Xiaomi IPO to make dozens of workers millionaires

Now Xiaomi is the fourth-largest smartphone maker in the world and likely will be valued at more than 200 times that amount. — Bloomberg

Eight years ago, before China’s Xiaomi Corp had sold a single smartphone, 56 of the earliest employees pulled together US$11mil (RM43.74mil) to invest in the startup. Rank-and-file workers dipped into savings and borrowed from parents. One receptionist tapped her dowry.

Today, they’re the Lucky 56. Xiaomi is one of the most successful smartphone makers in the world and it’s prepping a blockbuster initial public offering. Their stake in the company may soon be worth US$1bil (RM3.97bil) to US$3bil (RM11.92bil), depending on the stock sale. That works out to US$36mil (RM143.15mil) each at the midpoint.

The fortuitous decision began with workers like Li Weixing, an ex-Microsoft Corp engineer who was employee No. 12. Back in 2010, staffers were working seven days a week out of a bare-bones Beijing office park to get the unknown mobile phone maker up and running. When word spread that Lei Jun and his co-founders were chipping in their own money for a venture financing round, Li and others wanted to join them.

Li, who helped create Xiaomi’s mobile operating system, had around 500,000 yuan (RM311,843) saved up. “It wasn’t enough to buy a house, so he asked if he could invest in Xiaomi instead,” CEO Lei said in a March interview at Beijing headquarters. “We said, we can’t let only Weixing invest, so we let everyone in.”

Some early Xiaomi employees were already wealthy, including Lei who made his first fortune leading software developer Kingsoft Corp and investing in Chinese startups. But many staffers in those days had to scrape together cash to participate. Li and others preferred investing in an effort they knew rather than the uncertain stock market. Now Li stands to make US$10mil (RM39.76mil) to US$20mil (RM79.53mil), depending on Xiaomi’s IPO value.

It was employee No. 14, a receptionist now working in Xiaomi’s human resources office, who contributed her dowry of around 100,000 yuan (RM62,363) to 200,000 yuan (RM124,727). That stake could be worth between US$1mil (RM3.97mil) and US$8mil (RM31.81mil). Xiaomi declined to make her or other early employees available for interviews. Li declined to comment.

After a first surge of interest, Lei decided to cap rank-and-file investments at about 300,000 yuan (RM187,091) each to limit risk and stop employees from taking out loans to invest. “The interest was overwhelming, but we put a cap on it because we worried, if everyone put in too much money, it would be very bad if the company failed,” said co-founder Li Wanqiang in a March interview.

The group collectively stands to gain as much as US$3bil (RM11.92bil) if Xiaomi floats 15% of the company at a US$100bil (RM397.65bil) valuation when it goes public in Hong Kong later this year, according to calculations based on Xiaomi’s prospectus. A more conservative estimate would yield a US$1.4bil (RM5.56bil) payout for the 56 employees if Xiaomi floats 25% of the company at a US$50bil (RM198.82bil) valuation. (Calculations assume existing shareholders haven’t sold their stakes and the US$11mil (RM43.74mil) from employees was invested during what Xiaomi’s prospectus refers to as Series B-2.) Employees stand to make roughly 200 times their original investment. A greater number of Xiaomi’s workers should be enriched through stock options, which don’t require capital upfront.

Lei and his co-founders put in the heftiest amounts in that round and stand to make far more than the average. Five are poised to become newly-minted billionaires, according to Bloomberg calculations, and Lei’s stake, accumulated over several investment rounds, could be worth US$27bil (RM107.36bil). Investment powerhouses from Qiming Venture Partners to Morningside Group are also expected to reap mega-returns when Xiaomi goes public this year in what may be the biggest IPO since Alibaba Group Holding Ltd’s 2014 debut.

None of this was obvious in 2010. Back then, Xiaomi was really just an idea in Lei Jun’s head, said Hans Tung, one of his earliest backers. Lei was a local tech celebrity with 1 million follows on Weibo, China’s answer to Twitter, but it was far from clear he could compete with Apple Inc, Samsung Electronics Co and Huawei Technologies Co. He would host smoke-and-booze-filled meetings at Beijing hotels, showing up with bags of cell phones and gadgets for his friends to try.

But after Lei lured seven co-founders away from cushy jobs at Microsoft Corp and Alphabet Inc’s Google in a matter of months, Qiming, where Tung worked at the time, and Morningside decided to bet on him. They led fundraising rounds in late 2010 and early 2011 that valued the company at about US$250mil (RM994.12mil). That’s when employees put in their US$11mil (RM43.74mil) too. Now Xiaomi is the fourth-largest smartphone maker in the world and likely will be valued at more than 200 times that amount.

