Daily Tech Snippet: Tuesday, April 14

• With click-to-shop ads, Instagram Takes Another Step Toward E-Commerce...: Instagram is running its first marketing campaigns that transform viewers into shoppers with a single click. Finally, retailers can link to product pages from their Instagram ads—a feature Banana Republic was among the first to employ—and still more sophisticated ads are in the works. The new ads are part of a carefully managed rollout of better marketing tools on the Facebook-owned photo-sharing app, which is starting to offer the sort of products brands have been demanding, especially in view of the $200,000 many of them are shelling out. And that's just the entry fee for buying ads on the platform, according to digital marketing executives familiar with Instagram's business. (Instagram declined to comment for this story.) "Instagram continues to tease big things coming," said one Hollywood marketing executive who buys ads on the platform. "And they're talking about more ways to integrate buying." Another ad executive revealed that, instead of a "Buy" button, Instagram would allow marketers to more easily link to checkout pages online. Yet even that step is a complicated undertaking, given that the app is largely a mobile experience. Sources reveal that more tools like this are on the horizon. Instagram is said to be considering a number of ad formats that could prove game changers for brands, similar to how Twitter built highly customizable ad cards that send users to products with ease. But because these changes would signal a fundamental change to how marketers use and customers experience the platform, Instagram is proceeding with caution, no doubt wary of displeasing its growing user base (now upwards of 300 million). Instagram introduced its first ads in late 2013 and since then has tried to maintain an image as a place for glossy campaigns as opposed to direct-response, click-driven efforts. The high price to advertise there is a reflection of the platform's self-fashioned air of exclusivity. "We're paying a premium on Instagram ads," the Hollywood executive said. Video ads are especially pricey, going for as much as $30 per 1,000 views, according to sources. Instagram is even attempting to get brands to rethink what success looks like by providing campaign data, aiming to prove that impressions boost sales more than garden-variety clicks.

• ..even as Instagram and Facebook are more entwined than ever, for advertisers, who now have a potentially powerful new marketing strategy—using video ads on one to drive sales on the other. Stuart Weitzman, the fashion brand, is one of the first marketers to buy video ads on Instagram, and then send product posts on Facebook to a custom audience of people who viewed the ad. It's an aggressive tactic that incorporates some of the most advanced new ad products from the two social media platforms. Stuart Weitzman also is using cinemagraphs—a mix of still imagery and video that Facebook is encouraging marketers to embrace—for the creative. "The campaign is about how to find that perfect mix of brand and direct response marketing," said Susan Duffy, CMO of Stuart Weitzman. "One of the exciting things we're doing is using the full marketing funnel." Stuart Weitzman is going after 22- to 40-year-old women, and it's using sequential messaging to influence their buying decisions. One week, the women see the cinemagraphs on Instagram, and the next, they get a product ad on Facebook, thanks to custom targeting tools integrating the two platforms. Facebook has no official stats on how many of its users also are on Instagram, but with more than 1.3 billion people on Facebook and more than 300 million Instagram users, there is plenty of room for overlap.

