Friday, July 26, 2013

Technology Insider from Bloomberg BusinessWeek :Tesla

The Tesla Model S

Musk: Photograph by David Paul Morris/Bloomberg; Car: Courtesy of Tesla The Tesla Model S


Why Everybody Loves Tesla


The Tesla Motors (TSLA) design studio in Los Angeles is a huge open space that usually has a couple of prototype cars on the floor and parts scattered along the walls. Tonight, it’s a lounge, with red lighting, white leather couches dotting tiered plateaus of AstroTurf, Daft Punk on the sound system, and women in little black dresses serving cocktails. A few hundred guests mingle and snap photos. Most are local owners of the Model S, the luxury sedan Tesla introduced last year to near-universal acclaim.
The crowd parts for the star of the evening, Elon Musk, Tesla’s chief executive officer, and closes behind him as he works the room. After about an hour, Musk, wearing a black velvet jacket, hops onto a stage outfitted with the kind of wheel guides and drive-over repair pit you’d see at a Jiffy Lube. He tells them they’re about to witness history: a refueling contest between gasoline and electricity. “You’re here for the title fight!” he says.
A $70,000 Model S rolls onstage and stops over the pit. Simultaneously a live video feed of an Audi (NSU:GR) entering a gas station appears on a big screen. An on-screen timer starts, and the Audi driver begins pumping gas while robot arms beneath the stage replace the battery pack on the Model S. After 93 seconds, the Tesla rolls off the stage; the Audi is still refueling. A second Model S stops over the pit and finishes its battery swap after 91 seconds—just as the Audi tops off at 20 gallons. “There are people that take a lot of convincing,” Musk tells the adoring audience. “Hopefully, this is what will finally convince people that electric cars are the future.”
Wall Street needed assurances, too. In Tesla’s 10 years of existence, the company has suffered through embarrassing delays and leadership overhauls, verged on bankruptcy at least once, and been a favorite target of short sellers. In May it posted its first profitable quarter, with earnings of $11.2 million; sales for the first quarter rose 83 percent, to $562 million. Musk raised the 2013 sales
estimate by a thousand vehicles to 21,000, an eightfold increase over 2012. A few weeks later, Tesla paid off a $465 million government loan early and then raised $1 billion from investors. The stock price has soared in the past six months, from $32 a share to $129.90 on July 15, before falling $18.21 in one day after Goldman Sachs (GS) published a skeptical report about the carmaker’s margins.

Tesla has a market cap of about $13 billion, or about the size of Mazda Motor, which, according to a Bank of America Merrill Lynch (BAC) estimate, will sell about 1.3 million vehicles globally in 2013.
A 17-inch touchscreen instead of knobs and buttons
A 17-inch touchscreen instead of knobs and buttons

Some of the stock’s rise may have come from short sellers covering their bets, but you don’t get revenue increases like that without a decent product. The Model S does zero to 60 miles per hour in 4.2 seconds, has plenty of room (including a “frunk,” a second trunk under the hood), and gets the energy usage equivalent of 95 miles per gallon. Last November it became the first electric to win the Motor Trend Car of the Year award; in May, Consumer Reports gave the Model S its highest car rating ever—99 out of 100. “It’s what Marty McFly might have brought back in place of his DeLorean in Back to the Future,” the magazine said.
After the battery-pack demonstration, Tesla’s chief designer, Franz von Holzhausen, can barely contain himself as he talks about the design of the Model S. “It’s like the leap of faith Apple (AAPL) took with the iPhone,” he says, explaining why the car has a touchscreen instead of the usual physical buttons. “There’s a cleanliness to the interior. The screen is the hero. We are in the midst of that transition toward a new way of thinking. For me, it’s that iPhone moment
That the company has come this far is no small achievement. But the next phase of Tesla’s growth is going to be exponentially more challenging. Tesla’s ambition isn’t merely to win the title of hottest car in Silicon Valley, it’s to simultaneously become the next Ford Motor (F) and ExxonMobil (XOM)—to be a profitable, mass-scale manufacturer and fuel distribution network. Not even Henry Ford tried to pull all that off.

