Silicon Valley perks up its ears for buzzy audio chat startup

It's a secret, almost. But Silicon Valley is buzzing over a new audio-chat social network which is struggling to keep people out even as it hits an eye-popping value.

The invitation-only platform called Clubhouse lets people drop in on conversations ranging from weighty topics such as artificial intelligence to light-hearted trivia contests.

Silicon Valley venture capital colossus Andreessen Horowitz reportedly invested $12 million in Clubhouse at a valuation of $100 million, edging out rivals eager to get into the hot startup.

Clubhouse has won devotees even though it remains in a "beta" test mode and only has some 1,500 users as it tunes its platform for the masses.

The service has struck a chord with people longing for a return to the time when people could casually engage new acquaintances in banter or discussion.

The startup has been helped by some celebrities such as actor Kevin Hart popping in to conversations which have been growing during the pandemic as people turn increasingly to social media.

"With social distancing, we're all so craving being out and meeting people that, for people who miss that, it's like a godsend," said Nathan Baschez, a business strategy specialist who accepted a Clubhouse invitation two months ago when there was just a single virtual room.

Clubhouse founders Paul Davison and Rohan Seth have been noticeably out of the media spotlight as they seek a niche for the new social platform, which has no website or media team. Andreessen Horowitz has not commented publicly.

- 'Dinner Party' -

Sheel Mohnot, a Silicon Valley investor who joined Clubhouse about six weeks ago, said he came out a cash winner in a trivia game being played in one room, and was the topic of a "discussion party" about a dating contest in which he was a participant.

"It really feels like a great dinner party," Mohnot said.

"It's a product I am really enjoying, at the expense of Netflix."

Mohnot conceded that Clubhouse is benefitting from users having more time available due to the pandemic keeping them at home. He estimated he spends about 15 hours weekly on the service.

"Normally, I have dinner plans several times a week and can't spend all that time talking with strangers on the internet," Mohnot said.

Clubhouse joins other startups vying for consumer attention as Facebook, Google, and Microsoft ramp up online meetings and collaboration offerings.

But in the case of Clubhouse it's not looking for the popular Silicon Valley term "eyeballs", since it frees users from needing to be in front of screens.

- Elitist or cautious? -

Some who haven't been admitted to the Clubhouse, and even some who have been invited, have called the platform elitist.

But users interviewed by AFP countered that Clubhouse is limiting users while it tunes the freshly launched service to handle the load.

If Clubhouse crashes after opening to the world, people might leave and not return.

"The reason it is locked down is not because they want to create a velvet-rope, VIP type atmosphere," said Baschez.

"The founders don't think like that. It does build the buzz, but I genuinely believe they don't like the buzz."

One room calling itself "Back of the Bus" underscores the notion that Clubhouse is more about conviviality than celebrities or events.

"Back of the Bus", favored by Mohnot among others, is a riotous, unrestrained chat where moderators make sure everyone has the chance to talk about anything -- other than tech.

When it opens to all, Clubhouse will likely face challenges including maintaining a sense of community; preventing abusive behavior, and dealing with misleading content.

It will also need to find a way to make money without tainting the experience.

"I think with the funding and celebrity relationship they have built, they won't die any time soon," said Bobby Thakkar, a tech industry product manager who confided that he spends 25 hours or more at Clubhouse weekly.

Agence France-Presse

Oculus unveils standalone virtual reality headset

SAN JOSE, United States - Facebook chief Mark Zuckerberg on Wednesday unveiled a new Oculus virtual reality headset untethered from computers as part of a vision to bring the new technology to the masses.

Oculus Go headsets will be priced at $199 when they begin shipping early next year, Zuckerberg said during a keynote presentation at an annual developers conference in the Silicon Valley city of San Jose.

Zuckerberg touted Oculus Go as the first product in a "sweet spot" between smartphones and powerful desktop computers.

"It's an all-new, standalone headset that doesn't require you to snap in a phone or plug in a cable," Zuckerberg said.

Oculus Go uses internal cameras, sensors and software to track movements that are translated into corresponding motion in virtual worlds rendered in headsets.

Facebook stressed its commitment to virtual reality, despite less than stellar adoption of headsets such as Oculus Rift which need to be plugged into computers.

"We want to get a billion people in virtual reality," Zuckerberg said.

"The road ahead won't be easy, but virtual reality will change the way we see the world and will make all of our lives a whole lot better."

Sony, HTC and Facebook-owned Oculus are the top players in virtual reality head gear, each striving to stake out territory in the budding market.

