- Airbnb raises $1 billion in latest round of funding: Online room renting service Airbnb Inc said on Thursday it had raised $1 billion in its latest round of funding, valuing the company at $31 billion.The company turned in a profit on an EBITDA basis in the second half of 2016 and expects to continue to be profitable this year, the source said, adding that Airbnb had no plans to go public anytime soon. The company is locked in an intensifying global battle with regulators who say the service takes affordable housing off the market and drives up rental prices.Airbnb raised $447.85 million as part of the funding, a source close to the company told Reuters. The company said in September it had raised about $555 million as part of the same round of funding. Airbnb, which operates in more than 65,000 cities, has enjoyed tremendous growth as it pushes ahead with its plans of global expansion.
- Millennials buy more clothes on Amazon than any other website: Clothing is probably not what most people think of when they think of Amazon. But the datacontinues to show they should. Case in point: Amazon registered the most apparel sales in 2016 of any online retailer in the U.S. for shoppers aged 18 to 34 — yes, millennials. The e-commerce giant accounted for nearly 17 percent of all online clothing sales to this demographic last year, more than doubling the market share of the No. 2 seller, Nordstrom. One other interesting finding from the chart above: Stitch Fix, the young company that sends personalized assortments of clothing to customer homes, is only five years old and already cracked the Top 10. And its online market share among millennials is almost equal to that of household brands like Macy’s and Gap, and larger than Banana Republic and British fast-fashion site Asos. Stitch Fix has a huge following in the middle of the U.S., fueling a business that has as much as $1 billion in annual revenue, according to industry estimates.
- Alibaba seeks $5 billion loan amid tech financing rush: Basis Point: Chinese e-commerce giant Alibaba Group Holding Ltd is in talks with banks to raise $5 billion in new funding, sources told Thomson Reuters' Basis Point, amid a flurry of fund-raising by China's tech giants. Alibaba is looking to raises the funds offshore via a bullet loan with a five-year maturity, with the aim of using the proceeds for general corporate purposes including refinancing, the sources said. The plan comes as key rival Tencent Holdings looks to raise up to $2 billion in new debt funding, with competition heating up amongst the country's Internet firms domestically and overseas.
- Wikileaks' CIA hacking dump sends tech firms scrambling for fixes: Tech companies must rapidly step up information-sharing to protect users from prying eyes, a security software executive said on Wednesday after WikiLeaks released a trove of data purporting to show that the CIA can hack all manner of devices. Dozens of firms rushed to contain the damage from possible security weak points following the anti-secrecy organization's revelations, although some said they needed far more information on what the U.S. intelligence agency was up to before they could thwart suspected but previously hidden attacks. Sinan Eren, vice president of Czech anti-virus software maker Avast, called on mobile software makers Apple and Google to supply security firms with privileged access to their devices to offer immediate fixes to known bugs. Avast, which counts more than 400 million users of its anti-virus software worldwide, was named in the WikiLeaks documents as one of the security vendors targeted by the CIA in a leaked page labeled "secret" but lacking further details. The leaks - which WikiLeaks described as the biggest in the Central Intelligence Agency's history - had enough technical details for security experts and product vendors to recognize that widespread compromises exist. However, they provided few specifics needed to offer quick fixes. The 8,761 leaked documents list a wealth of security attacks on Apple and Google Android smartphones carried by billions of consumers, as well as top computer operating systems - Windows, Linux and Apple Mac - and six of the world's main web browsers.
- Valuation Shell Game: Silicon Valley’s Dirty Secret: You want to know the dirty, little secret of Silicon Valley? It’s called the 409A valuation. Here’s how the process works: In order to attract and to retain high-powered employees, high-flying tech companies want to issue them common stock or options. To do so and to comply with Internal Revenue Service rules, they need to obtain an independent, third-party valuation of the company. This type of valuation allows hot, privately owned technology companies — like Uber, Airbnb or Nextdoor — to issue common stock or stock options to employees at a low price and, at the same time, or nearly the same time, sell preferred stock to outside investors at a price that is often three or four times higher. It’s also a way for company founders to control the market for the stock of their private companies while rewarding themselves and key employees with cheap shares that seem instantly worth a lot more than the price at which they were issued. Failure to comply with section 409A of the tax code would make employees receiving the stock grants personally liable for immediate taxation on the excess value embedded in the stock or options, plus a 20 percent penalty tax. The valuations also give the founders of technology companies extraordinary control over the market for the private sale of company stock. Whether employees realize it or not, the stock the company grants to them often explicitly prevents its sale to anyone, or in any private secondary market, without the express written consent of the founder, the chief executive or the board of directors. Obviously this becomes a problem when an employee wants to sell his or her private stock. And who wouldn’t, if for instance, the stock is issued to employees at a $500 million valuation, and then sold to outside investors at a $1.5 billion valuation. This is often the point where the founder steps in and says, sorry, no sale, or at least not at the higher valuation. Selling implies the person is no longer a true believer in the company or in its mission. This dynamic falls especially hard on early investors who are not company employees, those so-called “series A” or “series B” venture-capital investors who would like to sell at the higher valuation but can do so only with the founder’s or chief executive’s permission and only at the sanctioned valuation. Employees looking to diversify their wealth also often feel frustrated.
