Author: Ben Debski

Yahoo’s Mayer is set to stay

Posted on by Ben Debski

Marissa Mayer, the CEO of foundering internet giant Yahoo, faces mutiny from investors who are placing increasing pressure on the firm to reshuffle its management and sell off the core business. It would seem, however, that rather than comply with these demands, Yahoo is preparing to face the battle head on. During an interview with PBS, when asked where Yahoo would be in a year’s time, Mayer said: “I would love to be running Yahoo. We have a three-year strategic plan.”

It is through mobile that Mayer hopes to turn around Yahoo

Mayer was defensive when the oft-mentioned criticism of Yahoo’s failed acquisitions was raised, saying the company was one of the largest app development platforms in the world – a feat achieved through various mobile acquisitions. It is through mobile that Mayer hopes to turn around Yahoo; the company plans to invest further in communications and mail in order to enhance engagement and convert its 600m monthly users into daily users.

On the same day as the interview, Yahoo announced it had appointed two new directors to its board: Catherine Friedman, a former MD at Morgan Stanley, and Eric Brandt, who previously held the post of CFO at Broadcom Corporation.

Industry experts suggest the decision to appoint Friedman and Brandt could signal an upcoming proxy battle with Yahoo shareholder Starboard Value. According to The Wall Street Journal, the hedge fund sent a letter to Yahoo’s board of directors at the start of the year, warning it would fight until Mayer, along with various others, were replaced. Despite such threats, as Mayer plainly stated during her PBS interview, she fully intends to stay in her post. It would seem the industry can expect an ugly battle before Yahoo’s story is over.

Square up with first quarterly results

Posted on by Ben Debski

Fintech company Square has released its first quarterly results since going public in November, beating expectations with a total rise in revenue of almost 50 percent. While the company is not yet profitable (posting a loss of $80.5m in the fourth quarter), improved revenue across all categories of its business has increased confidence in Square’s ability to move beyond mobile payments and into business support systems.

In 2015, Square Capital issued over $400m in cash advances

Started by Twitter cofounder Jack Dorsey in 2009, Square specialises in mobile payments through small attachments to smartphones and tablets. While this has remained the core of its business, Square has been offering more varied financial services. Its system has a low charge per transaction, but users are encouraged to use its add-on services such as inventory management, sales data analysis and loans. In 2015, Square Capital issued over $400m in cash advances.

The company has announced it expects to be profitable by the end of the year thanks to increased support from larger merchants. According to its website, “over 40 percent of Square’s payment volume comes from sellers who process over $125,000 a year, up from less than 25 percent in 2012”.

Square’s first earnings release has been seen as a major test of the company’s viability. The value of its shares dropped over 30 percent in January, briefly reaching a level below the IPO price before rebounding in February. Doubts centre on Square’s ability to compete with companies such as PayPal and Apple as they move into the mobile transaction business. Confidence has also been low in Dorsey as he juggles his roles as CEO of both Twitter and Square. He was reappointed CEO of Twitter in October, replacing Dick Costolo as the social media network struggled to grow its user base.

WeWork is now worth $16bn

Posted on by Ben Debski

With its latest valuation of $16bn, WeWork, the shared office space platform, is now one of the most valuable start-ups in the world. The New York-based company’s latest round of funding secured $430m from a group of Chinese investors, paving the way for its upcoming expansion in Asia.

Founded in 2010, WeWork has grown to boast around 50,000 members

Private-equity firm Hony Capital and its parent company, Legend Holdings, led the round of funding. With them on board, WeWork will begin setting up communal office spaces in China, India and South Korea, with business hubs Beijing and Honk Kong being the first on its list.

“Not only does WeWork have one of the largest addressable markets I have ever seen, but the quality of its execution and fit for the Chinese culture is unparalleled”, said the CEO of Hony Capital, John Zhao, in a news update published on the WeWork website.

Founded in 2010, WeWork has grown to boast around 50,000 members. For a monthly fee (starting at $45), they can hire desks and offices in communal spaces in over 60 locations worldwide.

Rather than purchasing properties, the start-up leases the space and then sublets to individuals and small groups.

In addition to new markets, WeWork is exploring the extension of its service to residential rentals around the world under the WeLive brand. On March 3, Bloomberg reported the start-up was in discussions with Australian development company the Lendlease Group to set up a global venture.

At a time when other start-ups are being forced to participate in ‘down-rounds’ (where they are devalued in order to raise capital), WeWork’s expansion model is helping it move in the opposite direction. With a number of promising endeavours taking shape, it seems the only way is up for WeWork. The $10bn increase in value from last summer makes it the world’s sixth most valuable venture-backed private firm.