While Sony's VR headsets work with PS 4 consoles, competing gear requires computers that can handle the demand of processing rich, immersive graphics in real time. — Agence France-Presse

source: gmanetwork.com

Google parent Alphabet may soon top Apple’s market value

SAN FRANCISCO— As the digital advertising market booms and demand for smartphones wanes, Alphabet Inc. could soon dethrone Apple as the world’s most valuable company.

If it happens, Alphabet will move to the head of the class just five months after Google reorganized itself under the holding company.

The Silicon Valley rivals could trade places as early as Friday, given how rapidly the financial gap between them is narrowing. At the end of trading on Thursday, Apple’s market value stood at $522 billion; Alphabet was worth $515 billion.

That’s a dramatic swing from where things stood just 13 months ago. Apple then boasted a market value of $643 billion, almost twice Google Inc.’s $361 billion.

Since then, investors have soured on Apple Inc. The company has struggled to come up with another trend-setting product amid slumping sales of its most important device — the nearly 9-year-old iPhone, which accounts for roughly two-thirds of Apple’s overall sales.

Apple has already acknowledged the iPhone will begin this year with its first quarterly sales decline since it debuted in 2007. The slowdown helped push down Apple’s stock price by 15 percent since the end of 2014.

In contrast, Google has maintained its leadership in the lucrative Internet search and ad market while building other popular products in video, mobile, web browsing, email and mapping. That bundle of Google services brings in most of Alphabet’s revenue, and is expected to deliver growth in the 15 percent to 20 percent range as marketers shift even more of their budgets to digital services.

Alphabet also has impressed investors by reining in its spending. Google hired a Wall Street veteran, Ruth Porat, as its chief financial officer last May.

In addition to reversing a long expansion of Google’s operating expenses, Porat also persuaded Alphabet’s board to spend $5 billion buying back its own stock. That move signaled a more shareholder-friendly approach to managing the company’s cash hoard.

Investors also have applauded the creation of Alphabet, which is structured to provide more information about the cost of the company’s experimental ventures into self-driving cars, Internet access services, health science and city management.

All of those factors have helped lift Alphabet’s stock — previously Google’s — by 41 percent since the end of 2014.

It’s a potentially big shift for Apple, which has held bragging rights as the world’s most valuable company for most of the past four-and-a-half years. (ExxonMobil seized the high ground for a brief time in 2013.)

Alphabet would become the 12th company to rise to the most valuable spot, according to Standard & Poor’s.

BGP Financial analyst Colin Gillis believes the potential changing of the guard reflects a wider recognition that Alphabet is fostering a “culture of innovation” while Apple has lost some of its magic since the October 2011 death of co-founder and former CEO Steve Jobs. “I no longer see a sense of urgency at Apple,” Gillis said.

If Alphabet doesn’t surpass Apple’s market value on Friday, it could do so early next week after it releases fourth-quarter earnings on Monday. Investors expect a big quarter after Google’s closest competitor in digital ads, Facebook Inc., announced that its revenue soared 52 percent in the period.

Of course, Apple isn’t just rolling over. It’s reportedly working on new products such as self-driving cars, virtual reality and Internet TV that could conceivably re-ignite its revenue growth — as could any resurgence in the iPhone itself. Alphabet has shown no signs of letting up on Google’s grip in Internet search or its expansion into other markets.

Which means we could see Apple and Alphabet continue to trade places in the market-value rankings over the next few years, as both race to be the first company worth $1 trillion.

source: business.inquirer.net

Silicon Valley granddaddy HP readies breakup

SAN FRANCISCO, United States - Seventy-seven years after Bill Hewlett and Dave Packard began tinkering in a Palo Alto garage, the company that became the foundation for Silicon Valley is breaking up.

Hewlett-Packard on Sunday officially splits into two entities, opening a new chapter for the US technology legend.

The computer colossus is being divided into HP Enterprise, focusing on software and business services, and HP Inc, which will keep the personal computer and printer operations.

The aim is to develop a sharper focus both for the enterprise unit and the PC-printer division that made it a household name but has become fiercely competitive and less lucrative in recent years.

The new structure splits off the computer arm that became for a time the world's biggest PC maker following the HP 2002 acquisition of Compaq.

The controversial deal was engineered by then-chief executive Carly Fiorina -- now running for the Republican nomination for president.

Tom Bittman, analyst at the research firm Gartner, said the current tech landscape calls for this approach, with flexibility more important than size.