- Instacart, Now $400 Million Richer, Tries to Be Thrifty: Apoorva Mehta is thinking a lot about bottle deposits. Recycling fees vary by state and container size, but until recently, Mehta’s online grocery delivery startup Instacart Inc. hadn’t paid much attention to what it was charging customers purchasing soda or beer. Then they did the math and discovered that this oversight was costing the company on average 35 cents a delivery. Instacart now charges the correct amount for bottle deposits. In the last year, it made a similar adjustment to how it accounts for local sales taxes, which has saved another 20 cents per delivery, according to the company. The penny-pinching is part of a new strategy designed to show investors that Instacart can rise above the pile of on-demand startups that have bled venture capital. Enough VCs were convinced by Mehta’s pitch to contribute $400 million for Instacart’s latest round of funding. With the additional cash, the investment increases the company’s valuation to $3.4 billion, an unlikely harvest in a down market. “This is not what I’ll call ‘funny math’ here,” said Mehta, the co-founder and chief executive officer. “One of the things we’ve had as a result of this round is a lot of scrutiny from the smartest investors in the world, looking at a lot of these numbers in detail.” Mehta wants everyone to know that unlike a typical startup newly awash in cash, Instacart is going to spend it very carefully. The San Francisco-based company, which pays workers to pick up and deliver groceries from local supermarkets, is also eager to demonstrate that it’s taking in more revenue while spending less. Instacart cut its burn rate by more than half in the past year, Mehta said. In addition to the bottle deposit and sales tax adjustments, the company focused on driving down “time per delivery,” a metric that’s the source of some obsession within the walls of Instacart. For inspiration, the company filmed its most efficient shoppers to learn what they did differently and then taught those lessons to new recruits. Quicker deliveries translate not only into happier customers but cost savings resulting from higher productivity.
- Instacart Raises Funding Valuing Grocery Startup at $3.4 Billion: Online grocery delivery startup Instacart Inc. has raised a $400 million round of venture funding, said people familiar with the deal. With the additional capital, the San Francisco-based company’s valuation has risen to $3.4 billion, said the people, who asked not to be identified because the matter isn’t public. The investment was led by Sequoia Capital, which had led an earlier round, the people said. Instacart allows customers to shop through an app at local grocery stores. Orders are then picked off shelves and delivered by Instacart workers, who are a mix of part-time employees and independent contractors. Before the latest fundraising discussions, Instacart had been valued at $2 billion after a 2015 funding round.
- Wrapify raises $3M from Avery Dennison to pay you to wrap your car in ads: Wrapify, the startup that will pay you to wrap your car with an advertisement, has raised $3 million in seed funding. As a refresher, the startup provides a two-sided marketplace that matches up drivers wanting to make some extra money with brands looking for a unique way to advertise. Eligible drivers will get their car wrap installed (and removed) for free, and on average are paid $450 a month for the duration of their campaign. The entire round of funding will come from Avery Dennison, the global manufacturer of adhesive materials. Interestingly, Avery Dennison is the manufacturer of the wraps that Wrapify uses on all of its cars. While the adhesive manufacturer has already provided Wrapify exclusive access to new adhesive wrap technology (wraps with fast installability and removability) that better fit the startup’s use case of short-term installations, being on the cap table should incentivize them to continue investing in wrap technology that will allow Wrapify to operate more efficiently.
