Daily Tech Snippet: Thursday, December 3

• Startup Founders Sound Just as Pessimistic About a Bubble as Tech Journalists: There has been a lot of kvetching of late about whether or not we’re in the middle of another tech bubble, and most of the pontificating has come from venture capitalists and tech media. But what do people who launch startups actually think? According to First Round Capital’s new State of Startups Report — a survey of more than 500 founders of VC-backed companies — founders are also largely convinced we’re in a tech bubble of some sort. First Round’s findings indicate that startup leaders are having a harder time raising money and that they think it’s only going to get tougher. The report also says they believe bitcoin is one really overhyped technology, whereas self-driving cars don’t get enough attention. We’ve embedded the report in a slideshow below, but here are some key facts and figures from First Round: 80 percent of founders say they were able to raise what they wanted to in their last rounds, but virtually all of them say that it will be harder to do so in the next year. 73 percent of startup founders believe we are in a bubble, but enterprise startup leaders are twice as likely to say we aren’t (twice as many enterprise tech founders also say they’ll be profitable in the next year). No one has a clue about what the IPO market will look like in 2016: One third says there will be more IPOs, one third says it’ll be about the same and one third says there will be fewer. 90 percent of founders expect to see more tech mergers and acquisitions over the next year, which is also what’s generally expected by industry analysts and experts.

• Crazy Like a Box: Going Public Can Give Start-Ups Outsize Power: In early 2014, when the cloud storage company Box filed for an initial public offering, many on Wall Street looked at its numbers and laughed. Box’s revenues were soaring, but its losses were growing nearly as quickly. It was pouring vast sums into sales and marketing, it had less than a year of cash remaining, and executives did not anticipate making a profit for years. When Box eventually went public this January — after raising another round of private funds to delay its I.P.O. — its stock price briefly surged but has since lost about 40 percent of its value. The company reported on Wednesday that in the third fiscal quarter, it again increased sales, and it projected slightly higher sales in 2016 than it had previously expected. Now, with a stock market valuation of about $1.7 billion, Box is technically in league with the “unicorn” private companies valued at more than a billion dollars — but compared with some of those highflying start-ups, it could easily be mistaken for a pony. Dropbox, a cloud storage competitor that remains private, was valued at about $10 billion in its last fund-raising round. To many in Silicon Valley, Box’s inauspicious debut on the stock market, like several other recent tech offerings, serves as a cautionary tale. While floating an I.P.O. was once seen as a rite of passage in Silicon Valley, in the last few years it has become a much bemoaned annoyance to many tech founders. Companies are waiting longer to go public, and thanks to a surge of money from hedge funds and mutual funds looking to get in on the start-up scene, young companies have been given resources to stay private for years on end. Go out to the public markets before you’re bulletproof, the thinking goes, and you’ll get crushed. No one wants to be the next Etsy, Hortonworks or Box, all of which now trade below their I.P.O. price. But what if Box gets the last laugh? Despite the company’s languishing stock price, it’s possible that a few years from now, many in the Valley may come to look back on Box’s I.P.O. as a masterly timed bit of corporate strategy — an initially painful move that ultimately rewarded investors, improved employees’ financial stability, provided executives with independence from unpredictable private investors and pushed the company to adopt a more structured path toward profitability. To understand why, it helps to look at the market for private tech funding, and how it is affected by public valuations. Several unicorns have recently discovered that taking money from mutual funds and other large investors brings surprising public scrutiny. The mutual fund company Fidelity and others must regularly report assessments of their private-company holdings, and lately they’ve calculated that start-ups like Snapchat and Dropbox are worth less than what the funds paid for them. Dropbox’s valuation, in fact, may now be tied directly to Box’s, since large investors look at comparable public companies to help determine the value of their private investments. The same logic applies to employees. If you’re an engineer looking to work at a cloud storage company, you could go to Dropbox, where you’ll receive stock options at a lofty $10 billion valuation that you’ll have a hard time turning into actual money. Or you can go to Box, in which you’ll get shares at a relatively reasonable valuation that can also be traded on the public market.

• Ballmer Chides Microsoft Over Cloud Revenue Disclosures:  One major Microsoft Corp. investor wasn’t happy with the level of disclosure Wednesday at the company’s annual shareholder meeting: Steve Ballmer. The company should disclose profit margins and sales for its cloud and hardware businesses, Microsoft’s former chief executive officer said. “It’s sort of a key metric -- if they talk about it as key to the company, they should report it,” Ballmer, who is the company’s biggest individual shareholder, told Bloomberg at the software maker’s annual meeting in Bellevue, Washington. Microsoft reports an annualized revenue run rate -- or sales at a certain point in time carried out to a yearly rate -- for its commercial cloud business and has said it is aiming to reach $20 billion on that basis by 2018. Ballmer, who handed the reins to Satya Nadella in 2014, derided the use of run rate as “bulls---.” “They should report the revenue, not the run rate,” he said. Margin -- a measure of profitability -- is important because while gross margins for software are very high, they are far lower for things like hardware and cloud services, Ballmer said. Microsoft also said in April it would end its fiscal year with a commercial cloud gross margin of 44 percent. Though it reports revenue and margin for some of its cloud businesses, it doesn’t provide a total sales number for cloud. Ballmer said he has discussed the issue with the company and that after almost two years out of the CEO job, he can’t even guess what these numbers are. “We enjoy a regular dialogue with Steve, and welcome his input and feedback, as we do from our other investors.” said Chris Suh, Microsoft’s general manager for investor relations. Ballmer also criticized Nadella’s answer to an audience member questioning the lack of key apps, like one for Starbucks, on the company’s Windows Phone. Nadella responded by citing the company’s plan to appeal to Windows developers by allowing them to write universal applications that work on computers, phones and tablets, targeting a larger array of devices than just Microsoft’s handsets that have just a single-digit share of the mobile market. “That won’t work,” Ballmer commented as Nadella spoke. Instead, the company needs to enable Windows Phones “to run Android apps,” he said.

• Uber launches taxi-hailing button for third-party apps:  Online taxi-hailing service Uber [UBER.UL] said it would allow third-party app developers to add a 'Ride Request' button within their apps for free. Developers would need to register their apps on Uber's website to get access to the code to add the button, which users can tap to request a ride. To entice developers to use the feature, Uber said it would pay $5 for every new U.S.-based customer that uses the button from the developer's app. Earlier this year, Uber had partnered with Zomato, an India-based restaurant finder, to add a "Ride there with Uber" button on the restaurant page. Last year, Google Maps also integrated Uber within its app to allow users to book a ride.