“Lei Jun is the founder. He could afford all the capital. But why did he share with everyone?” said Morningside co-founder Richard Liu. “He has a vision and he can build up that strong belief and people are willing to take the huge risks.”

Silicon Valley is known for its secret millionaires who were early joiners at companies like Facebook Inc. Among the more famous examples is Bonnie Brown, the massage therapist who bargained for stock options to accompany the US$450 (RM1,789) a week she was making at her part-time job at Google. She retired a millionaire after five years at the company.

In China, such riches are virtually unknown. “These employees already had enough risk working for a small, untested startup and it showed this great enthusiasm,” said Tung. “They turned out to be right.” — Bloomberg

Source: The Star Online

Grab launches a bike-sharing service in Southeast Asia

After much speculation, Southeast Asian Uber rival Grab has jumped into the bike-sharing space after it launched a service in Singapore.

GrabCycle Beta will offer services from a range of services, including bike-sharing services oBike — which includes Grab as an investor — GBikes and Anywheel, plus electric scooter rental Popscoot. The project is the first to launch under GrabVentures, Grab’s new “innovation arm” which is focused on projects in verticals beyond taxi rides such as payments and transportation.

The project ties into Grab’s payment efforts because GrabPay credits, its virtual currency, are used to pay to rent a cycle.

While dock-less bikes have their fans for making access to bikes easier, they have also adopted criticism for large cycle ‘dumps’ which have become commonplace across China. Grab is looking to mitigate that concern by partnering with Singapore island resort Sentosa, which will feature dedicated parking stations for bikes. The company plans to add other partners to help avoid “polluting public spaces” with cycles.

“In Singapore, approximately one in five car commutes are three kilometers and under. There is huge potential to convert this segment of commuters into bike-sharing users, in support of the country’s car-lite ambition,” Grab wrote in an announcement that was distributed to press today.

In adopting a marketplace-style model from the get-go, Grab is avoiding the issues that Didi — a Grab investor — encountered in China when it invested in bike-sharing company Ofo. As demand for bike-sharing rocketed, Ofo found itself becoming a potential threat to Didi. Throw in some internal politics between investor and investee, and Didi moved to counter the younger company by introducing a marketplace that served bikes of its own, alongside those from Ofo and Bluegogo.

The move was essentially aimed at relegating Ofo to a feature within Didi’s app in a bid to remove the need for consumers — and potential Didi customers — to install Ofo’s own app. That’s important because Mobike, an Ofo rival, has moved into taxi services and there is the potential for Ofo to do the same at some point.

Back to Southeast Asia, Grab’s service is initially operational in Singapore, where the firm is headquartered, but there is the potential to expand it to other markets in Southeast Asia, a spokesperson confirmed. Right now, the core Grab service is present in eight countries across the region with 86 million downloads and 2.6 million drivers.

Rumors persist that Grab is on the brink of agreeing to a deal that will see it acquire Uber’s Southeast Asia business in exchange for equity, according to Bloomberg. Any such deal would make it the dominant player across the region bar Indonesia, where local unicorn Go-Jek remains top of the pile.

Uber has moved into bike-sharing in the U.S. but it has not done the same in Southeast Asia despite its head of the region admitting to TechCrunch that the company is studying space.

Source: TechCrunch

Grab is said to close deal for Uber South-East Asia business

Grab would buy out Uber’s operations in certain markets in South-East Asia and Uber will take a stake in Grab. — Bloomberg

Grab, the dominant ride-hailing service in South-East Asia, is close to finalising a deal to acquire Uber Technologies Inc’s business in the region and may sign a deal this week or next, according to people familiar with the matter.

Under terms of the proposed agreement, Grab would buy out Uber’s operations in certain markets in South-East Asia and Uber will take a stake in Grab, the people said, asking not to be named because the talks are private.

The structure would be similar to the deal Uber struck with Didi Chuxing in China in 2016, when the San Francisco-based company sold its local operation in exchange for equity in the company.

Under a scenario being considered, Uber’s stake in Grab is likely to be in the high teens or 20%, said one of the people. Grab has separately been in discussions with existing backers, including SoftBank Group Corp, and new investors for additional capital, according to people familiar with the talks.

Grab was most recently valued at US$6bil (RM23bil) according to CB Insights. The current talks may still fall apart or the terms and timing may change. Grab and Uber declined to comment.

