Ari Levy | Vox

China’s Troubles Permeate U.S. Tech Earnings

2019-03-06T05:19:28-05:00

China is the world’s biggest country, second-largest economy and top nation for smartphone sales. It’s also driving tech investors crazy.

Economic growth is slowing faster than many experts expected. Add to that uncertainty surrounding when and to what degree the Chinese government will weaken its currency to boost exports.

Just as China is becoming an increasingly crucial market for U.S. tech companies, its volatility is making future earnings hard to predict. As the Nasdaq closes out its worst month since the 2008 financial crisis, down 10 percent as of Thursday’s close, China is on everyone’s lips.

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This article originally appeared on Recode.net.

Nutanix IPO Filing Wraps Up Big Year for Storage

2019-03-06T06:07:22-05:00

Storage isn’t the sexiest topic in technology, but with the explosion of data funneling through corporate data centers, there’s no shortage of action. As 2015 comes to a close, storage companies are all over the tech headlines.

Nutanix, a provider of so-called converged storage, filed to go public on Tuesday, with tentative plans to raise $200 million. A day earlier, NetApp agreed to buy flash storage maker SolidFire for $870 million. And there’s daily noise around the mammoth $67 billion Dell-EMC deal, which was announced in October, the same month that flash provider Pure Storage debuted on the stock market. The Hewlett-Packard Enterprise business, which includes storage, is now separate from the computer company’s consumer unit.

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This article originally appeared on Recode.net.

Silicon Valley’s Cash Party Is Coming to an End

2019-03-06T06:07:11-05:00

Silicon Valley is cooling, not crashing. Valuations are falling. The era of cheap money is over.

Based on interviews with about two dozen venture capitalists and tech investors, 2016 is shaping up to be a year of reckoning for scores of technology startups that have yet to prove out their business models and equally challenging for those that raised money at unjustifiably high prices.

“It’s been surprising to see how quickly valuation expectations are recalibrating,” said Craig Hanson, a partner at Next World Capital in San Francisco. “Rounds will be harder to raise, valuation multiples will be lower and, in many cases, companies will have to demonstrate metrics that back up the big projections they promised before.”

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This article originally appeared on Recode.net.

Mobile Shopping Has Its Muzak Moment

2019-03-06T05:45:29-05:00

Walk the aisles of any store in any mall in America and you’re almost certain to hear music coming from above. Consumers know the familiar background tunes colloquially as Muzak.

Of course, that experience is feeling more and more like a relic of the shopping past. Physical retail is deteriorating, malls are closing and the Muzak brand is dead. The upheaval has been well documented.

Still, as the 2015 holiday season ramps up, music remains important to retailing, even as the way we browse and buy evolves. With commerce going digital and consumers glued to their smartphones, brands are trying to recreate the Muzak experience on their new most valuable real estate: Mobile apps.

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This article originally appeared on Recode.net.

Apple Takes Mobile Phone Billing to Russia

2019-03-06T06:06:26-05:00

Apple is quietly making it easier for consumers to buy digital goods without needing a credit card.

Starting this week, Apple users in Russia can purchase music, books, games and other apps by typing in their phone number and having the items charged to their monthly bill. No plastic required.

In Russia, Apple is partnering with Beeline, the domestic unit of Amsterdam-based mobile phone company VimpelCom, according to sources with knowledge of the deal. The launch comes a month after a similar agreement in Germany with Telefonica’s O2, the first deal of its kind for the iPhone maker.

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This article originally appeared on Recode.net.

How Startups Like Square Ratchet Up Their Valuation

2019-03-06T05:37:52-05:00

Square’s mega-financing round late last year at a $6 billion valuation looked impressive on paper. It was up 20 percent from earlier in the year and almost double from 2012.

But there was more to the story. In order to achieve that valuation, the payments company had to promise investors in the round — including Rizvi Traverse and JPMorgan — that its eventual initial public offering would price at $18.56 a share, 20 percent above the $15.46 they were paying. Failing that, Rizvi and JPMorgan would be rewarded additional stock to make up for the difference.

To summarize, Square, which is currently on the road pitching its IPO to prospective shareholders, guaranteed its latest investors a minimum 20 percent return on their investment.

In Silicon Valley, this sort of measure has been labeled a “ratchet.” The headline valuation number is so important, the thinking goes, that some companies are willing to accept potentially punitive terms to gain billion-dollar-plus status at the expense of all else. But they’re also diluting the equity of their hardworking employees by giving additional shares to investors.

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This article originally appeared on Recode.net.

Atlassian, the Anti-Silicon Valley Tech IPO

2019-03-06T05:37:44-05:00

For investors in U.S. software companies, nothing about Atlassian looks familiar.

In addition to its Australian roots, Atlassian, which sells software that helps developers and technical teams collaborate on projects, has been private for 13 years without ever raising outside capital. And we now know, from the company’s IPO prospectus filed on Monday, that the two co-founders each own a startling 38 percent of the company.

Here’s what’s really bizarre: Atlassian spends a tiny percentage of revenue — 21 percent — on selling its stuff. In fiscal 2015, which ended in June, Atlassian generated revenue of $319.5 million and spent $68 million on sales and marketing.

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This article originally appeared on Recode.net.

Technology IPOs at Lowest Level Since 2009

2019-03-06T06:02:14-05:00

Despite all the hype in Silicon Valley, technology IPOs haven’t been this scarce since 2009, according to data released this week from Renaissance Capital.

As the media have been reporting for over a year now, the action is all in the private markets, where companies that are big enough to be public can raise more money at bigger valuations without worrying about being punished for missing guidance.

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This article originally appeared on Recode.net.

Google’s Abc.xyz Just Put This Guy on the Map

2019-03-06T05:30:44-05:00

Here’s one giant winner in Google’s rebranding announcement: Daniel Negari.

Negari is the founder and CEO of XYZ.com, an Internet domain registry that owns alternative suffixes like .rent and .college. His 10-person company also owns .xyz. Abc.xyz is the Web address for Google’s new parent entity, Alphabet.

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This article originally appeared on Recode.net.

The Anti-Amazon That’s Making Money: Zazzle

2019-03-06T05:36:26-05:00

Amazon.com became the world’s most valuable retailer by selling everything imaginable at virtually no profit. Jet.com raised hundreds of millions of dollars before launch, with the promise of undercutting Amazon’s prices.

E-retailer Zazzle has spent the past decade — and made money — refusing to play that game.

Zazzle’s trick: CEO Robert Beaver and his sons, Jeff and Bobby, focus on products that can’t be found elsewhere, and thus face little to no pricing pressure.

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This article originally appeared on Recode.net.