- Holiday Shopping Is Chilly for ‘Buy’ Buttons at Twitter, Facebook and Pinterest: More than a year after Twitter and Facebook began placing Buy buttons on their social networks, their e-commerce initiatives still appear to be relegated to experimental side projects. And at Pinterest, the tech platform that many believe is most conducive to e-commerce, one of its mainstream launch partners is seeing fewer than 10 purchases a day via so-called Buyable Pins. The lack of aggressiveness on the part of Facebook and Twitter, and tepid early results at Pinterest, highlight the myriad challenges all three platforms face in transforming their immense user bases into shoppers. The sluggishness of the combined efforts also serves as a warning to other industry players betting big on the idea of social commerce that it’s still unclear if consumers will make purchases in big numbers on platforms that aren’t mainly retail destinations. Spokespeople for the three companies declined to disclose sales numbers for these initiatives. While each platform had its own reasons for pursuing e-commerce initiatives, the central idea was that they thought there was an opportunity to make it easier for their users to buy a product when they discover it on the platform. In theory, the usefulnesses of such a feature would be the biggest on mobile phones, where clicking through to make a purchase on another site can make purchases less likely because of uneven mobile webpage experiences. Facebook was the first to take a crack. Sixteen months after Facebook first began testing Buy buttons on ads and regular posts to let people purchase products they discover on Facebook without leaving Facebook, the initiative is still being dubbed a beta test, restricted solely to online merchants who work with e-commerce software provider Shopify. The company has also recently added purchase capabilities to some Facebook business pages and to a dedicated shopping section of Facebook, but these features, too, are being characterized as “tests” that aren’t available to all Facebook users in the U.S. At Twitter, it’s still unclear how big of a priority e-commerce will be going forward under the leadership of new CEO Jack Dorsey. The company began placing Buy buttons in tweets in September of 2014, and struck partnerships in October of this year with software partners such as Bigcommerce and Stripe to get more merchants on board. Best Buy, for example, will soon join the program — just not in time for the just-passed Black Friday weekend. But regular Twitter users can still go weeks without seeing any tweets enabled with e-commerce; most Re/code colleagues I polled, who are absolute Twitter power users, said they never come across them at all. Then there’s Pinterest, the massive tech platform that retailers were most excited about for its e-commerce potential. The company began inserting Buyable Pins into its iPhone app in late June, and just added the feature to its Android app in early November. The company says more than 10,000 merchants have joined the program, including big retailers and brands like Macy’s, Nordstrom, Neiman Marcus, Cole Haan and Tory Burch, but at least one of these big partners is seeing fewer than 10 purchases a day on Pinterest, according to a person with direct knowledge of the sales figures. This source and another also said that Pinterest insiders have privately admitted to being disappointed with early sales numbers.
- AppDynamics Raises $158M; Now Valued At $1.9 Billion: Last month, based on an SEC filing, we told you that seven-year-old, San Francisco-based AppDynamics had raised a fresh $83.4 million in funding as part of a round that was targeting up to $150 million. Turns out the company met that target and then some. CEO David Wadhwani — who joined the firm in September after spending more than a decade as an executive at Adobe, including as its digital chief — says the company has just closed on $158 million in a round led by General Catalyst and Altimeter Capital. Other participants in the round include Adage Capital, Industry Ventures, Goldman Sachs, and Cross Creek Advisors, as well as earlier backers Institutional Venture Partners, Greylock Partners and Lightspeed Venture Partners. AppDynamics makes software to monitor the performance of business applications, competing with some traditional firms like IBM, as well as younger outfits like New Relic, which went public last December and has seen relatively steady stock performance since. (New Relic, which raised $214 million in venture funding, has a current market cap of $1.8 billion.) AppDynamics had previously raised roughly $206 million in debt and equity, including a $120 million round — $70 million equity and $50 million of debt — that closed in July of last year. At the time of the funding announcement, the company told VentureBeat that the money represented “pre-IPO growth financing.” Asked today what this new round means, Wadhwani said he “won’t speculate on the exact timing” of an IPO but added, “I was brought in to take this company public, and that’s what I intend to do.” The new funding, he said, “represents freedom. We can [execute on our plans for the company] on this money and effectively choose when we want to go public.” Wadhwani declined to discuss the company’s post-money valuation, but a source close to the company pegs it at $1.9 billion.
