Square has made another key hire today — Demetrios J. Marantis will be leading the company’s international government, regulatory and policy work. Marantis most recently served in President Barack Obama’s Cabinet as the Acting United States Trade Representative, and was the U.S.’s chief trade negotiator.
“Square is already having a meaningful impact on local economies in the US and Canada,” said Square co-founder and CEO Jack Dorsey in a release. “Demetrios’ invaluable experience will help Square provide powerful business tools to local entrepreneurs around the world.”
Marantis, who is a lawyer, first served in the White House as the Deputy United States Trade Representative, where he was responsible for U.S. trade negotiations and enforcement in Asia and Africa. In March 2013, Marantis assumed the duties of Acting United States Trade Representative. Before joining the Administration, Marantis served as Chief International Trade Counsel for the Senate Finance Committee, where he advised Congress on trade and economic issues.
It looks like he’ll be working on international and regulatory issues for Square. International expansion for payments companies is especially challenging because of the regulatory and security issues in various countries. The company recently expanded to Canada, its first market outside the U.S. Square says that gross payment volume over the first six months is 90 percent higher per capita than it was in the U.S. at the equivalent point in time. Square has yet to launch in the UK, but competitor PayPal here entered the market a few months ago.
It’s also worth noting that Square is ramping up leadership and executive hiring. Last week, Square announced that Alex Petrov, a former PayPal exec, joined as Vice President of Partnerships. Previously, Square brought on a new global business lead from Google.
Yelp, the local online business and restaurant guide that first launched in the U.S. in 2004 and now lives in 21 countries and 12 languages, and has more than 100 million monthly unique visitors as of January this year, launched in New Zealand this morning. On the heels of bringing its review data to Kiwis and continuing its international expansion, Yelp announced its first quarter earnings at market close today.
In the fourth quarter, Yelp missed earnings expectations, with net revenue coming in at $41.2 million in Q4 of 2012, a 65 percent growth in new revenue from 2011, while it saw a net loss of $5.3 million, or $0.08 per share. Today, Yelp turned things around, as it announced net revenue jumped to $46.1 million in Q1, reflecting a 68 percent growth from Q1 2012, while cumulative reviews grew 42 percent year-over-year to more than 39 million, average unique visitors grew 43 percent y/y and local business accounts grew 63 percent.
Wall Street’s consensus estimates were that Yelp would see $44.5 million in revenue for the quarter, and $1.5 million EBITDA. Yelp hurdled over the bar, in fact, seeing a net loss in the first quarter of 2013 of $4.8 million, or $0.08 per share. This means that while net losses only fell slightly from Q4 2012, it saw a more significant reduction in losses year-over year, $9.8 million, or $0.31 per share, over the first quarter of 2012.
In addition, compared to Wall Street estimates, Yelp said that adjusted EBITDA for the first quarter of 2013 was $3.2 million, in comparison with an adjusted EBITDA loss of approximately $1 million for the first quarter of 2012.
In the quarterly earnings release today, Yelp CEO Jeremy Stoppelman trumped up Yelp’s milestones in the last quarter, namely its hitting a record 102 million unique users over the last quarter, while touching on its plans to improve on its mobile experience. Something that should be music to the ears of anyone with a smartphone.
“We had a great start to the year and are excited about the large opportunity in front of us,” Stoppelman said. “This quarter we achieved many milestones including a record 102 million unique visitors on a monthly average basis, demonstrating the strength of our content and the trust we have earned from consumers. We provide valuable leads to local businesses because consumers turn to Yelp at the critical point when they are making purchase decisions. Looking to the rest of the year, we will continue to focus our product innovation around the mobile experience and new features to better serve the consumer and local business owners, and we will continue integrating Qype into the Yelp platform.”
Other business highlights?
Yelp mobile saw 36 percent of local ads shown on mobile devices in the first quarter, while the app was used on 10 million unique devices over the quarter, building on the company’s launch of display ads on mobile for the first time in Q1.
In terms of guidance, Yelp expects revenue in the second quarter of 2013 to be in the range of $52.5 million to $53.5 million, which would represent a growth of around 62 percent compared to the second quarter 2012. Adjusted EBITDA is forecasted to fall in the range of $4.5 million to $5 million. For the full year 2013, net revenue is expected to be in between $216 million and $218 million, representing a 58 percent growth year-over-year.
