Month: April 2017

The key to winning Indian e-commerce?

Losing big. FlipKart, the “Amazon of India,” made headlines yesterday when it announced a funding round of $1.4B from big hitters like eBay, Microsoft, and Chinese investment firm Tencent.

Which seems great, until you consider the company lost $800m last year.

Apparently, e-commerce in India is a tough nut to crack and FlipKart’s main competitors, Snapdeal and Amazon India, both lost over $450m last year as well. So, if online sales in India are a big money pit, why do people keep investing?

It’s all in the name of scaling

As Amazon has already shown at home by owning 43% of all U.S. online retail sales, it pays to be top dog.

And, considering India has the world’s fastest growing, soon-to-be $48B online retail market, investors are pouring money into marketing and logistics, hoping to beat out the competition.

However, the race to the bottom can’t go on indefinitely, and experts predict the next few years will determine who’ll come out on top.

But when you come at the king, you best not miss

It’s hard to imagine beating Amazon at its own game.

While Flipkart’s parsed together $4.65B over several rounds of funding, Bezos allocated $5B in Amazon revenue with a few strokes in an Excel sheet.

However, Flipkart does have a number of recent, strategic advantages in its latest round of funding, including purchasing eBay’s India business and getting the necessary capital to buy struggling competitor Snapdeal.

And like kids teaming up on the playground to fight a bully, this is also the largest India deals by Microsoft and Tencent, illustrating the growing international support for chipping away at Amazon.

Apple’s oval orchard

Well circular, to be precise. After 4 years of teaser videos and leaked blueprints, Apple plans to open its $5B donut-shaped “Apple Campus 2” in Cupertino this month.

And, while the office itself is a feat of engineering (requiring around 6km of glass for its rounded walls) — it only accounts for about 20% of the 2.8m ft2 campus.

The other 80%? Landscaping including grass, shrubs, flowers, and… about 9k trees. Unfortunately for Apple’s Chief Arborist David Muffly (yes, that’s his real title), they’re not the only ones in the market for some green.

It’s a no-hoes-barred battle of the branches

San Francisco’s Transbay Transit Center, a $2.3B bus terminal under construction, still needs 469 trees for its 5.4 acre park.

Meanwhile, Apple is about 3k short, so they’re calling dibs on the best trunks from nurseries across the Pacific Northwest by marking trees with locking tags so no one else can swipe ‘em.

But, unlike the TTC, which is seeking rare specimens like Chinese elms and “a single Chilean wine palm,” Apple’s main focus is its orchards.

Everyone’s freaking out about fruit

When they’re not perfecting the “beveled edges” of the next iPhone, employees will be able to eat persimmons, cherries, apricots, and — of course — apples right off the tree, as they stroll leisurely across campus.

That is, if they get bored of the other 20%, which features a $70m fitness center, 90k ft2 cafeteria, and a thousand-person underground auditorium for product launches — all run on 100% renewable energy via one of the largest corporate solar arrays in the world.

Not to mention the office itself, a never-ending circle that encloses the man-made forest and houses 13k engineers and designers.

“A circle, huh? This shape sounds strangely familiar…”

Well, yeah, it looks like the iPhone home button.

Oh, but you’re thinking of The Circle, a Tom Hanks and Emma Watson thriller debuting this month based on a David Eggers book about a giant tech company with a circular HQ that collects way too much data and looks perfect from the outside but is actually evil?

“Yeah, it’s cool. I’ll hang back at the old office…”

Turnstyle: Like taking emails from a baby

Yelp has acquired Turnstyle Analytics, a marketing company that tricks lures people into giving companies their email addresses when they login to their free wifi network, for $20m.

With this acquisition, Yelp can offer businesses the ability to track when users visit their stores and send them loyalty rewards for repeat trips. And as much as we all hate promotional emails, that sweet, sweet internet hookup is hard to resist… especially if you’re at the end of your data cycle.

Square wants to hang out with the cool kids

 

The mobile payments company is now in talks to acquire Yik Yak, the $400m anonymous messaging app that peaked in college. Though nothing’s set in stone, the deal would likely be an “acquihire” for Yik Yak’s employees and shutting down development on the app.

