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- Alibaba Finance Arm Is Valued Above $40 Billion in Latest Funding Round: Alibaba’s finance affiliate, which runs China’s biggest online payments business, closed a private placement valuing the unit at more than $40 billion, according to two people familiar with the matter. Ant Financial sold stakes to external investors, including China Development Bank Capital Company. China’s National Social Security Fund has become a strategic investor, the finance arm said on its official microblog account, without giving details of the investment. The pension fund acquired about 5 percent. Ma spun off the finance operations into a new company he controls in 2011, citing the risk of foreign ownership restrictions. Yahoo and SoftBank held a majority of Alibaba at the time. Prior to Alibaba's record $25 billion IPO in September, the companies struck a new deal that entitled the e-commerce operator to a share of earnings at Ant Financial, which is moving into new businesses, including money-market funds. Alipay, which has more than 800 million registered users, is a service similar to PayPal. Alibaba is entitled to either a third of Ant Financial shares or a one-time payout equal to 37.5 percent of the equity value, according to Alibaba’s IPO prospectus. Alibaba also holds perpetual claim to 37.5 percent of Ant Financial’s pretax earnings until it receives a third of the financial arm’s equity.
- Chinese government deals help nurse Alibaba's bottom dog cloud business: Alibaba is an underdog in the global cloud computing industry, but it has one thing going for it: it's Chinese. The firm scored a minor deal with China's northeastern port city of Dalian to build a cloud computing center and provide online government services such as bill payment.The pact is a small part of a growing portfolio of similar cloud services tie-ups between Alibaba and government bodies around China and comes against a backdrop of Beijing's deepening paranoia about foreign technology. The domestic alliances will help Alibaba's cloud unit Aliyun, literally "Ali Cloud", build scale and gain experience before any global campaign to challenge market leaders Amazon.com, Microsoft and Google. "China wants control of its information, of its data, of its news, of its technology food chain, and so there are huge opportunities." For the time being, Aliyun is small.It accounted for just 1 percent of Alibaba's overall revenue for the year ended March 31. But it says in China it has the biggest market share in cloud computing. Aliyun has forged cloud agreements with more than a dozen Chinese provinces and cities including Hainan, Guangdong, Tianjin and Shanghai. It also works with China Meteorological Administration, China Central Government Procurement Center and the state railway service center. The deals range from developing cloud storage solutions to helping the government of the southern province of Guizhou gather and crunch data to optimize its traffic lights. Aliyun in April announced a deal with state oil and gas giant Sinopec, to create a cloud system to track its petrochemical production chain and emissions. Cheng Jing, an Aliyun director who deals with government agencies, said his primary consideration was the bottom line. "First, we have to be sure that our services can make money. If these services can also promote Ali's relationship with the government then that's a good thing."
- Traders bet on Twitter near-term gains as takeover chatter persists: Dick Costolo's decision to step down as Twitter's chief executive last week failed to stem the weeks-long slide in the company's shares, but options traders appear to be betting on a near-term rebound. The stock has shed more than a third of its value since Twitter reported first-quarter results in April. It edged up 6 cents to $34.62 on Thursday, after touching a year-low of $33.51 on Tuesday. Since May, open interest in calls, usually used for bets on the shares rising, has swelled at a faster pace than the open interest in puts. For every open put contract, 1.7 calls are open, the most bullish for this ratio since early March. Traders have bid up near-dated options, with the demand for upside reflected in options skew - the difference between expectations for volatility priced into puts versus calls. Normally, puts tend to have a higher premium relative to calls, because people are willing to PAY more to protect against risk of losses. For Twitter, calls have become more expensive than puts. "The upside skew in Twitter most likely reflects the possibility of an upside event between now and July expiration," Place said."It seems that everyone and their uncle is betting that Twitter will be bought by another firm"
- A Fearless,“Fail fast, fail often” Culture Fuels America's Tech Culture, and Why Europe Trails: Here’s a stark comparison: In the United States, three of the top 10 companies by market capitalization are technology companies founded in the last half-century: Apple, Microsoft and Google. In Europe, there are none among the top 10. There are institutional and structural barriers to innovation in Europe, like smaller pools of venture capital and rigid employment laws that restrict growth.Often overlooked in the success of American start-ups is the even greater number of failures. “Fail fast, fail often” is a Silicon Valley mantra, and the freedom to innovate is inextricably linked to the freedom to fail. In Europe, failure carries a much greater stigma than it does in the United States. Bankruptcy codes are far more punitive, in contrast to the United States, where bankruptcy is simply a rite of passage for many successful entrepreneurs. There is also little or no stigma in Silicon Valley to being fired; Steve Jobs himself was forced out of Apple. Europeans are also much less receptive to the kind of truly disruptive innovation represented by a Google or a Facebook
- Payments at a Tipping Point: Password-less authentication will drive more mobile transactions in 2015: "Today, 85 percent of transactions are still done via cash, but 2014 started changing the game for payments, and I believe we’re at an inflection point to push more payments than ever into the digital realm for 2015 thanks to innovations in authentication, shopping on social networks, and near field communication-based payment technology. The truth is only about 1 percent of commerce happens on mobile today, which is hard to believe considering there are now more mobile devices than people in the world. But I think that’s all about to change, and authentication is going to be an even bigger driver in mobile shopping and conversion in 2015."
