Category: Billion Dollar Companies

To reinforce its gaming market success, Epic Games has raised $1.25 billion in capital funding through new “financial and strategic” partnerships.

Epic’s new partners are drawn from investment firms and stakeholders key in technology, entertainment, esports, live events, and even professional sports.

KKR, ICONIQ Capital, Smash Ventures, aXiomatic, Vulcan Capital, Kleiner Perkins, and Lightspeed Venture Partners have joined Epic’s existing minority investors Tencent, Disney, and Endeavor.

CEO Tim Sweeney explained the strategy behind the move:

“This reinforces Epic’s position of leadership in real-time 3D technology, and accelerates our ability to improve the way people play, work, and interact with the world.”

Sweeney, Epic’s founder, retains full control over the gaming giant which he founded in 1991. At 47, Sweeney is now worth an estimated $1.8 billion after bringing games like Fortnite, Unreal, and Gears of War to market.

There is also Epic’s Unreal Engine technology, one of the most used gaming platforms for other developers.  The Unreal Engine platform adds high-fidelity, interactive, experiences for PC, console, and mobile as well as augmented reality (AR), virtual reality (VR) and the internet.

Epic Games New Investors

Ted Oberwager of new investors to Epic, KKR & Co Inc, said of Epic’s success:

“Epic Games has fundamentally changed the model for interactive entertainment under the company’s visionary leadership.”

KKR has over 280 private equity investments across a portfolio worth $545 billion, historically KKR has invested predominantly in the energy and media sectors.

KKR acquired a software company, Epicor Software Corporation in 2016 and then invested $250 million in French cloud computing company OVH. Since 2016, KKR’s portfolio has become more technology oriented.

Investors aXiomatic are the owners of eSports company Team Liquid, whose 60 professional eSports players compete in 14 of the world’s top games including Epic’s Fortnite.

It’s also a media enterprise having expanded within the gaming ecosystem to video content production, wider player management, and to create eSports resource platform Liquipedia. Team Liquid is the third most valuable eSports company in the world.

Another new investor to Epic, Lightspeed Venture Partners, focuses on enterprise and consumer technology. Lightspeed is known to have backed 300 companies including SnapChat, DoubleClick, Playdom, and Cisco.

The recent announcement reveals none of Epic’s plans for the capital raised or how it will leverage the new partnerships.

Epic could be planning to build on its recent knock-out success with Fortnite, potentially the world’s most popular game today, as well as continuing to develop its Unreal Engine technology which recently celebrated 20 years since its launch.

Join us in celebrating this month’s #EpicFriday as we showcase amazing community projects built in #UE4! pic.twitter.com/AONieeddBp

— Unreal Engine (@UnrealEngine) March 30, 2018

Fortnite is currently generating Epic Games $2.5 million per day in revenue which has almost certainly attracted this new round of investors.

Featured image from Epic Games.

Amazon continued its online-to-offline strategy this week with its latest appearance in central London. The online retailer opened a “pop-up” store on Baker Street, looking to get in-person feedback from its shoppers on store experience, the quality of its clothes, and prices.

It’s the first European fashion store by Amazon. The physical location closes on Saturday, after five days of sales, fashion, and social events.

Yoga Sessions for a Top Shopping Experience

In London, the store provided autumn and winter clothes from various producers, including Amazon’s labels, as well as popular brands, such as New Look and Calvin Klein.

Besides clothes and accessories, the pop-up store came complete with a special program for all five days. The events were intended to provide clients with a unique shopping experience.

People who shopped in the Amazon London store could attend live-music events, panel discussions on style and beauty trends, yoga sessions, and even denim customization by Pepe Jeans.

The concept behind the London pop-up store is related to Amazon’s need to get valuable feedback from its customers. People were asked to fill in questionnaires to share their opinions and communicate what they expected from the retailer.

A spokeswoman for Amazon’s UK fashion business for The Guardian said:

“We know with fashion, customers love to touch and feel the product. We are definitely an e-commerce brand, and that is a part of everything we do, but we are experimenting and trying new things. The pop-ups we have done before have been really successful, and we were ready to try it for fashion. It really is a test.”

Amazon took the traditional shopping experience to another level. In the pop-up store, shoppers could use Amazon Fire tablets to learn more about current offers. They could also buy and take away items or scan codes using Amazon’s app and order products for home delivery.