• As PEs increase Tech Funding, Founders find that Big Valuations Come With Dangerous Small Print: About three years ago we started noticing a sliver of founders who were obsessively focused on valuations start to make short-term decisions in their fundraising that risked meaningful long-term consequences. With the popularity of the “unicorn” label, this trend has gotten worse. A few months ago a Midas List friend shared a story of dismay with an example in their portfolio that typifies the situation. Their founder had two term sheets to choose from. One was a “clean” term sheet with no preferences beyond the norm and a barely sub-billion-dollar valuation. The other granted the magical, in the founders’ but not investors’ minds, $1 billion valuation in exchange for a set of onerous preferences. The founder chose the latter. The investor’s fear, which we share, is that the excessive focus on valuation, regardless of terms, can be significantly damaging over time — not just to the founder, but to his team and all the prior shareholders, including seed and venture investors. Part of this is due to the changing nature of funders; many mega-valuation, pref-heavy term sheets come from private equity (PE) shops like hedge and mutual funds accustomed to standardizing on downside protection and guaranteed returns, a very different game than venture. PE shops are making even better returns than the already phenomenal ones we detailed through the issuance of additional shares, guaranteed return levels and other downside protections that protective prefs provide. And in the zero-sum game of return, additional return to one party comes out of the return, or through the dilution, of another; specifically founders, employees and prior investors alike. Let’s look at an example: Several years ago an entrepreneur raising money in a particularly heated round asked, “How do I get a billion?” He was entirely focused on hitting $1 billion in valuation above all else. He didn’t get to his billion target in that round, though he got close, but he did in a later round, at a significant cost. The cost was paid when the company went public. The cost of the valuation was a guaranteed return on the investment made: at least 2x on IPO. Beyond being onerous, as the IPO proved, it set a precedent and pattern. A later investor got a guarantee of 1.5x and the one thereafter a more traditional 1x; although a 1x guarantee on IPO is very different from a traditional 1x liquidation preference, which only kicks in on the sale of the company or a similar event. When the company IPOed it did so below the $1 billion valuation, and the preferences kicked in. In order to make good on the guarantees the company had to issue additional post- IPO stock, which diluted all the non-pref-enriched shareholders by almost 15 percent. The company’s shares also traded down significantly on opening day, chalking up an unwanted record; the biggest first day dip in IPO price of any U.S. company that year. More recently, when Box priced its IPO at $14 a share, below its last private round at $20, it triggered the preferences to their last private investors, Coatue and TPG, including “profit protection.” According to Box’s S-1, every share of Series F stock converted into shares of common stock equal to $20 divided by the lesser of 90 percent of the price per share of common stock, or $20, meaning Series F investors were guaranteed at least a 10 percent discount to the IPO price. If not the balance was made up in additional stock grants. So if Box priced at $22.22 or above, the Series F shareholders wouldn’t receive any additional shares from their preference for the shares they paid $20 thereby locking in a 10 percent profit plus all upside above $22.22. But Box priced at $14, triggering the preference and ever Series F share converted into 1.587 shares of public common, versus the one-to-one conversion they would have achieved at a $22.22 price, and further diluted the shareholder base. Box’s most recent 10K reports a share count of 119.8 million, but if the series F had not converted the number would have been 115.4 million, meaning the company issued an additional 4.4 million shares as a make good on top of the original 7.5 million shares originally converted. Without a conversion preference, the Series F holders would have converted to 6.5 percent of the shares, with the preference that increased, post IPO, to 10 percent (54 percent accretion for Series F PE shareholders) and lowered the remaining shareholders ownership from 93.5 percent to 90 percent. To make this that much more frustrating to the founders and investors before the final investor, Box’s shares actually traded as high as $24.73 on opening day, well above the $22.22 protection price, but since ratchets are triggered by IPO pricing the last private round investors received their additional shares regardless. Prior private preferred rounds (PPR) are not uncommon in IPOs, but they do appear to be more common in TMT (Technology Media & Telecommunications) IPOs, and are even more pronounced in TMT IPO down rounds.

• Written-off and forgotten, but still going: Groupon Market Value Seen as High as $6 Billion With Divestments: Groupon Inc. could divest four businesses in the next two years, netting as much as $730 million, to raise cash as it expands into an e-commerce marketplace, according to Gene Munster, an analyst at Piper Jaffray Cos. Groupon has a market value of about $5 billion, though it should be closer to $6 billion because those businesses are undervalued, Munster said. A majority stake in its Ticket Monster business, which offers daily deals and e-commerce services in South Korea, could fetch about $500 million, while smaller units might yield between $30 million and $100 million each, he said. With a stock that trades at little more than a third of its 2011 initial public offering price, Groupon has shifted its focus from e-mailed daily deals to competing with Amazon.com Inc. and EBay Inc. as a marketplace. To do so, it will need to sell some non-core properties to free up more cash to invest in the initiative, some analysts said. As of the end of December, the Chicago-based company had about $1 billion in cash and cash equivalents. “What is safe to say is that Groupon has several stealth assets that are generally underappreciated by investors as far as overall value,” said Munster, who is based in Minneapolis. Private equity firms are the most likely buyers, he said. Groupon shares have climbed 28 percent in the past six months to $7.39 in New York. Still they are 63 percent below the IPO price of $20 set in November 2011. Proceeds from the sales could help Groupon make acquisitions to expand its e-commerce operations, including online retailers or a payments business, Sweeney said. Another option -- buying a service that delivers food or goods to customers, Tom Taulli, the author of The Complete M&A Handbook, said in an interview. Or it could put the money into new fulfillment centers, Sweeney said. Groupon is testing Groupon Stores, where businesses can post their offerings. It’s also testing movie downloads from its site.

