Author: Matthew Lynley

Benchmark’s Mitch Lasky will reportedly step down from Snap’s board of directors

Benchmark partner Mitch Lasky, who has served on Snap’s board of directors since December 2012, is not expected to stand for re-election to Snap’s board of directors and will thus be stepping down, according to a report by The Information.

Early investors stepping down from the board of directors — or at least not seeking re-election — isn’t that uncommon as once-private companies grow into larger public ones. Benchmark partner Peter Fenton did not seek re-election for Twitter’s board of directors in April last year. As Snap continues to navigate its future, especially as it has declined precipitously since going public and now sits at a valuation of around $16.5 billion. Partners with an expertise in the early-stage and later-stage startup life cycle may end up seeing themselves more useful taking a back seat and focusing on other investments. The voting process for board member re-election happens during the company’s annual meeting, so we’ll get more information when an additional proxy filing comes out ahead of the meeting later this year.

Benchmark is, or at least was at the time of going public last year, one of Snap’s biggest shareholders. According to the company’s 424B filing prior to going public in March last year, Benchmark held ownership of 23.1% of Snap’s Class B common stock and 8.2% of Snap’s Class A common stock. Lasky has been with Benchmark since April 2007, and also serves on the boards of a number of gaming companies like Riot Games and thatgamecompany, the creators of PlayStation titles flower and Journey. At the time, Snap said in its filing that Lasky was “qualified to serve as a member of our board of directors due to his extensive experience with social media and technology companies, as well as his experience as a venture capitalist investing in technology companies.”

The timing could be totally coincidental, but an earlier Recode report suggested Lasky had been talking about stepping down in future funds for Benchmark. The firm only recently wrapped up a very public battle with Uber, which ended up with Benchmark selling a significant stake in the company and a new CEO coming in to replace co-founder Travis Kalanick. Benchmark hired its first female general partner, Sarah Tavel, earlier this year.

We’ve reached out to both Snap and a representative from Benchmark for comment and will update the story when we hear back.

Pinterest gives advertisers a way to show promoted videos that take up the screen

Pinterest is continuing its push into video as a potential avenue for advertisers by today saying that it will offer advertisers a promoted video tool that takes up the width of the entire screen.

While Pinterest normally offers users a grid that they can flip through — compressing a lot of content into a small space — taking up the full width of the screen with a promoted video would offer advertisers considerable real estate if they’re looking to get the attention of users. Pinterest pitches itself to advertisers as a strong alternative to Facebook or Google, giving marketers a way to reach an audience that behaves a little more differently than when on those other platforms and coming to Pinterest to discover new things.

The company also said it’s hired Tina Pukonen as an entertainment strategist and Mike Chuthakieo as an industry sales lead. Pinterest says more than 42 million people in the U.S. come to Pinterest for entertainment ideas, and that potential tool offers an interesting niche opportunity for advertisers to capture the attention of a user for a product — say, a movie — that needs a lot of awareness marketing. Getting a user’s attention for just a few seconds can be more than enough time to at least plant the seed of potentially buying a product down the line.

It’s that argument that what gives Pinterest potential value for advertisers. The company offers an array of advertising products designed to target users at all phases of a potential buying cycle, whether that’s just clicking around on the platform looking for ideas down to actually saving an idea or buying it — through Pinterest or through a referral. Most of Pinterest’s content consists of images and other content from brands or businesses. That makes sense given that it’s a place where people tend to go to plan life events, whether that’s parties, or weddings, or home improvement — and those events center around products that they may in theory one day buy. All the while Pinterest is accumulating a lot of different plays at advertising products and an experienced level of senior hires, including hiring its first COO Françoise Brougher, who was the former VP of SMB global sales and operations at Google and business lead at Square.

Pinterest, interestingly, seems to have been a little more tolerant of making what might seem like small design changes but may have substantial user implications. The company added a tab for followers at the bottom of the app, shaking up what is often seen as a core navigation bar for any app. But the company continues to grow, crossing 200 million monthly active users in September last year.

Netflix magic market number larger than big cable company’s magic market number

Netflix’s market cap is now larger than Comcast, which is pretty much just a symbolic thing given that the companies are valued very differently but is like one of those moments where Apple was larger than Exxon and may be some kind of watershed moment for technology. Or not.

