Other.” That grouping brought in $1.34 billion in the third quarter, up from $960 million a year ago. Yet sales growth fell to 39 percent from a year earlier, down from 57 percent a year before. The cloud industry has become increasingly competitive this year, with Google Inc. and Microsoft slashing costs of their offerings and boosting cloud products. Earlier this month, Google said it was reducing the price of some cloud features -- including storage and networking options -- by 23 percent to 79 percent. Microsoft has also trimmed prices this year and last month said it was increasing cloud services with packages of hardware and software. “Commodification is kind of washing at the foundations of what they do,” said Carl Brooks, an analyst with 451 Group. Amazon remains the dominant cloud provider, with a 27 percent share of the worldwide market for cloud infrastructure services, according to a report last month from Synergy Research Group Inc. Microsoft has around 10 percent, while International Business Machines Corp. has 7 percent.
Going cheap rates for website visits in China show why traffic figures from Chinese sites might be unreliable: : A screenshot from a Chinese website that’s selling web traffic: The cheapest option, visits from 1,000 unique IPs per day, will run you just RMB 2.46 (US$0.40) a day. 8,000 visits a day costs just RMB 19.68 (US$3.22). The site in question, which we won’t link to as we don’t wish to contribute to the site’s business, is something that Tech in Asia found easily by searching Baidu, and it claims that it can even help webmasters increase their Alexa ranking.
Today is Singles Day: updates at Alibaba’s @Alizila Twitter account
As Alibaba sells $2B in the first hour of Singles’ Day, 4 questions analysts are asking: (1) Can Alibaba break US$9 billion in GMV? Last year, Singles Day spenders spent nearly US$6 billion across Alibaba’s marketplaces, Taobao and Tmall. That was nearly double what the sale took in the previous year, and this year Alibaba will be looking for similarly massive growth. (2) Can mobile sales break 50%? Mobile sales accounted for about 36 percent of Alibaba’s overall sales in Q2 of this year, so breaking 50 percent this Singles Day could be a stretch. (3) Will this year’s Singles Day go international? Through programs like Tmall Global, the company has increased the number and profile of international brand names on its ecommerce platforms, and today’s results should reflect how well that’s panned out. For example, Tesla automobiles go on sale on Tmall for the first time today. (4) Will delivery get better and faster? Alibaba has put a great deal of effort into improving the logistical side of its business through projects like its new Cainiao subsidiary and its new partnership with Gooday distribution.
The multi-app strategy is paying off and spreading: canonical example Facebook Messenger has 500M users; : Sometimes offering one mobile app just isn’t enough. The thinking goes as such: As companies add features to their main mobile apps, the design and experience can become increasingly cluttered and difficult to navigate. If these companies offer a separate, dedicated app for each feature, perhaps more users will adopt their services. The multi-app strategy is hardly new. Groupon follows in the footsteps of companies like Facebook, Twitter, Foursquare and LinkedIn, among many others. All of these companies have taken sections from their main mobile app offerings and created stand-alone apps for users to download.
An app to measure kids shoe size is a hit with moms: Stride Rite today is launching an iPad app to grab a chunk of that business, and it lets parents measure their children's feet size so they can then order shoes from the company. It is designed to alleviate a pain point for moms and dads who would rather not head to a store every few months to measure the shoe sizes for kids with constantly growing feet. Kristin Smith, director of e-commerce for the Boston-based retailer, said her brand has seen a 129 percent uptick in mobile traffic and a 200 percent jump in sales during the last 18 months. The app, called Rite Feet and developed by MJD Interactive, will be pushed with digital and social ads, as well as placements via Stride Ride's email list and 300 store locations. "We've seen a shift among millennial moms to mobile," Smith explained. "So we are building comprehesive strategy, beginning with the apps. And we are starting to look at iBeacons, though when it comes to mobile payments—we're not quite there yet."
Alibaba's first post-IPO earnings release was very positive overall: Strong GMV growth, especially on Tmall ($90.5B, 49% Y/Y. Taobao GMV $61.9, 38% Y/Y. Tmall GMV $28.6B, 78% Y/Y). Mobile GMV now accounts for 36% of total GMV (up from 15% a year ago). Revenue growth beat expectations: $2.7B, 54% Y/Y. Profits were a tad weak: Overall margins at a 2- year low of 18%. GAAP $494M, -39% Y/Y (overall margins are at two-year lows on share-based compensation charge of $490M). Strong user growth, especially on mobile. MAU: 307M, +52% Y/Y. Mobile MAU 217M (up 138% Y/Y). Valuation stands at $250B, greater than that of Facebook. Extensive coverage: Reuters, Bloomberg, NYTimes, TechInAsia
As Singles Day approaches, Chinese Regulators met Alibaba, JD and others to warn them against (1) raising prices to lower (2) stocking out selectively (3) making superlative claims: China’s State Administration for Industry and Commerce (SAIC) recently held a meeting with ten of China’s top ecommerce companies, including Alibaba and JD, to send a clear message: platforms must take steps before sales are publicized to ensure the deals are legit. Specifically, the SAIC is worried about the following abuses, which it has gotten consumer complaints about following previous years’ Singles Day sales: (1) Artificially raising prices so that they can then be lowered to make the normal price look like a great deal (2) Claiming to be out of stock to avoid selling low-priced items to too many customers when stocks are actually sufficient to honor customer orders (3) Changing orders or canceling sales (again, to avoid having to sell too many items at a discount) (4) Advertising using superlatives like “the lowest price on the web” or “lowest price ever”, which are illegal.