Why the buy? Too soon to tell, but could be a play to integrate messaging into their payments service, kind of like WeChat Pay in China (mega-successful) and Facebook Messenger payments (mehhh)…

It works great until it doesn’t

On Sunday, a video surfaced of a 69-year-old man getting physically dragged from an overbooked United flight, and the internet reacted with reasonable outrage. You’ve probably heard something about it…

Since then, overbooking stories have been coming out of the woodworks and, most of the time, the strategy seems to work out fine — people change flights or cancel plans.

But sometimes it doesn’t. And, if you’re United this week, those times can cost you about $255m in a single day.

So why gamble by booking too many people?

It’s like hedging your bets on a house party by inviting 200 people when your place can only fit 150. Pretty much guaranteed a rager even if 60% of the “maybes” don’t show.

And, in the notoriously slim-margined airline business, just 3 empty seats on each of United’s 4,523 daily departures, means $2.7m in lost revenue every day (assuming a $200 ticket price).

So slightly higher stakes than throwing a dud party.

But it’s not like flight attendants are picking favorites…

The decisions are made by a complex algorithm (surprise!) which factors in the number of refundable tickets and past no-show rates.

Which includes your individual data so, if you’re a flake risk, they’ll probably sell more seats on your flight than usual.

After that, a real-live human adjusts these calculations to consider attendance-altering factors like weather, or other events that could cause people to miss their flights. Say, a music festival or Evan’s annual epic Easter Eggstravaganza.

Works pretty well, all things considered

Except when it doesn’t, and you have passengers held hostage on a tarmac until 4 of them “reluctantly” give up their seats.

To put it in perspective, United only bumped about 0.09% of passengers in 2015, so hopefully it’s not all that likely to happen. And, if does, airlines will usually offer you up to 4x the ticket retail price.

That said, the small percentage of bumped passengers still have no say in whether or not they can board the flight they paid for, even if they have to miss their niece’s birthday party/little league game/graduation.

Ski resort consolidation is heating up

Closing the ski season on a high note, Colorado-based resort company Aspen Skiing Co. announced yesterday that they’re acquiring Intrawest Resorts for $1.5B.

Those who haven’t heard of Intrawest have likely heard of their well known-mountains, including Winter Park, Steamboat, Stratton, and Snowshoe.

The purchase is a big move to help Aspen (which previously only owned 4 mountains) catch up with its biggest rival, Vail Resorts…

Which has been consolidating like crazy

The world’s largest resort operator has been on a buying spree itself lately, dropping $1.1B to buy most of the Whistler ski area in Canada, and $50m to buy Stowe in Vermont.

Why does one resort need so many mountains? To sell “Epic Passes,” of course.

Priced at $809, the awesomely-named pass gives skiers access to any of Vail’s 11 mountains. So more mountains equals more epicness — which equals more money. And with 650k passes sold last season, the strategy appears to be working.

Now with Aspen’s Intrawest purchase, multi-resort passes are simply table stakes. Other resorts have no choice but to buy a place at that table, or operate as a loss, getting people in the door while making the real money on bison chili and jacuzzi bubbles.

Not that we’d complain.

Tesla meets Ford at the crossroad

Over the past few months, Tesla’s valuation has slowly crept up on Ford’s and, at this point, the car/battery/solar company’s worth could surpass the model-T mainstay literally any second now…yep, aaaannyy second…

“HAS IT HAPPENED YET?”

No. But keep your peepers peeled people because, despite Ford winning the hearts of Americans for over a century, the teenage Tesla’s stock has grown 714% in the past 5 years while Ford’s fell 5%.

After all, the market never looks back

Frankly, US consumers don’t have much of a long-term memory either.

Sure, Ford’s investing heavily in its incubator and self-driving tech but their greatest profit margins still come from SUV and truck sales, and demand for those depends heavily on volatile gas prices.

And while Tesla’s $7B in revenue for 2016 is just a drop in the bucket compared to Ford’s $152B, it’s their future trajectory that has investors on the edge of their seats.

