Tech boom coming to an end?

For the last few years Silicon Valley has been the darling of venture capitalists looking for the next big thing. The result has been huge investments and valuations for companies that often come with whimsical names (Think Twilio and Sprinklr). The rise of mobile has contributed to the belief that there should be and “app for that”, and paved the way for companies less than 10 years old to become part of the billion dollar startup club. But that seems to be coming to an end.

At least, that is what the data shows anyway. Since the end of 2015, venture capital has been pulling back on investing in Silicon Valley unicorns. Unicorns are Silicon Valley companies with valuations of a billion dollars or more. Funding fell 8 percent to $25.5 billion, extending a steep decline that began the quarter before, according to a report released Wednesday by KPMG, an accountancy, and CB Insights, a venture researcher.

“There’s a lot of cautiousness out there,” says Kerry Wu, an analyst at CB Insights. “It’s reflected in the data.”

What that data shows is the rate of new unicorn companies is slowing. In Q3 of 2015 there was a new unicorn showing up in the valley every four days. But by the end of 2015 that had tricked down to just 1 new unicorn that quarter. The report by KPMG points to a few key reasons for the slow down in venture capital funding.

  • Too many unicorns A unicorn is a unicorn because its rare, but there have been so many lately that it may have driven the value down. When the value goes down, the money starts to slow because investors don’t see the next app as the best way to make money fast.
  • Startups are still growing The unicorns that have received funding are continuing to get more, such as Uber. This is helping them to grow larger quickly. And spreading the money thinner for the new comers on the block.
  • American funding is cooling off  The total number of venture deals flatlined in the first quarter after plunging 15 percent a quarter earlier. The stagnation suggest that venture capitalist aren’t the excited to invest in this market.
  • California startups aren’t as exciting Funding has fallen by 1.5 percent. It’s down almost half from the $12.2 billion raised in the September quarter. Although these numbers don’t indicate trouble, it does confirm the latest data that suggest that the tech economy is slowing down.

Article via CNET, 13 April 2016

Photo Startup by Dennis Skley [Creative Commons Attribution-NonCommercial-NoDerivs]


Cuba open to US tech companies

President Obama’s recently trip to Cuba has opened the door for US based internet companies to do business with the island.

Obama’s visit is the first by a US president since the communist revolution of 1959. Since 1962, the US has imposed trade and travel restrictions that have kept US based companies out of Cuba. But since 2008, the Bush and Obama administrations have overseen a slow return to diplomatic relations with Cuba. Now that there is more communication between the two countries, industry experts are concerned about a virtual land grab by companies like Google and Airbnb.

During the President’s visit to Cuba, he announced that Google would be expanding wi-fi in Cuba. Other companies like Airbnb and Bookings.com are also looking to take advantage of the thawing climate between the US and Cuba. These US companies are attracted to Cuba’s lucrative tourism industry, and are quickly trying to claim their stake in this new market. The time is ripe for these technology companies to take advantage of the coming opportunities.

Cubans have limited access to the internet. Only about 25 percent of the population is currently online and only a little over 12 percent of the households have a computer at home. This is expected to shift as Google provides more wi-fi and broadband access across the country.

Airbnb has been operating for about a year already, allowing Americans to book accomodations in Cuba. Although technically travel to Cuba has been illegal except under special circumstances, 161,000 Americans were among the 3.5 million tourists from all over the world who visited Cuba last year. Commercial flights are expected to resume in the fall, giving way to a larger market for sites like Bookings.com. In the coming weeks, its parent company Priceline will begin allowing US customers to book vacations in Havana and plans to sign deals with existing hotels and tourism countries.

Article via Cnet, 21 March 2016

Photo: Press conference, Havana by IIP Photo Archive [Creative Commons Attribution-NonCommercial-NoDerivs]


Hackers attacked the IRS

Hackers were recently able to break into the IRS and steal taxpayer identification numbers. The agency was able to detect the attack and shut it down on Tuesday. The breach means that it may be possible for the hackers to file fraudulent tax returns. The attack was done by attempting to obtain e-filing pins from over 450,000 stolen social security numbers. Attempts involving about 100,000 of those social security numbers were successful, the IRS said in a statement.

The IRS stated that the attacks did not originate in their system. It appears as though the social security numbers were stolen outside the IRS, and then used in the attack. They added that “no personal taxpayer data was compromised or disclosed” by its systems. The IRS said it will notify people affected by the attack and will mark their accounts to guard against identity theft.

All of this is part of why President Barack Obama proposed, on Tuesday, to spend $19 billion on more secure technology for the government. If approved, the funds would help in efforts like recruiting cybersecurity experts, reducing reliance on unsafe items like social security numbers. “The caliber of the enemy we’re facing is incredibly sophisticated and global,” IRS Commissioner John Koskinen told the Senate Finance Committee at a hearing Wednesday, in response to a question about the most recent hack. The attackers are professionals that steal sensitive data from their targets, government and financial institutions throughout the world.

Attacks like these have become more prevalent as more tax filing and banking is done online. In the US 150 million tax returns are expected to be filed this season, with 80 percent of them expected to be filed online.

Despite storing a massive trove of data on American citizens, the federal government has struggled to protect it from hackers. That includes the IRS, which hackers attacked last year to steal tax records of perhaps 300,000 people. The agency has even struggled with fraudsters in its ranks; on Monday it successfully prosecuted an employee for identity theft and conspiracy to commit bank fraud.