Re: Ray Tomlinson

Posted on by Ben Debski

Ray Tomlinson, the man who invented email and revolutionised the way we work, has passed away at the age of 74. As well as pioneering the electronic messaging programme, he chose the @ symbol to incorporate into the address of each user.

2.6bn people communicate via email, with over 205bn emails being sent each day

Tomlinson gained a cult following for his 1971 invention, which first appeared on ARPANET, the forerunner of the modern internet. The system allowed messages to be sent between individuals from separate computers on different servers for the first time; through it, Tomlinson sent the world’s first email.

After studying at the Rensselaer Polytechnic Institute and MIT, Tomlinson began working for Bolt Beranek (now Raytheon BBN Technologies), the R&D company where his breakthrough was made.

Tomlinson’s invention had a huge impact on modern living, igniting a shift from communication via faxes and post to instantaneous dialogue between parties from one end of the planet to the other. Email changed how friends kept in contact, the way companies interacted with their clients, and how people communicated within and between organisations. According to Raytheon BBN Technologies, it is estimated around 2.6bn people communicate via email, with over 205bn emails being sent each day.

In 2012, Tomlinson was inducted into the Internet Hall of Fame for his invention. “I’m often asked: ‘Did I know what I was doing?” he said at the time. “The answer is: ‘Yeah. I knew exactly what I was doing. I just had no notion whatsoever about what the ultimate impact would be.'”

Until his death on March 5, Tomlinson worked as a principle engineer at Raytheon BBN Technologies.

Chris Poole, founder of 4chan, joins Google

Posted on by Ben Debski

Chris Poole, founder emeritus of the notorious image-sharing forum 4Chan, alerted the world to the news he has “joined Google” in a Tumblr post. The move, which is likely to stir up controversy, was confirmed by Bradley Horowitz, Google’s VP of Streams, Photos and Sharing and architect of Google+. The choice of Horowitz to make the announcement fuelled speculation Poole has been brought on board to help the internet giant make a proper break into social media.

Google could probably do without the headlines that have followed Poole and 4chan

“I can’t wait to contribute my own experience from a dozen years of building online communities, and to begin the next chapter of my career at such an incredible company”, said Poole in his blog post. “When meeting with current and former Googlers, I continually find myself drawn to their intelligence, passion and enthusiasm – as well as a universal desire to share it with others.”

Google could probably do without the headlines that have followed Poole and 4chan over the years. The forum was among the first places where private pictures of celebrities were leaked in 2014, following Apple’s iCloud breach, and is today best known for its associations with offensive and sometimes illegal activities. The platform has also shown itself to be something of a breeding ground for hacktivism, and has been home to groups such as Anonymous in the past.

However, Poole, who was last year dubbed the “Mark Zuckerberg of the online underground” by Rolling Stone, last year sold 4chan after his other start-ups ran out of money and has already been at Google for a week. The consensus is he will spend much of his time working on Google+, which has struggled since launch and was last year redesigned to resemble something closer to Reddit or Pinterest.

EDF’s CFO says new nuclear plant could ruin the company

Posted on by Ben Debski

Thomas Piquemal, the Chief Financial Officer of energy giant EDF, has resigned over the company’s plans to build a new nuclear power plant in the UK. As reported by Bloomberg, Piquemal has quit due to his concerns that investing in the UK’s first nuclear plant in decades could strain EDF’s financial situation and lead to trouble down the line.

The Hinkley Point nuclear plant will cost EDF $25.8bn

It is estimated the construction of the Hinkley Point nuclear power plant will cost EDF, which is 85 percent owned by the French government, $25.8bn. The project was announced in 2013, but EDF has repeatedly postponed the final investment decision.

There has also been a great deal of opposition to the plant on environmental and technical grounds: the EPR technology proposed for the site has run into considerable problems in Finland, where the first reactor of its type is 10 years behind schedule and has already cost €5bn more than was originally budgeted.

According to the BBC, EDF’s shares have dropped 8.2 percent following the announcement of Piquemal’s resignation. Xavier Girre, the current head of the group’s finances in France, has been “provisionally” selected to replace Piquemal’s worldwide role.

With electricity prices in Europe plunging, EDF is experiencing a reduced cash flow, meaning such heavy investments could place too much pressure on the company’s balance sheet. The plans also coincide with upcoming maintenance on 58 reactors in France (needed to improve their life expectancy), which could cost up to €55bn.

Nonetheless, abandoning the venture could damage EDF’s international image in the limited and competitive market of nuclear plant construction. This, in turn, could set back the company’s potential projects elsewhere.

EDF is expected to finalise funding plans for the Hinkley Point project sometime in April. Should construction go ahead, it is estimated the nuclear plant will be capable of producing seven percent of the UK’s electricity by 2025. The plans indicate a new direction for Britain’s energy strategy, with nuclear power playing an increasingly important role in the country’s energy mix.

