Facebook to launch start-up incubator in world’s largest start-up campus

Posted on 01/18/201701/25/2017 by Ben Debski

Facebook is seizing an opportunity to invest in the entrepreneurial spirit of aspiring start-ups with a ‘Start-up Garage’ in a vast new Parisian start-up campus, which is due to open in April. On January 18, Facebook COO Sheryl Sandberg announced her plans for the programme, which aims to offer promising start-ups the opportunity to develop under Facebook’s expertise over a rolling six-month cycle. According to a press release, the Start-up Garage will involve a “multi-million-euro commitment over a number of years”.

Under the scheme, Facebook employees are to provide weekly workshops for the chosen start-up teams, passing on their knowledge in tech development, design, marketing and UI. The start-ups will also be provided with desk space for their six-month stints, with 80 desks in the space earmarked for the incubator.

The Paris space where the programme will take place, named Station F, is described on its website as “the only start-up campus gathering a whole entrepreneurial ecosystem under one roof”. This ecosystem consists of a 34,000 sq metre space with over 3,000 desks, as well as several event spaces, one ‘maker space’, and 24-hour access. Further plans already underway involve the development of a co-living space for entrepreneurs, providing 100 shared apartments, due to open in 2018.

Facebook employees are to provide weekly workshops for the chosen start-up teams, passing on their knowledge in tech development, design, marketing and UI

“We’re thrilled to be a founding partner and start the Facebook Start-up Garage here”, Sandberg said. “Paris has always been a place where people come together to break new ground”, she added.

Several start-ups have already been selected for the programme, including: Mapstr, a location-tagging app; Onecub, a digital dashboard for personal statistics; and Karos, a carpooling app. This is not to say that the programme is fully booked, as the company is actively appealing to data-driven startups to apply for the scheme through the Start-up Garage Facebook page.

“My guess is that we’re going to learn even more from working with you than you working with us”, Sandberg said. While Facebook will not have any equity in the start-ups involved in the programme, it will be able to benefit from spotting talent early, as well as having inside knowledge on upcoming ideas and prospective acquisitions.

This move by Facebook emphasises that companies are becoming increasingly willing to invest in the right kind of ecosystem for the development of new ideas. Such an entrepreneurial space would not look out of place in Silicon Valley, but this move by Facebook underscores the growing influence of Europe as an entrepreneurial hub.

China announces closure of 104 coal-fired power plants in line with renewables push

Posted on 01/18/201701/23/2017 by Ben Debski

China’s push to become a world leader in renewable energy has taken a significant step forward, as the country’s National Energy Administration (NEA) ordered the cessation of 104 individual coal-fired power plants, according to Greenpeace. The move, reported on January 16, is the latest stage in the country’s five-year plan to transition to green energy. Earlier in the year, the NEA announced China’s commitment to invest $292bn in renewable energy technology by 2020.

Closing down the coal projects represents a significant boon for the Chinese Government; as late as November last year, it was reported that around $500bn could be wasted on unnecessary coal-fired power plants in China, mostly pushed ahead by local governments against the will of state authorities. This threatened to create a Catch-22 situation, in which the projects would potentially be even more wasteful and damaging to shut down than to complete, both in terms of environmental damage, and in terms of job losses and financial impact.

China plans to invest $292bn in renewable energy technology by 2020

Addressing this point in relation to the recent announcement, Greenpeace said in a statement: “Stopping under-construction projects seems wasteful and costly, but spending money and resources to finish these completely unneeded plants would be even more wasteful.”

The decision to scale back coal power in China could not have come too soon. In October last year, climate think tank Energy Transition Advisors predicted that if China were to complete all coal power projects then under construction, it would use up its entire International Energy Agency carbon budget by 2036. The carbon budget is an absolute maximum that countries can produce while still leaving a 50 percent chance of keeping global warming at or below two degrees Celsius.

Unfortunately, power plants do not account for all coal-fired industry in China. The country is home to many privately owned steel mills, which supply their own power by burning vast quantities of coal. As International Business Times reported last year, many of these steel plants are run illegally, and avoid closure by paying informal fines to local inspectors.