- In a Global Market for Hacking Talent, Argentines Stand Out: Want to learn how to break into the computerized heart of a medical device or an electronic voting machine? Maybe a smartphone or even a car? Thanks to the legacy of military rule and a culture of breaking rules of all sorts, Argentina has become one of the best places on earth to find people who could show you how. As Silicon Valley’s talent war has gone global, particularly for those skilled at breaking into things, this Latin American nation has become a rich recruiting ground for corporations and foreign governments. Companies need hackers to help defend against online criminals and state-sponsored spies. And as the world’s critical infrastructure moves online and the threat of war moves into cyberspace, governments are desperate to acquire hackers’ tools. Within Latin America, Brazil has become known in recent years as the world leader in Internet banking fraud. But Argentina’s hackers have a reputation for creativity. In particular, they are known for their ability to find so-called zero-day flaws, which are unpatched holes in widely used technology that can be used to spy on or even destroy adversaries’ computer networks. Technology companies like Apple, Facebook and Google have encrypted their products and services so that in many cases the only way to monitor a target’s communications is to hack directly into its device. As a result, there is a new urgency among governments in acquiring zero-day exploits. A mix of executives from around the world, government officials, contractors and — or so it was rumored — spies gathered here in October in an industrial building converted into a cultural center to watch hacking done the Argentine way at the 11th annual EkoParty, the largest hacking conference in Latin America. Long before foreign companies came calling, hacking things was a life skill in Argentina, a way to get by through decades of repressive military rule and a volatile economy. Argentines have a saying, “atado con alambre,” which translates roughly as “held together with wire,” to describe the inventive nature of so many here who learned to do much with little. The country still has one foot in the tech industry’s past because of stringent import rules. Amazon will not ship to your door here. BlackBerry has more market share here than Apple. A new iPhone costs $2,000 or more on MercadoLibre, an online auction site, but many iPhone owners said they had been able to persuade a friend traveling from abroad to sneak one through customs. To get their hands on the latest, greatest devices, Argentines often have to think like a hacker — or even become one. “You make do without resources, without high-end technology, with poor Wi-Fi connections,” said Sergio Berensztein, an Argentine political analyst. “We improvise creative solutions, for lack of other options, and many have applied these same procedures to the technical industry.”
- FAA Permit for Drone Flight School May Help Amazon, Google Speed Up Delivery Plans: The Federal Aviation Administration is plotting how to regulate drones. Tech companies with plans for drones — Amazon, Google, DJI, GoPro and a bevy of others looking to tap a potential multi-billion dollar market — are itching for the FAA to get on with it already. Last week, the agency made a small legal maneuver that advocates hope indicates more leniency to come on the commercial applications of drones. The FAA authorized the Kansas State University Polytechnic campus to train students and outside companies on flying unmanned aircraft. This type of authorization, called a Section 333 exemption, is common; construction sites, news outlets and disaster relief groups have received them. Amazon scored one in April. The notable difference here is in how close the FAA lets drones get to people. Even with flight authorization, drones must stay 500 feet from people, unless the craft meet some stringent safety and logistics requirements. The only exception had been on closed film and TV sets, which deploy drones for movie magic. But the FAA lifted the 500-foot restriction for the Kansas school, even though it didn’t ask for the specific closed-set exemption.
- Target and PayPal Sites Report Problems on Cyber Monday: Cyber Monday, the online version of Black Friday, is not immune to traffic jams of shoppers rushing to take advantage of post-Thanksgiving sales. Some of the most popular websites experienced an overload on Monday, similar to a crowd pushing its way into an already packed brick-and-mortar store. Shoppers were for a period of time unable to gain access to the site of Target, the discount chain,and PayPal, the online payments processing service. Both are now back online after an onslaught that reflects the shifting trends in the way consumers are looking for shopping bargains. Foot Locker, Groupon and Victoria’s Secret also experienced brief outages or slowdowns Monday afternoon, according to Catchpoint Systems, a web monitoring firm. In a statement on Monday, Target said it was experiencing its biggest online volumes ever in response to a 15 percent online discount that it had announced previously. Visitors to the site early Monday got a message saying: “Please hold tight. So sorry, but high traffic’s causing delays. If you wouldn’t mind holding, we’ll refresh automatically & get things going ASAP.” According to a statement from Target, the company said it placed online shoppers in a queue in order to manage the volume of users, but it then allowed them to keep trying to gain access by refreshing their browser. A heat map on downdetector.com showed most of the problems with PayPal were reported in North America and Europe. Problems started around 8:30 a.m. Eastern time. PayPal said in an emailed statement that the “brief, intermittent interruption” in service was resolved. It did not provide a reason. The holiday buying frenzy has evolved over the years as more stores offer sales before and sometimes on Thanksgiving Day. It has also shifted away from physical stores as Americans have increasingly turned to online shopping. For many people, Monday was their first day back at work after the long Thanksgiving weekend, so some shopping was presumably being done surreptitiously while at work.
