Daily Tech Snippet: Tuesday, February 23

A New Breed of Trader on Wall Street: Coders With a Ph.D.: While traders at large investment banks watched their screens in horror, at Jane Street, a bunch of Harvard Ph.D.s wearing flip-flops, shorts and hoodies, swung into action with a wave of buy orders. By the end of the day, the E.T.F. shares had retraced their sharp falls. “It’s remarkable what they can do,” said Blair Hull, a founder of an electronic trading firm who relies on Jane Street to make a market for his recently started E.T.F. “If you look at who provides this kind of liquidity these days, it’s fewer and fewer firms.” It is not only Jane Street, of course. Cantor Fitzgerald, the Knight Capital Group and the Susquehanna International Group have all capitalized on the E.T.F. explosion. And as these firms have grown, so has the demand for a new breed of Wall Street trader — one who can build financial models and write computer code but who also has the guts to spot a market anomaly and bet big with the firm’s capital. In a word, these are not your suit-and-tie bond and stock traders of yore, riding the commuter train into Manhattan. They are, instead, the pick of the global brain crop. Here is a small sample of Jane Street’s main traders: Tao Wang (doctorate in philosophy and finance from the National University of Singapore), Min Zhu (master’s in chemistry, Columbia), Brett Harrison (master’s in computer science with a focus in artificial intelligence, Harvard) and Srihari Seshadri (bachelor’s in computer science, Carnegie Mellon). Jane Street was founded at the beginning of the previous decade, when a couple of option traders and a computer expert left Susquehanna to start their own business. Harnessing Ph.D.-toting mathematicians to the most powerful computers money can buy has become the accepted way for hedge funds and banks to get a trading edge these days, but Jane Street takes this marriage of high tech and high intellect to a new level. Writing computer code, or at the least being conversant in the firm’s program of choice, OCaml, is a requisite for all traders. Indeed, new traders must complete a monthlong OCaml boot camp before they start trading. And to the degree that the super-shy Jane Street does has have a public face, it belongs to its chief technology officer, Yaron Minsky, who givesfrequent lectures at Harvard, M.I.T. and Carnegie Mellon, promoting the firm’s ability to manage risk by developing the best software around.

• A Do-It-Yourself Revolution in Diabetes Care: John Costik got the call at the office in 2012. It was his wife, Laura, with terrible news: Their 4-year-old son, Evan, was headed into the emergency room. His blood sugar reading was sky high, about 535 mg/dl, and doctors had discovered he had Type 1 diabetes. The first three days in the hospital were a blur during which the Costiks, engineers in Rochester, received a crash course in managing the basics of diabetes care.For starters, they were told to log their son’s numbers on paper forms. It was their first hint that diabetes management did not occupy a place on technology’s bleeding edge. The methods for guesstimating carbohydrate intake also seemed imprecise, Mr. Costik found, and the process generated a lot of wasted data.“The last thing you want to do is find some form and fill it out,” he said. “You’re really just emotionally trying to cope with it, and that data in that book isn’t necessarily useful to the people with diabetes.” Several months later, Mr. Costik fitted his son with a Dexcom G4 continuous glucose monitor. A hair-thin sensor under Evan’s skin recorded an exact blood sugar reading at five-minute intervals, 24 hours a day.But all that data left with Evan every morning when he headed off to day care. Mr. Costik wanted something better: continuous access to his son’s glucose readings.So he examined the device’s software code and wrote a simple program that transmitted the monitoring data to an online spreadsheet he could view on a Web browser, Android mobile phone or, eventually, his Pebble smartwatch. Now, as consumer gadgets weave themselves ever more tightly into everyday life, patients and their families are finding homespun solutions to problems medical-device manufacturers originally did not address. Industry executives say the pace of user-driven innovation was one reason the Food and Drug Administration recently reclassified remote glucose-monitoring devices, hastening approval for new models by big companies like Dexcom and Medtronics. James Wedding, a civil engineer who lives outside Dallas, saw Mr. Costik’s Twitter post and used his code to set up a remote monitor system for his daughter, Carson, who is now 12. Lane Desborough, an engineer in California, got in touch with Mr. Costik after seeing his tweet, ultimately creating an open-source system based in part on Mr. Costik’s code. It allows anyone to hack existing glucose monitors so they transmit readings to the cloud, where they can be read by patients and caregivers.Mr. Desborough called the project Nightscout. The Nightscout group onFacebook, known as CGM in the Cloud, provides free tech support for users trying to improve on monitoring devices.About two dozen users have even started a project called Open APS, in which they are pairing insulin pumps with glucose monitors in an effort to create an open-source artificial pancreas system. These wearable devices, which automate insulin delivery, are being tested in academic settings, but these early adopters are not waiting for the results of those continuing clinical trials.Mr. Costik now works at the Center for Clinical Innovation at the University of Rochester, where he works to improve management options for all patients; Mr. Desborough is now the chief engineer at Bigfoot Biomedical, a start-up in Palo Alto, Calif., that plans to create an artificial pancreas.

• Fitbit Forecasts Miss Estimates on Global Rollout of New Devices: Fitbit's current-quarter profit forecast missed Wall Street estimates by a wide margin, as the wearable fitness device maker aggressively invests in new products, sending its shares down more than 16 percent in after-hours trading. The lackluster guidance overshadowed the company's comfortable quarterly revenue and profit beat in the holiday shopping season. Fitbit has been diversifying its portfolio of colorful wristbands and clippable devices that track calories, sleeping patterns and heart rate, to better compete with rivals as well as to tap new markets and demographies.The company last month unveiled its $200 smartwatch, Blaze, to mixed reviews. Earlier this month, Fitbit announced a new wristband, Alta, to appeal to the more fashion-conscious customer.  Fitbit's net income attributable to common stockholders rose to $64.2 million, or 26 cents per share, in the quarter, from $11.9 million, or 19 cents per share, a year earlier.On an adjusted basis, the company earned 35 cents per share. Revenue nearly doubled to $711.6 million from $370.2 million.Analysts on average had expected a profit of 25 cents and revenue of $647.8 million. Fitbit's revenue forecast of $2.4 billion-$2.5 billion and adjusted profit of $1.08-$1.20 per share for 2016 was largely in line with expectations.Shares of the San Francisco-based company were down 15 percent at $14.04 in after-hours trading on Monday after closing up 5.9 percent.The stock, which has lost nearly 70 percent of its value since hitting a high in August, has been trading below the June IPO price of $20 all this month.