For Grab co-founder and chief executive officer Anthony Tan, the truce would bring to an end a bruising battle for leadership in South-East Asia’s fast-growing ride-hailing market.

The companies have been locked in a struggle for control of as many cities as possible across South-East Asia, home to 620 million people.

Uber’s new CEO, Dara Khosrowshahi, has been pushing to clean up the company’s financials in preparations for an initial public offering next year. Pulling out of markets like South-East Asia would boost profits at a company that has burned through US$10.7bil (RM41.7bil) since its founding nine years ago.

Khosrowshahi signaled during a trip through Asia last month that he is committed to key markets such as Japan and India.

Japan’s SoftBank became the largest shareholder in Uber in January, setting off speculation that it would encourage ride-hailing startups in its portfolio to cut back on competing with each other. SoftBank also holds stakes in China’s Didi and Ola, the India startup vying with Uber for leadership in that market.

Grab, which has more than 81 million mobile app downloads, currently offers services in 178 cities across Singapore, Indonesia, the Philippines, Malaysia, Thailand, Vietnam, Myanmar and Cambodia. — Bloomberg

Source: The Star Online

11,000 People Grapple to Buy $100 iPhones at Malaysian Apple Store

A Malaysian technology store that sells official Apple products had to close its doors this week when 11,000 fans turned up to buy $100 iPhones.

According to British tabloid newspaper The Sun, employees at the Switch store had no choice but to close the doors after thousands of people arrived to take advantage of its clearance sale.

Not only was the store offering $100 iPhones to customers, but it was also flogging off iPads, Apple TVs and Macs for bargain prices. Some devices cost just $24, causing the last-minute frenzy.

At one point, the store was offering discounted iPhone Xs and new MacBooks. But quickly, customers grabbed these bargains and stock ran low. It is believed that the store had about 200 devices on sale.

The company was trying to get rid of old and demo devices. However, despite envisioning a more manageable turnout, people were left forming multiple queues outside the store.

While the shop said that it would not let customers queue overnight to be first in line, that didn’t stop fans from waiting up to 19 hours to get their hands on cheap devices.

Customers crowded social media platforms such as Twitter and Facebook to describe the event. One compared it to “The Hunger Games”, while another called it an “embarrassing and disappointing experience”.

Some people said “there were too many people pushing” at the sale, and another angry Facebook commenter said that the closure of the store was unfair to people who had been waiting hours.

Writing on Facebook, Switch explained that it had to close the store due to safety worries. But it did not delve into these in detail, leaving many customers angry.

It said: “Due to security reason[s], we regret to inform you that the clearance sale will be put on hold until further notice. So stay tuned for more announcements.”

Source: iDrop News

Apple plans to combine iPhone, iPad, Mac apps

Apple is reportedly planning to give people a way to use a single set of apps that work equally well across its family of devices: iPhones, iPads and Macs. — Bloomberg

Apple Inc’s iPhone and iPad introduced a novel way of interacting with computers: via easy-to-use applications, accessible in the highly curated App Store.

The same approach hasn’t worked nearly as well on Apple’s desktops and laptops. The Mac App Store is a ghost town of limited selection and rarely updated programs. Now Apple plans to change that by giving people a way to use a single set of apps that work equally well across its family of devices: iPhones, iPads and Macs.

Starting as early as next year, software developers will be able to design a single application that works with a touchscreen or mouse and trackpad depending on whether it’s running on the iPhone and iPad operating system or on Mac hardware, according to people familiar with the matter.

Developers currently must design two different apps – one for iOS, the operating system of Apple’s mobile devices, and one for macOS, the system that runs Macs. That’s a lot more work. What’s more, Apple customers have long complained that some Mac apps get short shrift.

For example, while the iPhone and iPad Twitter app is regularly updated with the social network’s latest features, the Mac version hasn’t been refreshed recently and is widely considered substandard. With a single app for all machines, Mac, iPad and iPhone users will get new features and updates at the same time.

Unifying the apps could help the iOS and macOS platforms “evolve and grow as one, and not one at the expense of the other,” says Steven Troughton-Smith, an app developer and longtime voice in the Apple community. “This would be the biggest change to Apple’s software platform since iOS was introduced.”

Apple is developing the strategy as part of the next major iOS and macOS updates, said the people, who requested anonymity to discuss an internal matter. Codenamed “Marzipan,” the secret project is planned as a multiyear effort that will start rolling out as early as next year and may be announced at the company’s annual developers conference in the summer. The plans are still fluid, the people said, so the implementation could change or the project could still be cancelled.

An Apple spokeswoman declined to comment.