A couple notes on this largely symbolic and not really important thing:

  • Netflix users are going up. That’s a number that people look at. It’s why Netflix’s magic market number is going up.
  • People are cutting cable TV cords. Netflix has no cable TV cords. It does, however, require a cord connected to the internet. So it still needs a cord of some sort, unless everything goes wireless.
  • Netflix is spending a lot of money on content. People consume content. Cable is also content, but it is expensive content. Also, Comcast will start bundling in Netflix into its cable subscriptions.
  • They have a very different price-to-earnings ratio. Comcast is valued as a real company. Netflix is valued as a… well, something that is growing that will maybe be a business more massive than Comcast. Maybe.
  • Comcast makes much more money than Netflix. Netflix had $3.7 billion in revenue in Q1. Comcast had $22.8 billion and free cash flow of $3.1 billion. Netflix says it will have -$3 billion to -$4 billion in free cash flow in 2018.

Anyway, Netflix will report its next earnings in a couple months, and this number is definitely going to change, because it’s pretty arbitrary given that Netflix is not valued like other companies. The stock price doesn’t swing as much as Bitcoin, but things can be pretty random.

In the mean time, Riverdale Season 2 is on Netflix, so maybe that’s why it’s more valuable than Comcast . See you guys in a few hours.

Gfycat ramps up its focus on game clips and highlights as it hits 180M monthly users

Gfycat is already a pretty popular host for lots of content like short clips from shows and movies, but there’s also a pretty substantial store of content centered around gaming — which is why the company is starting to put some extra focus on it.

Gfycat, which is centered around creator tools to make those short-form video clips and GIFs, said it’s going to create an interface specifically designed for gamers. Called “Gfycat for gaming,” the startup hopes to ride both the wave of ever-omnipresent GIFs getting shared around the internet and popular, highly shareable game titles like PlayerUnknown’s Battlegrounds and Rocket League. GIFs serve as a pretty good vehicle for delivering highlight reel clips for those games, which is why it’s going to be putting some extra focus on that audience. Gaming is one of the most popular verticals on Gfycat, CEO Richard Rabbat said.

“As we were looking at different verticals, gaming is such a strong vertical, and we wanted gamers to get an experience that just really speaks to what they’re looking for,” he said. “We wanted to just focus on that as opposed to content that was much more mixed. You see a lot of teams or players that will play for hours, but that exciting moment was like 10 seconds or 20 seconds. They want to capture them and keep them, to chat about them, and share them.”

While the platforms are certainly a big component of this, creator tools for getting that content onto the Internet is also a pretty big segment. That’s what Gfycat focuses on, and the company says it has 180 million monthly active users, which is up from 130 million monthly active users in October last year. The service has more than 500 million page views every month, Rabbat said.

There are two changes that are coming with this update: first, there will be a direct home for gaming highlights on Gfycat, where users can follow creators in that area; second, the time limit for Gfycat clips is growing to around 60 seconds instead of just 15, which is a soft change the company made in the past few months. Both are geared toward making content more shareable in order to grab those highlights, which might not just fall into 15 second buckets. Down the line, the company will start working on subscribing to specific channel.

“A lot of gaming moments are created in 10 or 15 seconds,” Rabbat said. “Some of the gamers have been asking us for a longer period. We moved from 15 seconds to 60 seconds so people can share exciting experiences that take a little more time. GIFs are not only just a moment but also it’s a bit of storytelling. We wanted people to have the ability to do that storytelling.”

GIFs are already a big market, and there has even been some activity from the major players looking to dive further into that type of content. Earlier this month, Google acquired Tenor, a GIF platform that has its own keyboard and integrates with a variety of messenger services — even ones like LinkedIn. That a tool like Tenor or Giphy has grown to encompass all those messaging tools is just a further example of how much of an opportunity platforms centered around GIFs have.

The short-form video clips, as Gfycat likes to label them, are a good form factor for compressing a lot of information into a unit of content that’s easy to share among friends or an audience on the Internet. Rather than just sending a text message, a GIF can convey some element of emotion alongside just the typical information or response some user is trying to achieve. That’s led to a big boom for those companies, with Tenor hitting 12 billion GIF searches every month as an example.

Twitter beats expectations with $665M in revenue amid its turnaround hopes

It looks like Twitter, the oft-beleaguered social network that’s still worth more than Snap, will still hold that status for a little longer after delivering a stronger-than-expected quarter this morning.