• Amazon Raises Minimum Order Size as It Seeks More Prime Buyers: Amazon.com Inc. is increasing the minimum order size for free shipping to $49 from $35, a step that could encourage more consumers to sign up for Prime, the online retailer’s annual service that includes two-day deliveries. The benefit of getting more people to sign up for Prime services -- for $99 a year -- is that they tend to shop more frequently and spend more money, while access to other perks such as online movies, music and other content helps to keep customers within Amazon’s shopping ecosystem. By encouraging non-Prime customers to spend more on a single order, Seattle-based Amazon is also aiming to reduce costs while boosting profits on each sale. The new threshold follows a 33 percent jump in fulfillment costs -- warehousing, packaging and shipping -- in the fourth quarter, which outpaced a 15 percent increase in product sales. Monday’s price increase is the first since 2013, when Amazon raised the threshold to $35 from $25. Amazon’s new minimum order size for free shipping brings it in line with Wal-Mart Stores Inc.’s online store, which has a threshold of $50, or free pickup in stores. Target Corp. has a $25 minimum, while it’s $35 at startup Jet.com Inc.

Daily Tech Snippet: Friday, January 7

• Flashing Red: A day of distress in the financial markets, and of distress sales in the tech startup-world.

• U.S., world stock markets slide as panic in China spreads: A collapse in China’s ailing stock market spread like contagion across the globe again Thursday, pummeling nervous investors looking for respite from the week’s rocky trading. Chinese stocks traded for less than 30 minutes, slumping 7 percent and triggering the second emergency market closure this week. The action prompted markets in Europe to retreat and then spread to the United States, where stocks tumbled 2 percent. China’s CSI 300 had traded for only 14 minutes before the first circuit breaker kicked in, calling a 15-minute halt to trading after a 5 percent fall. But instead of calming the market, it caused only more panic. When trading reopened, prices soon fell further, triggering a halt for the rest of the day. The Dow Jones industrial average, which tracks 30 blue-chip stocks, and the Standard & Poor’s 500, a broader measure of the market, both fell about 2.3 percent. They have lost about 5 percent of their value the week so far. The tech-heavy Nasdaq suffered the deepest losses, falling 3 percent on Thursday. It is down about 6 percent this week and on pace to enter a what’s known as a correction, meaning the index will have fallen about 10 percent from its most recent high. The sell-off was widespread, even hitting tech giants Apple and Amazon, which were down 4 percent and 3.7 percent respectively. JPMorgan Chase slid 4 percent, while Nordstrom tumbled 5.5 percent.  

• Distress Sale #1: Gilt’s Unicorn Tale Comes To An End After Being Acquired For $250M: Hudson’s Bay Company, the owner of department chain stores like Saks Fifth Avenue, said today it was acquiring Gilt Groupe for $250 million. The sale still represents a tough end to the story of Gilt. The startup was one of the original darling flash-sale sites coming out of New York. But that whole market has found itself challenged by slim operating margins, its initial popularity waning, and the difficulties of building a large-scale e-commerce operation. Prior to the acquisition, the company had been widely considered to be part of the billion-dollar startup club. But the company struggled to become profitable, and in October last year the company continued cutting jobs (at that time laying off 45 people). The company previously said a few times that it would go public in 2013 and 2014, before putting that on hold indefinitely and raising additional capital. It’s also not the greatest return for its investors. Prior to the sale the company had raised more than $270 million, which makes this look like a deal that will not return the total amount of money that it had raised. 

• Distress Sale #2: One Kings Lane, Once Valued at $900 Million, Is Likely to Sell for a Fraction of That: One Kings Lane, the online seller of furniture and home decor that has struggled for the better part of the last two years, has been running a process to sell the company for several months, four sources told Re/code. The company had aimed to seal a deal by the end of 2015, one of these people said, calling it a “fire sale.” After originally seeking a higher price, One Kings Lane notified potential buyers in the last few months that it was willing to sell for less than the $230 million it had raised in venture capital, multiple sources said. It’s not clear if a deal is done or who the potential buyer would be, but sources say a deal is unlikely to fetch more than $150 million. That would mean at least some investors will lose money and any employee stock would likely become worthless. Several of One Kings Lane’s investors have a liquidation preference, according to venture data startup PitchBook, meaning they will get paid out before holders of common stock, such as employees. The company most recently cut a quarter of its staff in December, including five members of its senior management team. Sources said the layoffs were likely a condition to get a deal done.

• Distress Sale #3: Quikr closes purchase of online real estate portal Commonfloor.com, pushed by investor Tiger Global: Online classifieds firm Quikr India Pvt. Ltd, one of India’s most valuable start-ups, bought real estate portal CommonFloor in a distress sale orchestrated by Tiger Global Management Llc, the influential US-based hedge fund that is an investor in both. Quikr, valued at an estimated $1 billion, and CommonFloor (maxHeap Technologies Pvt. Ltd) didn’t disclose the terms of the transaction, but two people familiar with the matter said Quickr paid $120 million in an all-stock deal. The people spoke on condition of anonymity. CommonFloor was valued at more than $150 million when it last raised Rs.60 crore from Google Capital in December 2014. The company raised a total of Rs.321 crore from Tiger, Accel Partners and Google Capital since 2011. Quikr and CommonFloor have valuations that seem disproportionate to their revenue. Quikr reported sales of Rs.24.78 crore for the year ended 31 March 2015 while CommonFloor generated sales of Rs.45.76 crore for that year, according to documents with the Registrar of Companies. Despite having generated revenue that is much larger than Quikr’s, CommonFloor attracted a much lower valuation because of the valuation metrics used by e-commerce investors that may seem peculiar to shareholders in traditional businesses.