- Good news for Chinese smartphone brands: Taiwan clears Xiaomi, others of breaching data privacy: In September, Taiwan's government began performing independent tests on Xiaomi phones after media reports said that some models automatically send user data back to the firm's servers in mainland China. Taiwanese regulators cleared on Tuesday Xiaomi and other smartphone brands of breaching local data protection laws after national security concerns triggered that proble. The probe, which also involved Chinese handset makers Huawei Technologies Co Ltd and ZTE Corp, was a reminder of the scrutiny Chinese technology firms are subject to abroad as governments become increasingly wary of potential cyber security threats from the world's second-biggest economy. Privately owned Xiaomi, whose budget smartphones are popular throughout Asia, was previously accused of breaching data privacy. In August, the company apologized and said it would change a default feature after a Finnish security company said Xiaomi collected address book data without users' permission.
- Uber must add 'panic buttons' to operate in Delhi: Taxi firms including Uber, the online cab-hailing company banned in New Delhi, will have to install panic buttons if they are to operate in India's capital under new rules framed after allegations that a driver for the U.S. firm raped a passenger.The Delhi government now wants all taxi operators, including aggregators such as Uber, to have a fleet of taxis running on clean fuels and fitted with tracking devices and emergency buttons. "The licensee shall ensure the facility of a panic button in the radio taxi so that in case of any distress, the signal is transmitted to the control center of the licensee and therefrom, to the nearest police station/police control room," Delhi's transport office said on its website.
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
Snapdeal in India claims to be aggressively investing in assisted kiosks (similar news also from Kudo in Indonesia): Snapdeal is planning to set up assisted outlets across over 70,000 rural areas and 65 cities by the end of March 2015 in partnership with FINO PayTech, who has thousands of business correspondents on the ground, especially in rural areas. Under the partnership, Snapdeal.com is trying to expand its access to consumers in the hinterland with an assortment of over 1000 products through assisted kiosks which would be operated by FINO Paytech. This would enable the target segment to shop online. Apart from Dharavi, Varanasi, Valsad (Gujarat), urban villages of Noida, Gurgaon, Hyderabad and Jaipur are the targets of the e-commerce player to begin with. The company has already started the pilot project in these places. The products would be on display at the digital kiosks curated on an exclusive page requiring login by FINO agent, who would place an order, collect payment, receive and deliver to people who have no permanent address. “Together we aim to provide innovative, yet simple ways to reach and service those end-consumers who are still not exposed to the benefits of online shopping,” Kunal Bahl, co-founder and CEO Snapdeal.com said in a statement. FINO will assist in sales, payments and delivery of ordered products to customers through its network, he added.
Google Glass seems to have lost its mojo: Many developers and early Glass users are losing interest in the much-hyped, $1,500 test version of the product: a camera, processor and stamp-sized computer screen mounted to the edge of eyeglass frames. Google Inc itself has pushed back the Glass roll out to the mass market. While Glass may find some specialized, even lucrative, uses in the workplace, its prospects of becoming a consumer hit in the near future are slim, many developers say. Of 16 Glass app makers contacted by Reuters, nine said that they had stopped work on their projects or abandoned them, mostly because of the lack of customers or limitations of the device. Three more have switched to developing for business, leaving behind consumer projects. Google Glass now sells on eBay for as little as half list price.
