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

Alibaba buys $9.5b food-delivery startup

An Ele.me deliveryman on his electric scooter. Photo credit: Alibaba

Jack Ma just ordered some Chinese takeaway – he’s bought food-delivery startup Ele.me in a multibillion-dollar deal.

Ma’s Alibaba announced this morning that it’s taking “full ownership” of Ele.me – which means “Hungry?” in Chinese – by topping up the stake it had in the startup after earlier investments. The buyout figure isn’t disclosed, but the online shopping giant says Ele.me is now valued at US$9.5 billion, up from the US$5.5 billion it was pegged at last year.

Ele.me’s blue-and-white delivery personnel and their electric scooters are a common sight across China. The service gets 9 to 10 million orders each day, which its riders dash to collect and deliver from around 1.3 million participating stores, including major chains like KFC and Starbucks. Its app claims to have 260 million users.

Food fight

Even before today’s deal, Alibaba and Ele.me have been working closely together, with the startup’s foodie offerings available from within Alibaba’s spin-off Alipay mobile wallet app, which has 450 million users.

China’s booming food-delivery market was worth US$31.9 billion in 2017, up 23 percent from the year before.

Alibaba’s Ele.me is locked in a fierce battle for all that takeout food, with archrival Tencent backing two different apps, Meituan and Dianping. Those three apps dominate the market.

Source: Tech in Asia

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

Hackers infect thousands of websites to mine cryptocurrencies

Researchers warn about a kind of malware that can deliver profits without being obvious to users. — AFP Relaxnews

The attack is the first major incident made public in which a new breed of hackers took over a large numbers of websites to effectively create currencies like bitcoin which are generated by using computing power.

The attacks made public over the weekend by British security researcher Scott Helme showed more than 4,000 website were infected in this manner, including those of the British data protection and privacy watchdog and the US federal courts system.

Unlike traditional attacks, these infections do not contain “ransomware” or steal data, but operate in stealth mode to make profits from the shadowy world of cryptocurrencies.

Helme said in a blog post that the hackers were able to reach large numbers of websites by infecting a commonly used “plug-in,” or software which helps a site run better. In this case, the hackers used the malicious software to create Monero, one of several new cryptocurrencies which are making a splash in financial markets.

“If you want to load a crypto miner on 1,000 websites you don’t attack 1,000 websites, you attack the one website that they all load content from,” he said.

The creator of the plug-in, the British software firm TextHelp, said it took the affected software offline after it discovered the “attempt to illegally generate cryptocurrency”. “This was a criminal act and a thorough investigation is currently underway,” the company said in a statement.

Researchers have been warning in recent weeks about this kind of malware, which can deliver profits without being obvious to users. Security researchers at Cisco Talos warned last month that this kind of hacking activity “has exponentially increased”.

Because of the huge financial gains in cryptocurrencies, Cisco researchers said this has become a prime target for hackers. “At a high level mining is simply using system resources to solve large mathematical calculations which result in some amount of cryptocurrency being awarded to the solvers,” Cisco researchers wrote in a research note.

Security researcher Graham Cluley said the latest attack highlights vulnerabilities in websites which may have weaknesses in third party components.

“Things could have been much worse,” Cluley said in a blog post. “Imagine if the plug-in had been tampered with to steal login passwords rather than steal CPU resources from visiting computers.” — AFP Relaxnews

Source: The Star Online

Meltdown & Spectre – Computer chip ‘flaw’ sparks security debate amid scramble for fix

Intel said it was working with AMD and ARM Holdings and with the makers of computer operating software “to develop an industry-wide approach to resolve this issue promptly and constructively.” — Reuters

WASHINGTON: A newly discovered vulnerability in computer chips raised concerns Jan 3 that hackers could access sensitive data on most modern systems, as technology firms sought to play down the security risks.

Chip giant Intel issued a statement responding to a flurry of warnings surfacing after researchers discovered the security hole which could allow privately stored data in computers and networks to be leaked.

Intel labelled as incorrect reports describing a “bug” or “flaw” unique to its products.

Intel chief executive Brian Krzanich told CNBC that “basically all modern processers across all applications” use this process known as “access memory,” which was discovered by researchers at Google and kept confidential as companies work on remedies.

Google, meanwhile, released findings from its security researchers who sparked the concerns, saying it made the results public days ahead of schedule because much of the information had been in the media.

The security team found “serious security flaws” in devices powered by Intel, AMD and ARM chips and the operating systems running them and noted that, if exploited, “an unauthorised party may read sensitive information in the system’s memory such as passwords, encryption keys, or sensitive information open in applications.”

“As soon as we learned of this new class of attack, our security and product development teams mobilised to defend Google’s systems and our users’ data,” Google said in a security blog.

“We have updated our systems and affected products to protect against this new type of attack. We also collaborated with hardware and software manufacturers across the industry to help protect their users and the broader web.”

Spectre and Meltdown

The Google team said the vulnerabilities, labelled “Spectre” and “Meltdown,” affected a number of chips from Intel as well as some from AMD and ARM, which specializes in processors for mobile devices.

Intel said it was working with AMD and ARM Holdings and with the makers of computer operating software “to develop an industry-wide approach to resolve this issue promptly and constructively.”

Jack Gold, an independent technology analyst, said he was briefed in a conference call with Intel, AMD and ARM on the issue and that the three companies suggested concerns were overblown.

“All the chips are designed that way,” Gold said.

The companies were working on remedies after “some researchers found a way to use existing architecture and get into protected areas of computer memory and read some of the data,” he added.

Microsoft said in a statement it had no information suggesting any compromised data but was “releasing security updates today to protect Windows customers against vulnerabilities.”

But an AMD spokesman said that because of the differences in AMD processor architecture, “we believe there is near zero risk to AMD products at this time.”

ARM meanwhile said it was “working together with Intel and AMD” to address potential issues “in certain high-end processors, including some of our Cortex-A processors.”

“We have informed our silicon partners and are encouraging them to implement the software mitigations developed if their chips are impacted,” the SoftBank-owned firm said.

Slowdown?

Earlier this week, some researchers said any fix – which would need to be handled by software – could slow down computer systems, possibly by 30% or more.

Intel’s statement said these concerns, too, were exaggerated.

“Contrary to some reports, any performance impacts are workload-dependent, and, for the average computer user, should not be significant and will be mitigated over time,” the company statement said.

Tatu Ylonen, security researcher at SSH Communications Security, said the patches “will be effective” but it will be critical to get all networks and cloud services upgraded, Ylonen said.

British security researcher Graham Cluley also expressed concern “that attackers could exploit the flaw on vulnerable systems to gain access to parts of the computer’s memory which may be storing sensitive information. Think passwords, private keys, credit card data.”

But he said in a blog post that it was “good news” that the problem had been kept under wraps to allow operating systems such as those from Microsoft and Apple to make security updates before the flaw is maliciously exploited. — AFP

Source: The Star Online

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