• Samsung's Earnings Miss Underlines Sputtering Global Demand: Samsung Electronics’s profit miss is the latest sign the global smartphone market is running out of steam, spelling trouble for the suppliers of displays, semiconductors and other components that go into mobile devices. The world’s largest maker of displays and memory chips, which sells to Apple and many other brands, posted fourth-quarter profit that fell short of analysts’ estimates as sales remained sluggish over the holiday season. Demand is waning for smartphones as markets mature and China’s economy slows, pressuring profit margins at Samsung. Concerns that the smartphone market is fizzling out has spurred analysts to trim estimated demand, which in turn has hammered device vendors as well as suppliers of components and contract assemblers. Apple, which garners most of the industry’s profits, ended Thursday below $100 for the first time in over a year after investment brokerages from UBS  to Morgan Stanley lowered forecasts on iPhone shipments. Samsung phone shipments are headed for their second straight annual decline in the wake of tougher competition from Apple in the high-end segment to China’s Xiaomi  and Huawei. for budget consumers. Yet even Xiaomi, which rose from obscurity to become the country’s biggest phone brand, may have missed its 80-million unit sales target in 2015, people with knowledge of its production plans have said.

• Amazon Is Now Selling Its Own ARM-Based Chips: An Israeli company acquired by Amazon last year has announced a new line of semiconductors, marking Amazon’s first foray into the chipmaking market. The company, Annapurna Labs, announced its Alpine line of ARM-based processors on Wednesday, nearly a year after Amazon acquired it for a reported $350 million. The company says that its chips are designed for Wi-Fi routers, media streaming devices, connected home products and data storage gear, and that they’ve already been used in commercial products from Asus, Netgear, and Synology.

• Collapse in Q4 Venture Deal-Making Could Signal End of Unicorn Era: A study released in October found that venture capital firms were raising significantly less money than in previous quarters. Around that time, a bunch of well-known investors — like Union Square Ventures’ Fred Wilson — began saying that the days of steady unicorn valuations were coming to a close. Here’s more cold water: An upcoming report from CB Insights says that VC funding levels in the fourth quarter of 2015 “fell 30 percent amid weakening mega-round activity while deal activity fell 13 percent vs. the previous quarter.” Here are the core findings from the KPMG International & CB Insights 2015 Venture Pulse Report, which will be released on January 19: In the third quarter of 2015, there were 72 $100 million equity funding rounds for VC-backed companies. In Q4, there were only 39 of those gigantic growth equity rounds. There were only nine new unicorns birthed in the fourth quarter, versus 23 in Q3. Deal-making activity in general fell to its lowest levels since the first quarter of 2013. While these numbers are by far the most concrete indicator that venture startup investing is getting less, um, frothy, there have been warning signs for the last few months. December data from Ernst & Young indicated that tech startups were avoiding IPOs, partly fearful that public markets would tank their private sector valuations. In November, a series of valuation writedowns of a number of unicorn startups shaved billions off Snapchat, Zenefits and other high-flying and fast-growing tech companies.

Daily Tech Snippet: Monday, January 4

• Facebook fights for Free Basics in India, global test-case: India has become a battleground over the right to unrestricted Internet access, with local tech start-ups joining the front line against Facebook founder Mark Zuckerberg and his plan to roll out free Internet to the country's masses. The Indian government has ordered Facebook's Free Basics plan to be put on hold while it decides what to do. The program, launched in around three dozen developing countries, offers pared-down web services on mobile phones, along with access to Facebook's own social network and messaging services, without charge. But critics say the program, launched 10 months ago in India in collaboration with operator Reliance Communications, violates principles of net neutrality, the concept that all websites on the internet are treated equally. It would put small content providers and start-ups that don't participate in it at a disadvantage, they say. "India is a test case for a company like Facebook and what happens here will affect the roll out of this service in other smaller countries where perhaps there is not so much awareness at present," said Mishi Choudhary, a New York-based lawyer who works on technology and Internet advocacy issues. Also at stake is Facebook's ambition to expand in its largest market outside the United States. Only 252 million of India's 1.3 billion people have Internet access, making it a growth market for firms including Google and Facebook.

• Uber’s No-Holds-Barred Expansion Strategy Fizzles in Germany: Uber is rapidly expanding its ride-hailing operations across the globe. But here in this city of 690,000 — less than the population of San Francisco, Uber’s hometown — the company recently did something unusual: It retreated. In early November, Uber shut its small office in Frankfurt’s centuries-old city center after just 18 months of operation, mothballing the online platform that had let people in the city hail rides through a smartphone app. The pullback was spurred in part by drivers like Hasan Kurt, the owner of a local licensed taxi business, who had refused to work with the American service. With more than 20 years of experience as a taxi operator, Mr. Kurt said he disliked how Uber barreled into Frankfurt in early 2014, using primarily unlicensed drivers who had not passed the same exams and health checks required of licensed drivers. That low-cost service, UberPop, which is similar to UberX in the United States, faced legal challenges and was eventually outlawed, last March, by German regulators. Uber then tried to recruit licensed operators like Mr. Kurt to build its service within the letter of the law. But Mr. Kurt would not budge. “It’s not part of the German culture to do something like” what Uber did, Mr. Kurt, 45, said over a cup of tea last month during a break in his busy holiday schedule. “We don’t like it, the government doesn’t like it, and our customers don’t like it.” Uber’s withdrawal from Frankfurt is just one of a multitude of retreats by the company — now valued at $62.5 billion — across Europe in recent months. In November, Uber also pulled out of Hamburg and Düsseldorf after less than two years of operating in each of those German cities. In Amsterdam, Uber recently stopped offering UberPop. And in other European cities, Uber faces the prospect of being beaten back — or at least contained. In Paris and Madrid, Uber has been confronted by often violent opposition from existing taxi operators, while in London, local regulators are mulling changes that could significantly hamper Uber’s ambitions there. Uber’s aggressive tactics also turned off potential customers like Andreas Müller, a financial analyst who tried the company’s Frankfurt service after first using Uber on a business trip in Chicago. Mr. Müller said he liked the convenience of paying through his smartphone, but soon turned against the company after reading that it had continued operating in violation of court orders and did not directly employ its drivers, who are independent contractors. “That might work in the U.S., but that’s not how things are done here in Germany,” said Mr. Müller, 37. “Everyone must respect the rules.”