- Thanksgiving Final Results – OmniChannel Strikes Back: This morning we are releasing the final results from Thanksgiving 2015. What stands out is the Omnichannel players with stores and online marketplaces (Best Buy, Sears, etc.) did extremely well. This indicates that these ‘Brick and Clicks’ retailers were really able to tie their store and online promotions together with great success. This data is date-shifted to compare Thanksgiving this year (Nov 26) vs. last year (Nov 27). In summary, Thanksgiving 2015 blew the doors off, coming in at 43.4% y/y growth compared to 20.1% last year – more than twice the rate of growth. The trick is while we know that Thanksgiving 2015 was very strong, we don’t know if this will continue through the entire Cyber Five and through all of Holiday 15, or if consumers are shopping much earlier than last year and will taper off as we get past Thanksgiving. Omnichannel marketplaces led the pack with Google Shopping and Amazon also outperforming. From a device perspective, Smartphones were 58% of traffic compared to last year’s Thanksgiving 35% and a new high water mark for this device type in our data. From an order perspective, smartphone came in at 37% which was also more than double last year, although conversion rates continue to lag desktop and tablet considerably. Conclusion: consumers not only increased their Thanksgiving sales, but they utilized their smartphones heavily and favored omnichannel retailers.
- Kobe Bryant Takes NBA Retirement News to Twitter, Not TV. Chris Sacca Is Pumped: On Sunday, outgoing NBA star Kobe Bryant opted not to make his expected retirement announcement on broadcast TV. Instead, he went for social media, posting his retirement poem on Facebook and Twitter simultaneously. It links to Players Tribune, a site for athletes from fellow superstar Derek Jeter, which subsequently crashed after the Kobe post. It took about an hour for Twitter to add the news to its Moments tab. (Facebook’s trending section, at least for me, does not have the news, but is teasing a split between NFLer Tim Tebow and a former Miss USA over “lack of sex.”)It took about an hour for Twitter to add the news to its Moments tab. (Facebook’s trending section, at least for me, does not have the news, but is teasing a split between NFLer Tim Tebow and a former Miss USA over “lack of sex.”)
- Amazon releases video showcasing unmanned delivery drones: Amazon has unveiled what its unmanned drones for package delivery would look like with a video launched on Sunday on the prototype of technology it announced two years ago. The promotional clip, narrated by television show host Jeremy Clarkson, shows a family receiving in about 30 minutes replacement soccer shoes for the one chewed up by its dog. "In time, there will be a whole family of Amazon drones. Different designs for different environments," Clarkson says. The video shows the box containing the shoes ordered by the family fitting seamlessly into the body of the drone. It then rises vertically, in helicopter style, for nearly 400 feet, according to Clarkson, after which it assumes a horizontal orientation, flying like an airplane. Clarkson said the drone in the clip could fly for 15 miles. It was equipped with what he called "sense-and-avoid technology" to sense, then avoid, obstacles in its path. The video shows the drone approaching its targeted landing spot, dropping the package, then taking off again, presumably to return where it came from. The launch of the video appeared to be timed ahead of "Cyber Monday", one of the biggest shopping events for electronics retailers. Amazon did not say when it hoped to have the drones in service.
- Judge Dismisses Yelp Suit Brought by Shareholders: Yelp won the dismissal of a lawsuit by shareholders who claimed they had been fraudulently misled about the authenticity and quality of its reviews, and who accused Yelp of manipulating those reviews to favor paying advertisers. In a Nov. 24 decision, United States District Court Judge Jon S. Tigar in San Francisco said reasonable investors would understand that not all Yelp reviews are real, particularly given the company’s admission that its technology to screen user-generated content is not foolproof. In April, Judge Tigar dismissed an earlier version of the complaint, which sought class-action status. He said the plaintiffs could not sue again because any amendment would be “futile.” Yelp lets users rate restaurants and other businesses on a five-star scale. Positive reviews can bolster sales and negative reviews can harm sales, especially if viewers perceive the reviews as unbiased. Shareholders led by Joseph Curry accused Yelp of inflating its share price by falsely promoting the reliability of its reviews, as part of a calculated strategy to extort businesses into buying ads or making payments in exchange for removing bad or fake reviews. But the judge said only 11 of the complaints accused Yelp of offering to manipulate reviews in exchange for fees, a small number.