Article via CNET, 10 February 2016

Photo: Please Insert Coin by arsheffield[Creative Commons Attribution-NonCommercial-NoDerivs]


Trans-Pacific Partnership steeped in controversy

Nearly half of the world’s GDP teeters on the passage of the Trans-Pacific Partnership, a 622-page document between the United States and 11 other Pacific Rim countries. Opponents consider it “the dirtiest trade deal you’ve never heard of” due to the secrecy surrounding the negotiations. The 11 other countries included in the deal include Australia, Singapore, New Zealand, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, Peru and Vietnam.

Negotiations that started in 2010 were kept fully secret until a 2013 Wikileaks release of the document’s chapter on Intellectual Property Rights. The leak exposed what was to come in terms of copyrighting, digital rights management (DRM) and torrenting—the downloading and sharing of large files. Copyright infringement would be met with “criminal procedures and penalties… of sufficient severity to provide a deterrent” for further offenses.

The US Electronics Frontiers Foundation commented on TPP, saying,“We have to do everything we can to stop this agreement from getting signed, ratified, and put into force.”

The agreement was completed in October 2015, but each of the 12 countries needs to pass the contract in their respective countries. On the Office of the United States Trade Representative’s website, the TPP is advertised as “leveling the playing field for American workers and American businesses.”

“The Trans-Pacific Partnership (TPP) writes the rules for global trade—rules that will help increase Made-in-America exports, grow the American economy, support well-paying American jobs, and strengthen the American middle class,” the website writes.

Article via CNET, February 6, 2016

Photo: Eimskip Ship via Corey Templeton [Creative Commons Attribution-NonCommercial-NoDerivs]


Alphabet, worlds most valuable company

On Monday, Alphabet, the company that owns Google, overtook Apple by becoming the most valuable company in the world.

The most valuable companies in America are nearly all tech companies. Google and Apple are leading the pack with market values of $543 billion and $535 billion respectively. Behind those two companies sits Microsoft at $433 billion. Facebook, at $328 billion, took fourth on Monday, surpassing Exxon Mobile at $318 billion. The revenues of the top leaders (Google and Apple) are higher than any other company in corporate history.

Just last quarter Alphabet reported revenues of more than $21.3 billion, blowing past estimates by roughly half a billion dollars. Traders are expecting Alphabet to keep the title of most valuable company for some time to come. Revenue for the company saw $74.5 billion in sales for all of 2015, up from $66 billion in 2014. The good news keeps coming as Monday their stock rose another 5 percent.

Colin Gillis, senior technology analyst for BGC Partners, believes that Alphabet will become the world’s first trillion dollar company. Why? Sheer numbers, for one, Gillis said in an interview. “Think about the number of services they have with a billion users: Google Search, YouTube, Maps. Some of those are used multiple times every single day,” he said.

Some also think that the deciding factor between Google and Apple is all about China. Apple reported the slowest-ever sales growth for the iPhone and revealed that its business in China is facing trouble. In contrast, Alphabet makes very little money off hardware and does almost no business in China. Now that China’s economy is slowing down, Apple and their stock seem to be following suit.

It could be that Alphabet knows exactly how to show investors its future promise. Google has been famous for its moonshots, like the self driving car. The reorganization of Google, including the creation of the parent company Alphabet, has allowed transparency into its many services and what they offer. All that adds up to a lot of success and the number one spot for the tech company.

Article via The Washington Post,1 Febraurary, 2016

Photo: iPhone Alphabet by schnaars [Creative Commons Attribution-NonCommercial-NoDerivs]


Bitcoin declared a failure

Two years ago, British software developer Mike Hearn quit his job at Google so that he could dedicate himself to developing the new online currency, Bitcoin. The currency’s value and prevalence has fluctuated considerably these past two years, but it suffered perhaps its largest blow yet on Jan. 14: Hearn announced Bitcoin to be a failure and admitted that he had sold his entire collection of Bitcoins. The value of the currency fell 10 percent within a day.

In the blog post he wrote about the failure of the system, Hearn wrote, “Bitcoin has gone from being a transparent and open community to one that is dominated by rampant censorship and attacks on bitcoiners by other bitcoiners.”

Yet the need for an effective virtual currency is still great. Venezuelan citizens grapple with hyperinflation that devalues the paper money they own and makes buying simple products at the supermarket nearly impossible. Migrant workers sending money to families in Mexico, India and Africa lose 5 to 12 percent of their earned salary to money-transfer companies. Even in the United States, citizens lose 1 to 2.5 percent in each transaction with a credit-card company.

Bitcoin failed largely because it was unregulated. Criminals and drug users exploited the anonymous nature of the currency; venture capitalists invested millions in Bitcoin start-ups that were forced to navigate the changing value of the currency. Above all, Bitcoin was dominated by an elite few, and therefore it lost its egalitarian potential to help people in countries suffering from hyperinflation or working far from home.

“It (Bitcoin) has failed because the community has failed. What was meant to be a new, decentralized form of money that lacked ‘systemically important institutions’ and ‘too big to fail’ has become something even worse: a system completely controlled by just a handful of people,” said Hearn on his blog post.

Article via The Washington Post, 19 January 2016; The New York Times, 14 January 2016

Photo: Bitcoin by Tiger Pixel  [Creative Commons Attribution-NonCommercial-NoDerivs]