Clearly, if China is to get on top of its still-rampant use of coal as a fuel, the government must first establish order in the industrial sector. Otherwise, no amount of climate-friendly rhetoric will stop the country leading the world to the brink of irreversible damage.

BAT takeover of Reynolds American set to create market-leading behemoth

Posted on 01/17/201701/20/2017 by Ben Debski

On January 17, British American Tobacco (BAT) announced its agreement to a $49.4bn takeover deal with rival cigarette manufacturer Reynolds American. BAT, which already owns a large stake in Reynolds, will acquire the remaining 57.8 percent of the company, paving the way for BAT to enter the lucrative US market. According to Bloomberg, the merger will also see BAT save on operating costs of up to $400m.

The strategic move to consolidate the company is not novel for BAT; in 2015 the company spent $2.45bn on a merger with Brazil’s largest tobacco company, Souza Cruz. Similarly, in the same year, BAT was described by reporters as, “the real winner in the Lorilland takeover”, having investing $4.7bn in Reynolds American to retain its original 42 percent stake in the company.

With smoking bans across the west shrinking the cigarette industry, this multi-billion-dollar merger will have a ripple effect on other companies, including Phillip Morris and Japan Tobacco. As Steve Clayton from analyst firm Hargreaves Lansdown told the BBC: “The sheer scale of the enlarged BAT raises the pressure on the remaining players to bulk up too, and attention is likely to turn to Imperial Brands, who look more and more like a minnow swimming in a tank of big, hungry fish.”

This multi-billion-dollar merger will have a ripple effect on other companies, including Phillip Morris and Japan Tobacco

Founded in 1902, BAT today sells over 200 brands across the globe. Included in its portfolio of internationally recognised and iconic labels are Dunhill, Vogue, Lucky Strike and Kent. It is also a market leader in what the company describes as ‘next generation products’ (NGPs). As the company said in its press release on the merger: “The transaction will benefit from the best of the two companies’ talented R&D and NGP organisations and allow NGP capabilities to be shared more broadly.” For BAT, it will also mean the acquisition of Reynolds’ Vuse, “one of the leading vapour brands sold in retail in the world’s largest vapour market”.

The deal will see BAT become the world’s largest listed tobacco company, putting it in an unrivalled position across the globe. The company proudly acknowledged this success on its Twitter page, stating: “We believe combination with Reynolds American will create a stronger, global tobacco and next-gen products business.”

Applied innovation

Posted on 01/12/201701/12/2017 by Ben Debski

Argentina joins oil and gas companies to invest in multi-billion-dollar shale bounty

Posted on 01/11/201701/18/2017 by Ben Debski

On January 10, Argentinian President Mauricio Macri finalised an agreement with labour unions and energy companies to increase investment in the country’s largest shale reserve. In return for a $15bn investment into the shale deposits at Vaca Muerta, the government has promised natural gas subsidies in the area, as well as more flexible labour conditions, a reduction in production costs, and the abolition of export taxes for oil and gas.

The deal will involve an initial $5bn investment from companies in 2017, followed by a further investment of $10bn. The more relaxed labour conditions promised in return have been negotiated with labour unions, who historically have suffered strained relations with the ruling party as a result of high inflation. Addressing the momentous deal in a televised address to the nation, Macri described the concessions as necessary: “We have to give guarantees and provide certainty in order to attract investment”, he said.

The companies that have signed up to the agreement include the country’s national energy company Yacimientos Petroliferos Fiscales (YPF), Shell, Total, Dow, Chevron, and Exxon Mobil.

The amount of oil buried beneath the Jurassic rock has the potential to power Argentina for decades

The Vaca Muerta shale reserve, located in west-central Argentina in the Neuquén Basin, is the second largest of its kind in the world. It is largely unexplored and therefore presents an attractive source for investment in oil and gas production. The reserve has drawn international attention due to its unique geological formation – the rock beneath the land’s surface contains unusually thick layers of shale, meaning that “companies can produce more from a single site”. Chevron spokesman Kent Roberston told Reuters that “Argentina has kind of won the geological lottery”. He explained: “Vaca Muerta is like one big cake, 1,000 feet (305 metres) thick in places, which means one well can be much more productive.”