• Tencent market value breaks US$200 billion: China’s Tencent broke new ground on Monday when its stock (00700.HK) closed at HK$170.50, bringing the company’s total market value above US$200 billion for the first time ever. Tencent has been one of China’s biggest internet companies since the very beginning with its QQ messaging service. These days, the company has its hands in almost every corner of the internet industry. It remains the top player in China’s social media and messaging sector, and it also dominates a number of other sectors including online and mobile gaming.

• Urban Ladder aims for $100M in GMV, outlines tech-product plans: The firm has just raised $50 million in a fresh round of funding from both new and existing investors. The main focus is to expand our products and services to more cities, which we have been doing for the last six-seven months. The next focus is technology—we are focusing on innovations in customer experience, mobility, automation and analytics. We are trying to offer a new customer experience, helping customers get a sense of our products. We believe a lot of innovation needs to happen in this space. Mobility is getting a big push. Customers are doing a lot of discovery, exploration and transactions via mobile. Once we have the right products, services and technology in place, we would want to enable a marriage of these aspects to bring out greater results. Our aim is to invite the customer to give us the key to his/her house so that we can design and furnish an extremely beautiful house and give the key back to the customer in just three weeks through a tech-enabled process. A lot of innovation needs to happen on the customer experience and the web (store) part. We are investing a lot on mobile technologies to provide a great experience on the core catalogue as well as on areas like visualisation, personalisation and app development. A bunch of innovations will come out on how customers interact with products on mobile and how customers engage with the brand on mobile. We are building a strong technology, user experience and product management team to look into these aspects. We are also looking at technologies such as ERP, GPS and RFID to automate and ensure smooth flow of information throughout the process without any manual involvement. Analytics is another key area of focus in terms of real-time data and dashboards. We now have a scale of data with which we will be able to gain a lot of inputs on buying patterns and personalisation can be done much more effectively with real-time analytics.

• Marissa Mayer Shuffles Yahoo Leadership Team; Tumblr Struggles Lead to Founder's Demotion: Marissa Mayer, Yahoo’s chief executive, announced a major reorganization of the company’s product teams on Friday, promoting the head of one recently acquired company and effectively demoting the chief of another. Under the new structure, Simon Khalaf, the Internet company’s data-spouting prophet of mobile, will become a senior vice president and oversee many of the company’s consumer-facing products, including the Yahoo home page, its portals devoted to themes like sports and movies, and related Yahoo apps. Mr. Khalaf joined Yahoo in July when it bought his mobile analytics company, Flurry, for about $300 million. Flurry, which offers data and advertising services to mobile app developers, has since become the core of Yahoo’s efforts to compete with Google, Facebook and Twitter to persuade developers to use its tools. Mr. Khalaf, a rapid-fire speaker with a knack for presenting complex information simply and clearly, has become a crucial Yahoo ambassador to the outside world and played a starring role at Yahoo’s recent mobile developer conference. As part of the reorganization, the blogging platform Tumblr and its chief executive, David Karp, will report to Mr. Khalaf, according to an internal announcement made at Yahoo Friday morning. Although Mr. Karp will remain part of the executive team, he will no longer report directly to Ms. Mayer, which he has done since he sold Tumblr to Yahoo for $1.1 billion in 2013. The move reflects Tumblr’s struggles to broaden its appeal beyond its core audience of of artists, teenagers and 20somethings looking for a platform to express themselves. Tumblr has served as the technology behind Yahoo’s digital magazines, but it has faced challenges in luring advertising. Tumblr’s top ad executive, Lee Brown, recently left the company and joined BuzzFeed after Yahoo integrated Tumblr’s ad sales with Yahoo’s. Mike Kerns, the senior vice president who previously oversaw Yahoo’s home page and verticals, is leaving the company to pursue entrepreneurial opportunities

Daily Tech Snippet: Friday January 2

• Snapchat is raising funds in an unusual manner - has raised $485M from >23 Investors since April 2014, valuation >$10B, 200M MAU:  “[Snapchat] goes after individual investors at different valuations. It’s a rolling investment and a rolling close. In theory you could say he’s already done 40 rounds.” (40 is likely figurative rather than literal.) What this means is that, if it’s true, then yes, Snapchat may have raised nearly $500 million in the last six months. Of that $500 million, it may be that only 75% of it is closed, and with portions at different valuations, some getting in pre-$10-billion, like Yahoo, and some above it and closer to $20 billion.The SEC filing notes that the date of first sale was in April 2014. We’ve also heard that the current post money valuation is $20 billion, although others have disputed this and said it’s closer to $10 billion. The cash is much-needed. One source said that Snapchat has an over $30 million-per-year burn rate, and pays half of that to Google Apps Engine to host all its photos, though this number seems low to us. Another noted that at one point the company was paying $3 million each month in legal fees alone. Snapchat’s had its share of lawsuits. Monthly Active Users are now at 200M, up from 100M in August. Amazon was not one of the investors in this round