Amazon Builds a Solid Brick-and-Mortar Infrastructure

Offline stores aren’t new to Amazon. In 2017, the giant e-commerce company opened a real store in London, especially for Black Friday. Moreover, the company bought Whole Foods last year and has been opening a significant number of Amazon pop-ups and bookstores across the US and UK.

Amazon also recently opened a new store in New York, Amazon 4-star, where people can shop for products that have received good and very good ratings from shoppers online–four stars and above. The new location also sells items from trending and top sellers (with or without having the four-star rating).

Featured image Amazon.

China’s internet sensation, ByteDance, the owner of popular video sharing app TikTok and news aggregator platform Toutiao has closed a $3 billion funding round led by SoftBank Group at a whopping valuation of $75 billion. With this, it has left behind Uber Technologies, currently valued at $72 billion, to become the world’s most valuable internet startup.

ByteDance is now on a par with other Chinese internet giants like Alibaba, Baidu, and Tencent. Founded in March 2012 by serial entrepreneur, Yiming Zhang, it earned a revenue of $2.5 billion in 2017 and is aiming to achieve a revenue of $7.2 billion in 2018–although it is yet to make profits like most technology startups.

The company plans to deploy the funds into developing new business lines and boosting growth at both home and abroad. Starting as a producer of a joke sharing app, Zhang eventually launched the first version of Toutiao app which means “Today’s Headline” in August 2012 in China, sensing the need for a mobile-based app news platform.

With the use of AI, it refined its content as per user’s interests and became a huge hit. It reached 1 million daily active users within four months of launch and is now the most recognizable app in China.

ByteDance Goes After the Foreign Market

ByteDance’s short video-sharing app Douyin, branded as TikTok for the foreign market, is a huge hit among teenagers in West. It acquired Musical.ly and merged into the Douyin’s platform and by July reached an active user base of 500 million.

Despite being the most highly valued startup, it continues to face risk from its own home country which has a highly sensitive and strict censorship policy.

Earlier this year, it had to temporarily pull down its Toutiao app from app store and close down its popular joke sharing platform, Neihan Duanzi.

ByteDance refused to make the details of funding public but according to the news reported in Bloomberg, the Softbank group will be investing close to $1.8 billion, on the condition of availability of secondary shares.

Recently, ByteDance has ventured into an e-commerce platform with the launch of budget shopping website, Zhidian and social commerce platform Xincao, a move to diversify from news and entertainment segment.

Featured image from Reuters.

It’s no secret that the Chinese are gaining ground when it comes to the smartphone battle. While both Samsung and Apple are starting to make concessions to the rising popularity of cheaper manufacturers like Huawei and Oppo, by releasing cheaper devices, Samsung’s upping the ante with bendable phones and 5G.

Samsung Always Good on Hardware

While staunch iPhone fanatics will tell you there is no rival (just ask Ksenia Sobchak) it’s well-known that Samsung devices beat them out time and again when it comes to hardware. Better cameras, longer batteries, etc.

So, the South Korean tech giant is rushing to finish their latest phone for next year, a bendable device that it hopes will corner a market niche.

The folding phone will feature an OLED screen that is curved on both sides. It also has round corners and practically no bezel whatsoever at the top or bottom.

Around the same size as the 5.8-inch S9 model, Samsung’s new folding phone comes packed with additional ammo in the shape of triple cameras on the back. There are also plans for a plus version later on in the year.

Experimenting with Different Models

Samsung is experimenting with different phone features and models to cut down costs, including one that comes with no headphone jack. All S10s will come with 5G and Google’s Android Pie operating system.

The foldable screen device goes by the code name of “Winner,” and has been in the works for years according to Samsung insiders. They’re now debating over whether the design should be longer horizontally or longer vertically when fully open.

It seems that the landscape model isn’t as popular with consumers since the portrait version is easier to carry with one hand.

There’s no fingerprint sensor because flexible screens don’t register fingerprints well. The prototype of the bendy phone weighs some 200 grams due to its screens, which makes it heavier than other devices and may force Samsung to reduce the battery size.

Market Ready?

