Daily Tech Snippet: Wednesday, February 10, 2016

• Amazon Building Global Delivery Business to Take On Alibaba: In recent weeks, speculation has mounted that Amazon.com Inc. plans to launch a global shipping and logistics operation that will compete with United Parcel Service Inc. and FedEx Corp.Asked about reports that the company was leasing planes and had registered an ocean freight booking business, Chief Financial Officer Brian Olsavsky downplayed Amazon’s ambitions last month in an earnings call. He said the company was simply looking to supplement its delivery partners -- not replace them -- during peak periods like the Christmas shopping season. Amazon documents reviewed by Bloomberg News reveal a far bolder plan.A 2013 report to Amazon’s senior management team proposed an aggressive global expansion of the company’s Fulfillment By Amazon service, which provides storage, packing and shipping for independent merchants selling products on the company’s website. The report envisioned a global delivery network that controls the flow of goods from factories in China and India to customer doorsteps in Atlanta, New York and London. The project, called Dragon Boat, is proceeding, according to a person familiar with the initiative, who asked not to be identified because the information isn’t public. The ambitious strategy promises to turn FedEx and UPS into Amazon rivals, but also will pit the Seattle giant against Chinese counterpart Alibaba Group Holding Ltd. Both companies are vying for dominance of the rapidly growing cross-border e-commerce market, which by 2020 is expected to swell into a $1 trillion industry serving 900 million shoppers, according to a June report from Accenture and AliResearch, Alibaba’s research arm. Amazon’s plan would culminate with the launch of a new venture called “Global Supply Chain by Amazon,” as soon as this year, the documents said. The new business will locate Amazon at the center of a logistics industry that involves not just shippers like FedEx and UPS but also legions of middlemen who handle cargo and paperwork associated with transnational trade. Amazon wants to bypass these brokers, amassing inventory from thousands of merchants around the world and then buying space on trucks, planes and ships at reduced rates. Merchants will be able to book cargo space online or via mobile devices, creating what Amazon described as a “one click-ship for seamless international trade and shipping.”

• Federal Government Will Treat Google’s Driverless Car System as a Legal Driver: Google’s robot just got its driver’s license. On Tuesday, the federal agency that sets road rules — the National Highway Traffic Safety Administration (NHTSA) — released a letter to the Internet giant that supports its interpretation of a driverless system as legally adequate for roadways, a key victory for the critical initiative within Alphabet, Google’s parent company. Previously, the NHTSA only considered humans as drivers under law, because that’s how cars worked until Google came along. Now the agency has said it will consider Google’s self-driving system a driver, too. The letter came in response to a November petition from Chris Urmson, the director of Google’s self-driving car project. Urmson argued that regulators should treat Google’s homemade cars, built without a steering wheel and brakes, on par with human drivers. It’s been a persistent sticking point for the Google unit, particularly after California issued draft autonomous vehicle rules expressly prohibiting driverless cars. Ensuring that its driverless fleet has regulatory approval to get on the roads is critical to Google’s car strategy.

• Public Markets Are Sending Some Ominous Signals to Private Tech Companies: After years of rapidly growing valuations and additions to the "Unicorn" club, a number of private companies have seen their valuations take dramatic cuts. From Foursquare Labs Inc. raising funds at a roughly $250 million valuation versus a former round in 2013 at $600 million, to Fidelity writing down its Snapchat Inc. holding, there's a lot of interest in where private tech companies might be valued right now. One way to think about private tech valuations is to look at publicly-traded entities that might reasonably seen as proxies. Here's a few examples: The Bloomberg IPO index tracks the performance of companies during their first year of trading, and it has certainly taken a tumble. Cracks began to show late in 2015 as many of them fell below their IPO price. Charlie Bilello, Director of Research at Pension Partners, pointed out just how rare the positive performance of Facebook Inc. actually is, with firms like Groupon Inc., Etsy Inc., Twitter Inc., GoPro Inc., and LendingClub Corp. all down more than 40 percent from their offering price. The index is down 30 percent over the past year and 36 percent from recent highs. One company to keep an eye on is SVB Financial Group, which is the holding company for Silicon Valley Bank. This commercial bank serves emerging and middle-market growth companies in the fields of technology and life sciences.You could see it as a gauge of red-hot tech since it has done business with Pinterest, BuzzFeed, and others. Shares are down 43 percent from recent highs and 31 percent over the past year.