"The market right now needs to move in this kind of direction, more focused, and more nimble, than in Carly Fiorina era, when competing with IBM, not Amazon, was critical," Bittman told AFP.

It remains to be seen whether the breakup will revitalize a company that has been in a defensive, restructuring mode for several years as it lost ground to rivals like Chinese PC maker Lenovo, and as tech sector leadership was taken over by mobile-focused Apple and Google.

"A split in itself is not a good or bad thing, it's what they do with it," Bittman said.

The new HP Enterprise will be led by company CEO Meg Whitman and the PC business by Australian native HP executive Dion Weisler. Both firms begin trading independently Monday on Wall Street.

Faded star

HP has long had a special place in the hearts and minds of Silicon Valley.

Founded by two Stanford University graduates, the company has been a major benefactor to the school seen a source of many innovative startups, including Google.

The garage where the company began has been designated a California historic landmark.

HP also led a number of workplace innovations including flexible schedules and the open-space office.

But today, the company is often seen as a dinosaur overtaken by younger, more dynamic startups.

The company has been in transition since dumping Fiorina in 2005.

Fiorina's successor Mark Hurd left in 2010 amid allegations of sexual harassment.

The next CEO, Leo Apotheker, was set to get rid of the PC business before he departed. But he led a $10 billion deal for Autonomy that became the object of lawsuits and probes into accounting irregularities at the British software firm.

The market value of HP today is roughly $50 billion -- less than half of its annual revenues -- compared with nearly $300 billion for Facebook, $500 billion for Alphabet and almost $700 billion for Apple.

Some on Wall Street parlance see opportunity in the breakup because HP's stock has been beaten down by concerns about its ability to compete.

The breakup into two separate companies "will unlock value for shareholders, as it allows each separate company to better focus on their core markets," said Deutsche Bank analyst Sherri Scribner in a research note.

Peter Burris at Forrester Research said the new structure offers an opportunity after numerous missteps by the company.

"Compaq was a portfolio of a lot of underperforming companies. It didn't serve HP's shareholders and customers as well as it might have," Burris said.

"History has shown that HP could have spent its time differently."

More recently, Burris said the company "has been showing signs of life on the execution front" but "it has to dramatically accelerate its execution and get the job done." — Agence France-Presse

source: gmanetwork.com

Silicon Valley IPO market boom winding down

SAN FRANCISCO -  Last year, many tech IPOs enjoyed soaring valuations in their Wall Street debut, raining cash on the companies and their investors and boosting concerns about another Silicon Valley bubble.

Now, the party is winding down, according to data analyzed by Reuters: Five of the 12 U.S.-based tech companies that went public this year, or 42 percent, priced their shares at a valuation below or nearly the same as their private market value, compared to 24 percent of the 29 that went public in 2014.

"People are no longer out of their minds with valuations and expectations," said Adam Marcus, managing partner at OpenView Venture Partners in Boston.

A recent example is Pure Storage (PSTG.N), whose IPO earlier this month gave the data storage company a $3.1 billion market cap that almost matched its valuation in the private market.

The shift in the investing climate comes as payments company Square filed this week for its own IPO later this year, becoming one of the most prominent of the so-called "unicorns," or private companies valued at more than $1 billion, to try to go public.

Even when valuations increase, they are growing by a smaller amount, according to the data, which was provided by Ipreo, a market intelligence company, and Pitchbook, a venture capital, private equity and M&A data provider, and analyzed by Reuters. Among the companies that saw their values grow in an IPO in 2014, the median increase from their value in the private market was 61 percent. Some companies saw increases of three-, four- and even five-fold.

So far this year, that gain is 32 percent. The data excludes eight companies that went public in 2014 because there was insufficient information to calculate their pre-IPO valuations.

The shrinking difference affects every corner of the pre-IPO market, compelling some companies to delay or withdraw their public-offering plans, bankers and industry analysts said.

And some late-stage investors - while they will still get paid - may see smaller returns than they gambled on. Those who invested in rounds with an eye on a 30 or 40 percent return will more likely get a return similar to the S&P 500 over the past year - about 8 percent, sources said.

According to interviews with bankers, venture capitalists and late-stage investors, this shift in the venture investing climate is just getting underway and likely to accelerate.

It is also an about-face from the last few years, when hot tech companies found no shortage of investors for their private financing and experienced massive valuations, and then demanded an even higher market cap in an IPO.

But now the public market is less willing to play along, venture capitalists said.

To be sure, some delays in going public can be attributed to the surge in funding from late stage investors, allowing tech startups to stay private longer.