Tango Card, the Seattle-based startup that aggregates digital gift card services from dozens of companies like Amazon, Nike, Target, iTunes, charities and more, has raised $4.125 million in a Series B round of financing led by Allegro Venture Partners. Floodgate, Swan and Legend Ventures, and existing investors Western Technology Investments and Innovation Endeavors, the early-stage fund co-founded by Google chairman Eric Schmidt, as well as a strategic investor that Tango Card cannot disclose, also participated in the round. A Form D from Tango Card filed with the SEC for $5.452 million includes both this round along with some of the money raised in Tango Card’s previous venture round. To date, Tango Card has raised $6.925 million.
David Leeds, founder and CEO of Tango Card, says the company will be using the funding for the first stages of its international expansion and to continue building out its existing sales and marketing efforts around its enterprise service, in which businesses offer employees and customers gift cards as part of incentive and reward schemes. To date, the company has over 80 live enterprise customers covering 600,000 users and grew 500% from 2011 to 2012 in terms of revenue.
Enterprise-based gift card services may have a lower profile than consumer focused apps — with companies like Square and Facebook getting into a space already full of smaller startups like Wrapp and Gyft.
But they are nonetheless a lucrative business: Leeds estimates this to be a $50 billion annual opportunity, when you calculate employee recognition schemes ($20 billion); customer acquisition ($10 bilion) and customer loyalty offerings ($20). And given that the market may well be over-saturated for straight consumer business in the current market, “Gift cards are growing much faster on the enterprise side than on the consumer side,” Leeds notes. He also points out that enterprises can be more lucrative in the digital gift care business.”In enterprise your customers pay you in advance and via methods like checks and wire transfers. One of the challenges on the consumer side is that those purchases tend to be with credit cards, so if you take 10% margin, 3% disappears at the time of the transaction because the customer is not present,” he says. The other issue is fraud, which can be higher in consumer services.
The opportunity for a company like Tango Card is that enterprises that have traditionally tried to run gifting schemes in-house are starting to outsource services like these to third parties.
Tango Card’s pitch is that it can provide a cost-effective back end to run these services, and offer more engaging rewards to boot — “rewards as a service,” in Leeds’ terminology. When these services have been outsourced in the past, it’s been to large third party companies like Maritz, Carlson and Affinion, which offer gift catalogs rather than gift cards for recognised retailers. These catalogs and the services of larger companies tend to be priced at higher rates than Tango Card offers, and as for the offerings in the catalogs, “people are just not interested in crystal clocks and t-shirts anymore,” says Leeds.
Tango Card takes an API-based approach to working with enterprises for their gift card needs. They offer enterprises an API, which the business uses to enable rewards inside its own corporate platform; these can integrate with wider accounting packages that the enterprise uses to manage their employees’ expenses. Often these are integrated with yet more platform providers that work directly with enterprises to enable this: typical customers are companies like oPower, Extole and work.com, with oPower. These are typically charged on an SaaS-style model per user and per month.
The other part of the Tango Card’s business focusses on small and medium businesses that want to offer rewards to their employees or customers. Again, here the aim is to interface with other companies that help drive loyalty/reward schemes, giving them a gift card service to have as part of their offering. Leeds notes that these companies include companies like Beintoo for mobile loyalty; Plink, which helps drive offline purchases from online customers.
As a part of the deal, Julie Allegro is joining Tango Card’s board.
Amazon’s business model, CTO Werner Vogels reminded us today, is based on “low margins, high volume”, and today the company announced a development on how it’s applying that principle to its enterprise services. From today, AWS is expanding to Europe its Redshift data warehousing service and its EC2 High Storage service. Amazon first announced the intention to take Redshift global in February; it’s actually turning on Europe today.
The news of the international expansion was made this morning during the Amazon Web Services Summit in London, part of a wider roadshow for AWS. Redshift, Amazon’s petabyte-scale solution to better manage huge backlogs of data, was first announced in November 2012. It is very competitive on price: traditional data warehousing solutions can cost between $19,000 and $25,000 per terabyte while Redshift charges $1,000 per terabyte per year.
Big data, Vogels said in a speech today, will be the crux of competitive advantage in the future, but also, it can be the biggest stumbling block. “The database will be the bottleneck,” he said.
Vogels also took the audience through what he sees as the cloud services to watch in the future — a primer, of sorts, for what we may expect to see from AWS in terms of its product roadmap.
Internet of things: “To me it’s much more important that you see these devices as part of a wider strategy.” He described how Shell, an AWS customer, has plans for hundreds of thousands of sensors; and larger consumer developments around wearable technology like the Nike Fuelband and connected everything. “All of these devices in the hands of customers will need to have their data stored somewhere.” Is that a sign of more security services coming from AWS?