To continue goto:
Beyond Tesla: Rival Electric Car Makers Shred Sticker Prices

Gone in 90 Seconds: Tesla's Battery-Swapping Magic

Inside Tesla: A Massive Factory Pumping Out Model S

Vance is a technology writer for Bloomberg Businessweek in Palo Alto, Calif. Follow him on Twitter @valleyhack.




Thursday, July 18, 2013

Yahoo Inches Forward After Year One of Marissa Mayer: from Bloomberg BusinessWeek

Yahoo CEO Marissa Mayer at the announcement of the company's acquisition of Tumblr on May 20 in New York

Yahoo CEO Marissa Mayer at the announcement of the company's acquisition of Tumblr on May 20 in New York



There’s even more interest than usual in the perennially embattled Yahoo!’s (YHOO) second-quarter earnings, released just a half-day ahead of the one-year mark since former Google (GOOG) executive Marissa Mayer took over as chief executive officer of the pioneering Web portal.
Mayer, as Yahoo’s fifth boss in four years, has proven herself a steady steward so far. Shares are up more than 70 percent during her tenure, buoyed for the most part by an ongoing stock buyback and by the rising value of the company’s 23 percent stake in Chinese powerhouse Alibaba Group, which could stage an IPO this year. Still, as Bloomberg News notes in its one-year-later assessment, advertisers remain unsold on the Yahoo turnaround and analysts are nervous about Mayer’s acquisition spree of 17 startups, including the pricey $1.1 billion purchase of blog network Tumblr.
Other outlets have weighed in today with similar report cards that emphasize less what Mayer has accomplished than what she has yet to prove. Of particular concern is the lack of growth in Yahoo’s core advertising business. Research firm EMarketer predicts that Yahoo’s share of global digital ad spending is set to decline from 3.37 percent to 3.1 percent this year, with rivals Google and Facebook (FB) eating into Yahoo’s primary domain of display ads.
Today’s tepid earnings report raises more of the same questions. The company reported revenue (minus traffic-acquisition costs) of $1.07 billion, slightly missing analyst estimates of $1.08 billion and coming in at the low end of its own guidance. That amounts to a decline of 1 percent from the same quarter last year–not the arrow any company wants to put up on the board.
Digging a little deeper into the revenue numbers only emphasizes that challenges abound: The $423 million from display ads is off 11 percent from a year earlier, while the $418 million from search fell 9 percent from the same quarter last year. Yahoo stock slipped 0.7 percent in after-hours trading, after a runup in recent weeks.
Mayer put a positive spin on the numbers in a conference call with analysts. In an unusual move, the call was also made available as a live webcast that featured Mayer sitting alongside Chief Financial Officer Ken Goldman at a desk—as if they were television newscasters. Mayer called the quarter “one of the most productive in the history of Yahoo. We basically reached a phase of releasing a new product every week.” Among the dozens of new products were mobile apps for Yahoo’s Mail, Weather, Sports, News, and Flickr properties. Mayer said the company now had hundreds of engineers working solely on mobile, up from only dozens when she joined.
Mayer also said she was on the second part of her turnaround plan, centered around improving products, and she claimed that renewed traffic growth for Yahoo properties after years of decline was “unprecedented.” Acknowledging that none of this has increased revenue, Mayer predicted a “chain reaction” that would further increase traffic and spark growth.
Some analysts appear comfortable waiting. Mark Mahaney, an analyst at RBC Capital Markets, called it a “lengthy turnaround process” in an interview with Bloomberg and said that if Mayer is successful, “it will show up in the company’s fundamentals two to three years from now.”
A wait-and-see approach makes sense for now. Mayer inherited a famously leaky ship, and it’s difficult to argue that Yahoo isn’t in a better position today than it was a year ago. Job satisfaction among employees is up, according to a recent survey by Glassdoor, and Mayer continues to improve Yahoo’s standing as a coveted place to work for engineers. The company is even trying to energize employees by giving away Jawbone Up fitness wristbands and challenging staffers to walk or jog 100 miles in a month, as Businessweek reported earlier today.
Of course, if Mayer doesn’t get Yahoo’s revenue up soon, she may not be able to outrun her own critics.
Stone is a senior writer for Bloomberg Businessweek in San Francisco. Follow him on Twitter @BradStone.