• It’s Amazon and Also-Rans in Retailers’ Race for Online Sales: Two decades after Jeffrey P. Bezos started Amazon in his Bellevue, Wash., garage, his e-commerce juggernaut could be forgiven for letting up on its rapid growth. Not Amazon, though, which steamrolled through 2015, capturing an ever-growing share of United States retail sales. Of every additional $1 Americans spent for items online this year, Amazon captured 51 cents, according to a recent estimate by analysts at Macquarie Research. And of the expected $94 billion growth in all retail sales this year — both in stores and online — Amazon took a staggering $22 billion, or almost a quarter, Ben Schachter, a retail analyst at Macquarie, calculated. Two decades after Jeffrey P. Bezos started Amazon in his Bellevue, Wash., garage, his e-commerce juggernaut could be forgiven for letting up on its rapid growth. Not Amazon, though, which steamrolled through 2015, capturing an ever-growing share of United States retail sales. Of every additional $1 Americans spent for items online this year, Amazon captured 51 cents, according to a recent estimate by analysts at Macquarie Research. And of the expected $94 billion growth in all retail sales this year — both in stores and online — Amazon took a staggering $22 billion, or almost a quarter, Ben Schachter, a retail analyst at Macquarie, calculated. And at times, Amazon has seemed to be in danger of getting trapped in a race to the bottom that it brought on with its steep discounting. “They were just trying to sell more by underpricing everybody,” said Craig Johnson, president of Customer Growth Partners, a retail consulting firm. “But they realized they would never make any money that way. They evolved,” he said. “It’s much a different company than it was five years ago.”

• Bill Miller Is Misfiring on Twitter Options After Boon on Amazon: Bill Miller turned to an unusual strategy in mounting his comeback as a top stock picker, buying options on hard-hit technology companies to make leveraged bets with a big impact on his returns. The tactic paid off in 2013 and 2014 as Apple Inc. and Amazon.com Inc. rebounded and helped lift Miller’s $2.3 billion Legg Mason Opportunity Trust to a top ranking. The veteran manager is having less success so far with a similar wager on Twitter Inc. that he escalated last quarter, when he owned options allowing him to buy $350 million of the stock -- equal to 15 percent of the fund’s assets. The massive wager highlights how some managers are using derivatives to boost profits in mutual funds, tightly regulated investment vehicles that have strict limits on what they can invest in. The technique allows funds to make big wagers with relatively little money up front, though they can lose that money should their bet go wrong. Proponents of the strategy include bond manager Bill Gross, who has said managers need to use leverage to juice up gains in a low-return environment. “You are going to get a much bigger pop to the upside,” said Abraham Goodfriend, founder of Yedid Capital Management, a Miami Beach, Florida-based firm that employs options. “The downside is, if you are wrong you are going to lose all your money” paid for the contracts. Miller bought options on 9 million shares of Twitter in the third quarter, filings show. The drop in value of the options may be one reason the fund lost 4.6 percent over the past month and ranked among the bottom 5 percent of peers, according to data compiled by Bloomberg, though it’s still ahead of 95 percent for 2015. Buying options frees cash to invest elsewhere and allows a fund to bet on a large number of shares with a small down payment, boosting returns if the underlying stock gains. Miller said in an e-mailed response to questions that options occasionally provide more potential reward for the amount of risk being taken than the underlying stocks. “This almost always happens after the stock has gone down significantly, which was the case with” Amazon, Apple and Twitter, he wrote.

Daily Tech Snippet: Wednesday, March 25

• Google hired Morgan Stanley's CFO to succeed Patrick Pichette as its new CFO: Google said it hired Ruth Porat, Morgan Stanley’s chief financial officer, to succeed Patrick Pichette as its new CFO in May. Porat, 57, will leave Morgan Stanley in April after 28 years at the firm, the New York-based company said Tuesday in a memo to employees. Jonathan Pruzan, 46, co-head of global financial institutions banking, will become Morgan Stanley’s new CFO. Porat, one of Wall Street’s most senior female executives, pivots from a job in which she built up cash reserves for safety to one where she must figure out how to use Google’s growing cash pile. In five years as Morgan Stanley’s CFO, the Stanford University alumna has helped stabilize an investment bank that almost collapsed in 2008. “I’m delighted to be returning to my California roots and joining Google,” Porat said in a statement released by the Mountain View, California-based Internet company. “Growing up in Silicon Valley, during my time at Morgan Stanley and as a member of Stanford’s board, I’ve had the opportunity to experience first-hand how tech companies can help people in their daily lives. I can’t wait to roll up my sleeves and get started.”Silicon Valley has tapped Wall Street bankers to help them manage the finances associated with their rapid growth. Twitter Inc. last year named Anthony Noto, 46, previously Goldman Sachs Group Inc.’s co-head of technology, media and telecommunications banking, as its CFO.