YPF has been cutting slices out of this big cake for quite a while, being one of the few major players in extracting oil and natural gas from the region. However, the energy sector’s ongoing dependence on imports thanks to falling global crude oil prices, as well as its increasing fiscal deficit, has prompted the Marci administration to take action and incentivise production for other companies.

The amount of oil buried beneath the Jurassic rock has the potential to power Argentina for decades. With inflation on the decline, investment into this largely untapped shale mass will increase global competition and may just be the energy revolution needed to revamp Argentina’s sluggish sector.

Alibaba’s deal for Intime opens door to retail integration in China

Posted on 01/10/201701/18/2017 by Ben Debski

On January 9, China’s biggest e-commerce company, Alibaba, announced a $2.6bn deal to take the Hong Kong stock exchange listed company Intime private. The deal will see an important integration of technology and services, as Alibaba expands its online presence into store-based shopping.

Intime Retail is a Chinese investment holding company primarily involved in the operations and management of department stores and shopping malls. It operates 29 department stores and 17 shopping malls in the country, while boasting annual revenue of just under $1bn.

Alibaba already owns around 28 percent of Intime Retail after purchasing an initial $692m stake in the company in 2014, while Intime’s founder, Shen Guo Jun, owns around 9.2 percent. The transaction will see Alibaba’s stakes merge with that of Jun’s, to increase its total to around 74 percent, making it the controlling shareholder.

In 2015, Alibaba took an additional step to integrate its digital and technology services with offline distribution and retail by investing a further $4.6bn in electronics retailer and logistics expert Suning Commerce. Embracing the Chinese government’s Internet Plus action plan, first proposed in the same year, Alibaba is now looking to further integrate online and offline sectors as a lucrative new business model.

Today recognised as the world’s largest e-commerce retailer, Alibaba’s operations are paradoxically largely domestic

It is Alibaba’s intention to use Intime’s physical retail stores as a tangible presence for its online operations, while also acting as collection points for shoppers. For Intime, whose profits fell 21.3 percent in the first-half of 2016, the opportunity to merge with the e-commerce giant is forecast to bring the company’s operations back into the competitive retail landscape. It will allow the company greater insight into consumer trends through data collated online, in addition to increasing the customer base through digitisation of services.

In a statement from Alibaba, CEO Daniel Zhang spoke of the merger creating value for consumers through the integration of online and offline retailers with the power of “mobile reach, real-time consumer insights, and technology capability to improve operating efficiency”. For Alibaba, the new relationship with brick-and-mortar stores run by Intime “will enable us to tap into the long-term growth potential of a new form of retail in China powered by internet technology and data”, he said.

The agreement to acquire further control in the form of the Intime Retail deal comes in the wake of decreasing online sales amid slower economic growth for the world’s second-largest economy. Today recognised as the world’s largest e-commerce retailer, Alibaba’s operations are paradoxically largely domestic. However, with a population of 1.4 billion people, of whom only seven million are internet users, it’s not hard to see the growth potential – particularly in a country whose internet growth rate of 2.6 percent trumped the figures attained for GDP growth in 2016.

Alibaba founder and Executive Chairman Jack Ma met with President-elect Donald Trump this week to discuss the potential to add US businesses to its online platform. Now in a strong position in the retail market with a foothold in both the digital and physical departments, it would seem that the company is set to go from strength to strength, both domestically and across the globe.

China poised to dominate in renewable energy with ‘going global’ strategy

Posted on 01/06/201701/11/2017 by Ben Debski

On January 5, the Institute for Energy Economics and Financial Analysis released a report forecasting that China’s global leadership in renewables will widen in the future, due to expansions in Chinese investment, as well as the upcoming change in US leadership.

China currently represents well over a third of global investments in renewables, investing $103bn in 2015 alone. Its funding of renewables dwarfs that of the US, with domestic investment amounting to two and a half times that of the US in 2015, according to Bloomberg New Energy Finance.

China is set to strengthen its current position further by turning its sights overseas with a ‘going global’ strategy, as well as its ‘One Belt, One Road’ programme, which focuses on developing Chinese presence in Eurasia. Furthermore, China is looking to expand renewables investment in Africa, Europe, the Middle East and South America. As part of this global expansion, Chinese firms have stepped up the value of their international investments. The number of foreign investment deals that exceed $1bn rose by 60 percent from 2015 to 2016, with a total investment of $32bn over the course of the last year.

