- Wi-fi first telcos might be about to disrupt the telecom business: It would not be an insult to say Republic Wireless and FreedomPop are obscure little companies. But they dream big. The two companies are at the forefront of a tantalizing wireless communications concept that has proved hard to produce on a big scale: Reduce cellphone costs by relying on strategically placed Wi-Fi routers. And when there are no routers available, fall back on the traditional cellular network. They have been at this for nearly five years with mixed success. The companies say they are already profitable and gradually adding subscribers. But they are tiny — both say their customers are in the hundreds of thousands. Verizon Wireless, by comparison, has more than 100 million. Still, the upstarts have been trailblazers, proof that alternative wireless networks are feasible and maybe even profitable. Now some giant companies look to be following their lead. Last month, Cablevision announced a phone service that would be powered entirely by Wi-Fi, for $30 a month, while a traditional wireless contract costs around $100 a month. Google has also been working on a cellphone service that relies heavily on Wi-Fi, according to people briefed on the company’s plans. For consumers, all this could be very good news. The big American carriers — Verizon Wireless, AT&T, Sprint and T-Mobile USA — have not been worried about their Wi-Fi-powered competitors. But Cablevision and Google could force them to pay attention. And an industry already engaged in a price-cut war could be compelled to go even lower to keep the upstarts at bay. “Wi-Fi first is a massive disrupter to the current cost structure of the industry,” said Stephen Stokols, chief executive of FreedomPop. “That’s going to be a big shock to the carriers.” The concept championed by the two little companies in their nationwide services is surprisingly simple. The traditional wireless carriers operate their services with cell towers, but occasionally in areas with extra heavy traffic they resort to Wi-Fi to bear some of the load. FreedomPop and Republic Wireless do the opposite. They offer services that rely primarily on Wi-Fi networks, and in areas without Wi-Fi, customers can pull a signal from regular cell towers.
- Infosys acquires SaaS provider Panaya in deal valued at $200M: Consulting and IT services provider Infosys announced today that it will acquire Panaya, an enterprise resource planning (ERP) software company. Worth an enterprise value of about $200 million, the deal is expected to close by the end of March.Infosys, which is based in Bengaluru, India, said that it will integrate technology from Panaya’s CloudQuality suite to bring automation to some of its software. CloudQuality helps businesses test changes to SAP, Oracle EBS, and Salesforce software by identifying functions that might break and providing potential solutions including code corrections. Infosys, one of India’s largest software exporters, is currently in the midst of revamping its strategy as it faces challenges including slower revenue growth than competitors like HCL Tech and TCS, and the departure of several key executives. Sikka told TechCrunch’s Ron Miller last July that he would take time to understand Infosys’ problems and that he believes software solutions should be about expanding the knowledge and capability of an organization. According to Crunchbase, Panaya has received $59 million in funding. Its last round, a Series E of $20 million, was disclosed in January.
- Ford and Tencent in talks to build messaging functions for Ford's cars in China: Ford said it was in talks with Tencent, maker of the popular WeChat messaging app, to develop messaging functions for the manufacturer’s cars in China. David Huang, a senior engineer who heads Ford’s Asia Pacific connected-services unit, said, “People want to stay connected, stay informed and stay entertained all the time, even when they’re driving.” Drivers would sync their phone to their car’s software system and control WeChat functions, chosen by Tencent and certified by Ford as safe, through voice commands or limited use of buttons. Yale Zhang, managing director of the Shanghai-based consultancy Automotive Foresight, said connectivity was a deciding factor for Chinese customers buying a car. “Those kind of things are the fundamental things people will consider,” he added. Many Chinese use WeChat’s free voice messaging feature instead of phone calls, holding up their smartphones like walkie-talkies as they speak, tap and listen to replies. Rivals including Daimler and Nissan are also looking at ways to give drivers safe, hands-free access to mobile apps in China, home to the world’s largest number of smartphone users. WeChat is China’s most prevalent chatting app, with about half a billion active monthly users.
- China’s internet restrictions are hurting business, survey finds: Foreign businesspeople in China are increasingly frustrated by the growing obstacles to wide Internet access, including the onerous system of censorship known as the Great Firewall, according to survey results released this week by the European Union Chamber of Commerce in China. The survey was answered by 106 companies that are based in the European Union and have offices in China. Eighty-six percent of the respondents said their businesses had been negatively affected by the blocking of certain websites or tools. That was an increase from 71 percent in last year’s survey. The chamber also asked its members about the greater tightening of Internet access that occurred in China at the end of 2014 and this year. Eighty percent reported a worsening impact on business. Starting in late 2014, the Chinese government cut off access to Gmail from third-party apps, forcing people in China to rely on virtual private network, or V.P.N., software to get to Google’s email service. The regular Gmail site and other Google pages had been blocked consistently since last summer, but people in China had been able to use third-party apps to download Gmail to their devices until December. After blocking Gmail downloads through those apps, forcing more people to turn to VPN software, the government went on to aggressively attack V.P.N.’s. The chamber found that 13 percent of survey respondents had recently deferred investing more in research and development in China, or had been unwilling to set up those operations here, since restrictions grew at the beginning of the year.