- India’s Grofers Grabs $120M To Bring Offline Merchants Into The On-Demand World: The race for on-demand delivery services in India is on, and today one of the bigger startups in the market has picked up a large cash injection as it goes for pole position. Grofers, an Instacart-style app that links up with local, offline merchants to delivery groceries, medicine, flowers, and other daily items to customers, has raised $120 million led by new investor SoftBank. The Series C round also included existing backers DST’s Apoletto Managers, Tiger Global and Instacart investor Sequoia Capital. Grofers CEO and co-founder Albinder Dhindsa and SoftBank have both directly confirmed the round and investors to TechCrunch. Grofers has been on a fundraising tear to aid its expansion. This is the third round raised by the company this year alone, after earlier rounds of $10 million and $35 million. It brings the total to just under $166 million including an earlier seed round. Japan’s Softbank has been pouring hundreds of millions of dollars of investment into Indian startups like Ola, Snapdeal and more, and as part of this round it will take a seat on Grofers’ board. The Times of India, which first reported the raise, cites sources that say Grofers now has a post-money valuation of over $300 million. Dhindsa, who cofounded the company with Saurabh Kumar, would not comment on the valuation and said he hadn’t even wanted to make this fundraise public. “Very honestly it’s just a distraction for the team,” he told TechCrunch. “We’re in the middle of trying to build a business.” Today, that business is currently live in 26 cities in India, with some 1.6 million downloads of the mobile apps that are used to order its services. While Grofers looks on the surface like another Instacart clone, there is more going on under the hood. The company originally started as a B2B provider of a supply chain platform it built to help larger brands distribute consumables to smaller merchants, and for those smaller merchants who are almost completely offline to better keep track of their stock. “In India, retail is very unorganised, so we see an opportunity in helping small merchants come online,” Dhindsa says. Still, perhaps to tap into a more mass market prospect, it recently pivoted — or expanded may be the more accurate term — to make its business more consumer-facing, by offering those small, offline businesses an additional service: a way of showing their stock to consumers, who can order and have items delivered. Typically, Grofers offers some features to businesses for free, such as its inventory management system. It then takes a cut on other business software and services, as well as on the delivery, which can range at prices to consumers of between $1 for groceries to $0.40 for medicines (not as cheap sounding in India as it may be in the U.S.). Dhindsa says that the funding will be used to continue growing its supply-chain management development, but also to continue building out its last-mile infrastructure. Today, Grofers uses a mix of its own employees and contractors to deliver goods. Perhaps cleverly, it has chosen not to make delivery the cost-and-profit focus of its whole operation. In fact, it’s even considered partnering with others for that aspect of its business.
- Thanksgiving Online Sales Stats: Growth Higher Than Rest of Year As Importance of Holiday Season Sales Rises: Thanksgiving is now in full swing in the U.S., and while many are focused on food and football, some are turning their attention online to kick off their holiday shopping. Adobe, which has tracked 100 million visits to some 4,500 retail sites so far today (including 80% of all online transactions from the top 100 U.S. retailers), says that over $1 billion has been spent so far online, and that the final figure is on track to be $1.7 billion — growth of 22% compared to Thanksgiving a year ago, with Star Wars being one of the big brands driving sales. “Thanksgiving Day online sales continue to trend ahead of expectation as we head into the evening hours, when mobile shopping comes back into the mix,” said Tamara Gaffney, principal analyst, Adobe Digital Index. “We expect the day to come in up 22% YoY at over $1.7 billion, driven by stronger than expected toy sales due to Star Wars items and much higher shopping via email promotions (+25% YoY).” Meanwhile, IBM — which also tracks sales across thousands of websites in the U.S. — is publishing real-time numbers showing how people are buying online. As of 3 PM Pacific time today, the average value per order has been $142.55. As a point of comparison, a year ago, IBM said the average order value was $125.25; and in 2013, it was $132. IBM says that online sales the day before Thanksgiving were up by 35% compared to the same day a year ago, with average value per order up by $9.10. (As comparison, U.S. e-commerce sales overall are only expected to go up by 14% this year compared to last, so 35% is high). Taken together, yesterday’s and today’s numbers indicate not only that more more of us are shopping online, but we are spending more in the process. We’ll have to see how those numbers bear out over the next days and weeks before saying whether this is a sign of people getting in early and dropping off, or whether this is a bellwether for a strong season overall. Overall, the period is projected to bring in between $70 billion $95 billion in e-commerce sales. Yesterday, comScore published some numbers predicting that mobile would account for less than 17% of all sales in November and December ($11.7 billion out of $70 billion); but that it would represent nearly all the growth. IBM’s numbers today so far are actually improving on those projections. It says that just under 28% of all sales are being made on mobile devices. And mobiles are also account for just under half (48%) of all e-commerce traffic — that is, browsing for goods if not buying outright. Adobe, on the other hand, is reporting slightly lower numbers for mobile. It says that $283 million in sales have come mobile devices so far this Thanksgiving, with smartphones accounting for 15% of that and tablets 11%. Adobe says this is a big leap over last year’s 18% but actually lower than the 29% it had expected “but will pick up again during Thanksgiving dinner time.”