Twitter’s monthly active users barely grew — though it did, indeed, grow — by around 3% worldwide year-over-year, and is now at around 336 million monthly active users. That isn’t crazy growth or size in the scope of how large Facebook is, but it still means that Twitter isn’t losing those users. It’s going to be re-entering a critical time heading into another year of elections. All this is going to be critical to its story as it tries to sell a turnaround on Wall Street, where it at one point was worth more than double it is now.

The company beat out Wall Street’s expectations by delivering $655 million in revenue, leading to a small spike in the stock this morning by about 5%. Here’s the final scorecard:

  • Monthly active users: 336 million, up 3% year-over-year and compared to around 334 million expected
  • U.S. MAUs: 69 million, about flat year-over-year
  • International MAUs: 267 million, up 4% year-over-year
  • Q1 Revenue: $665 million, compared to $608 million Wall Street estimates and up 21% year-over-year
  • Q1 Earnings: 16 cents per share, compared to 12 cents per share estimates

While all of this looks pretty strong, Twitter had a pretty bumpy but somewhat positive 2017 on Wall Street toward the back end of the year. It’s been making significant moves to try to curb abuse and harassment and has actually been tweaking the product in some ways, even if they don’t particularly feel earth-shattering. Expanding the character count from 140 to 280 characters might not seem like a lot, but it does compress more information into that small space, and any bit of engagement helps Twitter in the long run sustain itself.

Late last year, Twitter passed Snap in market cap. While this is largely symbolic, it’s kind of a snapshot of the pressure both networks are under to show that advertisers are actually interested in a platform beyond Facebook. Both companies are pretty volatile and have to sell Wall Street on growth stories. Twitter has often been slammed for being difficult to use and having a lot of problems related to harassment and abuse, and it’s spent much of the last year trying to fix those problems.

(Interestingly, Twitter’s stock-based compensation expense — an expense that’s been hounding Twitter for some time — increasingly seems to be getting under control. It’s down to around $73 million in the first quarter, compared to $117 million in the first quarter last year.)

While it won’t be the size of Facebook, Twitter has to position itself as a unique spot where advertisers can reach an audience that is in a different kind of behavioral mode than they are on Facebook. Twitter has sought to specialize in a live feed of information, whether that’s trying to rejigger the timeline to surface up important information or investing more in video. That, theoretically, means that Twitter could sell itself as a platform with a higher level of engagement in certain activities — something that Snap has done in order to position itself in a positive way for Wall Street.

All this has given Twitter a way to show that while its revenue is not the scale of Facebook, it’s a different kind of revenue, and one that might have a lot of value for advertisers. If it can do that, and continue to scale up its user base over time and then move into significant news events like an elections cycle, it might be able to pick up more and more advertisers. There was a point when we were talking about how its advertising revenue had completely stalled and was headed into a tailspin, but it looks like it’s actually gotten that under control.

That’s also why Twitter loves to show this chart and talk about it on its quarterly earnings releases, which has only one of the two required axes in order to be a chart. The chart shows year-over-year daily active user growth, but the company doesn’t like to offer some kind of basis for how many of its users are actually super-active DAUs. But, nonetheless, here it is in all its glory:

Facebook has a new job posting calling for chip designers

Facebook has posted a job opening looking for an expert in ASIC and FPGA, two custom silicon designs that companies can gear toward specific use cases — particularly in machine learning and artificial intelligence.

There’s been a lot of speculation in the valley as to what Facebook’s interpretation of custom silicon might be, especially as it looks to optimize its machine learning tools — something that CEO Mark Zuckerberg referred to as a potential solution for identifying misinformation on Facebook using AI. The whispers of Facebook’s customized hardware range depending on who you talk to, but generally center around operating on the massive graph Facebook possesses around personal data. Most in the industry speculate that it’s being optimized for Caffe2, an AI infrastructure deployed at Facebook, that would help it tackle those kinds of complex problems.

FPGA is designed to be a more flexible and modular design, which is being championed by Intel as a way to offer the ability to adapt to a changing machine learning-driven landscape. The downside that’s commonly cited when referring to FPGA is that it is a niche piece of hardware that is complex to calibrate and modify, as well as expensive, making it less of a cover-all solution for machine learning projects. ASIC is similarly a customized piece of silicon that a company can gear toward something specific, like mining cryptocurrency.

Facebook’s director of AI research tweeted about the job posting this morning, noting that he previously worked in chip design:

While the whispers grow louder and louder about Facebook’s potential hardware efforts, this does seem to serve as at least another partial data point that the company is looking to dive deep into custom hardware to deal with its AI problems. That would mostly exist on the server side, though Facebook is looking into other devices like a smart speaker. Given the immense amount of data Facebook has, it would make sense that the company would look into customized hardware rather than use off-the-shelf components like those from Nvidia.