- Russian cybersecurity firm alleges the US embeds super-sophisticated spyware in Iran, Pakistan, Russia and elsewhere: The United States has found a way to permanently embed surveillance and sabotage tools in computers and networks it has targeted in Iran, Russia, Pakistan, China, Afghanistan and other countries closely watched by American intelligence agencies, according to a Russian cybersecurity firm. In a presentation of its findings at a conference in Mexico on Monday, Kaspersky Lab, the Russian firm, said that the implants had been placed by what it called the “Equation Group,” which appears to be a veiled reference to the National Security Agency and its military counterpart, United States Cyber Command. It linked the techniques to those used in Stuxnet, the computer worm that disabled about 1,000 centrifuges in Iran’s nuclear enrichment program. It was later revealed that Stuxnet was part of a program code-named Olympic Games and run jointly by Israel and the United States. Kaspersky’s report said that Olympic Games had similarities to a much broader effort to infect computers well beyond those in Iran. It detected particularly high infection rates in computers in Iran, Pakistan and Russia, three countries whose nuclear programs the United States routinely monitors. Some of the implants burrow so deep into the computer systems, Kaspersky said, that they infect the “firmware,” the embedded software that preps the computer’s hardware before the operating system starts. It is beyond the reach of existing antivirus products and most security controls, Kaspersky reported, making it virtually impossible to wipe out. In many cases, it also allows the American intelligence agencies to grab the encryption keys off a machine, unnoticed, and unlock scrambled contents. Moreover, many of the tools are designed to run on computers that are disconnected from the Internet, which was the case in the computers controlling Iran’s nuclear enrichment plants.
- JD.com and Tencent back the same horse - to invest $1.55 billion in Chinese auto e-commerce site Bitauto: Chinese auto information website operator Bitauto Holdings Ltd said JD.com Inc and Tencent Holdings Ltd would invest about $1.3 billion in the company, sending its shares sharply higher in early trading on Friday. E-commerce company JD.com and Tencent, best known for its communications app WeChat, will also invest a total of $250 million in Bitauto unit YiXin Capital Ltd. JD.com, China's No. 2 e-commerce company after Alibaba Group Holding Ltd, will invest $400 million in cash and about $750 million in resources to Bitauto, whose sites offer sales data and other information on new and used vehicles as well as customer reviews. Tencent will pay $150 million for its shares.
- Infosys weighs smart uses of its ~INR 35,000 Crore cash pile; stock up 7% on strong earnings (Q3 Rev INR 13,796 Crore, +6%, NI INR 3250 Crore, +13% Y/Y): Under new CEO Vishal Sikka Infosys, once a trendsetter for India's more than $100 billion IT outsourcing industry, has made a push for new age technologies such as machine learning and artificial intelligence, which the CEO has said will help Infosys hit annual revenue growth rates of 15-18 percent over time. On Friday, Infosys said it was also using its workforce more efficiently, with a utilisation rate of 82.7 percent excluding trainees, its highest in 11 years. Attrition, or the number of people leaving or retiring, fell in absolute terms to 8,900 employees in the third quarter from 10,100 in the quarter before. India’s second largest software company reported a 13 percent on year increase in net profit to Rs 3,250 crore and 6 percent rise in revenue to Rs 13,796 crore for the quarter ended December, sending its shares soaring about 6 percent yesterday. The company’s cash and cash equivalents stood at Rs 34,873 crore as on 31 December. With a change in the top leadership, there are expectations that the company will start using this cash more productively. "We are interested in acquisition of small innovative companies. We are not interested in acquiring technologies from yesterday, but in acquiring technologies of tomorrow," Sikka had told analysts in a recent interaction.