This wave of investments will ensure that China makes up a large share of global renewable capacity growth. According to the IEA World Energy Outlook 2016, from 2015 to 2021, Chinese capacity growth is forecast to climb to 36 percent, 40 percent and 36 percent of the global total in hydro, wind and solar power respectively.

As the US owned the advent of the oil age, so China is shaping up to be unrivalled in clean power leadership today

“Going forward, this China presence can be expected to increase as the second-largest economy in the world sees strategic advantage in becoming the global leader in renewable energy”, said the report.

This ambitious strategy comes at a time when the US is actively turning away from climate commitments, with President-elect Donald Trump having pledged to pull out of the Paris Agreement. It thus marks a key divergence in the approach of the world’s two largest economies, especially given that Trump has made it clear that he sees climate measures as a drain on productivity. China, on the other hand, “sees a huge opportunity in extending its domestic renewable energy build-up overseas with ambitions of making the country the global leader in the new energy technology”, according to the report.

“As the US owned the advent of the oil age, so China is shaping up to be unrivalled in clean power leadership today”, said Tim Buckley, Director of Energy Finance Studies for the Institute for Energy Economics and Financial Analysis, according to the Financial Times.

Apple to invest $1bn in SoftBank’s tech fund

Posted on 01/05/201701/10/2017 by Ben Debski

Technology giant Apple has confirmed that it will be investing $1bn into SoftBank’s international technology fund. The SoftBank Vision Fund, launched in October 2016, plans to make significant investments in technology start-ups around the world.

“We believe their new fund will speed the development of technologies which may be strategically important to Apple”, company spokesman Josh Rosenstock told Reuters.

Set to become one of the world’s biggest private equity funds, the SoftBank Vision Fund has attracted a growing list of high-profile investors. The Saudi Arabian Government has pledged to invest $45bn in the fund over the course of five years, while chipmaker Qualcomm, Foxxconn Technology Group and Oracle Chairman Larry Ellison also intend to contribute. An initial close to this first round of fundraising is scheduled for the end of January 2017, with a final close expected by mid-2017.

Apple’s contribution to SoftBank’s Vision Fund marks a change in the company’s investment strategy

The $100bn tech fund, which will be based in London, looks to invest in emerging technologies including artificial intelligence and the Internet of Things. Such research areas may be of particular interest to Apple, as it increasingly looks to diversify its technologies. In December, the company published its first artificial intelligence research paper, detailing its progress in developing AI software.

Apple’s contribution to SoftBank’s Vision Fund marks a change in the company’s investment strategy. Historically, Apple has shown little interest in investing in venture-capital funds. However, this stance appears to have changed over the past year, most significantly with a $1bn investment in Chinese ride-share company Didi Chuxing. While Apple may have previously focused on acquiring fledging start-ups valued at under $1bn, the company’s recent string of billion-dollar investments could mark something of a shift in its vision for the future.

US vehicle sales defy expectations with highest year on record

Posted on 01/05/201701/09/2017 by Ben Debski

The US motor vehicle industry has achieved its most successful year on record, with sales reaching 17.465 million units, up from last year’s record of 17.396 million, according to data from WardsAuto. 2016 marked the seventh year in a row of rising sales in the industry, presenting a remarkably consistent recovery.

Furthermore, the numbers defied expectations, presenting an encouraging result for the US economy, especially given the fact that vehicle sales are often considered an early indicator of the shape of consumer spending. Sales outpaced expectations by the bulk of industry experts, largely due to a surge in December. A key factor in this sales rush was a range of extra incentives, with carmakers vying to lure buyers with heavy discounts.

General Motors, Honda, Nissan, Volvo, and Volkswagen/Audi all posted double-digit year-on-year growth for December

This success was spurred by a particularly good month for General Motors – the industry leader – whose sales in December rose by 14 percent from the same month in 2015. General Motors was not the only company to publish double-digit growth from this time last year, with Honda, Nissan, Volvo, and Volkswagen/Audi all following close behind in terms of year-on-year growth for December.