Critics say that Tesla’s insane valuation has less to do with their business model and more to do with Elon Muskrat’s sheer animal magnetism… But honestly, can you blame ‘em?

NETFLIX WORLDWIDE

Revenue from Netflix’s in-app subscription purchases hit close to $120m this quarter, which blows the competition’s mobile apps out of the water (HBO NOW and Hulu each did $23.7m and $19.4m in Q1 2017, respectively).

Compare that to this time last year when the brands’ revenues were in the same ballpark (Netflix and HBO’s apps each did just under $40m in revenue in Q1 2016), and you’ll see Netflix has nearly tripled its top line while everyone else deconstructed Game of Thrones trailers.

What’s their special sauce, you ask?

Global programming. They’ve been servin’ up sizzling entrees of international-friendly content like The Crown (about Queen Liz) and Narcos (a drama in which the Colombian characters actually speak Spanish).

Netflix also provides free servers to ISPs (internet service providers) worldwide to relieve the strain of the extra streaming data and provide service to users in area areas with limited internet bandwidth.
And people are eating it up

Almost 50% of their audience now comes from outside the US, and according to a recent company blog, soon English won’t even be their dominant viewing language.

All this from a platform that expanded from 3 languages (English, Spanish, Portuguese) to over 20 in just 5 years.

Eso es loco (that’s crazy)

But, with more subtitles, comes more responsibility — and a lot more chances to screw up. Netflix currently works with thousands of linguists to translate their shows, but their subtitle track record hasn’t exactly been spotless.

Frustrated users on blogs and Reddit forums continue to call them out for nonsense or half*ssed subtitles, and Netflix is finally taking ownership.

On Friday, they rolled out a standardized test, called “HERMES,” that all translators must pass, to make sure nothing gets lost… in translation. And if they can nail this, it’s looking like smooth snailing from here.

Roll over, play dead, good boy!

It’s not often 2 rival companies take a step back, consider what’s best for their collective customer base, and decide to tag-team the future hand-in-hand.

But that’s pretty much happened yesterday when Rover acquired DogVacay, the #1 and #2 companies in the dog-sitting space, respectively, in an all-stock deal.

The new entity will operate under the Rover name and, unsurprisingly, Rover CEO Aaron Easterly will be the man in charge.

Honestly, it’s a smart move

They both do pretty much the same thing (think: Airbnb for dog boarding and walking), they both raised a bunch of money from top investors ($138m total), and they’re both doing exceptionally well ($150m in combined bookings).

Instead of competing head-to-head for the foreseeable future, joining forces lets them play to each other’s strengths and focus entirely on doing what they do best — solving annoying problems for pet owners.

For example, Rover grew 9x faster over the past 3 years, but DogVacay makes more money per host.

The riches are in the niches

Easterly’s hinted in the past that they’re planning on an IPO, and they’re now the clear leader in a $15B pet care industry. Not too shabby for taking Fido on walks and asking “who’s a good boy??”

But seriously, it’s easy to forget how much opportunity there is on the fringes.

Speaking of which cats.com is available and up for auction. For a cool $1m, you could start the big cat-sitting startup.

Slo-mo, no-mo

In the age of instant replay in sports, you’d think we’d have put the debate around questionable calls to bed once and for all.

But, according to a recent study by the University of Chicago, slow motion video may actually make it harder to make the right call.

Because in slow-motion, that “shove” looks purposeful

The study showed that slow-motion can skew our perception and that altering the speed of the action and taking it out of context causes it to look more intentional than it does in real-time.

According to the paper, “This is because slow motion gives the false impression that the actor had more time to think before acting.”

Which, in sports, might result in unwarranted fouls or flags, but in court…

“Bad reffing” can lead to a life sentence

In the study, organizers showed mock juries the same real surveillance footage of a murder, to study how changing the playback speed affected their decision-making.

The results showed that juries were almost four times as likely to vote unanimously for a first-degree murder verdict if they had seen the scene in slow motion, compared to juries who had seen the same video at regular speed.

Which is a little bigger of a deal than the refs missing that goaltending call in the Gonzaga – Northwestern game a few Saturdays ago.

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