- Amazon takes 1.3 days on average to return cash, the quickest among online stores, and customers respond, according to new research from StellaService Inc., which tracks e-commerce data. While most Web stores will only pay once a return parcel is on its way, Amazon offers instant refunds for some purchases, issuing immediate credit and 30 days to return a product. Instead of tying up cash and preventing customers from buying other things, Amazon’s aim is to get people spending again. That’s especially critical during and after the annual holiday shopping season, when gift returns spike and consumers are predisposed to buy merchandise. Fast refunds are also important in Internet commerce because shoppers buy things they haven’t touched or tried, making return rates higher than in retail outlets. “Amazon is killing it on refunds and others should follow suit,” said Eduardo Vilar, chief executive officer of Returnly Technologies Inc., a San Francisco company that researches retail returns. “Customers who are given the right experience on a return are more loyal shoppers.” Amazon’s instant refund, which was rolled out quietly last year, gave the Web retailer the fastest refund-processing time out of 40 companies measured by StellaService. Amazon’s closest competitors in refund-processing speed include online furniture and home goods retailer Wayfair Inc. (W) and personal computer and printer-maker Hewlett-Packard Co., which both took about three days to issue refunds, according to StellaService. The average refund-processing time of the 40 companies tracked by the researcher was more than nine days.
- Offline retailers bet on smart in-store tech: Neiman Marcus is reinventing the mirror: The retailer announced Thursday that it has installed a MemoryMirror from MemoMi in its Walnut Creek, Calif. store. It plans to install two in its San Francisco store later this month and then two in Dallas. The mirror* allows for shoppers to compare in real time how different outfits look on them. After trying on clothes in the fitting room, a customer can head to the sales floor where the special “mirror” is located. A customer controls the mirror with an iPad, instructing it when to start recording or take photos. Then he or she can try on additional outfits, and compare video footage. Two outfits can be looked at side-by-side, and the mirror stores as many clips as the customer wants. So a customer could try on a dozen looks, take videos of each, and quickly compare how each look. There’s also the option to e-mail videos or photos to friends for their input, or share on social media. The MemoryMirror isn’t technically a mirror, but a 70-inch screen with a camera on top that films the consumer. MemoMi founder Salvador Nissi Vilcovsky says the secret sauce is its perspective distortion correction, which automatically sizes the mirror to fit the customer. So no matter if you’re standing four feet in front of it or 10 feet away, it proportions the mirror so the customer fills the shot. “The world is going in the direction of in-store devices and personalization. We want to make these devices as cheap as possible and give these services not only for luxury brands,” said Vilcovsky. Nordstrom and Rebecca Minkoff have also dabbled in the smart fitting room space, using eBay technology. MemoMi is working on adding features to its MemoryMirror that allow a customer to see how they look in different colors or patterns of the clothes they’re trying on. Vilcovsky also envisions one day technology such as this being available on consumers’ televisions.
- Box is finally close to $162M IPO, valulation likely lower than last round of funding: After months of delay, Box is finally close to making its stock market debut. Box, the online data storage provider, disclosed on Friday that it was seeking to raise up to $162.5 million in its initial public offering, as the company embarked on a road show for potential investors. (If demand proved high, the company could sell additional shares and raise up to $186.9 million.) In an amended prospectus, Box said that it planned to price its shares at $11 to $13 a share. At the midpoint of that range, the company would be valued at about $1.4 billion — less than the valuation the company fetched in a private $150 million fund-raising round last summer. Founded in 2005, Box became one of the most prominent independent providers of online storage and file sharing services, particularly for corporations. But the company has been somewhat overshadowed by the much bigger Dropbox, a member of the 11-digit club of start-ups with a $10 billion or more valuation, and rival file-sharing offerings from technology juggernauts like Google. According to its prospectus, Box still hasn’t turned a profit. It lost $121.5 million in the nine months ended Oct. 31, a slight narrowing from the same time in the previous year. Sales, however, jumped 80 percent during that same period, to $153.8 million. And Box has asserted that it has won clients like General Electric, DirecTV and AstraZeneca. The company first filed to go public last spring, but put off its I.P.O. plans as a sudden investor distaste for risky technology companies rippled through the markets. Since then, the start-up has waited for a more propitious time to make its stock market debut. Bankers and companies are betting that time is now. Last month, a number of technology start-ups, ranging from the peer-to-peer lending juggernaut Lending Club to the data analysis provider New Relic, enjoyed strong trading debuts. The company is expected to begin trading on the New York Stock Exchange under the ticker symbol “BOX.”