Apple wouldn’t be first to bring mobile and desktop apps closer together. Before it discontinued Windows software for smartphones, Microsoft Corp pushed a technology called Universal Windows Platform that let developers create single applications that would run on all of its devices – tablets, phones, and full-fledged computers. Similarly, Google has brought the Play mobile app store to some laptops running its desktop Chrome OS, letting computer users run smartphone and tablet apps like Instagram and Snapchat.

It’s unclear if Apple plans to merge the separate Mac and iOS App Stores as well, but it is notable that the version of the store running on iPhones and iPads was redesigned this year while the Mac version has not been refreshed since 2014.

Apple’s apps initiative is part of a larger, longer-term push to make the underpinnings of its hardware and software more similar. Several years ago, the company began designing its own processors for iOS devices. It has started doing the same for the Mac, recently launching a T2 chip in the iMac Pro that offloads features like security and power management from the main Intel processor onto Apple-designed silicon. Much the way Apple plans to unify apps, it could also one day use the same main processor on Macs and iOS devices.

That would make it easier to create a single operating system for all Apple gadgets. Will Apple go there? Chief executive officer Tim Cook has resisted doing so, arguing that merging iOS and macOS would degrade the experience. “You can converge a toaster and a refrigerator, but those things are probably not going to be pleasing to the user,” Cook said in 2012. Apple software chief Craig Federighi has called the blending of iOS and macOS “a compromise.”

Maybe so. But Apple has a long history of insisting it would never do something – make a small iPad, say, or a big iPhone – and then doing it anyway. — Bloomberg

Source: The Star Online

Tencent valued over $500B

JIAXING, CHINA – NOVEMBER 16: A speech about WeChat Ecosystem Innovation by Tencent is delivered during the Release Ceremony for World Leading Internet Scientific and Technological Achievements as part of the 3rd World Internet Conference (WIC) at Wuzhen Internet International Conference and Exhibition Center on November 16, 2016 in Jiaxing, Zhejiang Province of China. The 3rd World Internet Conference (WIC) – Wuzhen Summit kicks off at Wuzhen township on Wednesday and will last to Nov 18, in Zhejiang Province. (Photo by VCG/VCG via Getty Images)

Tencent has become the first Chinese company to be valued at more than $500 billion.

Shares of the 19-year-old company, which is listed on the Hong Kong Stock Exchange, rallied to reach HK$418.80 to give it a market cap of HK$3.99 trillion which takes past the $500 billion mark. Close rival Alibaba is Asia’s second-highest-valued firm at $474 billion.

Entry to the half-a-trillion-dollar club — which includes Apple, Alphabet, Facebook, Microsoft and Amazon — comes a week after Tencent posted a profit of 18 billion RMB ($2.7 billion) on revenue of 65.2 billion RMB ($9.8 billion) for Q3 2017. Overall profit was up 69 percent year-on-year and revenue rose by 61 percent thanks to Tencent’s games business

As SCMP pointed out, a US$9,000 investment in the company’s 2004 IPO would now be worth US$1 million.

Just looking at the last twelve months alone, Tencent’s share price has doubled thanks to impressive earnings reports like Q3.

Tencent’s market cap has more than tripled since March 2014 when it reached $150 billion, surpassing Intel in the process. Writing then, The Wall Street Journal opined that the company “isn’t yet a household name in the U.S., but it should be” and that still applies today.

WeChat, its messaging app that is China’s top social service, is closing in on one billion users overall but it has not managed to replicate that success overseas. Tencent has instead focused on investing itself into global positions.

Its lucrative gaming business focuses on PC and mobile and is the heartbeat of revenue, accounting for $5 billion in the last quarter alone, thanks to smash hits like Honour Of Kings, 2017’s top grossing game, and the acquisition of the companies behind hit games Clash Of Clans (Supercell) and League Of Legends (Riot Games).

Tencent’s investment focus seems to have gone into overdrive over the last year. It has bought up stakes in public companies Tesla, Snap, invested in India-based unicorns Flipkart, messaging app Hike, health portal Practo and Uber rival Ola. Other earlier-stage deals include flying cars, lunar drones and asteroid mining, while longer-standing investments like Sogou (search) and China Literature (e-publishing) have gone public over the past month.

If the recent Snap and Tesla deals are anything to go by, Tencent is likely to commit considerable resources to developing a base among U.S. tech companies. Not only does it believe it can learn from their experiences to boost its business in China, but it can add fresh perspective too — particularly around messaging/WeChat.

Source: TechCrunch