Not yet. The screen’s hinge is still being tested. Although it has fared well in all the experiments, once a phone is mass produced, that’s often when the technical problems arise and if this phone’s screen cracks, it will shatter like a broken mirror.

The folding phone may not be ready until the second half of next year, but it will be interesting to see how Apple responds to the raised stakes.

Featured image YouTube.

Ever wondered where the world’s largest sovereign wealth fund is? You’d probably imagine a country like Switzerland, the UK, or Germany. However, Norway is actually home to the oil fund that owns an average of 1.4% of every listed company in the world. Let that sink in for a minute.

This Friday, the Norweigan fund Norges Bank Investment Management launched its latest push on corporate governance, specifically focusing on board members.

In its line of fire are large companies like JPMorgan, General Motors, and Facebook. It says that board directors should not combine the company roles of CEO and chairman. Just as well Mr. Musk has already stepped down.

World’s Largest Sovereign Wealth Fund Is Worth $970 Billion

You don’t hear much about Norway, apart from maybe the northern lights, grueling winters, a penchant for strong liquor, and of course, salmon. Yet, Norway is home to the largest sovereign wealth fund in the world worth $970 billion. And that kind of wealth gives you a serious amount of clout when it comes to decision-making and dishing out advice.

This Friday, the Norweigan oil fund released three papers that talk about how chairmen should chair at one company only and how non-executive directors should sit on no more than five boards.

With a 1.4% stake in every company on the planet, the fund also says that an independent director must have “fundamental industry insight” to be able to chair.

A Push on Corporate Governance

The papers released today also take the view that chief executives should not be able to chair for the same company, highlighting that this is a frequent occurrence especially in high-profile US companies including Bank of America, Amazon, and Facebook.

The fund wrote in one of its position papers:

“We believe that a clear division of roles and responsibilities is necessary to ensure effective oversight and controls. This may be particularly relevant when monitoring management performance and deciding on a remuneration policy for the CEO and management.”

This push on corporate governance comes after a scathing attack on executive paychecks last year and positioning itself against popular long-term incentive plans of many companies.

The fund also reported a 2.1% profit return in quarter three, with Amazon, Apple, and Microsoft boosting its portfolio, while Tencent, Bayer, and Facebook helped to drag it down.

Featured image from Shutterstock.

Uber took the whole intra-city commuting thing to a new level, forcing people to ditch their cars and adopt the new product of the shared economy. But now, after a decade, intra-city commuting is again witnessing a sea-change. This time with e-scooters, usually seen as a teenager’s toy.

Being dubbed as the future of intra-city commuting, the e-scooter rental service business model has generated a lot of buzz around investors, who are willing to pump huge sums of money to make it work.

E-scooter startups like Bird Rides and Lime have already set their eyes on global expansion within two years of their launch after the huge success in their home country.

The E-Scooters Craze Is Gripping the People

The craze of e-scooters has gripped people wherever the services are launched and has seen massive adoption. According to Baltimore’s Department of Transportation, where e-scooter startups Bird and Lime launched their services, the companies witnessed over 250,000 rides within the first 45 days and between 800-1,400 e-scooters on the streets each day.

How lucrative are e-scooter rental startups? Bird, which was founded in 2017 in Santa Monica, has attained the valuation tag of $1 billion, just within 15 months of the launch. It has already raised $250 million in funding in two tranches led by Sequoia Capital and is seeking another $300 million in funding.

Another US-based e-scooter startup, Lime, with the backing of major investors like Uber and Google parent, Alphabet, is also making some big strides in the e-scooter rental business. In the first year of launch, it has handled six-million rides and is now targeting the UK market to expand its services.

In a very short period of time, the segment has witnessed some intense competition and startups are targeting different countries to stay ahead. For commuters, it means up to 80% reduction in traveling bills compared to owning a car with the added benefit of being carbon neutral.

Yet another startup, Beam, co-founded by Chinese bike sharing company Ofo Inc. has raised $6.4 million in funding from different VCs led by Sequoia India to particularly focus on the Singapore market.

With all these heavy investments, Beam is trying to replicate the success of Bird Rides and Lime in the island nation. Beam plans to eventually expand the model to Malaysia, Indonesia, and Australia.

Is the Model Profitable and Why Are Investors Loving it?