• SolarCity Beats Q4 Estimates, But Stock Plunges 30 Percent On Soft Outlook: SolarCity, which is down more than 50 percent over the past year, just released its Q4 2015 earnings. The market has reacted negatively, with the stock trading down about 30 percent after-hours at a price of around $17.50 per-share. While Q4 revenue of $115M and loss of $2.37 per share beat estimates of $111M in revenue and a loss of $2.59 per share, the company’s Q1 2016 forecast was lower than expected. Additionally, the company missed its quarterly installation estimates for Q4, installing 272 MW, below the guidance of 280 MW – 300 MW. In its shareholder letter, SolarCity said they expect to install 180 MW of solar panels in Q1 2016, which represents 18 percent year-over-year growth, but a 34 percent decline compared to the previous quarter. While some seasonal slowdown for Q1 is normal, the company said that this estimate reflects a “higher-than-usual” seasonal slowdown.

• GitHub Updates Its Enterprise Product With Clustering Support, Updated Design: GitHub Enterprise, the company’s on-premises solution for managing code, is getting a major update today. It comes at a time when there seems to be some upheaval in the company around the importance management has been putting on this product. The marquee feature of GitHub Enterprise 2.5 is support for clustering. With this, businesses can now set up a cluster of GitHub Enterprise servers that act as a single installation, enabling it to support significantly larger teams. “With GitHub Enterprise 2.5 more users can be enabled on one system as teams grow,” Kakul Srivastava, GitHub’s VP of Product, tells me. “We have customers with tens of thousands of developers who need to be able to work together, and this is really important functionality to enable them to do this in a scalable way.” She also noted that clustering doesn’t currently come at an additional cost to GitHub’s enterprise users. This new version also includes interface improvements with updated designs for everything from log-in screens to the look and feel of the GitHub repositories. This brings GitHub’s enterprise product in line with its hosted version. Also new in this version is improved Subversion support — for those who aren’t using git as their version control system — as well as an API for managing protected branches (that is, branches developers can neither delete nor force-push their code to). This new API is currently in preview.

Daily Tech Snippet: Thursday, July 30

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• Facebook Revenue Tops Estimates; Shares Drop as Spending Surges: Facebook, buoyed by robust advertising sales, signaled that it will keep up its brisk pace of investments to attract users and advertisers. Spending climbed 82 percent in the second quarter as the social-media company increased hiring, poured money into data centers and boosted marketing. While that was more than double the rate of sales growth, Facebook still managed to top analysts’ revenue estimate, crossing the $4 billion mark for the first time. Net income shrank to $719 million from $791 million a year earlier, while the operating margin, a measure of profitability, narrowed to 31 percent from 48 percent. Revenue rose 39 percent to $4.04 billion. Yet Facebook also signaled that it wouldn’t let investments grow uncontrollably. The company forecast that expenses will rise 55 percent to 60 percent this year, compared with a previous range of 55 percent to 65 percent. Facebook is improving tools for advertisers and expanding the audience for its mobile applications beyond Facebook itself, including Messenger, Instagram and WhatsApp, which have yet to contribute meaningfully to revenue. Monthly active users for Facebook’s main social network jumped 13 percent to 1.49 billion, with 1.31 billion people logging in at least once a month via mobile. Shares of Menlo Park, California-based Facebook fell 3.4 percent in extended trading, after advancing 1.8 percent to $96.99 at the close in New York. The stock is up 24 percent this year. Facebook’s ability to keep adding users and keeping them engaged stands in stark contrast to Twitter, which is struggling to break past 300 million people. The total number of Facebook users who logged in daily rose to 968 million in June, the company said, slightly less than the 970.5 million projection of four analysts surveyed by Bloomberg.


• Samsung Electronics cautious on outlook, says mobile business environment tough: Samsung Electronics offered a downbeat outlook for the third quarter after April-June profit dropped on a supply shortage for one of its main smartphone models, underscoring continued headwinds for the tech giant. Samsung remained the world's top smartphone seller in the second quarter, but investors and analysts say the South Korean firm's inability to meet demand for its curved-screen S6 edge smartphones likely cost the firm in April-June. Second-quarter operating profit fell 4 percent to $5.9 billion, matching an estimate issued by the company early this month. But the firm doubled its interim dividend payout to 1,000 won per common share. The firm said on Thursday that the mobile division faces a tough business environment as smartphone market growth slows. On the bright side, the chips division reported an operating profit of 3.40 trillion won, up from 1.86 trillion won a year earlier on the back of healthy demand for memory chips and sales growth for its mobile processors. Overall, annual profit is expected to rebound from a three-year low marked in 2014, thanks to robust semiconductor profits and some stabilization for the mobile business. In addition to the supply shortage for the S6 edge model, some analysts are worried by softer demand from China and Europe. Research firm TrendForce last week cut its forecast for 2015 global smartphone shipment growth to 8.2 percent from 11.6 percent, citing a weaker world economic outlook.