Friday, July 12, 2013

Technology Insider, from Bloomberg BusinessWeek

Instacart: Crowdsourcing Your Grocery Shopping

Instacart: Crowdsourcing Your Grocery Shopping

Sequoia Capital partner Michael Moritz has a favorite disaster. Its name was Webvan, and it operated for less than two years during the dot-com bust and burned through $375 million from its initial public offering before going out of business in 2001. So Sequoia’s July 10 announcement that it’s investing $8 million in a San Francisco-based online grocery upstart, Instacart, rekindled some dormant traumas. “We had still been receiving outpatient therapy for our Webvan fiasco,” says Moritz, who’s joining the year-old company’s board. Still, with Instacart, he says, “There’s little danger of a relapse.”
In contrast to the high overhead of Webvan, which had its own refrigerated warehouses and a fleet of trucks, Instacart is built on a crowdsourcing model. Its 10 full-time employees, mostly engineers, work from a small office in San Francisco’s South Park neighborhood. Its app sends customer orders to about 200 independent Bay Area personal shoppers, who receive commissions based on the number of items and orders they deliver in their own vehicles. The app features detailed maps of local supermarkets and can direct the personal shoppers to specific aisles. Founder Apoorva Mehta says Instacart’s “secret sauce” is its fulfillment software, which allows the online retailer to combine orders placed at different times and fill them from different stores—supplementing frozen food from Trader Joe’s with fresh fruit from Whole Foods (WFM) and cereal from Costco (COST). Customers assemble their orders with lengthy drop-down menus on Instacart’s website or app.
That’s an advantage Instacart will need as it tries to use its new funding to expand to 10 U.S. cities by the end of next year. Peapod, FreshDirect, and supermarket chain Safeway (SWY) are well established in what could be a big part of the $600 billion U.S. grocery business, and the field is about to get crowded. (AMZN) is expanding its AmazonFresh service to Los Angeles and San Francisco and is crafting a national rollout, say three people familiar with its plans who aren’t authorized to discuss them publicly. Wal-Mart Stores (WMT) is testing a delivery service in the San Jose and San Francisco metro areas.
Instacart’s Mehta says he can expand quickly to other cities because he doesn’t have to build infrastructure. The 26-year-old Toronto-born engineer spent two and a half years working in Amazon’s supply-chain division and witnessed the challenges of storing and shipping perishables. “How you keep tomatoes at the right temperature and prevent them from spoiling is actually a very difficult problem,” says Mehta. “The mechanics of perishable inventory are very different from delivering televisions.”
It’s difficult to find dependable shopping couriers who can master Instacart’s app and also reliably pick the ripest avocado or the milk carton least likely to spoil. Customers will pay a premium for that kind of service, says Linda Collins, who complements her day job as a cashier at Trader Joe’s by working about 30 hours a week for Instacart, stuffing grocery bags into the back of her red Mini Cooper. “People are very generous. They all seem to love the service,” says Collins, adding that Instacart delivers her more than $500 a week in commission and tips.
While some stores that Instacart shoppers frequent have competing online services, grocery operators should welcome the business, says Bill Bishop, an analyst at research firm Brick Meets Click. “Everybody is fighting tooth and nail to get sales today, so any source of incremental business to them is a plus, and they don’t have to pay markdown dollars or cut their prices to get it,” he says.
Instacart’s greatest challenge may be the very crowdsourcing model that limits its expenses and risk. The company will have to ensure quality customer service even though it can’t completely control factors such as the reliability of its contractors or the freshness of its food. Eventually it’ll also have to match prices with expert cost-cutters such as Amazon and Wal-Mart. Moritz says the business opportunity is big enough for more than a couple of players. “The one thing that we got extremely right about the Webvan investment was that there would be huge consumer demand for home delivery of groceries,” he says. “It’s just taken time for technology to finally catch up.”
The bottom line: An Amazon veteran is trying to take his online grocery startup national with $8 million from Sequoia Capital.