• 'While you were away' - Twitter's recap feature is rolling out to significant numbers of users: ‘While you were away’ works much like Facebook’s Timeline and is the first major non-chronological feature to hit Twitter. Back in November, the company said it would look at the ‘best’ tweets from your network since you last opened Twitter, and put them at the top of your timeline so you don’t miss them. The algorithm that Twitter uses to source your ‘best’ tweets from your friends is crucial to its success. As someone who doesn’t use Twitter every minute of every day, I’d appreciate a recap but only if it is able to surface content that is relevant and interesting to me. There are already some services that exist solely to do that, while Twitter has email alerts for the purpose too. Nuzzel, for example, taps into your Facebook and Twitter network to surface news stories and other items that are popular with people you know. I’m skeptical that Twitter’s feature can be as effective, particularly since it only serves up a single tweet and that takes up precious real-estate at the top of your feed. Nonetheless, the addition looks like it will be more useful for users than many of Twitter’s recent features — which include sponsored accounts appearing in following lists, tweets from people you don’t follow in your timeline, and a test that meddled with the retweet button.

• VMWare, Workday testing a data-driven technology to predict employee attrition: VMware has been testing a new prediction technology from Workday, which makes software for human resources departments. The system delivers notifications about when employees might be getting ready to quit, and allows managers to intervene before it's too late. It looks for trends within employee activity, when promotions were last handed out, regional factors, changes in the industry and other data to make its predictions. The recommendations can improve over time as employers train the system. "We've had some great results to date with the data,” Amy Gannaway, VMware’s senior director for worldwide human resources information systems, said at a Workday conference in September. The tool gave VMware "a very high percentage" of accurate predictions for which employees would leave the company, she said.

• The Indian Railways will soon launch an iOS app, as mobile travel bookings are surging in India: According to a report by the Internet and Mobile Association of India (IAMAI) and IMRB International, the number of mobile Internet users has witnessed a steady rise to 159 million in October. This is estimated to reach 173 million by the end of December. There were 119 million users in urban India accessing the Internet on mobile devices in October. Rural India is not that far behind, with a base of 40 million mobile Internet users in October 2013. Indian Railways, which has the largest share in online bookings, is witnessing surge of mobile bookings as well. According to sources at IRCTC, its mobile ticket booking app receives 8,000-9,000 bookings a day through mobiles. The numbers are low compared with the 600,000 tickets booked online every day, but officials say they expect this segment to grow. "Our mobile app has been downloaded 15,00,000 times on the Windows platform. On Android it has been downloaded 10,00,000 times. In a month's time we will be launching an app for iOS too," says a senior official on condition of anonymity.

• The 10 Most Innovative Digital Ad Products of 2014: (1) Google Shopping Campaigns took on Amazon with Product Listing Ads in early 2014, and then AdSense for Shopping, which shows product ads on third-party websites, in September 2014. (2) Snapchat's sponsored updates and live feed, which crowdsources Snapchat messages at events like the Macy's Thanksgiving Day Parade, now features commercials mixed in with the snaps from everyday users. For instance, Amazon sponsored Black Friday on Snapchat. (3) Instagram's autoplay sponsored videos, and brands from Disney to Electronic Arts to Banana Republic were the first to try them out. The video offering comes on top of sponsored photos, which were first served in 2013. (4) Facebook's Premium Video Ads didn't fully launch until March. These ads are autoplaying videos that are attracting a number of brands such as Macy's during Christmas. Video is the future of Facebook, according to CEO Mark Zuckerberg, and billions of videos from users and marketers are seen everyday.(5) Twitter's app-install ads and e-commerce ads that have Buy Now buttons and video ads with View Now, and the list of potential actions is only growing. (6) Tumblr Sponsored Dot: Tumblr was full of new ad ideas this year, perhaps the most intriguing was the Sponsored Dot (that period at the end of its logo). Now, brands can buy it, dressing their logo as the punctuation mark for special occasions, like Starbucks did on National Coffee Day. (7) Kik Promoted Chats: The paid chats launched this year and let properties like Funny or Die and electronics brands like Skullcandy to message one-on-one with followers who opt in. It's a new kind of marketing built for mobile and messaging, two increasingly relevant areas. (8) Pinterest's Promoted Pins are the platform's first ad product, which launched fully earlier this year after being tested in late 2013. Brands like Kraft, Dell, Home Depot and Walmart are paying to boost their Pins, and there are now self-serve tools, too, for managing marketing campaigns on the platform. (9) Pandora's Sponsored Listening product, which offers users ad-free listening for an hour in return for watching a sponsored clip. In October, Fox helped promote new shows on Pandora with the help of the format. (10) Google Giferator: shows that Google is allowing advertisers to be more creative on the digital platform. The Giferator was generating dynamic ads in real time that could be highly targeted to select audiences. The ad technology was developed as part of Google's Art, Copy and Code program, where it tries to blend the creative and technical sides of digital advertising. Also, the Giferator let users create their own Gifs, a format that marketers couldn't get enough of this year.