- Xiaomi's $45 Billion Valuation Seen `Unfeasible' as Growth Cools: Things were going so well for Xiaomi Corp. Customers were lining up, investors were swooning and the Beijing-based startup closed funding at a $45 billion valuation. That was last year. Now the high-flying smartphone maker is stumbling. Founder Lei Jun’s latest business, one of China’s most exciting startup stories of the past few years, is likely to miss its own goal of selling 80 million smartphones this year, according to two people with knowledge of its production plans. Suppliers also cut their internal targets for Xiaomi in anticipation of the shortfall, they said. Xiaomi’s falter shows the startup’s challenge in trying to maintain momentum after a meteoric ascent past Apple Inc. and Samsung Electronics Co. in China. Investors bought into the company’s story of youthful disruption and online sales, yet the subsequent lowering of China’s growth target and the copying of its sales strategy by rivals have neutralized Xiaomi’s first-mover advantage, putting its high price tag in doubt. "All those expectations of growth aren’t being realized, which now makes that $45 billion valuation unfeasible," said Alberto Moel, an analyst at Sanford C Bernstein in Hong Kong. "The argument was that their business is kind of like Apple and they’re growing very fast, but they’re no longer growing so fast and they’re not as good as Apple." Domestic shipments of Xiaomi smartphones, including its premium Mi 4 and more economical Redmi series, dropped 8 percent in the third quarter from a year earlier, its first-ever decline, according to researcher Canalys. IHS, another research firm, estimates that Xiaomi shipments dropped 3.9 percent, barely maintaining the lead over Huawei Technologies Co. That’s a big change from the bold growth projections used to justify Xiaomi’s tag as one of the world’s most-valuable technology startups. In March of last year, Lei predicted selling 100 million smartphones in 2015. Through the first nine months of this year, Xiaomi shipped about 53 million smartphones. With its optimistic forecast, Xiaomi secured $1.1 billion in December from investors including GIC Pte., All-Stars Investment Ltd. and DST. Xiaomi drew comparisons to Alibaba, the Chinese e-commerce company that months earlier held the largest initial public offering ever.
- Black Friday Deal or Dud? How to Shop Smart This Holiday Season: Black Friday, which has traditionally been the moment to flock to stores for steep discounts, and which has evolved to also include major online sales events for retailers like Amazon, Best Buy and Walmart, is not all that it is billed to be. We asked J. D. Levite, the deals editor of the product recommendations website The Wirecutter, for some data on just how beneficial the deals are on Black Friday — and the answer was not encouraging. Year round, Mr. Levite and his team track product prices across the web to unearth discounts on goods of all types, from gadgets to kitchenware. They also look at whether the product is high quality and durable based on their own testing and other reviews, and whether the seller or brand has a reasonable return or warranty policy. By those measures, Mr. Levite said, only about 0.6 percent, or 200 out of the approximately 34,000 deals online, which typically carry the same price tags inside retailers’ physical stores, will be good ones on Black Friday. “There are just more deals on that day than any other day of the year,” he said. “But for the most part, the deals aren’t anything better than what you’d see throughout the rest of the year.” There’s a smarter way to shop than relying on Black Friday. With the plethora of web tools now available, consumers can research online and then use trackers to follow product pricing for drops throughout the year. While it’s a time-consuming effort, the method is more precise for understanding pricing trends, both online and in stores. One useful tracking tool is Camel Camel Camel, which is geared toward users of the online retail behemoth Amazon. Using the Camel Camel Camel website, people can view a product’s price history on Amazon.com and then create alerts to receive an email as soon as the item’s price falls to a certain threshold. Over time, interesting trends emerge. One is that some product prices are raised in October, a few weeks before Black Friday. The prices are reduced again on Black Friday. Camel Camel Camel’s database also shows some items have predictable pricing patterns over the course of a year. A pair of bookshelf speakers made by Pioneer are typically $127, but that tends to drop significantly in August — to $60 in August 2014 and to $88 in August 2015, timed to the back-to-school season. This week, the same pair of speakers was again $127. In other words, there are times of year when different types of products decline in price — and Black Friday isn’t one of them.
- All In: Why Nikesh Arora Bet $483 Million on SoftBank's Future: It began late one night this year when he and Son were talking about people’s tolerance for risk and how it tends to decline over time. Arora took a chance as a kid by leaving India for the U.S. with only $200 in cash, but he had since gone on to a lucrative career. So Son prodded him. “Masa said, ‘How much risk appetite do you have?”’ Arora says. “‘Do you believe you can transform SoftBank into a company two, three, five times its size? Now is the time to take the risk.”’ A week later, Arora came back with a plan to buy 60 billion yen ($483 million at the time) in SoftBank shares, more than any insider purchase by an executive in Japan in at least 12 years, according to Bloomberg data. He would become the company’s second-largest individual shareholder and borrow heavily to do it. Arora says investors don’t yet appreciate what SoftBank is becoming. The company has been battered recently because of struggles at two major holdings, the China e-commerce powerhouse Alibaba Group Holding Ltd. and the U.S. wireless operator Sprint Corp. SoftBank is still valued at less than the public shares it owns, meaning investors deem its operating businesses practically worthless.Arora professes not to be worried. He says investors will come around once the company makes progress in reviving Sprint, lets Alibaba recover and demonstrates that it’s more than a Japanese telecommunications company with a spotty investment record.“I’m very relaxed,” Arora said. “I’m here for at least the next 10 years.” Arora was hired last year after a decade at Google Inc. and promoted to president in June. Since then, he has been quietly building his own operation within SoftBank, an investment arm that will take stakes in technology companies around the world. Though SoftBank put money into startups for decades, including a tumultuous foray during the dot-com bust, the effort had dwindled in recent years to what Son called a “hobby” next to his wireless and broadband businesses. Arora is reviving the venture push and making it much more ambitious. He is hiring a team of 15 to 20 outsiders and plans to put about $3 billion into startups each year. Arora’s recruits, from companies such as Google and LinkedIn Corp., are hand-picked for the expertise they can offer startups in key areas like personnel, product development and acquisitions. He says SoftBank will hold a competitive advantage by operating at a financial strata few can reach. He plans to make five to 10 investments a year of $100 million to $1 billion. The idea is to back startups that have proven products and need to expand -- the rapid phase of growth Arora helped manage at Google.