Amber Rudd, the UK’s Energy and Climate Change Secretary, said last November that the government had plans in place for not just one nuclear power station, but a whole new fleet, including one in Moorside in Cumbria and one in Wylfa on Anglesey. Other opportunities, such as Small Modular Reactors, are also being explored in the search for low carbon energy that is cost effective.

Whether EDF chooses to go ahead with its contentious investment in Hinkley Point is still uncertain. What is clear, however, is that the UK is in the process of energy diversification, with a resource advocates believe is clean and comes at a low cost. Although opponents argue the investment needed to build nuclear plants offsets the price it takes to generate electricity – while the dangers spillages pose to the environment are huge – it would seem that little can block the UK’s path.

Tech companies back Apple’s battle against the FBI

Posted on by Ben Debski

A growing number of individuals and organisations have filed amicus briefs in support of Apple’s battle for the right of privacy against the FBI. As previously reported, Apple has been ordered by a Los Angeles court to decrypt the iPhone of San Bernardino shooter Rizwan Farook.

The importance of encryption for the sake of customers’ personal information is absolute

Among the tech giants standing up in defence of Apple are Twitter, Intel, eBay, Yahoo, Facebook and Google. This formidable lot is joined by various NGOs, such as the United Nations, Human Rights Watch and Privacy International, as well as over 30 legal professors.

The FBI has been unable to bypass the code lock on Farook’s smartphone as part of its investigation into the attack that killed 14 people and injured 22 others. Using the 1789 All Writs Act, the FBI has ordered Apple to remove the phone’s security features and create software that will enable the swift determination of the correct passcode. In an open letter published on February 16, Apple CEO Tim Cook argued that, while the company has shared data within its possession and assisted in other ways, the importance of encryption for the sake of customers’ personal information is absolute.

The argument Apple et al make is that, by creating software that can crack into iPhones, a precedent will be set, and such bypassing of encryption will be unlikely to stop at Farook’s device. Their legal argument goes so far as to say that, were Apple to comply with the FBI’s court order, multiple laws would be broken.

Of course, prosecuting acts of terrorism is crucial, but forcing individuals and companies to break fundamental rights is nothing short of abhorrent. The consequences of a society without privacy cannot even be imagined, particularly as the dissolution of one right could be followed by the dissolution of many others. Once the journey into such a dystopia has begun, reversion would be nigh on impossible.

Ontario joins carbon-pricing initiative

Posted on by Ben Debski

Canada’s most-populous province has linked up with neighbouring Quebec and California to form North America’s largest carbon market and keep a lid on rising GHG emissions. Ontario’s new cap-and-trade programme, due to start in 2017, will raise $1.4bn (or CAD 1.9bn) a year and cover approximately 82 percent of the province’s emissions.

The aim is to slash GHG emissions by 15 percent below 1990 levels by 2020 and 37 percent by 2030

The aim is to slash GHG emissions by 15 percent below 1990 levels by 2020 and 37 percent by 2030. “Ontario is investing in the global low-carbon economy”, said Quebec’s Finance Minister Charles Sousa in his budget speech. “Cap and trade will create an even more dynamic and innovative and business environment [sic].”

The scheme will generate approximately CAD 18 per tonne of carbon, with the proceeds going to energy efficiency schemes, public transport and clean technology projects. Having already ploughed CAD 325m of government money into sustainability initiatives this year, policymakers are looking to speed the transition to a low-carbon economy and make good on their years-long commitment to carbon pricing.

The province signed off on the Western Climate Initiative as far back as 2008, alongside British Columbia, California and Quebec. The latter two have created a joint cap-and-trade system and BC implemented a carbon tax.

Ontario’s decision to follow suit has therefore been a long time coming, and while many have expressed their frustration at the slow rate of change, the public is at odds over the decision to implement a carbon-pricing scheme. When asked about the cap-and-trade system, 59 percent of respondents told Forum Research they disapproved and only 22 percent approved. Others believe the price is not high enough to make a measurable difference.

Speaking to CBC News about the government’s 2016 budget, Premier of Ontario Kathleen Wynne said: “We’re trying to find that sweet spot because there is another chorus of voices who say we shouldn’t be doing this at all, it’s hard on businesses. We know we have to tackle climate change, there is no doubt about that… We’re bringing in a system that’s consistent with what’s happening in Quebec, California [and] Manitoba.”

Look out for a special feature on corporate carbon pricing online and in the next issue of The New Economy

Five times technology clashed with the law

Posted on by Ben Debski

New and exciting technology, by definition, has to push boundaries. And that often means it finds itself within grey areas of the law. Dominating the news at the moment is the FBI’s struggle to get Apple to compromise the iPhone’s security system so investigators can access information relating to a mass shooting. While few cases are this high profile or will create such an important benchmark, history is filled with examples of the law struggling to regulate new inventions.