- Google may have missed a big chance to become a major smartphone maker: Since its October launch, Google's Pixel phone has received rave reviews, and Google recently confirmed to the Android-focused publication Android Pit that it will release a new Pixel this year. Yet despite these successes, it seems the phone may be experiencing some trouble on the sales front and may have missed an opportunity to capitalize on competitors' missteps. While Google doesn't break out its numbers for Pixel units sold, analysts estimate that customers bought around 552,000 Pixel phones by the end of 2016, according to USA Today. In comparison, Apple sold 78 million iPhones between late September and December. Samsung sold 2.5 million Galaxy Note 7 phones between its mid-August launch and its October discontinuation. To put that in perspective, Google's market share for smartphones shipped is now less than one percent worldwide — as compared to Samsung's 18 percent and Apple's 18.2 percent — said Ramon Llamas, a research manager for the analysis firm International Data Corporation. On paper, it seemed like it should have been a slam dunk for Google given the Pixel's Google branding, Samsung's Note 7 problems, and criticism of Apple's latest iPhones not being that revolutionary. The Pixel is a solid phone thanks to its quality construction, pure version of Android and special Google features such as the voice-controlled Assistant. The big problem for Pixel is that only one carrier, Verizon, sells the phone, said Jeff Moore of research firm Wave7 Research. While users can get it directly from Google for full price of $649 — and take it to another carrier if they want — that's not an option that a majority of wireless customers think about. Compounding the availability issue, Moore said, is that stores are having trouble keeping the phones in stock. That's a good sign for Google in terms of demand, but also a bad sign for the company in terms of being able to capitalize on that demand, he said.
- Snap slumps 12 percent, closes at lowest since IPO: Shares of Snap Inc (SNAP.N) slumped 12 percent on Monday and closed at their lowest level of the three sessions since the Snapchat owner's soaring market debut last week. The $3.4-billion listing last Thursday was the hottest technology offering in three years, but the loss-making company's lofty valuation and slowing user growth have raised eyebrows on Wall Street. In its market debut last Thursday, Snap surged 44 percent from its $17 IPO price to close at $24.48. After jumping another 11 percent on Friday, the stock on Monday reversed course and fell 12.25 percent to close at $23.77. "It's not necessarily because there's something wrong with it. It's because it probably moved way too far, way too fast," said Ken Polcari, director of the NYSE floor division at O’Neil Securities in New York. History suggests investors shut out of IPOs are better off waiting instead of rushing to buy them immediately after their debuts. Globally, shares of most of the 25 largest technology IPOs have languished in their first 12 months on the public market, with 16 of them notching a hefty decline from their debut day closing price, according to a Reuters analysis of market performance.
- How Uber Deceives the Authorities Worldwide: Uber has for years engaged in a worldwide program to deceive the authorities in markets where its low-cost ride-hailing service was resisted by law enforcement or, in some instances, had been banned. The program, involving a tool called Greyball, uses data collected from the Uber app and other techniques to identify and circumvent officials who were trying to clamp down on the ride-hailing service. Uber used these methods to evade the authorities in cities like Boston, Paris and Las Vegas, and in countries like Australia, China and South Korea. Greyball was part of a program called VTOS, short for “violation of terms of service,” which Uber created to root out people it thought were using or targeting its service improperly. The program, including Greyball, began as early as 2014 and remains in use, predominantly outside the United States. Greyball was approved by Uber’s legal team. Greyball and the VTOS program were described to The New York Times by four current and former Uber employees, who also provided documents. The four spoke on the condition of anonymity because the tools and their use are confidential and because of fear of retaliation by Uber. One technique involved drawing a digital perimeter, or “geofence,” around the government offices on a digital map of a city that Uber was monitoring. The company watched which people were frequently opening and closing the app — a process known internally as eyeballing — near such locations as evidence that the users might be associated with city agencies. Other techniques included looking at a user’s credit card information and determining whether the card was tied directly to an institution like a police credit union.Enforcement officials involved in large-scale sting operations meant to catch Uber drivers would sometimes buy dozens of cellphones to create different accounts. To circumvent that tactic, Uber employees would go to local electronics stores to look up device numbers of the cheapest mobile phones for sale, which were often the ones bought by city officials working with budgets that were not large. In all, there were at least a dozen or so signifiers in the VTOS program that Uber employees could use to assess whether users were regular new riders or probably city officials. If such clues did not confirm a user’s identity, Uber employees would search social media profiles and other information available online. If users were identified as being linked to law enforcement, Uber Greyballed them by tagging them with a small piece of code that read “Greyball” followed by a string of numbers. When someone tagged this way called a car, Uber could scramble a set of ghost cars in a fake version of the app for that person to see, or show that no cars were available. Occasionally, if a driver accidentally picked up someone tagged as an officer, Uber called the driver with instructions to end the ride.