- Morgan Stanley Said Struggling to Sell EBay Enterprise Deal Loan: Morgan Stanley is struggling to unload $640 million of loans backing the private-equity buyout of EBay Inc.’s enterprise business after investors shunned the debt, according to people with knowledge of the deal. The bank has been trying to sell the loans since mid-October and continues to hold the debt even after EBay said on Nov. 2 that the sale was completed. Morgan Stanley has discussed a steeper discount to lure buyers and has been probing investors in recent days about the price at which they may be willing to buy the debt, said the people, who asked not to be identified because the talks are private. One concern investors have raised is that the company’s projected earnings may be too optimistic. Buyout targets often make adjustments to forecast earnings, called add-backs, that can reduce a borrower’s leverage.
- HP Inc plunges after printer business underwhelms: Shares of HP Inc, which houses former Hewlett-Packard Co's legacy hardware business, plunged 16.3 percent on Wednesday after the company's lackluster results fueled concerns about its ability to weather a slowdown in the printer and PC markets. HP Inc's revenue from both its printer and PC businesses fell 14 percent each in the fourth quarter, their worst performance in the year ended Oct. 31, and forecast current-quarter profit below market expectations."Things got worse. Not only did they not get better - they got worse," said Shebly Seyrafi, an analyst at FBN Securities.HP Inc Chief Executive Dion Weisler called the printing business a "much greater challenge" than the PC business.The company has been cutting printer prices to tackle stiff competition, particularly from Japanese printer makers Canon and Epson.However, the price cuts, coupled with the effect of a stronger dollar, have reduced the value of income from overseas markets.Revenue from HP Inc's printer supplies such as ink cartridges and laser toner fell 10 percent this quarter. Supplies account for most of the profits for HP Inc.HP Inc's PC unit has been suffering as sales have been falling worldwide for several quarters and the launch of Windows 10 has so far failed to rekindle the industry."Ultimately I think (HP Inc), the way it's structured, it's going to be more of a sort of dividend yield play," said Jeffrey Fidacaro, an analyst.HP Inc's sibling, Hewlett Packard Enterprise, saw its shares rise as much as 8.5 percent on Wednesday, after it maintained its profit forecast for fiscal 2016.
- Zenefits Under Investigation For Allegedly Allowing Unlicensed Brokers To Sell Health Insurance: Cloud HR platform Zenefits may have allowed salespeople to illegally act as insurance agents in at least seven states. According to a BuzzFeed investigative report, the startup let unlicensed brokers sell health insurance, leading to at least one commissioner to investigate in Washington State. Those unlicensed solicitations go back to at least the summer of 2014, and the Washington State office of the insurance commissioner started looking at the potential violations earlier this year, according to the report. This is not the first time Zenefits has faced legal scrutiny for possible insurance violations. The Utah Insurance Department took the startup to task over claims it was illegally giving insurance software away for free. Regulators at the time said that the company violated local laws and that it was unfair to traditional insurance brokers. Utah legislators threw out the complaint and let Zenefits get back to business after both the Utah House and Senate overwhelmingly voted to let the startup continue operations. The broker license violation looks a bit more serious and could be considered a Class B felony, under Washington State law. Violators may be subject to a prison sentence of up to 10 years as well as face a $20,000 fine. According to the report, Zenefits execs may have known about the violations and were aware of the consequences, but were prompted to get sales agents licensed in the state only after learning of the insurance commission’s investigation. State records show 22 agents became licensed brokers just days after the report said Zenefits realized there was a state inquiry. The startup has since launched a “license management system” to help track which sales agents are properly licensed.
- Facebook’s Internet.org Now Available Throughout India: Internet.org, Facebook’s initiative to provide free Internet services in developing countries, is now available to all Indians through the Free Basics app on Reliance Communication’s network. The project is meant to give people in emerging economies easy access to the Internet, but has been hit by a slew of criticism. Reliance Communications is India’s fourth-largest telecom operator, with about 110 million subscribers as of June. According to its site, Free Basics will enable users to use Facebook and Facebook Messenger and access sites like Wikipedia, BBC News, Bing Search, Dictionary.com, and local news services. Detractors say that by making a handful of services available on its platform, Internet.org gives preferential treatment to its partners, therefore violating the tenets of net neutrality. In response, Facebook founder and chief executive officer Mark Zuckerberg said Internet.org will focus on offering basic services for free (hence the branding of its app) and is not meant to limit access to other providers. The company has also taken steps to make joining Free Basics easier to join for developers and other potential partners. This has done little to ameliorate critics who are concerned about the potential drawbacks of having a company as large and powerful as Facebook control what millions of new Internet users see. In addition to India, Free Basics is available in 30 countries throughout Africa, South and Southeast Asia, and Latin America.