Wednesday, December 3, 2014

• Stripe doubled its valuation to $3.5B; payment start-up that partners with Apple Pay, Alipay, Facebook, Twitter: Stripe, an e-commerce start-up based in San Francisco, announced on Tuesday that it had raised a new $70 million round in venture capital. The round, which includes Sequoia Capital and Thrive Capital, values Stripe at $3.5 billion, twice the amount the company was valued at less than one year ago. The company, which was founded by brothers, John and Patrick Collison, in 2009, offers payment processing services for small and medium-size businesses that want to sell items online. It competes with the likes of companies like PayPal, which has long dominated the online payments industry. The company has also secured partnerships with Facebook and Twitter — which allow for users to buy things directly inside of these social platforms — and recently announced a deal with Alipay, one of the largest e-commerce platforms in China. Stripe plans to use its new capital to continue to add to its existing staff of 180 employees, and push harder into international markets. It also plans to bolster the set of tools it offers to developers who use Stripe to process payments for their businesses. More here and here.

• IBM signs $1.25B cloud deal with WPP, and differentiates with hybrid focus: IBM seeks to differentiate its offering by focusing on hybrid clouds, which mix together the private, on-premise computer systems for which it has long been known with newer public-facing Internet, mobile and analytics systems, allowing clients to move existing systems to the cloud at their own pace. This hybrid approach means companies can wait for years before they consider moving their most sensitive core financial systems to the cloud computers. It also gives them the option of never having to move. Secondly, European clients demand that their data remain stored locally in European data center, a requirement IBM has met by building seven public cloud data centers across Europe in London, Amsterdam, Paris and one in Germany, with another to follow there shortly.

• Tumblr adds action buttons - simpler than Twitter buy button, but no payment integration: Tumblr, which has apparently overtaken Instagram as the fastest-growing social media property — has today announced a test of a new feature that will give it more interactivity, and more of a social commerce spin. Users that post links from a selection of sites — Etsy, Artsy, Kickstarter and Do Something — will now automatically see action buttons appear in the top right corner of the posts for people to “buy”, “browse”, “pledge”, or “do something”. For now, the actions are limited to these four sites. Down the road, if Tumblr decides to integrate the buttons into links from a wider range of properties — taking in e-commerce behemoths like Amazon and eBay, for example — it could feasibly become much more of a competitor against the likes of Pinterest, Facebook and others, positioning Tumblr not just as a place to consume content but to transact, too. the buttons on Tumblr are somewhat reminiscent of the buttons that Twitter has been adding to Tweets,but Tumblr’s buttons are much more simple for anyone (not just businesses or power users) to create — they come up literally when you a copy/paste of a link. And while Twitter has integrated with payments companies to underpin its own buy button, Tumblr’s implementation is, well, a bit more rough and tumble. It’s unclear, for example, if Tumblr is getting an affiliate cut on any traffic that it sends to these sites as a result of the button. If anything, it feels more like Tumblr has added these buttons to test the waters, looking at how such a feature might potentially get monetised in the future, perhaps as an ad unit for businesses using the button. The offering is desktop only — not mobile.