• Alibaba cloud unit sets sights on Amazon in $1 billion global push: Alibaba said on Wednesday it would invest $1 billion into its Aliyun cloud computing arm to challenge Amazon.com's lucrative Web Services division, opening a global front in the battle between the two e-commerce giants. With the global cloud computing market estimated by analysts to be worth about $20 billion, Alibaba said in a statement the investment would go toward setting up new Aliyun data centers in the Middle East, Singapore, Japan and Europe. The firm also plans to strike business partnerships with telecom and enterprise technology providers in those regions. Although Alibaba and Amazon have so far avoided competing directly in their core business of e-commerce outside China, Aliyun's international expansion takes aim squarely at Amazon Web Services (AWS), an increasingly central and profitable division of the Seattle-based company. Amazon shares soared last week after the company reported, among other items, an 81 percent revenue increase for AWS, which hosts Web customers like Netflix and Airbnb. As it expands, Aliyun will face stiff competition from some of the biggest names in technology. Amazon led the global cloud infrastructure market with a 28 percent share in 2014, trailed by Microsoft, IBM and Google Inc at 10, 7 and 5 percent, respectively, according to Synergy Research Group. After Amazon made a limited "beta" entry into China last year, where cloud adoption rates by businesses are far lower than in the rest of the world, Aliyun opened a data center in Silicon Valley in March to serve U.S. customers. "Our goal is to overtake Amazon in four years, whether that's in customers, technology, or worldwide scale".


• Steep Discounts a Boon for Customers, but a Gamble for Start-Upsh: Jet.com, a well-funded new shopping site, opened to the public last week and celebrated the debut by sending reporters a big box of swag. I got a T-shirt with a company logo, fuzzy socks, stickers and $1,400 in oversize, fake $100 bills. Jet is a discount site, so I suspect the funny money was meant to illustrate the cash I’d save by shopping there. But the faux bills immediately evoked a more cautious reminder — of all the money Jet plans to spend to become the next force in online shopping. It isn’t just Jet. On a venture-capital high, tech start-ups are burning through vast cash reserves to offer rock-bottom prices, and to sign up new customers with discounts, giveaways and other deals that may sound too good to be true. Jet, a Costco-like members-only discount company that has raised more than $225 million from investors before opening its doors, is only the largest such example. Forget the fake bills; for Jet, as well as for many of its smaller start-up kin, giving away real money is a key part of business. This sounds fishy. But there’s an upside: While investors’ cash lasts, consumers could be in for a boon. After all, from the perspective of customers, what’s so bad about companies giving away their venture-funneled cash? Jet’s prices may be the most ambitious. In May, I found the company was vastly undercutting Amazon, and The Wall Street Journal recently ordered a basket of goods from the site for which it calculated that Jet lost nearly $243 on a single order. In an interview, Mr. Lore was unfazed by these numbers, because, he said, they were already built into his projections. “We understand really well what these costs are now and how they’ll come down over time, and it’s simply a matter of understanding how much capital it’s going to take,” he said. In fact, he added, losing money on each order isn’t his biggest worry; instead, it’s failing to draw enough orders to get to scale. “The hard part is, can you get to $20 billion in five years?” The only way to get there, Mr. Lore said, is to keep spending. Whether or not he’s right, enjoy it.


• E-commerce firms boost Indian postal department revenues: With e-commerce platforms increasingly turning to the Indian Posts to deliver their orders to customers, the fast flourishing e-retail business has become a revenue generator for the state-run agency, whose traditional operations are dented by the deep penetration of e-mail and mobile phones. Realising the potential, the Postal Department has set up a dedicated e-commerce and parcel processing center in the country’s commercial hub Mumbai. Spread across 12,000 sq ft, the facility at Parel in the city has bagged good business in a short span, handling around 5,000 orders a day. The department officials expect at this pace the traffic would soon increase to 10,000 parcels per day. The facility has a capacity to process 30,000 parcels per day.