Since millions of people are using e-scooters for their daily commuting purposes, this business model certainly has a potential for growth.

Chris Nakutis Taylor, who currently runs Ofo’s North America business and was also in Uber for five years feels that the e-scooter business model will definitely be a game changer. According to him:

“It’s not going to be the use case of how do I get to work in the morning?” rather “It’s the case of how do I get to that burger shop for only $1?”

Spending a couple of hundred dollars on an e-scooter and getting approximately 20 rides each day with per ride costing $1 to $3 will not be an uphill task for turning operations profitable provided your business settings are right.

For e-scooter startups, cash burn will be much higher in order to expand to different regions and fight with competitors. The situation is very similar to that of Uber in its initial day, and it should also be noted that Uber has not made profits in its lifetime, although it is a very successful business model.

Paul Murphy, a partner at VC firm Northzone, highlighted the case in an interview:

“If you win just five or 10 markets, even as the number two or three player, you’ve got a massive company.”

Featured image from Shutterstock.

Apple plans to roll out a TV subscription service in more than 100 countries in a move that will put it in direct competition with content juggernauts Netflix and Amazon.

The California tech giant will launch the subscription streaming service in the first half of 2019, The Information reported. The roll-out will start in the United States and then move into other countries in the following months.

The new subscription service will be similar to Amazon’s Prime video channel subscriptions. Apple’s service will offer free original programming to Apple device owners as well as access to third-party services.

It will also allow users to sign up for network subscriptions, such as HBO and Showtime, using the Apple app.

$1 Billion Investment in Original Content

In 2018, Apple invested $1 billion to develop a wide array of “PG-rated” original content. Apple now reportedly has 20 shows in its pipeline after scoring high-profile, multi-year deals with mega-producers Oprah Winfrey, Steven Spielberg, and J.J. Abrams.

Among them is a scripted TV series co-starring Reese Witherspoon and Jennifer Aniston, according to The Verge. There is also a psychological thriller series from filmmaker M. Night Shyamalan.

Apple has been making a huge push to join the content war against Netflix and Amazon beginning in 2017 when it hired Sony Pictures Television presidents Zack Van Amburg and Jamie Erlicht to run its video business.

The duo produced the popular crime series “Breaking Bad” and the hit drama “The Crown,” among others.

Apple’s foray into original content has drawn some criticism after its initial failed attempts with the reality series “Planet of the Apps” and “Carpool Karaoke,” both of which flopped.

Analyst: Original Content Is King

Some analysts view the business decision as a cynical move to sell more Apple products. Media advisor Ezra Kucharz told The Wrap:

“First and foremost, they’ll use it to sell more products”

Kucharz, a former senior strategist to CBS, said content is king–but it must be original to win an audience.

“It’s going to be all about scripted shows… If you’re in the commoditized and perishable content business, things are going to be tough. You can get weather [updates from] a lot of places.”

That said, it could take a while for Apple’s TV subscription service to compete with established giants like Netflix and Amazon, which toiled for years to build up their business model and cachet in Hollywood.

But Apple has deep pockets and a will to win, so it could gain traction sooner rather than later.

Featured image from Shutterstock.

Tesla Motors Q3 financial results were published after closing bell yesterday. They turned out to be considerably better than many analysts had expected.

The hastily arranged Q&A webinar which Tesla announced earlier this week caught some analysts off guard. Just before the release of the interim financial results by Tesla Motors we suggested Q3 figures would be ahead of forecast:

“It’s widely accepted that good results are announced early, and bad results held back as long as possible. In 2016, Tesla announced their Q3 figures early. Q3 2016 was the only profitable period to date. So the clues suggest we should be bullish on TSLA.”

There’s a school of thought that its also good form to get bad results out early so the company can move on. This was far less likely for Tesla Motors when you consider their results since they went public in 2010.

Tesla stock price was up 13% on Tuesday, and there was a possibility it had already factored in better-than-expected forecast results. Before the closing bell, the gains from Tuesday were maintained but with no clear indication of direction.

Tesla Motors Q3 2018 Results

GAAP net income came in at $312 million (non GAAP $516 million) from $6.8 billion revenue. This compared with Q2 figures of a net loss of $718 million from $4.0 billion revenue.