• More on the same: Its stock trailing peers, Google looks to Wall Street for CFO as costs, cash grow: Google Inc. is turning to Wall Street for its next chief financial officer as the technology giant grapples with rising costs, a growing pile of cash and a need for fiscal discipline as it invests in new industries. Ruth Porat, 57, will leave Morgan Stanley in April after more than 25 years there, the New York-based company said Tuesday in a memo to employees. Jonathan Pruzan, 46, Morgan Stanley’s co-head of global financial-institutions banking, will become the company’s new finance chief. At Google, Porat will succeed Patrick Pichette, who announced earlier this month that he would retire. She is set to take her new post on May 26. Investors are looking for Porat, one of the financial industry’s most senior female executives, to apply her financial acumen as Google invests to spur growth amid increased competition from Apple Inc., Facebook Inc. and Amazon.com Inc. She follows other financial-services veterans who have migrated to Silicon Valley firms, such as social-media service Twitter Inc., payments-provider Square Inc. and messaging startup Snapchat Inc. “A dose of increased discipline could certainly serve Google well,” said Colin Gillis, an analyst with BGC Partners LP. “The key to this job is going to be the person that rationalizes the expenses of the company. Google is full of people who want to pursue big ideas.” Google’s net income climbed 41 percent in its latest quarter from a year earlier, while Facebook’s increased 34 percent and Apple’s rose 38 percent. Google’s shares have lagged behind its rivals, dropping 0.3 percent in the year through Tuesday. Facebook’s shares meanwhile rose 33 percent, while Apple’s increased 64 percent. Google’s shares rose 2.2 percent to close at $577.54 on Tuesday.

• TPG-backed AGS Transact plans up to $216.6 million India IPO: India's AGS Transact Technologies, partly owned by U.S. private equity firm TPG Capital [TPG.UL], plans an up to 13.5 billion rupees ($216.6 million) initial public offering, according to a term sheet of the deal seen by Reuters on Wednesday. The company plans to raise up to 4 billion rupees by issuing new shares, while TPG and other shareholders would raise up to 9.5 billion rupees selling existing shares in AGS, which offers payment solutions and technology products to banks and retailers, the terms showed.

• Accel announces $305M India fund, joins large tech investors accelerating India-focuse activity: Accel Partners has just announced a new US$305 million fund for India to invest in very early stage companies as well as those already in the growth trajectory. “The investment focus area will cover consumer, enterprise software, mobile, and healthcare businesses,” Subrata Mitra, partner with the VC firm, wrote on the company blog. This is Accel’s fourth fund for India. Accel has a star-studded portfolio of companies in India, including ecommerce major Flipkart, analytics company MuSigma, and cloud-based customer support provider Freshdesk. Since its Indian entry in 2005, it has had a few successful exits as well, including Myntra, which was acquired by Flipkart, TaxiForSure, which was acquired by Ola, and Virident, which was acquired by Western Digital. The venture capital flow into India moved to a new orbit last year, with nearly US$5 billion of startup funding. A number of big players have been pumping money into India. The leader of the pack is Tiger Global, the lead investor in Flipkart, which raised a whopping US$1.7 billion in 2014 alone. Tiger Global raised US$4 billion in two rounds last year, and a substantial portion of that can be expected to come to India. Sequoia is another big player from Silicon Valley, which raised a US$530 million India-focused fund last year. India-based VCs too are pulling in big bucks. Earlier this month, Saif Partners raised a US$350 million fund, and late last year, Lightbox VC raised a second fund of US$100 million. Investors focused on just the early stage startups have also been successful in raising money for India. 500 Startups and Blume Ventures have recently raised their second funds. There is growing interest from the east as well. SoftBank of Japan made three big investments last year in Snapdeal, Ola, and Housing. What’s more, it has pledged an investment of US$10 billion into India over the next few years. The rapid spread of smartphone and internet usage in a large population is one of the main factors making Indian tech startups attractive. An improvement in economic sentiment following the change in government is also making India the place to go for venture capital investors.

• With turn-by-turn directions, Google's Waze app wants to win location-based mobile advertising: Two years after Google acquired Waze for more than $1 billion, new research and prolonged advertising deals from brands show that the mapping app is making a dent in the lucrative—and competitive—market of location-based mobile advertising. Waze has kept a relatively low profile since being acquired by the Mountain View, Calif.-based company, building up an ad business with a core group of retail, fast-food, gas and transportation brands. Equipped with data and a solid following of daily users who consistently use the app to navigate traffic, Google is battling Facebook, independent ad networks and Foursquare for a piece of what BIA/Kelsey forecasts will be a $15.5 billion market by 2018, up from $4.5 billion in 2014. New research released this week shows how the app's promos affect ad recall and navigation rate, or the number of people who drove to a location after clicking on an ad. The mobile player offers advertisers two formats—branded pins and takeover ads. Branded pins show drivers how far away they are from stores. And takeovers are interstitial ads designed not to distract drivers. They pop up when a user is idle for three or more seconds and disappear when the car starts moving. Per Waze, ad recall increased 86 percent for drivers who saw branded pins compared to those who didn't. And takeover ads boosted ad recall by 155 percent when compared to a group of drivers that was not served ads. To measure navigational lift, Waze compared how people searched and clicked for directions after seeing a brand's ad, with a control group that did not see ads. On average, navigational lift increased 53 percent after either a pin or takeover ad. According to Jordan Grossman, head of U.S. sales at Waze, the average Waze user spends more than five hours with the app each month. That high level of engagement has kept advertisers coming back. After working with brands on quarterly campaigns in 2014, 25 percent of Waze advertisers—including Dunkin' Donuts, Phillips 66, Chick-fil-A, Panera Bread, Outback Steakhouse and Metrolink—are running yearlong campaigns for 2015. Waze crowdsources traffic data that brands can then use to target their promos by time, day and location. The app also has a partnership with Accuweather, pulling in real-time weather conditions like temperature, humidity and pollen count that brands can buy ads against. "[Advertisers are] now drilling in on a tactical level and seeing there are a number of different layers that you can use to engage people within a mobile environment," Grossman said.