As their valuations grew in the private market, a big increase in the value of their shares in an IPO became harder to achieve.

A valuation drop in an IPO doesn't necessarily dim the long-term prospects of a company. Hortonworks' (HDP.O) stock is up more than 34 percent from the IPO price, for instance, after its valuation took a 40 percent cut in its public offering last year.

But lower valuations in the public market raise questions about the future of the nearly 150 companies that have filed confidential IPOs, according to estimates by some investors.

There is not enough market demand, they say, to support so many deals. In a confidential IPO, reserved for companies with less than $1 billion in revenue, companies file a draft registration with the Securities and Exchange Commission that is for non-public review.

UNICORNS

And some "unicorn" tech companies that were expected to go public this year have put those plans off. Among them are online lending company Prosper Marketplace and data storage company Nutanix, according to sources familiar with those companies. After meeting with bankers, Prosper decided to stay private for about the next year, the sources said.

"We take the idea of going public seriously," said CEO Aaron Vermut, "but there are other ways to achieve your goals while staying private longer."

One of Prosper's public counterparts, online business lender OnDeck, saw its valuation fall from $1.3 billion during its IPO to about $624 million, according to Thomson Reuters data, likely contributing to Prosper's decision, bankers told Reuters.

Nutanix is also in a holding pattern, bankers told Reuters, although Nutanix investor Ravi Mhatre of Lightspeed Venture Partners said it "is fully capable of being a public company and operating as a public company."

Neither company has filed publicly for an IPO.

Regardless, many companies will go public in current market conditions, as those that have raised large rounds since 2013 are under pressure to return cash to their investors and employees in the next year.

Square is among those. It filed for a public offering this week, proposing to raise at $275 million.

But it, too, is expected to take a price cut. With its CEO, Jack Dorsey, now also leading Twitter, some investors expect the company's $6 billion valuation will be discounted to compensate for Dorsey's half-time role.  — Reuters

Mysterious Facebook event sparks online buzz

SAN FRANCISCO - A mysterious Facebook event set for Thursday has sparked buzz that the leading social network could be adding video to Instagram smartphone picture-sharing service.

The leading social network invited the media to its headquarters in the Silicon Valley city of Menlo Park where "a small team has been working on a big idea," but remained hush about what will be unveiled.

Online speculation at technology news website TechCrunch and elsewhere has included the possibility that Instagram will start letting people share video snippets in a style similar to a hit Vine app launched by Twitter in January.

Perpetually looping videos clips up to six seconds each can be shared using Vine or easily embedded in "tweets" fired off at the globally popular messaging service Twitter.

Twitter in December added Instagram-style smartphone photo sharing features after the Facebook-owned service made it impossible for Internet users to integrate its images into tweets.

Previously, Instagram pictures shared in messages tweeted from smartphones could be viewed unaltered at Twitter.

Facebook acquired Instagram last year. The original price was pegged at $1 billion but the final value was less because of a decline in the social network's share price.

Other speculation on the Thursday event has included talk that the social network might launch an RSS reader to lure fans of a similar service that Google is shutting down at the end of this month. — Agence France-Presse

source: gmanetwork.com

Facebook plans to raise $10.6B in mega IPO

SAN FRANCISCO—Facebook Inc. aims to raise about $10.6 billion in Silicon Valley's largest IPO, dwarfing the coming-out parties of tech companies like Google Inc. and granting the world's largest social network a market value close to Amazon.com's.

The eight-year-old social network that began as Mark Zuckerberg's Harvard dorm room project indicated an initial public offering price range of between $28 and $35 a share on Thursday, which would value the company at $77 billion to $96 billion.

The size of the IPO reflects the company's growth and bullish expectations about its money-making potential as a hub for everything from advertising to commerce.

"We certainly haven't ever seen a tech IPO on this grandiose a scale," said Lise Buyer, a principal with the IPO advisory firm Class V Group.

Buyer, who worked on Google's 2004 IPO, said the question about a company "that's already this big and that is raising this much money is how many of the glory days of growth are in the past versus how many are ahead."

Facebook stands to raise as much as $12 billion at the upper end of its planned range. If an over-allotment or "greenshoe" option is triggered, the company could sweep up a maximum of $13.6 billion, according to a Thursday prospectus.

Facebook is only getting about half, or $5.6 billion, of the estimated $10.6 billion that it would raise at the midpoint of its planned IPO range. About $4.9 billon will go to some existing shareholders.

Facebook's stock could begin trading as soon as May 18, according to a road show schedule obtained by Reuters. The offering's price range can be adjusted depending on Wall Street's response during the road show.