Meanwhile, Apple marches on inexorably - (i) links to UnionPay, China's largest bankcard network; (ii) Apple Pay is flirting with AliPay, and (iii) is gaining unprecedented traction in the US: App Store customers in China can now link their UnionPay debit or credit cards to their Apple IDs for purchases, Apple announced today. This is significant for Apple and Chinese consumers because China UnionPay, a bankcard network approved by China’s State Council and the People’s Bank of China, enjoys a virtual monopoly. It has issued more than 4.5 billion cards in China, and is available in all cities, as well as in overseas market. China (which has an estimated 100 million iPhone users) is Apple’s most important growth market; in its recent fourth-quarter earnings report, the company reported that the market generated $29.8 billion, or 16 percent, in net sales in 2014.
Behavior-tracking app ClassDojo is going mainstream in the US - and attracting critics: ClassDojo is used by at least one teacher in roughly one out of three schools in the United States, according to its developer. The app is among the innovations to emerge from the estimated $7.9 billion education software market aimed at students from prekindergarten through high school. Although there are similar behavior-tracking programs, they are not as popular as ClassDojo. Many teachers say the app helps them automate the task of recording classroom conduct, as well as allowing them to communicate directly with parents. But some parents, teachers and privacy law scholars say that the carrot-and-stick method of classroom discipline is outmoded, and that behavior apps themselves are too subjective, enabling teachers to reward or penalize students for amorphous acts like “disrespect.” They contend that behavior databases could potentially harm students’ reputations by unfairly saddling some with “a problem child” label that could stick with them for years.
Amazon's non-US eCommerce business (EGM-only, not media) constitutes ~20% of total revenue and grew about 19% Y/Y in Q3: That's one of many interesting insights in a deep-dive by a well-known Amazon blogger. Amazon's geographical mix for the Q was 63% North America (growth 25% Y/Y), 37% non-domestic (13% Y/Y). Amazon's 1P and 3P businesses are doing quite well and the problems are in media (25% of total revenue, which grew only 4%) and non-seller oriented areas such as the Fire phone which had a $170m write-down for the Q and Amazon is sitting on $83m in inventory. On a 2x2 of (EGM v Media) and (US v International), US EGM was the largest (~50%) and the fastest growing segment (31% Y/Y): every other segment is growing below the average. Amazon reported $20.6B in Q3 revenue, at 20% growth.
Twitter earnings (Q3 rev: $361M, 114% Y/Y, net loss $175M) beat estimates, but the stock was still down 10% on engagement worries and lack of product innovation: Twitter is doing a great job monetizing (especially on mobile:85% of revenue from mobile), but engagement is stagnating: not enough new users (monthly active users rose only 23% to 284 million in the quarter) and decreasing engagement per user (timeline views per user slid 7% globally to 636). “The lack of growth there comes from Twitter’s relative lack of innovation,” said Nate Elliott, an analyst at Forrester who studies social media. “The experience on Twitter today is the same experience people have always had on Twitter.”
AliPay and Apple Pay might join forces: Jack Ma and Tim Cook both repeatedly teased a possible partnership between The Paypal-like AliPay and Apple Pay in two separate talks while on stage at the Wall Street Journal Digital conference in Laguna Beach, California this evening. An Apple Pay/AliPay partnership is certainly intriguing. Apple Pay activated over 1 million credit cards within the first 72 hours of going live with the service, making it a strong contender in the digital payment space. AliPay dominates in online payments for a good chunk of the rest of the world and, as Ma pointed out on stage, “Alipay is now the third largest payment system in the world, behind Visa and Mastercard.”.
Separately, Alibaba's mutual fund has shrunk a bit - from $92B to $87B as big Chinese state-owned banks respond to competition: Alibaba’s mutual fund Yuebao garnered a lot of attention when it first launched last summer, and at first, it grew extremely fast. But by this July, it had begun to stagnate, and now according to the latest numbers, investment in Yuebao is actually dropping. Its still huge though: at $87B down from $92B Yuebao has been limited by government restrictions that emerged around March, which made it harder for customers to shift funds to online rivals, imposed transfer limits, banned new types of payments such as QR codes, and halted the launch of virtual credit cards. Alibaba chairman Jack Ma publicly slammed the central bank and big four for abusing their ‘monopoly’.