• Slack said to be in talks to raise money at more than $2B valuation: Slack, the San Francisco start-up that makes a​ workplace collaboration app, is back on the fund-raising trail and is​ in talks to​ rais​e money at a valuation of more than $2 billion, according to ​a person familiar with the matter. The talks come just four months after Slack, which is run by the entrepreneur Stewart Butterfield, raised $120 million at a valuation of more than $1 billion. The valuation could change because the talks are still occurring, according to this ​person, who requested anonymity because of continuing ties to the company. ​But the talks are another reflection of how Silicon Valley start-ups have been raising money at a furious pace, often snagging tens of millions of dollars and more than doubling their value just months after a previous financing round. Uber, the hugely popular ride-hailing app, has raised billions of dollars in little more than two years. Snapchat, a messaging start-up, has raised hundreds of millions in very short order as well. Bloomberg News earlier reported Slack’s new fund-raising. Mr. Butterfield declined a request for comment. In a recent interview, Mr. Butterfield acknowledged that Slack has “a lot of money and not a lot to spend on,” though he added the company is planning to increase its spending on marketing. The company employs just over 100 people. ​To date, Slack has raised about $180 million from firms such as Google Ventures, Accel Partners and Andreessen Horowitz, among others. Mr. Butterfield has been tossing around the idea of leasing a small storefront in one of San Francisco’s prime retail hotspots. A store, which might cost about $15,000 to $20,000 a month, could work as a public help desk for Slack’s rising number of users. It would also work to market the brand to new users. Slack was introduced about a year ago by Mr. Butterfield and now serves about half a million workers every day, who use the app as a kind of replacement for email and instant messaging. The company offers a free version of its product and also charges companies a monthly fee of $6.50 or more for each user if they want additional features. Mr. Butterfield recently said Slack wasn’t profitable and that its losses totaled “a couple hundred thousand dollars a month.”​

• Apple acquires NoSQL provider FoundationDB to bolster its server-side cloud technology: Apple has acquired FoundationDB, a company that specializes in speedy, durable NoSQL databases, TechCrunch has learned. A notice on the FoundationDB site notes that it’s no longer offering downloads of its database software. Financial terms of the deal were not available. CEO David Rosenthal was previously VP of Engineering at Omniture and co-founded the company with COO Nick Lavezzo and Dave Scherer in 2009. FoundationDB’s attractiveness came in the speed at which it handled ACID-compliant transactions and coupled that with strong scalability. FoundationDB hosted a booth at TechCrunch Disrupt SF in 2012, where we first wrote about its approach to a modern NoSQL database and its ‘NoSQL, YesACID’ motto. FoundationDB’s latest engine, which was covered by TC Columnist Jon Evans late last year, scaled up 14.4 million random writes per second. imag1829 A FoundationDB blog post on its newest engine made the following claim: At current (December 2014) AWS (non-spot) pricing and including enterprise FoundationDB licenses for all 480 cores with full 24/7 support this mega-cluster only costs about $150/hr. In that same hour this cluster will achieve 54 billion writes, yielding a cost-per-write of 3 nanodollars. Said another way, FoundationDB can do 3.6 million database writes per penny. So. A fast, affordable and durable database company, acquired by Apple. It seems likely that this was an acquisition designed to bolster Apple’s server-side technologies for the App Store, iTunes Connect or iTunes in the Cloud. With millions of apps now in the store and billions being served to users, there is undoubtedly room for improvement in those systems. Of course, there is always Apple’s rumored over-the-top TV service, which some reports claim is coming our way later this year. The need to be able to serve video at scale there will likely require bolstering systems, as we discussed with the head of media at the MLB just this week. The reliability and speed of Apple’s cloud services are more critical than ever now that it has shipped 700 million iPhones alone — along with millions more iPads and Macs — all of which use iCloud.

Daily Tech Snippet: Monday, March 23

• Fidelity, T. Rowe Price, BlackRock, all giant US money managers, are adding Uber, Airbnb, Pinterest and other private tech investments to mainstream portfolios: Tech Money Sends Funds on the Hunt for Unicorns: The retirement accounts of millions of Americans have long contained shares of stalwart companies like General Electric, Ford and Coca-Cola. Today, they are likely to include riskier private stocks from Silicon Valley start-ups like Uber, Airbnb and Pinterest. Big money managers including Fidelity Investments, T. Rowe Price and BlackRock have all struck deals worth billions of dollars to acquire shares of these private companies that are then pooled into mutual funds that go into the 401(k)’s and individual retirement accounts of many Americans. With private tech companies growing faster than companies on the stock market, the money managers are aiming to get a piece of the action. Fidelity’s Contrafund includes $204 million in Pinterest shares, $162 million in Uber shares, and $24 million in Airbnb shares. Over all, there were 29 deals last year in which a mutual fund bought into a private company, and they were worth a collective $4.7 billion, according to CB Insights. That was up from six such deals, worth a combined $296 million, in 2012. T. Rowe Price was the most active big investor, making 17 investments in private tech companies. Because these tech companies are not required to issue financial reports and are not traded on traditional exchanges, they are the sort of speculative investments not normally found in retirement accounts. Increasingly, however, investors are betting that these companies will be bought or go public at prices that exceed their latest funding rounds, a prospect that is anything but guaranteed. “I think it goes beyond what mutual funds were set up to do,” said Leonard Rosenthal, a professor of finance at Bentley University in Waltham, Mass. “It’s great for the portfolio manager, but it’s not necessarily in the interest of the shareholders of the fund. If investors are looking for a portfolio of risky securities, there are plenty of stocks to trade in the public market.” The dilemma for big fund managers is that fast-growing technology companies are so reluctant to sell private stock to the public that there is now a term — “unicorns,” reflecting just how wonderful and magical they are considered to be — for the dozens of private firms worth $1 billion or more. Several, including the ride-hailing company Uber, the room rental site Airbnb and the digital scrapbook Pinterest are worth more than $10 billion. Those lofty valuations, combined with the eagerness investors show in bidding them up, have created a shadowy market for private stock issued to tech companies’ early investors and employees. For the last few years, mutual funds have sat on the sidelines. Now, they are racing to get in. “More and more, the big lopsided growth is happening away from the public markets,” said Andrew Boyd, head of global capital equity markets at Fidelity. Take Uber, which was valued around $40 billion in its latest round of financing, up from $3.5 billion in mid-2013. That is more than 1,000 percent growth, compared with 28 percent for the Standard & Poor’s 500-stock index over the same time period.