Thanksgiving sales shocker: fewer shoppers, lower spend-per-shopper send Thanksgiving weekend sales (online + offline) down 11% Y/Y to $50.9 billion, from $57.4 billion last year, according to preliminary survey results released Sunday by the National Retail Federation. Sales fell despite many stores’ opening earlier than ever on Thanksgiving Day. And though many retailers offered the same aggressive discounts online as they did in their stores, the web failed to attract more shoppers or spending over the four-day holiday weekend than it did last year, the group said. The average person who shopped over the weekend spent $159.55 at online retailers, down 10.2 percent from last year. Over all, 133.7 million people shopped or planned to shop at stores or online over the four-day weekend, 5.2 percent fewer than last year, the federation said. And shoppers spent an average of $380.95 over the four days, 6.4 percent less than the $407.02 they spent last year. Executives at the retail federation, which had predicted strong growth in sales this holiday season, appeared at a loss to fully explain the drop-off. Black Friday itself may be waning in importance, as retailers increasingly offer deep discounts days, and even weeks, before the traditional year-end sales period. That means many people may have simply done their shopping earlier and stayed home during the Thanksgiving weekend. But even there, the picture was not clear: Mr. Shay said that people also might be holding out for even better deals as the season progressed. He said that the continuous sales had conditioned consumers to expect better deals the longer they waited. “Holiday sales are now a marathon, not a sprint.”
Amazon's play in after-sale services - among the highest profit margin revenue streams for retailers: Amazon publicly introduced an early release of Selling Services, which we had previously mentioned the company was working on a few months ago. Amazon is developing a marketplace that offers after-sale services such as car alarm installation, iPhone repair, and computer hardware setup to consumers buying relevant products. Today, the marketplace is available in 15 early rollout cities, including New York City and Lexington, Kentucky. For each product, Amazon will list the available services next to the listing, guaranteeing visibility and even potentially increasing sales among customers who are unsure if they can install or use a product. Geek Squad, which was founded by Robert Stephens in 1994 and sold to Best Buy in 2002, is perhaps the most prominent example of a success in this domain. As the Minneapolis Star Tribune wrote last year about the hometown retailer, “Over the past decade, Geek Squad has been a cash cow for Best Buy. […A]nalysts estimate Geek Squad generates a gross profit margin of 40 to 50 percent based on a minimum annual revenue of $2 billion, or about 4 percent of Best Buy’s total revenue of $50 billion.” Amazon will share with Geek Squad has one critical advantage that many other startups in the domain lack: point-of-sale access.
How Facebook plans to become one of the most powerful tools in politics: The end goal for the company seems clear: Replace, as much as possible, expensive, blanketed television advertising with much more immediate, much more specific ads appearing in users' feeds -- and then cash a whole lot of checks. Assuming you have a Facebook account, which you do, Facebook knows your email address. It probably knows your name, your birthday, where you work, where you worked, and who you're friends with. It knows far more than that, of course, both directly and indirectly. Facebook's partner in the effort Acxiom, also provides a wide swath of other data to Facebook, beyond what you've entered on the site or "liked." This allows campaigns (as it does other advertisers) to target very, very specific groups of people linked tightly to the campaign's voter file. One of the best practices for campaign communication is to sandwich messages, layering a communication (like a piece of mail or a TV spot) with some other spur (like an email or a Facebook ad) both before and after.
Lazada raises $250M Led By Temasek; valuation at $1.25B; H1 2014 GMV $91M (+202% Y/Y): The round is lead by Singapore’s Temasek Holdings, which manages a $100-billion-plus portfolio and this year invested in another Amazon rival: Snapdeal in India. Lazada operates in six countries in Southeast Asia — Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam — largely in tandem with Zalora, another well-backed e-commerce service started by Rocket Internet. This new funding round takes Lazada to more than $700 million in money from investors. Its most recent round was also $250 million back in December 2013, which included an interesting strategic investment from UK retail giant Tesco. Together, Zalora and Lazada have probably raised around $1 billion in funding, although the value of some rounds were left undisclosed. Raw figures about its business did reach the public domain this summer, however, as part of Rocket Internet’s IPO in Germany. According to a filing reported by Tech In Asia, Lazada brought in $91.4 million in the first six months of 2014, generating 1.8 million orders from 1.4 million active users. Those modest returns perhaps explain why it has been placing more emphasis on its marketplace. Lazada says its marketplace now accounts for 70 percent of its revenue.