• Google Loon To Cover Entire Country Of Sri Lanka With Internet: Google is working on many things, and that includes balloons that fly high in the sky to bring Internet infrastructure to locations that can’t be wired for it easily. Today, Sri Lanka announced that it’s the first country to ever get universal Internet access from Google’s Project Loon. Thanks to a partnership with Google, the country promises “affordable high-speed Internet” for all of its residents. Google Loon was announced in 2013, with only incremental and anecdotal information hitting the presses up until now. This is a landmark moment for Loon, and clearly for Sri Lanka.


• GitHub Raises $250M Series B Round To Take Risks: GitHub, the software development collaboration and version control service based on the popular open source Git tool, today announced that it has raised a $250 million funding round led by Sequoia Capital. Andreessen Horowitz, Thrive Capital and Institutional Venture Partners also participated in this round. The company, which was founded back in 2008, has now taken a total of $350 million in outside funding. While the company isn’t talking about its valuation, the WSJ reports that it’s currently hovering around $2 billion. GitHub’s 2012 Series A round was led by Andreessen Horowitz. At the time, the company’s valuation was said to be around $750 million. As GitHub CEO and co-founder Chris Wanstrath told me shortly after the new round was announced, the company plans to use this new round to accelerate growth and expand its sales and engineering team (as most companies do when they raise). He also stressed, though, that the round isn’t just meant for that. “The round is not just to accelerate, but also to allow us to think bigger and take larger risks,” Wanstrath said. This means GitHub acquisitions are likely on the horizon, but he also noted that the company wants to push its international strategy forward. It recently opened an office in Japan (and hosted its first meetup there) and other locations will likely follow. There can be no doubt that Git has become something of a de facto version control system for many startups and GitHub currently leads the charge among companies that essentially offer Git as a service. Atlassian, Microsoft, GitLab and others offer similar services, both cloud-hosted and on premise, but GitHub has clearly attracted most of the mindshare in recent years. GitHub says it currently has about 10 million users who are in collaboration on over 25 million projects (that’s up from 10 million in January 2014). Given that the company offers free accounts, it’s not clear how many of these users are actually paying for the service, though (pricing starts at $5/month).


• Caller ID App Truecaller Is Raising $100M At A $1B Valuation; India Is Its Biggest Market: Communications apps that strike a chord with users across different markets are hot property these days, and it looks like another one of them may soon enter the so-called unicorn club. TechCrunch has learned that Truecaller — a caller ID app that now has 150 million users — is looking to raise around $100 million at a $1 billion valuation. We’re hearing that Truecaller has hired Morgan Stanley to lead the process, and there are term sheets out. The round is likely to have previous and new investors. To date, True Software, maker of Truecaller, has raised around $80 million. Previous investors include Atomico, Kleiner Perkins Caufield Byers, Sequoia Capital, Access Partners and Open Ocean. The plan will be to use the funds to grow the product. Truecaller, founded in Sweden, has seen a lot of traction in markets like India, its biggest market at 80 million users. Now it wants to expand elsewhere, like the U.S., and will be building out the company’s office in the Bay Area. The company is projected to hit 300 million users this year. Truecaller works by aggregating directory services via deals with white pages companies, and platforms like Yelp to bring in businesses. It complements this with crowdsourced information from the app’s users. That includes accessing your own address book, although you can opt out. Individual users can also opt out from being listed. It then uses big data analytics and machine learning to offer additional services beyond caller ID such as predicting who you might want to call next based on where you are and what time of day it is, or what the top-reported spam number is in your area at the moment. Other features include spam blocking, directory services and “smart” SMS services. The company makes revenues through in-app purchases for premium features, as well as advertising within the app. The company’s country manager for India has also reportedly said that Truecaller may launch a paid version by the end of this year.

Daily Tech Snippet: Thursday, June 18

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• Profitable and Growing Fast, Fitbit Prices I.P.O. at $4.1 Billion Valuation, Above Top of Its Range: Fitbit begins trading on the New York Stock Exchange on Thursday under the symbol FIT. The company, which sells popular wearable fitness-tracking devices like the Fitbit Surge bracelet, priced its initial public offering at $20 a share on Wednesday, a dollar above its already heightened price range of $17 to $19 a share. At that level, the company will raise $732 million for itself and its selling stockholders after increasing the number of shares to be sold to 36.6 million from 34.5 million. The price values Fitbit at $4.1 billion. Its debut is a bet that consumers will continue to buy fitness bands as other, more complex smartwatches like the Apple Watch and various Android competitors hit stores. In addition to tracking users’ heart rates and steps, the newer devices offer access to email, text messages and other applications. Fitbit faces another challenge in the form of legal fights from a rival, Jawbone, which filed two lawsuits over the last month. One accuses the company of patent infringement, which could lead to a ban on importing Fitbit devices or important parts. The other accuses Fitbit of poaching employees who then illicitly stole confidential information from their former employer. Fitbit has denied those accusations. Investors for now appear undaunted by those challenges. Last year, Fitbit earned $131.8 million, reversing a nearly $52 million loss in the previous year. Its sales more than tripled during that same period, to $745.4 million.