• Smart home-audio market continues to heat up - Sonos raises $130M:  After Amazon's launch of Echo, and Apple's purchase of Beats, Sonos, in the smart home audio business since 2002, just raised $130 million, according to an SEC filing. The funding adds to Sonos’ previous $325 million, bringing it to around $455 million. That makes it a very, very well capitalized startup. It’s so big that probably no one but Google or Apple could afford to acquire it. Considering Apple’s personal audio buyout of Beats’ headphones business, and Google’s invasion of the smart home, either could be a smart alternative to an IPO for Sonos. Sonos has been steadily improving its core product — home stereo systems where each room can be separately controlled to wirelessly play music from online and local sources. It ditched its proprietary controller to let you use iOS and Android devices as remotes, and eliminated the need for its “Bridge” gadget you had to plug into your wireless router. Alongside Spotify, Pandora, iTunes, Deezer, Sirius XM, and your own music library, Sonos recently added support for SoundCloud and Google Music. What’s left is to become a household name. Sonos has already begun buying expensive commercials on primetime music TV shows like The X Factor. It’s also running huge outdoor ad campaigns on the sides of buildings in Europe

Wednesday, November 26, 2014

• Amazon is circling Jabong; potential deal size ~$1-1.2B, two sources privy to the development told Techcircle.in. According to a source, the meeting took place very recently and it has not even been a week. Restructuring would be complicated: Jabong is an inventory-based e-tailer, where foreign investment is not allowed at present. Another source cited above said that Amazon would keep Jabong as a separate property post the acquisition. “It (deal) would be very much on the lines of Amazon’s acquisition of Zappos in the US,” he said. Jabong, which is one of the two top lifestyle e-tailers in the country along with Flipkart owned Myntra, reported gross merchandise value (GMV) of Rs 509.5 crore from 3.197 million orders in the January-June 2014 period. This marked a three-fold rise over the previous year. If it maintains the same growth through the rest of the year it may end with GMV of around Rs 1,300-1,500 crore for the year ending March 31, 2015. Accepted fair valuation in e-com space internationally is pegged at 3.5x sales which would value Jabong at around Rs 5,000 crore. Jabong could be looking to drive a hard bargain given the strategic play of Amazon in India and significance of the deal to win in the high stakes game in the country.

• Twitter launches Twitter Offers, Which Link To Your Credit Or Debit Card; Separately Twitter's CFO commits a DM Fail: Companies will be able to offer cashback rewards in their tweets, and those rewards will tie directly into consumers’ credit and debit cards. The card-based approach should offer some significant advantages. If you see an offer in your timeline (to use the example in the screenshot above, it might be $2 back on a $5 purchase at a coffee shop), you should be able to add it to your card without leaving Twitter. Then when you go into the store, you don’t need to change your behavior — instead of bringing a coupon, you just pay with that card and the cashback payment should show up on your statement shortly after. A Twitter spokesperson said the card integration was already built by CardSpring, which Twitter acquired in July.Meanwhile, this gives businesses a way to track when their Twitter ads are actually driving consumers to make purchases in the store. From a security standpoint, Twitter says your card information will be encrypted and can be removed from your account at any time. Twitter Offers are being tested initially on desktop and mobile in the United States. The post says Twitter will be working with “a handful of brands” to test these offers in holiday-related promotions, and it will announce those brands “in the near future.”

• Uber is close to a round of financing at $35-$40B valuation: T. Rowe Price Group Inc. is in discussions to be a new investor, said the people, who asked not to be identified because the details are private. Existing investor Fidelity Investments is also set to participate in the funding, they said. Uber is raising at least $1 billion, the people said. The financing hasn’t closed and the terms and investor group may still change, one of the people said. T. Rowe previously considered investing in Uber and may still end up passing this time, two of the people said. If Uber completes the funding, a valuation of $35 billion to $40 billion would more than double its $17 billion value from a June financing. At the time, the valuation was a record for a U.S. technology startup in a direct investment round. That put Uber at the front of a pack of elite U.S. technology startups that are valued in the eleven-digit range, including Airbnb Inc. and Dropbox Inc. Such valuations are spreading internationally. In China, smartphone maker Xiaomi Corp. is in talks for a funding round that would value it at $40 billion to $50 billion, people familiar with the matter have said.
• Tumblr Overtakes Instagram As Fastest-Growing Social Platform, Snapchat Is The Fastest-Growing App; Facebook saturated: While Tumblr and Pinterest appear to have seen the most growth, they are not seeing as much use when it comes to frequency, where the numbers almost appear to invert. With 1.35 billion active monthly users, Facebook continues to be the world’s largest social network by some margin, but  when it comes to picking up new users, it appears to have reached a saturation point. Research out today from the Global Web Index notes that Tumblr’s active user base in the last six months grew by 120%, while Facebook’s grew by only 2%.  And in overall member growth, Pinterest took the lead with 57% growth while Facebook’s member base grew by 6%. In mobile apps specifically, while Facebook is the largest app today, Snapchat — with an emphasis on teen and 20-something users — is the fastest growing of them all, up 56% this year. It is however followed closely by Facebook Messenger and Instagram — a sign of not just how Facebook’s mobile apps continue to represent the company’s growth drivers, but also how its push to drive more users to the standalone app by cutting out Messaging from the main app has helped it grow. China continues to be dominated by home-grown social networks. Sina Weibo, Qzone and Tencent Weibo lead, while Youku and Tudou round out the top 5.