Having lost money every year since it went public, the cash flow figures were eagerly anticipated. Tesla didn’t disappoint. Free cash flow for Q3 was an impressive $881 million and operating cash flow $1.4 billion.

Elon Musk backed up the Q3 results in the Q & A webinar by saying he “hoped” income and cash flow would be positive for every quarter, hereon in. It has to be said though that he didn’t sound too convinced when he said it.

The Q3 results break down the results between automotive products and energy products. It also looks ahead and confirms they are still on target to deliver 100,000 Model S and X vehicles this year.

The first part of the webinar also covered Tesla’s safety designs with a recent 5-star rating and the highest standard of all 943 vehicle models ever tested in the US.

One hour after the closing bell TSLA was trading as high as $330 before falling back to around $317. The stock price is now ahead of the mean target from analysts of $304.

What Did the Tesla Analysts Get Wrong?

Revenue figures didn’t shock the analysts as much as the gross margin. The Model S is stated at more than 20%. Many analysts were simply not prepared for such an improvement in margin given the much-publicized difficulties in production and shipment.

Jamie Powell of FT Alphaville published a revised Q3 profitability forecast just a couple of weeks ago. It proved to be wholly inaccurate despite being released after Model S deliveries for Q3 had been reported by Tesla Motors.

In an earlier forecast, FT Alphaville had estimated 60,000 units would be delivered. They updated the forecast to the actual Model S deliveries of 55,840. They also increased their margin forecast from 11% to 15% and threw in some possible cost savings.

Their overall assessment was that Q3 would be another loss-making quarter:

“So returning to our model, and it is hard to figure out just how Tesla can eke out a profit this quarter, even with Model 3 gross margins of 15 per cent.”

How wrong they were, but that could be said for many market analysts covering Tesla Motors. Elon Musk was on his best behavior during the Q3 Q&A session with analysts.

This is in stark contrast to the Q1 webinar where Musk was quite belligerent to several Tesla analysts. Surprisingly, no tweets from Musk after the webinar, in fact, no tweets at all yesterday, which is quite rare for the serial tweeter.

Featured image from Shutterstock.

Apple’s Tim Cook just gave a speech in Brussels. In the heart of the European Union today, he called on the US government to follow the EU’s lead and adopt a “comprehensive” EU-style policy when it comes to protecting consumer data.

Speaking up at a time when many internet users are still livid over large tech players like Facebook and Google selling their data, losing their data, or infringing on their personal rights, Tim Cook picked his timing perfectly. When he finished, Apple’s chief executive received a powerful round of applause.

Tim Cook Lauds the EU’s GDPR Policy

As Apple’s chief, Cook stated that it was now time for the rest of the world to take the handling of consumer data seriously. He said that he believed the US should take a similar line to the GDPR (General Data Protection Regulation).

The GDPR was put into effect from May 2018 by the EU to protect users’ personal information. And it’s a policy that could see many large companies like Facebook that are too lax with data pay exorbitant fines. Mr. Cook said:

“We [Apple] are in support of a comprehensive federal privacy law in the US.”

Cook’s speech seemed to delight the listening members of the European Parliament. While for many people and businesses located within the EU, the GDPR has become somewhat of a headache, forcing internet users to take several extra steps and tick checkboxes before they can open a web page, the intentions of the law are solid. And the penalties are high.

In fact, the GDPR allows regulators in member states to fine companies by as much as €20 million ($22 million), or 4% of their annual revenue, which can take that figure a lot higher.

The Trump administration has made no secret of their dislike of the GDPR, saying that it imposes unnecessary burdens on global companies. Moreover, they have accused the EU of creating guidelines that are too vague and unclear.

Cook Warns of the Risks of Data Misuse

Those in favor of stronger consumer data protection, including, it seems, Apple’s Tim Cook, warn of the risks that many internet companies present, blatantly misusing and abusing the personal information of their users. He said that we had reached a point where:

“Companies know you better than you know yourselves… This is surveillance, and these stockpiles of personal data only enrich the companies that collect them. This should make us uncomfortable and unsettle us.”

Indeed. Let’s just hope that the so-far squeaky-clean tech giant doesn’t get caught up in a data scandal of their own. That might make Cook wish he hadn’t been so vocal in his support of hefty penalties.

Featured image from Apple.