Smart in-store notifications using location targeting beacons are gaining popularity among offline retailers: Urban Outfitters is loading up 15 stores in Philadelphia, Boston, New York, Atlanta, New Jersey and Delaware with beacons—small devices that marketers place around stores that ping messages at shoppers who have downloaded the retailer's app. Swirl, the platform that powers the beacons, said that two-thirds of consumers shop in-store with a smartphone. And instead of pushing aggressive offers at smartphone-wielding consumers, the beacons plug into the Urban On loyalty program, a section in the app that gives shoppers rewards and access to events. Initially, Urban Outfitters has pinpointed three areas to focus its mobile efforts around: the checkout line, fitting rooms and the entrance. When smartphone-wielding shoppers first enter the store, a push notification prompts users to check-in via social media to unlock an offer. Then in the fitting room, beacons are being used to churn out user-generated content about products. Shoppers are prompted to take selfies and post them to Instagram with the hashtag #UOonYou for a chance to be featured on Urban Outfitters' website. Shoppers at the register may get a push notification promoting them to shake their phone to show the Urban ID—a loyalty card—and earn a digital badge.
Amazon launches global shipping into China (from Amazon global stores) starting Singles Day: Amazon is planning an interesting move in China that could shift the balance somewhat starting with its Singles Day sale this year: global shipping. To be clear, this doesn’t mean you can buy goods off of Amazon China from anywhere in the world. Rather, it means that Chinese consumers will be able to shop on Amazon’s US, German, Spanish, French, and Italian stores and have whatever they order shipped directly to China. Amazon China is also launching an “international shopping” feature that should make it more convenient for Chinese customers to shop for goods they want from foreign Amazon shops. Moreover, the shipping may not take as long as you’d expect; Amazon China has arranged partnerships with EMS, UPS, and other global shipping companies that should bring international orders to Chinese doorsteps faster than ever. The new partnerships promise to help customers get their orders through customs quickly, and some items may arrive within three days of being ordered. Sure, that’s nothing compared to the speed of shipping within China, but for an international order, three days is very fast.
LinkedIn positive earnings surprise (Q3 revenue $568M, 45% Y/Y, net loss $4.3M) on real momentum in China; no updated user stats: Interestingly, each of the company's three divisions grew at the same rate (~45%). Talent Solutions – otherwise known as the company’s recruitment products and services — continues to be the company’s biggest earner, now accounting for 61% of all revenues. Marketing Solutions – the company’s advertising products — is a steady 19% of revenues. Premium Subscriptions – the paid subscriptions to have access to more LinkedIn features — is 20% of total revenue, same as a year ago. The U.S. is 60 percent of all revenues, at $343 million, and while LinkedIn is pushing harder into markets like China, it’s pulling in $225 million at the moment.
Groupon also had a positive earnings report (Q3 revenue $757M, 27% Y/Y, net loss $21M); firm is hanging in there tenaciously with many new products: Groupon managed to best expectations, but not by a margin that investors found too compelling. The company is up 1% in after-hours trading. Groupon in the last quarter has been continuing its efforts to build out its product portfolio and continue developing its services in a bid to boost its traffic and offset any declines that it may see in daily deals. That has included the launch of individual business pages to rival those of Yelp, a shopping loyalty and couponing app called Snap, and a more flexible model for how it lets businesses list deals based on specific times of day to improve footfall. It’s slowly making some progress on these fronts. The company says that 100 million people have now downloaded its mobile apps globally.
Facebook Audience Targeting could be changing politics just like it is changing the news business: Modern political campaigns home in on their key voters with drone-like precision, down to the smallest niche — like Prius-driving single women in Northern Virginia who care about energy issues. They compile hundreds of pieces of data on individuals, from party registration to pet ownership to favorite TV shows. Some platforms are now tailoring their offerings to meet the campaigns wherever they are. Facebook, for instance, at its most basic level allows campaigns to focus their message on a particular ZIP code or gender, or even a group of voters that “likes” a certain set of Facebook pages — maybe MSNBC’s Rachel Maddow and The Nation, or Fox News’s Sean Hannity and Guns & Ammo magazine. At a more sophisticated level, a campaign can upload its entire voter file to Facebook, and work with one of the site’s data partners to reach only its targets with messages designed specifically for them.