Friday, November 21, 2014

• "Social Media Bots Offer Phony Friends and Real Profit": Numerous reports have found that celebrities, politicians and companies often buy fake followers to enhance their perceived importance online. The practice is so widespread that StatusPeople, a social media management company in London, has a web tool called the Fake Follower Check that it says can tell how many fake followers a person has. According to that tool, 6 percent of Ms. Kardashian’s followers are fake, as are 12 percent of Mr. Sheen’s. Here’s how the pyramid works: With minimal effort, I downloaded a piece of software called Twitter Supremacy. For $50 for a six-month license, the software (which violates Twitter’s terms of service agreement) lets me fabricate an unlimited number of friends. Furthermore, I can program these fake accounts to tweet, retweet and follow others automatically, as if they were living, breathing users. (There are dozens of similar services that do this for Instagram, Vine, Twitter, Tumblr, YouTube and Facebook.) With an army of fake friends at my disposal, I can now charge people who want to increase their number of followers or promote certain tweets. One bot creator I talked to (who spoke only on the condition of anonymity because his work violates user agreements with social media sites) said that he manages hundreds of thousands of Instagram bots and makes a good living by pushing posts to the app’s popular page. He can also manufacture all kinds of engagement, including following accounts and commenting on photos. Who pays for these services? The bot creator said that his clients include well-known celebrities and brands, along with everyday people who want a social media ego boost. (The bot maker wouldn’t let me share whom he works with, but the list includes A-list celebrities and a fast-food chain.)

• "Cable & Wireless helped Britain spy on the world: Channel 4": Telecommunications firm Cable & Wireless helped Britain eavesdrop on millions of Internet users worldwide, Channel 4 reported on Thursday, citing previously secret documents leaked by a fugitive former U.S. National Security Agency contractor. Cable & Wireless, which was bought by Vodafone in 2012, provided British spies with traffic from rival foreign communications companies, Britain's Channel 4 television said, citing documents stolen by Edward Snowden. Channel 4 said Cable & Wireless gave Britain's GCHQ eavesdropping agency access by renting space on one of the arteries of global communications, a cable that runs to the southern English region of Cornwall. The Channel 4 report, which was impossible to immediately verify given the secrecy of the surveillance programs, said Cable & Wireless carried out surveillance on Internet traffic through its networks on behalf of British spies.

• Amazon's typical data centers have 50K-80K servers, and there are 28 such data centers globally: Amazon has 11 cloud regions across the world, said James Hamilton, an Amazon distinguished engineer, during a presentation at re:Invent. Each region has multiple sets of data centers, and there are 28 total sets across the world. Each of those has one or more data centers, with a typical facility containing 50,000 to 80,000 servers. A conservative estimate puts Amazon over 1.5 million servers globally. Lydia Leong, an analyst at research firm Gartner, puts it at 2 million or more. By comparison, Rackspace Hosting has a little over 100,000 servers spread across six data centers. Google has three regions with eight total sets, and Microsoft has 17 regions. Last year, Steve Ballmer, then Microsoft's CEO, said the company had over a million servers within its data center infrastructure and that Google had even more. Amazon's cloud could soon get even bigger. Hamilton told me that he saw no reason why Amazon couldn't eventually have a data center in every U.S. state if companies adopt cloud computing as enthusiastically as people predict.