The printing press
The printing press was one of the first technologies to run afoul of the law. The first printing presses were created in the mid 15th century and sped up the production of books by an incredible amount. Production of books was initially overseen by the church or state, but after 1500 the ability to easily mass produce information was seen as a potential source of heresy or dissent. Printing became heavily regulated – or even banned – in some countries. Between the 16th and 19th centuries, media regulation became a constant struggle between the restriction of information, copyright laws to protect authors, and freedom of speech.

Printing press

The automobile
Inventor of the modern car Karl Benz irritated his neighbours before the law caught up. In 1888, Benz’s neighbours complained about the sounds and smells his Motorwagen were producing. He asked for and received a handwritten note from the Grand Ducal Authority giving him permission to operate the vehicle on roads, creating the first driver’s permit. Licensing practices varied from country to country as the automobile gained popularity, but most were initially issued on an ad-hoc basis. The first tests to prove driver competence were introduced in 1910, in Germany. Testing and licensing became standard around the world following public outcry over the dangers automobiles posed.

Motorwagen

Napster
Napster was an early example of an internet start-up pushing the boundaries of the law. Released by Shawn Fanning and Sean Parker in 1999, Napster allowed users to share digital music files. At its peak, the service had 18m users. The Recording Industry Association of America quickly realised the threat Napster posed and filed a lawsuit for the unauthorised distribution of copyrighted material. Napster lost, and shut down in 2001, just two years after it was formed. Interviews with Napster’s founders suggested they thought that, once the service was up and running, record companies would appreciate the analytics that could be made available to them.

Napster

The Human Genome Project
The Human Genome Project was a coordinated international project to map and understand humanity’s genetics, leading to a greater understanding of the building blocks of life. This development naturally had big implications for medicine, and enterprising pharmaceutical companies moved quickly to cash in. Myriad Genetics applied and received patents for the sequence and location of two genes implicated with cancer, giving them the exclusive right to develop and create medical tests and therapies that involved them. In 2013, the US Supreme Court invalidated the patents, since you can’t patent something that naturally occurs in nature. However, the ruling does not cover composite genes created by combining elements of naturally occurring DNA.

DNA helix

International data transfer
EU privacy law forbids the transfer of citizen’s data outside EU borders. While this makes sense with paper records, it made the transfer of data to the US by companies such as Facebook and Google illegal. The Safe Harbour agreement was implemented in 2000 to allow for this, letting US companies self-certify that EU citizen’s data was protected without having to enter into a number of complex bilateral agreements. But data movements are back in the spotlight after the agreement was declared illegal by the European Court of Justice last year, on the basis it was not secure from the observation of US government agencies. A new agreement is currently in the works.

Data privacy

Tidal fires two more top executives

Posted on by Ben Debski

Jay Z’s music streaming service, Tidal, faces another restructuring following the dismissal of Chief Operating Officer Nils Juell and Chief Financial Officer Chris Hart. Reports of the dismissals first surfaced on February 29, before the company confirmed the news the following day. In the same announcement, Tidal revealed it was moving its operations and accounting departments to New York from Oslo, following its expansion into 46 countries around the world.

In less than a year, three people have held the position of Tidal’s CEO

The news came shortly after Tidal was hit with a $5m lawsuit from Yesh Music Publishing and John Emanuele of US band the American Dollar for licensing 118 songs without permission or payment, while also intentionally miscalculated the number of times the band’s music had been streamed. Tidal’s official response to Fortune said the accusations were without merit.

To add to the firm’s growing list of problems, Tidal’s exclusive release of Kanye West’s latest album The Life of Pablo was swiftly pirated over half a million times in February. The album was also left off the music charts after Tidal’s refused to submit data to the Nielsen ratings service.

A number of top executives have been fired since Jay Z, along with various other high-profile music artists, took control of the company (formerly known as Wimp). In less than a year, three people have held the position of CEO, with Jeff Toig, former Chief Business Officer of SoundCloud, currently at the helm.

Kanye West, Madonna, Daft Punk and Chris Martin are among the celebrity equity holders who joined forces to promote the artist-driven service when it was relaunched as Tidal last March. Jay Z’s pledge at the time was to pay all artists, producers and writers 75 percent of the site’s royalties, but he has come under fire for failure to do so.

The problems continue to come thick and fast. With a lack of business continuity and stability in the midst of territorial expansion, it would seem Tidal’s teething phase is far from over. The celebrity power of Jay Z et al may not prove enough to keep the company afloat without a sound and sustainable business model.