• China’s Internet Boom seems to fade: Half of the 14 Chinese dot-coms that debuted in the U.S. last year are now trading below their initial sale prices. Even Alibaba Group Holding Ltd., one of those still up in price, has dropped 28 percent from its record high in November. On average, the 14 Chinese shares are down 3.1 percent this year, compared with a 6.1 percent advance in the Nasdaq. Investor confidence, so high when Alibaba brought its record $25 billion initial public offering to market last September, is being undermined now by a wave of poor earnings at Chinese technology companies. Those that went public last year including Weibo Corp., the microblogging service, and mobile dating app developer Momo Inc. have failed to deliver the revenue investors were expecting. Sixteen of 28 Internet and technology firms in Bloomberg’s China benchmark reported fourth-quarter earnings below analysts’ forecasts, including search engine Baidu Inc. and video website Youku Tudou Inc. The percentage of stocks that slid below their IPO levels this year was the highest since 2011, when a series of corporate scandals eroded investor confidence, data compiled by Bloomberg show.

• Shoppers on Lazada last year spent $350 million as ecommerce booms in Southeast Asia: Rocket Internet’s Amazon-esque Lazada saw more than US$350 million in consumer purchases in 2014, group CEO Maximillian Bittner tells Tech in Asia. US$70 million of that spending (termed gross merchandise volume, or GMV) happened in December alone, due to Christmas and special promotions like the 12/12 sales day. The 2014 spending tally represents strong growth for Lazada from US$89 million in 2013. Lazada is this week celebrating its third anniversary. It operates in Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam. Lazada started out doing only direct sales to consumers from its own warehouses, but that changed in the fall of 2013 as the company launched a marketplace for third-party merchants. Those merchants now take in 70 to 75 percent of the consumer spending on the estore, Bittner reveals. They’re a “core driver of growth” on Lazada, he adds. There are now 15,000 merchants using the site as an online storefront. “It’s not a target to be a 100 percent marketplace,” Bittner emphasizes. “It depends on the best price for consumers” and other factors such as whether Lazada itself or third-party merchants have better purchasing power. Indonesia is Southeast Asia’s largest single market, and Bittner says the archipelago is the top market for Lazada. Indonesia’s shoppers made up over 30 percent of Lazada’s 2014 spending tally. While Indonesia has an array of homegrown rivals to Lazada – from well-funded Tokopedia to the new Matahari Mall – Bittner says the nation is not necessarily a tougher market than the other Southeast Asian countries. “There’s a growing dynamic of excitement” about Indonesia’s ecommerce scene right now, adds Bittner. He adds that exclusive online gadget sales for brands like Xiaomi and Motorola have helped Lazada greatly in Indonesia. Xiaomi uses Lazada as its sole sales channel in both Indonesia and the Philippines.

• Touted by some as the next Facebook, Meerkat is living the dream of every app creator. Three weeks after launching, it is enjoying viral growth. It’s been the talk of SXSW. Presidential candidates and celebrities are using it. It’s been called the new technology that will affect the 2016 presidential election. Prominent investors want to help fund it. 1. Its numbers are multiplying. Meerkat told me Thursday that its user base is growing 30 to 40 percent a day since SXSW started March 13. It signed up 120,000 users in its first two weeks, so should be closing in on the one million user mark. (Thirty-five percent daily growth compounded over a week would put it just short of one million) 2. Its founder is a genuinely likable guy. In a recent interview with Re/code, chief executive Ben Rubin corrected an interviewer who credited him as “the man behind the app Meerkat,” saying “We’re the team behind the app Meerkat.” 3. Meerkat is obsessed with making its user comfortable. If you talk with anyone on the Meerkat team, they’ll almost certainly use the word “comfortable.” It’s a value that’s guided their decisions, including embracing the trend toward vertical video on smartphones. “We wanted to lower the barrier to entry and make the behavior as comfortable and as familiar as possible given that the medium is still pretty unfamiliar to a lot of people within the context of social media,” community director Ryan Cooley told me at SXSW. Rubin made a really interesting parallel between smartphone live-streaming and the first photographs, during a recent interview with host Ryan Hoover on Product Hunt Radio. “When the first cameras arrived, people weren’t smiling. It was weird to smile in a picture. People don’t have that habit of taking a picture or being in a picture. It evolved,” Rubin said. “With live video, we don’t have this habit. My mother didn’t live stream, I didn’t live stream when I was a kid.” The challenge for Meerkat is to make everyone — especially people who aren’t early adopters– comfortable with live streaming. Because Meerkat videos aren’t stored and can’t be rewatched later, it’s a less intimidating experience. You don’t have to worry about slipping up, and having that mistake be re-lived forever. You simply hit a button on your phone, and suddenly people are digitally right there with you.

• Google launches Retail Search Ad with local inventory offering: Early success as Sears Hometown store visits jumped 122 percent: Sears Hometown and Outlet Stores, a retailer fighting for every sale, has evidently found a weapon in Google's Local Inventory Ads that it says works to drive consumers to its stores. The digital marketing product is still fairly new from the search giant, launched last year, and holds the promise of finally helping brick-and-mortar brands take advantage of the online world rather than always getting beaten by it. With that in mind, the Sears spinoff company has been running Google's shopping ads that target by location and reveal whether a product is actually in a location. As part of a Google report today, the retail company claimed that such information has worked to generate 122 percent more visits to its 1,240 shops under the Sears Hometown and Outlet Stores brand. The Hoffman Estates, Ill.-based chain's click-through rate was 16 percent higher on inventory ads when compared to other ad products. "The ad unit is terrific for a mobile experience," said David Buckley, CMO of Sears Hometown and Outlet Stores. "It's highly relevant to where you are, and it's served with an image, price attributes, and how far you're standing from that product. It's the ultimate search ad product for mobile. You can't ask for more than that."