- Why newspaper subscriptions are on the rise: A recent Nielsen Scarborough study found that more than 169 million U.S. adults now read newspapers every month, in print, online or mobile. That’s almost 70 percent of the population. The New York Times picked up 130,000 new subscribers last November — 10 times their average monthly growth rate. Subscriptions at The Wall Street Journal spiked 300 percent, the LA Times went up 61 percent and Vanity Fair picked up 13,000 new subscriptions in one day. The now-profitable Washington Post is hiring 60 new writers. NPR recently said that “Big Newspapers Are Booming.” Sure, those papers can thank the incoming president for some of their new business, but this isn’t just a political story. All sorts of reader-supported publishers are enjoying a resurgence. In the technology industry, for example, Jessica Lessin’s sharp, pointed (and subscription-only) The Information now has the second largest team of tech reporters in Silicon Valley. Ben Thompson has several thousand readers who are happy to pay him $100 a year for his excellent Stratechery newsletter. Why are readers and publishers alike embracing paid subscriptions for content services over ad-based business models? There are several reasons, but the dismal state of online advertising is a big one. People hate ads. More than 80 million Americans will use ad blockers this year, costing digital media companies around $10 billion in revenue. And despite all the media industry talk about relevant “native advertising,” most of us are still drowning in pop-ups. It says a lot about advertising that many publishers are pitching its complete absence as a way of incentivizing paid subscriptions. Even Google is doing it — take a look at YouTube Red. Ads have all sorts of other insidious effects, like turning content providers into clickbait factories. Ex-Politico president Jim VandeHei calls it the “crap trap.” “The number of people with access to the Internet is huge and lots of niches are underserved right now because they’re not broad enough for advertisers to care about,” says Ben Thompson. All successful subscription services, from Adobe to Dollar Shave Club to the Weekly Standard, can take advantage of predictable recurring revenue to stay razor-focused on their audiences, create distinctive new features (The New York Times now has a sizeable revenue stream just from its crossword app) and avoid the commodification crap trap. As Jessica Lessin says: “I still believe it’s much safer to build a business that doesn’t need any advertising to survive. Doing so forces you to focus 100% on your value to your readers. It’s the only way to make sure that what the news publishers deliver to readers in the future is smarter, more informed and more relevant than in the past.”
- NBCUniversal invests $500 million in Snap's IPO: Comcast Corp's (CMCSA.O) NBCUniversal has invested $500 million in Snapchat owner Snap Inc (SNAP.N), according to a memo on Friday, its latest move aimed at driving digital growth as more viewers go online for their favorite content. Like other traditional U.S. media companies, NBCU is pushing more into digital media, and over the past 18 months it has invested $400 million in online publisher Buzzfeed and $200 million in Vox Media, operator of The Verge and Recode news.NBCUniversal has agreed to hold Snap's shares for at least a year, according to CNBC. Snap disclosed last month that it expected investors buying up to a quarter of its shares in the IPO to agree not to sell them for a year. Lock-up periods help companies moderate stock volatility by preventing company insiders from selling their shares within an allotted time.
- Facebook tests reactions and Dislike button (!) on messages: Facebook finally has a Dislike button, but it’s not where you’d expect. How do you reply to a specific message in a rapid-fire chat thread? Facebook wants you to attach emojis to your friends’ messages the same way you do with News Feed posts.TechCrunch reader Hoan Do sent us a tip that Facebook Messenger is showing some users a Reactions option. When you hover over messages friends have sent in a chat thread, you can tap the emoji button to pick from attaching a little thumbs-up Like, thumbs-down Dislike, or a heart-eyes, lol, wow, sad, or angry emoji. Everyone in the thread will then see that Reaction counted below the specific message you attached it to, and you can tap to see a full list of who left which Reaction. Facebook confirmed this new feature to TechCrunch, saying “We’re always testing ways to make Messenger more fun and engaging. This is a small test where we enable people to share an emoji that best represents their feelings on a message.” That means not everyone has access now, but if people enjoy it, Messenger Reactions could roll out to all users. Notably, the Messenger reaction list differs from the News Feed one because of the addition of much-requested and always-denied Dislike button. Though it’s known as Facebook’s most asked for feature, the company didn’t want to inject too much negativity into the feed so it never built one. Instead, it built Reactions so people could share more nuanced emotions quickly, but left disliking for the comments. Facebook launched Reactions almost exactly a year ago, and they proven popular, with over 300 billion sent so far. “Love” is the most frequently used, making up more than half of all Reactions.