An interesting linguistic analysis of online reviews: In general, the length of a review corresponded with an item’s price. The most frequent interjections were “wow,” “yeah,” “yuck,” “yikes,” “sheesh,” “yum” and “yippee.” Slang terms that showed up most often were “meh,” “whatever” and “the bomb.” And adjectives were not always what they seemed. Wherever it appeared, the word “delicious” was always unambiguously positive, but not so with “good.” On all five sites, “good” often appeared very close to the words “but” and “not,” indicating ambivalence. Reviewers often wrote statements like “It’s good, but I’m not in love with it,” or “It’s good but not fall on the floor dance a jig good.” Among the most frequent three-word phrases, or three-grams, were “in the room” and “the front desk.” From these patterns, she surmised that consumers who stayed in hotels were about equally focused on the room’s quality as they were on customer service. Frequent four-grams included “in the middle of,” “the rest of the” and “at the end of.” That fits with Dr. Vásquez’s observation that when people write about hotels, recipes or diaper bags, they like to tell stories. Narratives, she found, are more likely to appear in negative reviews than in positive ones.
Xiaomi looking to raise funds at $40-50B valuation: Xiaomi Corp. is in talks for a funding round that values the smartphone maker at around $40 billion to $50 billion, people familiar with the matter said. The discussions are at an early stage and nothing is finalized, said the people, who asked not to be identified because the matter is private. The world’s third-biggest smartphone maker had a financing round in August 2013 that valued the company at $10 billion.
Caught off-balance by Holiday season demand surge last year, US retailers (a) boost demand planning (b) hire more (c) push in-store pick-up: Last year hundreds of millions of gifts and bad weather overtaxed United Parcel Service and FedEx, leading to shipping delays and empty space under the tree. Given the expected spike in online sales, the big question will be whether retailers and carriers can plan well enough to avoid the same problems. “We started talking to our customers much earlier this year, and we were planning together with them for their volume forecasting,” she said. U.P.S. and FedEx, which typically hire tens of thousands of extra workers around the holiday season, plan to hire even more this year, both companies said. And they are taking other steps, like adding more sorting facilities and technology to help track packages. At the same time, they will also be crossing their fingers to avoid the abysmal weather that delayed shipments last year (FedEx even has 15 full-time meteorologists on staff). But the onus is not just on the carriers. Major retailers like Walmart and Target are also taking steps to make sure that customers get their gifts on time. Target is planning an even bigger marketing push to get customers who order online to pick up their gifts in the store, a feature the company introduced last year, a Target spokesman, Eddie Baeb, said.
Audience-Targeted ads embedded in the comments sections of forums: Third party comments service Disqus believes it could be sitting on an advertising gold mine. The third-party comments service, which runs the discussion section on 3 million websites, is starting to show data-targeted sponsored comment ads. Disqus has 150 million users signed up for its service, which lets people leave comments across participating websites like CNBC, The Atlantic, ABC News, Rolling Stone and more niche sites like SuperHeroHype. The San Francisco-based company mines comments, comment votes and comment context to target ads, which will now show up looking like part of the discussion.Disqus is working with Xaxis, WPP's automated ad platform, to let brands buy ads against the Disqus comments, which will be shown at the top of the discussion threads and marked sponsored. It will be up to publishers if they want to show the new ads from Disqus, and they could share in the revenue."When people come to a page that has Disqus, we know what they’re reading," said David Fleck, gm of advertising at the company. "We know if they choose to comment. We know what they comment on and know what they say in that comment. We know if they voted on it, and shared it out to social networks." Disqus said its metadata are used to create anonymous profiles against which brands could target ads, without sharing personally identifiable information. "We have the largest and deepest audience profiles on the Web," Fleck said.Brian Lesser, Xaxis CEO, added, "It makes native advertising programmatic at scale. We are pushing the envelope of what is possible within the world of programmatic."
Fading Monster.com hopes big-data snooping and audience targeting will win its mojo back: Monster.com disrupted the talent business, and then the disrupter was itself disrupted. Competing websites, as well as aggregators that scanned many sites for job listings and put them in one place, began to eat into Monster’s business. LinkedIn was born and became a global behemoth by positioning itself as an upscale matchmaker that helped people build careers, not just find the next job. Today, the company that owns Monster.com, renamed Monster Worldwide, is a shadow of its former self, and its stock trades for less than $4 a share. It still earns substantial revenue, $194.4 million in the second quarter of this year, from its job board and various other services. But now it wants to recapture some of its past luster by offering new cutting-edge tools for employers. Its latest products, both rooted in start-ups acquired by Monster this year, use big-data snooping and social-ad targeting to improve the process of matching job openings and potential applicants. The more developed of the two new tools, called TalentBin, works by building profiles of individual workers. But unlike LinkedIn, it does so without their active participation or consent. Instead, TalentBin scans publicly posted information on social networks like Facebook, LinkedIn, Meetup and Twitter, as well as what people have put on industry-specific sites, such as GitHub for software engineers and Dribbble for visual designers, to craft the dossiers. It then allows employers to run their job listings against the database to find people who meet certain criteria, such as “knows a lot about Java programming.” Recruiters can also study the dossiers to craft personalized email pitches to top candidates, citing personal or professional details from their profiles — something like “I loved the shoe designs you posted on Coroflot.”