- Americans teens switching to Snapchat, but adults are still loyal to Facebook; Instagram, Pinterest gaining, Twitter and LinkedIn losing: Pew study of user engagement: American Teenagers may be spending more time on messaging services like Snapchat, but American adults are still increasing their use of social networks, according to a new survey released Friday by the Pew Research Center. The Pew survey, conducted in September, found that 52 percent of Internet users regularly logged on to at least two social networks, up from 42 percent in Pew’s August 2013 survey. The percentage of adults using Facebook, the most general social network, stayed about the same, at 71 percent of the online population. But Pew found significant increases in the number of people using Instagram, a photo service owned by Facebook; Pinterest, a visually oriented service for “pinning” favorite items; LinkedIn, a business networking service; and Twitter, a microblogging service oriented toward real-time news and information. Facebook users were the most dedicated, with 70 percent logging in at least once a day. Nearly half of Instagram users visit the site daily. Twitter, which has reported slow user growth in recent quarters, saw fewer visits from its American users, according to the Pew study. Only 36 percent of them visit the site daily, the researchers found, compared with 46 percent in the 2013 survey. In a statement after the survey data was released, Twitter disputed the findings, saying, “Pew’s data is so wrong as to be laughable. As we said at our Analyst Day in November, 48 percent of our monthly active users in our top 20 markets use the service daily, and the U.S. is our top market,” said Rachel Millner, a Twitter spokeswoman. LinkedIn users also said they visited the site less frequently, although a dedicated core of 13 percent said they went at least once a day. What the numbers don’t reveal was the time people spent on each service. Because most social networks generate revenue from advertising, more time on the service means a greater opportunity for visitors to see ads. But the researchers did learn that for the median Facebook user, two-thirds of his or her friends weren’t “actual” friends at all. And less than half of adult Facebook users have friended their parents or children on the service.
- Cash collection can make the difference between life and death for a Saas business: how does one achieve rapid growth in a SaaS business while maintaining capital efficiency? By focusing on the timing of cash collection, not just cash spend. The timing of cash collection can drastically influence the cash consumption of a high-growth, recurring-revenue business significantly beyond what one would intuitively assume. This ultimately has implications on the attractiveness of a business or, at a minimum, the level of shareholder dilution it experiences over time and will become an increasing area of focus as the period of cheap growth capital slowly comes to an end. Let’s take two hypothetical early-to-mid stage, high-growth, recurring-revenue SaaS businesses and model them over a five-year period. We assume each company admirably grows annual GAAP revenue from $2M-$6M-$13M-$28M-$53M and enjoys a 100 percent annual renewal rate. Both companies have identical aggregate cost structures that are well over 100 percent of revenue, which is benchmarked on dozens of recent high-growth SaaS businesses we’ve evaluated or invested in, or that have gone public. As illustrated below, the two companies thus have identical GAAP bookings, revenues and operating income. The only difference is that the first company, Company M (“monthly”), is like most SaaS companies in that it gets paid cash monthly and ratably over the one year contract period. The second company, Company A (“advance”), collects the full annual contracted value in advance. The difference in cash consumption between the two companies is staggering. Company A would have burned $36 million less cash over the five-year period due to growing deferred revenue balances, to achieve the exact same revenue and bookings trajectory as Company M. This gap in cash consumption can be the difference between success and bankruptcy or moderate versus significant dilution for the founders and early investors. Company M burned more than three times the amount of capital as compared to Company A despite identical bookings, revenue growth and operating expenses. Who can afford to ignore this?
- Twitter Product Update #1: Twitter Will Launch Autoplay Video, but Here's How It Will Differ From Facebook Marketers have 6 seconds to entice users to click. Twitter is about to give marketers new ways to share videos with a feature the ad world has been asking for: autoplay. Twitter has been working on its built-in video system for months, which would finally give users and marketers a way to shoot footage within the app. However, the video capabilities will be different for users and brands. We spoke with industry insiders who saw Twitter's video pitch at CES, and here's what it will look like: Six-seconds to wow The autoplay feature allows marketers to create a six-second video preview, a quick opportunity to entice users to click. Choose wisely The six-second preview, however, does not have to be the first six of the video. Brands can take the best six seconds, the most captivating, and use that as the autoplay preview. Everyone knows that getting clicks on video is all about an exciting hook from the start. No sound to start The autoplay video will not have sound until a user clicks to watch the promoted tweet. Advertisers don't pay until they get that click. There's a lot of time to play with Brands will be offered up to 10 minutes of video time, which is an eternity in social media. Everyday users will only get 30 seconds.
- Twitter Product Update #2: Twitter Plans To Increase Revenue With Ads On Publisher’s Apps: Twitter reportedly has a new advertising strategy – sell ads within third-party apps. According to the Wall Street Journal, the social media network revealed the new plan to expand advertising revenue during a presentation at CES. The social media company is planning to sell ads within streams of tweets on other publishers’ apps and websites.” It isn’t clear which publishers have signed up so far. The WSJ says there were references to ESPN’s Sports Center app and Flipboard during the meeting. Twitter and ESPN have reportedly been chatting about the idea