Key factors in stimulating the year of successful sales were low gas prices and cheap borrowing. Thus, forecasted rate hikes and rising oil prices could be cause for concern for the coming years. Nevertheless, many remain optimistic. “Key economic indicators, especially consumer confidence, continue to reflect optimism about the US economy and strong customer demand continues to drive a very healthy US auto industry”, said Mustafa Mohatarem, Chief Economist at General Motors, according to Reuters.

Ford scraps Mexican production plans and moves production to US

Posted on 01/04/201701/06/2017 by Ben Debski

On January 3, Ford announced that it would ditch plans to build a $1.6bn manufacturing plant in Mexico, opting instead to expand production in Michigan. The decision came alongside a tweet from President-elect Donald Trump, which threatened General Motors with a tax hike on its Mexican-made Chevy Cruze. “Make in USA or pay big border tax!” he said.

Trump has pledged reductions in US corporate tax, and focused much of his election campaign on the subject of returning manufacturing jobs to the US. In addition, he has promised to renegotiate NAFTA, and pledged to impose tariffs on goods produced in Mexico.

The decision from Ford thus appears to be a victory for Trump, with the new Michigan expansion expected to create 700 US jobs.

That said, it is not clear that the production decision was prompted by Trump’s policy promises, or indeed by his threats fired over Twitter. Ford’s CEO, Mark Fields, said that the motor company would have made the same decision had Trump not been elected, in an interview on Fox Business Network.

The decision from Ford appears to be a victory for Trump

Nevertheless, Fields did emphasise the importance of future policy under Trump for the manufacturing sector. “One of the factors that we’re looking at is a more positive US manufacturing business environment under President-elect Trump and some of the pro-growth policies he said he’s going to pursue. And so this is a vote of confidence.” This, however, was just one of many factors considered in the decision, according to Fields.

Ford’s investment in Mexico had been intended for production of the Ford Focus, a vehicle that has recently seen shrinking demand. Over the course of ten months, sales of the vehicle have gone down by 17.1 percent, and demand has shifted instead towards gas-guzzlers amid a dip in oil prices.

Twitter China’s top executive quits after eight months in charge

Posted on 01/03/201701/06/2017 by Ben Debski

Kathy Chen, Twitter’s Managing Director for Greater China, has left the company after just eight months at the helm. Chen’s departure comes amid a global restructuring initiative by the microblogging platform, which has seen several high-profile executives leave the firm.

Chen confirmed her exit from the company in a series of tweets posted to her personal account on December 31. “Now that the Twitter Apac team is working directly with Chinese advertisers, this is the right time for me to leave the company”, one tweet read.

“I will take some time off to recharge, study about different cultures and then pursue more international business opportunities”, she wrote.

In addition to announcing her departure, Chen’s 12-tweet statement maintained that Twitter remains dedicated to expanding its presence in Greater China, and will be keeping its Hong Kong office open despite a restructuring of its Asian operations.

While Twitter is officially blocked in mainland China, the social network has a thriving Chinese-language user base, and allows Chinese advertisers to connect with a global audience. In April 2016, Twitter hired Chen with the intention of further cultivating its Asian advertiser base.

Twitter remains dedicated to expanding its presence in Greater China

According to Chen, Twitter has successfully grown its Greater China advertiser base by nearly 400 percent over the past two years, making it one of the company’s fastest growing revenue markets in the Asia-Pacific region. Chinese e-commerce giant Alibaba Group, Air China and electronics company Xiaomi are among the big-name Chinese brands that have run advertising campaigns with Twitter.

While Twitter has had some success partnering with Chinese advertisers, the firm’s Asian operations have recently been tested by a significant reorganisation initiative. In October 2016, the social media site announced that it would be cutting nine percent of its global workforce in order to keep costs down.

In the months following this announcement, a string of high-profile executives have left the company. In November, Twitter’s Chief Operating Officer, Adam Bain, parted ways with the firm, while Chief Technology Officer Adam Messinger quit shortly after in December. With no replacement currently in place to take over Chen’s position, Twitter’s future in Greater China now looks unclear.

Author: Ben Debski