Investors are expected to flock to the highly anticipated IPO, although there have been growing concerns about the social network's longer-term growth and Zuckerberg's majority control.

Facebook will trade at 13 to 16 times the revenue that GreenCrest Capital analyst Max Wolff believes it will generate this year. By comparison, Google, the world's dominant Internet search engine, currently trades at 5.5 to 6 times expected 2012 revenue, he said.

Google's valuation was higher when it went public in 2004, though Facebook's IPO valuation is still higher than Google's was back then, Wolff noted.

But some observers said the rich premium was unlikely to deter investors.

"People are going to be very comfortable with this valuation," said Sam Schwerin of Millennium Technology Value Partners, which owns Facebook shares worth roughly $200 million. The firm is not selling in the IPO.

"A price range of $28 to $35 will be a relief to some people who are concerned that they may try to take the highest possible price because of high demand," he said.

"The amount being raised is noteworthy. Selling stockholders are raising about $5 billion in the IPO, which is a lot."

Facebook executives are due to hit the road on Monday, presenting their investment case to audiences. They will start in New York, go to other major cities such as Chicago and Boston, and end up on Facebook's home turf in Menlo Park, California, according to the schedule.

Zuckerberg is expected to participate in the two-week road show, a source has said, although chief operating officer Sheryl Sandberg and finance chief David Ebersman will lead the briefings.

Tantalizing Wall Street

Zuckerberg's involvement in the road show will be key for investors with concerns about Facebook's long-term strategy and money-making potential, said Brian Wieser, an analyst with Pivotal Research Group.

Zuckerberg's control of the company–which was underscored when he orchestrated the $1 billion acquisition of mobile app maker Instagram last month–means that investors need to "get comfortable" with the 27-year-old CEO, said Wieser.

Last week, Facebook reported its first quarter-to-quarter revenue slide in at least two years, a sign that the social network's sizzling growth may be cooling just as it prepares to go public. Some observers have also flagged the company's lack of revenue on mobile devices such as smartphones as an area of concern.

Dressed in a gray t-shirt and jeans, the copper-haired Zuckerberg appeared in a 31-minute road show video posted online on Thursday. In the video, Zuckerberg predicted that in five years almost every software app would be integrated with Facebook.

Facebook generated the lion's share of its $3.7 billion in revenue last year from online advertising. It also collects fees when consumers use its special Credits currency to purchase virtual goods in social games such as Zynga's Farmville. The company has said it may expand the use of its payment business beyond games.

Facebook–which plans to list its stock on the Nasdaq under the ticker "FB"–has long tantalized investors with the prospect of a mega IPO.

As a private company, shares of Facebook have traded briskly in secondary markets for the past couple of years, as investors sought to get a piece of the fast-growing company ahead of its expected IPO.

The IPO price range indicated in Facebook's filing on Thursday would value the company a hair below the level it has traded at in the secondary markets in recent months, with some trades valuing the company at slightly more than $100 billion.

But some investors think Facebook, which touts 900 million users worldwide, is setting itself a fairly conservative target.

"The price range may be tactical. They will likely walk the range up," Schwerin argued.

Facebook plans to sell 337.4 million shares, or 12.3 percent of the company, in the offering. The capital-raising target far outstrips big Internet IPOs that came before it. Google raised just shy of $2 billion in 2004, while last year Groupon tapped investors for $700 million and Zynga raked in $1 billion.

At the top end of the IPO range, Facebook would rival the market value of Amazon.com and Cisco Systems Inc., which are worth just over $100 billion, and surpass the combined market value of older technology companies Hewlett-Packard Co. and Dell Inc.

Among existing shareholders, the largest seller in the IPO will be venture capital firm Accel Partners, which will make about $1.2 billion assuming the shares sell at the $31.5 mid-point. Zuckerberg is selling the next largest chunk of shares, worth a little under $1 billion.

Facebook said that a "substantial majority" of the proceeds from Zuckerberg's stock sale will be used to satisfy taxes he will incur from exercising his options.

In its prospectus, Facebook said the "lock-up" period, during which employees cannot sell shares after the IPO, would range from 151 days to 181 days.

Facebook also added two new underwriters, including online broker E*Trade Securities. The broker caters to retail clients who some have speculated may try to pile into the IPO.

"No doubt Facebook doesn't want to upset the average mom and pop out there," said Craig Huber, research analyst, at independent research firm Huber Research Partners. —Reuters

source: gmanetwork.com