(The wildest rumor we’ve heard about Facebook’s approach is that it’s a diurnal system, flipping between machine training and inference depending on the time of day and whether people are, well, asleep in that region.)

Most of the other large players have found themselves looking into their own customized hardware. Google has its TPU for its own operations, while Amazon is also reportedly working on chips for both training and inference. Apple, too, is reportedly working on its own silicon, which could potentially rip Intel out of its line of computers. Microsoft is also diving into FPGA as a potential approach for machine learning problems.

Still, that it’s looking into ASIC and FPGA does seem to be just that — dipping toes into the water for FPGA and ASIC. Nvidia has a lot of control over the AI space with its GPU technology, which it can optimize for popular AI frameworks like TensorFlow. And there are also a large number of very well-funded startups exploring customized AI hardware, including Cerebras Systems, SambaNova Systems, Mythic, and Graphcore (and that isn’t even getting into the large amount of activity coming out of China). So there are, to be sure, a lot of different interpretations as to what this looks like.

One significant problem Facebook may face is that this job opening may just sit up in perpetuity. Another common criticism of FPGA as a solution is that it is hard to find developers that specialize in FPGA. While these kinds of problems are becoming much more interesting, it’s not clear if this is more of an experiment than Facebook’s full all-in on custom hardware for its operations.

But nonetheless, this seems like more confirmation of Facebook’s custom hardware ambitions, and another piece of validation that Facebook’s data set is becoming so increasingly large that if it hopes to tackle complex AI problems like misinformation, it’s going to have to figure out how to create some kind of specialized hardware to actually deal with it.

A representative from Facebook did not yet return a request for comment.

Netflix nears a $150B market cap as its subscribers continue to balloon

Just last quarter Netflix passed a $100 billion market cap — and we might already be talking about it as a $150 billion company before too long with yet another big financial quarter that sent its stock soaring.

Netflix, again, beat out some expectations Wall Street held for the first quarter and provided a pretty good outlook for the next quarter as well, where it said it expected to add around 6.2 million new subscribers. In the first quarter, Netflix added 7.41 million new subscribers — around 2 million of them domestic and the rest internationally. The company continued to see some pretty strong streaming revenue growth, which was up around 43% year-over-year in the first quarter this year, to around $3.6 billion.

With all this, Netflix now has nearly 119 million paid streaming memberships — and it wasn’t all that long when Netflix finally said just over two years ago that it would begin opening up in hundreds of new countries internationally. The company’s shares are up around 6% in extended trading, sending its market cap up north of $140 billion. And all this subscriber growth, too, comes before we’re seeing a new tie-up with Comcast’s cable subscriptions that may end up driving that even more. As usual, Netflix expects to lose a ton of money and says it expects between -$3 billion to -$4 billion in free cash flow, but that’s usually not what investors are looking for.

One of the big questions Netflix still has right now is what kind of price tag it will carry as a tack-on to a Comcast subscription. Earlier this week, the companies announced that Comcast would bundle Netflix in to its cable subscriptions, offering yet another entry point for Netflix to ferret up potential consumers that haven’t quite cut the cord yet but still might be interested in Netflix’s content. Netflix normally carries a price tag of around $13.99, but the companies have not said what its price will be as part of a cable bundle yet.

Following Netflix’s last earnings report — which it, as you might expect, included some blowout subscriber numbers — the company rocketed past a market cap of $100 billion. Since then it’s only been an upward trend for Netflix, which prior to its first-quarter report was worth more than $130 billion. Despite increasing spend on original content, that subscriber number is still mostly where it gets its market value because it’s a forward predictor of its revenue.

Netflix late last year said it expected to spend between $7 billion and $8 billion on original content this year, a number that seems to periodically get an upward revision and is still a dramatic step up from 2017. The company in its report today said it expected to spend between $7.5 billion and $8 billion on original content, and expects that marketing and content spend to weight toward the second half of 2018.

But it has to continue to invest in original content because it is a way to attract new subscribers, and also because it’s content that it can more easily distribute across different geographies and itself has control of the rights and what happens to it. It relies on shows like Stranger Things or Altered Carbon to bring in new users, which then hopefully stick around and eventually help recoup the cost of those shows — and then the cycle starts anew.