- Snap Shares Leap 44% in Debut as Investors Doubt Value Will Vanish: Snapchat is a business built in large part on disappearing messages and adding animated dog ears and flower crowns to users’ selfies. As of Thursday, that business is worth about $34 billion — more than the market value of the old-line media company CBS, and about three times the size of another social media company, Twitter. Snapchat has made paper billionaires of its 20-something founders five times over. In making its stock market debut in spectacular fashion — its shares rising 44 percent on their first day of trading — Snapchat’s parent, Snap Inc., has blazed a trail for other technology darlings like Uber and Spotify that remain privately held. It elated Wall Street institutions eager for a prominent initial public offering when few had surfaced for months. The company has entranced investors despite a litany of red flags, like enormous losses that are expected to persist for years, a slowdown in its once-vaunted user growth rates, and an ownership structure that gives Snapchat’s founders control for decades to come.
- Amazon’s massive AWS outage was caused by human error: Amazon today blamed human error for the the big AWS outage that took down a bunch of large internet sites for several hours on Tuesday afternoon. In a blog post, the company said that one of its employees was debugging an issue with the billing system and accidentally took more servers offline than intended. That error started a domino effect that took down two other server subsystems and so on and so on. “Removing a significant portion of the capacity caused each of these systems to require a full restart,” the post read. “While these subsystems were being restarted, S3 was unable to service requests. Other AWS services in the US-EAST-1 Region that rely on S3 for storage, including the S3 console, Amazon Elastic Compute Cloud (EC2) new instance launches, Amazon Elastic Block Store (EBS) volumes (when data was needed from a S3 snapshot), and AWS Lambda were also impacted while the S3 APIs were unavailable.” In response, the company said it is making some changes to ensure that a similar human error wouldn’t have as large an impact. One is that the tool employees use to remove server capacity will no longer allow them to remove as much as quickly as they previously could. Amazon also said it is making changes to prevent the AWS Service Health Dashboard — the webpage that shows which AWS services are operating normally and not — from stopping working in the event of a similar occurrence.
- Snap Prices I.P.O. at $17 a Share, Valuing Company at $24 Billion: Millennials, those 14 to 35 years old, may be as exuberantly hyped a demographic as any in recent memory. That generation has now helped power one of the biggest and most eagerly awaited stock market debuts in recent memory, making billionaires of the founders of the disappearing-message service Snapchat. Investors, attracted by Snapchat’s hold on its millennial users — who check the app on average more than 18 times a day — flocked to the initial public offering, pushing the parent company, Snap Inc., to a valuation of nearly $24 billion. The stock sale sets Snap up as the most valuable American technology company to go public since Facebook nearly five years ago. And it may herald a coming wave of unicorns — technology start-ups valued at more than $1 billion by private investors — that are expected to hit the public markets in the next few years. Snap’s offering was priced on Wednesday at $17 a share — a dollar more than the previously expected pricing range. The pricing came on a day when the stock market surged to another high, fed by raised expectations of tax cuts, looser regulations and higher interest rates under the Trump administration. Shares of the social media companies Facebook and Twitter also rose. Those buying into Snap’s offering did so even as warning signs have flashed over the company, based in California. It lost more than $500 million last year, and its explosive user growth appears to have hit a speed bump. And in a decision that has angered some large investors, the shares will have no voting rights, leaving control in the hands of the company’s founders, who can retain that power for years even after leaving Snap. Yet when Snap begins trading on the New York Stock Exchange on Thursday, under the ticker name SNAP, it will command a lofty valuation multiple even richer than that of Facebook, which earned $10 billion last year. With a market value of almost $24 billion, including unvested stock options and grants, the company is now setting itself up with little room for error.
- Facebook's Oculus cuts price of virtual reality set by $200: Facebook Inc's virtual reality unit Oculus has cut $200 from the total price of its flagship hardware set, in a bid to expand the system's base of video game players, the company said on Wednesday. The virtual reality headset Rift and the motion controllers Touch will together retail for $598, Jason Rubin, Oculus' vice president of content, said in a statement. Facebook paid $2 billion for Oculus in 2014, believing it to be the next major computing platform. Chief Executive Mark Zuckerberg has said that Oculus would spend $500 million to fund virtual reality content development. Oculus and other virtual reality makers are struggling to make their products competitive with other gaming systems that sell for much less.
- Instacart In Talks to Raise About $400 Million: Grocery-delivery startup Instacart is said to be in talks with investors to raise about $400 million, more than two years after its last major round of funding.The new funding would value the San Francisco company at $3 billion, according to people familiar with the matter. The startup, which uses workers to pick groceries off the shelves of stores such as Whole Foods and deliver them to customers' doorsteps, previously raised funding in January 2015 at a $2 billion valuation. Sequoia Capital, which already has a stake in Instacart, is likely to lead the round, one of the people said. A year ago, Instacart Chief Executive Officer Apoorva Mehta told Bloomberg that the company had a plan for becoming sustainable, and he didn't expect to raise funding again in the future.