• Ola diversifies to add a mobile-only food ordering option: Online cab booking service Ola (formerly Olacabs), run by Mumbai-based ANI Technologies Pvt Ltd, has expanded its business area by adding a location-based online food delivery option under Ola Cafe. Unlike its core business, where one can book a cab ride through the web or through the mobile app, the food ordering option is restricted to its app, making it a mobile-only feature. The new feature is available on the latest update of the Ola app. The firm said this is currently in beta stage. The company plans to go pan-India but, to begin with, it has started the service in four cities — Mumbai, Delhi, Hyderabad and Bangalore. Moreover this is not for ordering from restaurants across the city but only from those located near to the user and in some identified areas. The service can be availed from 12 pm to 11 pm. The company did not disclose the number of restaurants it has tied up so far. It did not say if it proposes to use cabs in the vicinity, which do no have a passenger on board yet, to make the deliveries. Users can pay by either Ola money (it’s closed online wallet) or cash on delivery. The delivery person will call customers to confirm the address, just the way a driver of cab or auto currently calls to confirm addresses for pick-ups. Users can also track the person handling the food delivery via the app, like one can do a cab approaching the user.

• Hackers Attack GreatFire.org, a Workaround for Websites Censored in China: For years, a group of anonymous activists known as GreatFire.org has monitored online censorship in China, provided access to blocked websites and collected messages deleted by censors. This week, unidentified hackers have tried to put an end to those activists’ efforts with an unprecedented attack. In a post to its blog Thursday, GreatFire.org said it has experienced a massive so-called denial of service attack. The method is one that hackers frequently use to foil websites by flooding them with multiple requests — so many that they go offline and viewers see a blank page. GreatFire.org creates encrypted versions of 12 websites that are blocked in China. These are known as mirrored websites and grant users within China access to the content. On Thursday, GreatFire.org said it was receiving 2.6 billion requests an hour for its mirrored websites. On Friday, access to the mirrored websites was inconsistent in China. GreatFire.org’s name is inspired by the Great Firewall, the term often used to describe China’s Internet censorship. About two million people in China access GreatFire’s websites each month, a co-founder of the group who uses the pseudonym Charlie Smith, wrote in an email exchange. It was unclear who was responsible for the attack, which began Tuesday from inside and outside China, Mr. Smith wrote. GreatFire.org noted in its blog post that its tactics were the recent subject of a report in The Wall Street Journal, which appeared online Monday. The timing for the attack was a mystery. “Maybe that WSJ story,” Mr. Smith wrote. “Maybe because there have been some excellent Chinese-language news pieces and perhaps somebody who supports the authorities took issue with them. In the past there has rarely been rhyme or reason on the timing of such attacks.” GreatFire.org’s mirroring services provide unrestricted access within China to a range of websites, including itself and the Chinese language version of The New York Times, which has been regularly blocked in China. Some of the others are Deutsche Welle, BBC News, China Digital Times, Google.com, and Boxun, a Chinese-language news website. GreatFire.org says it does not mirror The Wall Street Journal. GreatFire.org works directly with some, but not all, of the websites it mirrors. GreatFire.org is partly funded by Open Technology Fund, a United States government-financed initiative under Radio Free Asia. Last year it provided $114,000 in funding, according to its website. Mr. Smith declined to comment on any financial backing. The Chinese government has in the last year ramped up efforts to prevent its citizens from accessing critical news coverage from abroad and from communicating on social media platforms that the government cannot directly censor. China has long disrupted many of Google’s services. Facebook, Twitter and YouTube remain blocked. LinkedIn agreed to censor its content to operate in the Chinese market last year. GreatFire’s mirroring websites circumvent the Great Firewall by channeling Internet traffic through cloud services, such as one available from Amazon. The difficulty for the Chinese government is that it can’t just shut off Amazon’s service, because it is used broadly by many major Chinese corporations. Emails to the Chinese Foreign Ministry and the Chinese embassy in Washington went unanswered as of Friday evening.

• Web-hosting giant GoDaddy files for $481M IPO, seeking $2.87B valuation: US-based GoDaddy.Inc, an internet domain registrar and web hosting solutions provider, has fixed the price band for its initial public offer (IPO) which may raise $480.7 million, including the portion allocated to the underwriters. It proposes to list on the New York Stock Exchange (NYSE), as per a disclosure this week. The firm is offering shares at $17-19 a unit which would value the company as much as $2.87 billion. GoDaddy first attempted to go public in 2006 but ultimately withdrew. It had refiled for an IPO in June 2014. The IPO proceeds will primarily be used for repaying some of the debt the company. took on as part of a 2011 buyout by private-equity firms Silver Lake, KKR & Co. and TCV Investments. GoDaddy currently manages 57 million domains which accounts for around 21 per cent of the world’s registered domains. Since its buyout, it has acquired other services, including Mad Mimi, which helps small businesses promote themselves by email, and Locu, which makes software that manages business-contact information across sites like Yelp and OpenTable. Services made up 8 per cent of its revenue in 2014. The company’s revenue last year was $1.4 billion, up from $1.1 billion in 2013. Its 2014 net loss, which included $85 million in interest costs to service debt, narrowed to $143 million from $200 million a year earlier. As of December 31, 2014, it had approximately 12.7 million customers, and in 2014, it added more than 1.1 million customers. In 2014, the firm generated $1.7 billion in total bookings up from $939 million in 2010, representing a compound annual growth rate, or CAGR, of 16 per cent.