• GitHub to Seek $2 Billion Valuation in Latest Funding Round: GitHub, a startup that helps companies and developers build software, is seeking to raise about $200 million in a new Series B round that may value San Francisco-based GitHub about $2 billion. The company works as a social coding platform, where a software developer can display a project and others can contribute. The company says more than 8 million people use the service, and it charges monthly subscriptions to store programming source code.


• Uber driver is an employee, not a contractor, California regulators say: California's Labor commission has ruled that an Uber driver was an employee, not a contractor, a potentially costly precedent for the ride-sharing company. Uber unsuccessfully argued to the commission that drivers on its ride-hailing smartphone platform aren't employees, because it doesn't set their hours or force them to pick up riders. The commission ruled that Uber was more than a passive platform connecting drivers and riders. Instead, the commission said in its ruling, Uber is “involved in every aspect of the operation,” vetting drivers, setting standards and establishing non-negotiable rates. The company can also kick drivers off the service if customers give them a low rating. Currently, Uber drivers take an 80 percent cut of fares, but they cover their own costs and pay their own taxes. The ruling could set a broad precedent if it is upheld. For Uber, the implications of counting its drivers as employees rather than contractors are substantial. It would suddenly have to pay for employees' health care benefits, worker’s compensation and payroll taxes, and be on the hook for costs like gas and car maintenance.


• Oracle sales, profit miss estimates; shares fall: Shares of Oracle, often seen as a barometer for the technology sector, fell 6 percent to $42.15 in extended trading after the company's earnings report.Revenue fell 5.4 percent to $10.71 billion. Revenue rose 3 percent on a constant currency basis. Net income fell to $2.76 billion, or 62 cents per share, in the fourth quarter ended May 31, from $3.65 billion, or 80 cents per share, a year earlier. Sales from Oracle's cloud-computing software and platform service, an area keenly watched by investors, rose 29 percent to $416 million.


• Location Intelligence firm AdNear expands into Europe: Bangalore and Singapore-based AdNear Pte Ltd, which helps brands reach out to audiences by analysing time-bound location data, has ventured into Europe by establishing a beachhead in London. The company has appointed Ken Parnham, former managing director of data privacy management company TrustE, as general manager of Europe. AdNear was founded by Anil Mathews, who is also the company’s CEO, back in 2009. The company’s advertising platform is built on a proprietary hybrid geo-location platform, which helps to provide location awareness on mobile phones without GPS or operator assistance. It serves clients in India, Singapore, Australia and other Asia-Pacific countries. AdNear leverages real geo-location, combined with consumer behaviour, to target relevant users within a geo-fence. All ads are displayed within mobile apps and they ensure further engagement as users can find their way to the advertised stores and use coupons among other things. Recently, the company had raised Series B funding of $19 million from Telstra Ventures, Global Brain, Sequoia Capital and JPM Private Equity Group. In November 2012, Adnear had raised $6.3 million in Series A funding from Sequoia Capital and Canaan Partners.


• 4 Microsoft Executives to Leave in Top-Level Shake-Up: Four senior Microsoft executives, including Stephen Elop and Mark Penn, will leave the technology company in the biggest organizational shake-up yet under Satya Nadella, its chief executive. Mr. Nadella said that three of the departures were related to his decision to organize the company’s engineering efforts into fewer groups. The three executives leaving as a result are Mr. Elop, former chief executive of Nokia, who has been leading Microsoft’s devices group; Eric Rudder, leader of its advanced technology and education efforts; and Kirill Tatarinov, head of its business solutions group. While Microsoft has a long history of bureaucratic reshufflings, they do not typically involve the departure of so many executives at once. Mr. Nadella’s decision to merge several groups into others effectively left a handful of Microsoft executives without clear roles. By far, the most significant of the changes is the merging of devices, which includes Xbox, Surface tablets, smartphones and other hardware products, with the Windows organization under Mr. Myerson. By grouping hardware and operating systems under one leader, the move undoes part of the reorganization by Mr. Ballmer.