Security and privacy: If I had to put some money on it, I think security and privacy are two areas where Amazon will be looking to do more, not just to protect its own cloud platform from attacks, but also because tech companies whose services are based on cloud infrastructure, and who may already be customers of Amazon’s (or a competitor) are also increasingly becoming targets for attacks. “Encryption will be the most important tool to protecting your customers,” he predicted. “It’s important to realize that encryption will be a really important tool.”
Other areas where we might expect to see more AWS developments are more competitive price reductions (unsurprising, especially considering Microsoft Azure’s recent overtures for competing on price).
And there will be more sophisticated ways of manipulating big data, in ways that are perhaps more self-service and less technical. “At this point, the cloud is the default environment for big data,” Vogels said. “But much of big data processing is still pretty raw. What we’ll see is that there will be targeted solutions for you to do customer targeting. You will no longer look at analytics but what you really use for things you want to do.”
The rest of this morning’s presentation was focused on showing off just how much AWS has exploded in growth since first being launched in 2006.
As Amazon noted last week during its AWS Summit event in NYC, it now stores over 2 trillion total objects in S3, and processes 1.1 million peak requests/second as of Q1 2013. (These and other numbers may well get updated when Amazon announces its quarterly earnings later this week.)
Vogels describes AWS Marketplace, launched almost exactly a year ago, the “Amazon.com for enterprise software.” It’s seen a 102% rise in active customers in the last year, he noted.
This is likely to be the lever for much of AWS’s growth as it matures as a platform. AWS Trusted Advisor has made 329,000 recommendations (and now over 330,000 he says) across $22 million in cost savings.
Vogels defended how the company has been slow to date in adding more features to AWS overall. “We bring out limited feature sets because we do not pretend to know what our customers want,” reminiscent of Jason Fried’s idea of big ideas needing to be cut in half in order to execute them well. “We had no idea how this space would develop but this way we can react immediately.”
But as the popularity of AWS and cloud services (and competition to Amazon) continues to grow, the pace of development has accelerated from its introduction of nine AWS products in its first year. “Last year we launched 159 new features. And this quarter alone we’ve launched 53 new features and services. We’re on track to roll out more this year than last,” he noted.
AWS, as Amazon likes to remind us, has had 31 price reductions since 2006. Vogels’ take on this is not unlike that of Amazon as a whole: “We believe that if we can help you drop your costs down you will be more successful in the long run. For us it’s a high volume, low margin business and we really know how to do that well.”
Amazon eats its dogfood. Vogels says that on a typical day 40% of your capacity is unused but some months worse: in early November nearly 80% of traffic is unused. In November 2010 Amazon.com swapped out the last of its physical services, and then a year later did the same for its international operations.
Skimlinks, the platform which effectively gives publishers control over affiliate links and content monetization, has completed a growth financing round led by Greycroft Partners. Joining the round are Japan-based angel investors, Hiro Maeda and Ryota Matsuzaki, as well as Forum Foundry, a Texas-based network of blog and forum communities. The amount raised was undisclosed. Existing investors also participated in the round. The capital will be used to develop its content monetization platform and expand across the US, Asia, and Europe. In particular Skimlinks opens its Japanese site, although a full office is still in the works.
Skimlinks CEO and Co-founder, Alicia Navarro told me: “This is not a ‘C-round of funding as such, since we’re a revenue generating business, but it’s more about having a bit of extra capital, bringing in a great and relevant VC and our international expansion… By bringing on Greycroft, we can tap their vast industry knowledge and contacts to further cement our position as the leaders in content monetization.”
She noted that their new Japanese investors also have deep contacts in the online advertising space.
New York-based Greycroft Partners is best known as being a VC which has made multiple bets on advertising technology and online publishing startups such as Buddy Media, Collective, Klout and Huffington Post, amongst others. Ian Sigalow, Co-Founder and Partner at Greycroft Partners, will join the Skimlinks Board of Directors.
In a statement Sigalow said: “Hyperlinks are the core building block of the Internet and… Skimlinks pioneered the concept of optimizing hyperlinks to create more revenue for publishers, and today the company is a leading Internet utility. This year, Skimlinks will be responsible for over $500 million of e-commerce sales globally. They are the most effective way for publishers to link content to commerce.”
Skimlinks says it is generating seven-figures in revenue monthly from its network of 140,000 active publishers, and has grown 100-200% year-over-year for four consecutive years.
Headquartered in London, Skimlinks has 55 employees with additional offices in San Francisco and New York. The company will expand operations to Asia this year.