Thursday October 23, 2014

• Xiaomi is moving user data out of China - possibly in response to security concerns, including some from the Indian Air Force: User data for those based outside of China is being moved to servers operated by Amazon.com in California and Singapore, Xiaomi Vice President Hugo Barra wrote today on his Google+ page. All shopping data for international users is expected to be moved out of Beijing by the end of the month, while profiles, text messages and other services should be completed by the end of the year, Barra wrote. In August, security firm F-Secure alleged that Xiaomi's devices were collecting and transmitting personal data to Beijing. The Indian Air Force made similar accusations, according to a report from the New Indian Express newspaper. Apart from privacy, Barra also said the moving data to overseas servers has significantly boosted speed in markets such as Singapore, India and Malaysia. Xiaomi is targeting India and Brazil as its next big markets. This, while Apple CEO Tim Cook met with Chinese Vice Premier Ma Kai to discuss protecting user data two days after a report that (possibly Chinese-backed) hackers targeted its iCloud services.

• Offline Retailers should use smart programmatic strategies to make in-store purchases more competive to  'showroomers'  consumers visit stores to see products in person, only to turn around and purchase those products at better prices online from other sellers. That's the recommendation of a study - see the image below for how this would work.

• Tumblr's 4 means of monetizing traffic:On Tuesday, Yahoo chief Marissa Mayer told investors that Tumblr would likely make more than $100 million in 2015. In our series this week, we learned that the social platform's millennial-leaning user base has grown 33 percent since Mayer and her team purchased it for $1.1 billion. This revenue is achieved via four main ad products:
• Sponsored Posts: Tumblr charges a cost-per-engagement (CPE) rate for Sponsored Posts, an offering for Web and mobile marketers that includes Yahoo.com properties in addition to Tumblr's. ("Engagements" entail likes, reblogs, clicks, etc.)Targeting options entail gender, location and interests.
• Trending Blogs: Brands pay for every follower picked up on the social platform when it comes to the mobile- and Tumblr-only Trending Blogs.
• Sponsored Radar: Two-year-old Sponsored Radar ads are Web- and Tumblr-only, while entailing a cost-per-thousand (CPM) pricing model.
• Sponsored Dot promos: And then the one-month-old Sponsored Dot promos are negotiated at a flat fee.

Wednesday October 22, 2014

• Chinese government backed hackers mounted attacks on Apple? The press (NYT here, Washington Post here) has been agog with reports that Chinese authorities have been involved in a sophisticated cyber-attack on Apple. A sophisticated cyber-attack has targeted Apple’s iCloud service in China, in an apparent attempt to collect user names, passwords and other private information as the company releases its newest round of iPhones in the world’s most populous country. The attack, first reported on Monday by Greatfire.org, an activist group that monitors Internet censorship in China, was confirmed Tuesday by Apple.  The group speculated that China was hoping to collect user names and passwords for iCloud because the newest iPhones will include a strong new form of encryption that governments will have a difficult time cracking, limiting their ability to monitor the communications of its citizens. Google has also reported significantly increased levels of Chinese government interference this year.

• Yahoo shows signs of life; might buy BrightRoll; revenue from Tumblr at $100M/year: Yahoo reported strong third-quarter financial performance on Tuesday, breaking a pattern of revenue declines and posting profits from its core operations that far exceeded Wall Street’s expectations. And mobile, long a bête noire for the company, for the first time contributed meaningfully to its results. Ms. Mayer, Yahoo’s chief executive, told investors that mobile revenue exceeded $200 million in the quarter and she expected it to top $1.2 billion for the full year. Yahoo and its Tumblr unit together had 550 million monthly users on mobile devices during the quarter, up 17 percent from a year ago.Shares of Yahoo rose 1.1 percent to $40.61 in extended trading on Tuesday. For the first time Yahoo disclosed its mobile revenue, which it said was more than $200 million in the third quarter. Yahoo said it expects that gross mobile revenues for the full year will exceed $1.2 billion. We finally have a look at Tumblr’s ad sales: $100 million in 2015. Interesting analysis here, here and here. Separately, Yahoo might buy BrightRoll, a digital video ad service provider, for about $700M.

• After acquisitions in Europe and New Zealand, Zomato now launched in Toronto: Just weeks after announcing its fourth acquisition in three months (in Poland, the Czech Republic, Slovakia and New Zealand), Indian restaurant search and discovery service Zomato took its first step into the North American market today. This time, instead of taking the buyout route, Zomato launched in Canada, listing over 11,000 restaurants in the Greater Toronto area on its website as well as mobile apps.