Tag Archives: tech firms

Facebook’s Next Acquisition; a Prediction

While scrolling through some articles for some inspiration for a blog post, I came across a tech crunch article that included a very good interactive info-graphic on acquisitions made by tech companies over the last fifteen years (screenshot below).

Screen Shot 2014-04-06 at 2.56.41 PM

For perspective, that huge blue bubble in the bottom corner is the much talked about WhatsApp acquisition by Facebook earlier this year. This got me thinking about some of the apps or web services that I have used or heard about that may be next on the list of companies to be acquired by one of these tech giants, given their seemingly unquenchable thirst to buy up these smaller web services and apps.

Cyber dust instantly comes to mind. The messaging company is somewhere in between text messaging and snapchat. The basic idea is that once you send someone any message or image, it disappears 30 seconds after they open it. Given snapchat’s popularity, I can see this app getting similar levels of attention. I couldn’t find any data on their current number or users or anything like that, but I have no doubt that this relatively new app will take off quickly.

While I am sure that any of the companies included in the info-graphic above (apple, yahoo, amazon, Facebook and google) would love to acquire this company, I would expect Facebook to make an offer if my prediction on the app’s user base growth is correct. Facebook had offered three billion in cash for snapchat late last year, so they have an interest in this “disappearing digital footprint” fad. Given heightened privacy concerns of many users, these kinds of apps are very popular. Since snapchat rejected Facebook’s offer, I wouldn’t be surprised if Facebook is quick to make an offer to cyber dust.

The service, whose tagline is “Every spoken word isn’t recorded. Why should your texts be?” is owned by Mark Cuban, who says he doesn’t think it will replace texting, only supplement it so that you can stay in control of your messages. With standard texting, you lose control as soon as you hit send. While there are some obvious sketchy uses for cyber dust that come to mind, I have used it to send my login information for my Netflix account to my brother. While that isn’t the most sensitive information out there, I don’t really want him to tell all his friends at school and have 300 high school freshmen using my Netflix account. Cyber dust prevents him from leaving that information on his phone when he takes it to school. Other more innocent uses for the app that come to mind are coordinating some kind of surprise birthday party or complaining about your boss to coworkers.

While there are a lot of “what ifs” about cyber dust’s growth, I think that my prediction is a reasonable one. I don’t know much about Mark Cuban’s goals for holding onto or selling the service, so whether or not cyber dust is actually sold if an offer is made is another issue.

 

Bonuses at Work

Today, I came upon an article about HSBC’s earnings report, where they have missed the expected revenue by about 5.7% from 68.3 billion to 64.6 billion dollars. This caused HSBC’s stocks in London to sink 4% and the final dividend for 2013 fell to $0.19 to $ 0.21. I could go on about which branches in some regions gained for what reason, while other regions lost for some other reasons. However, I would like to focus on HSBC’s CEO Stuart Gulliver’s new outline of pay for senior executives (about 670 in number) in the midst of this stumble.

With the EU’s new regulation limits that prohibits firms to pay out bonuses more than 100% of workers’ base salary or 200% with shareholders’ approval, Gulliver has came up with the new “fixed pay allowance” which would turn some of the bonuses into base salary. I wonder whether this new outline was announced at a right moment where HSBC’s earnings has been tumbling (10% fall in year-to-year pre-tax profit).

Bonuses at work has been very controversial–highlights had been especially shed on the finance sector ever since the melt down of financial services in 2008 that caused recession not only in the US, but around the world. Movements like occupy Wall Street that called out for more regulation in the finance sector, or numerous movies that ridiculed the moral-hazardous life style of bankers at the Wall Street. The most recent movie “The Wolf of Wall Street” – setting aside its vulgarity – is based on a true story of biographical account written by Jordan Belfort, and he acknowledges that general life style of spendthrift drug abuse and prostitutes depicted in the movie is quite correct.

Of course, I would not want to fall into the mistake of generalization fallacy. Most bankers are hard working spending 80+ hours per week. Some extreme schedule would even come to about 100 hours per week with weekend works too. Ironically, many recent college graduates crowd into the finance industry even after the 2008 recession.

To put things more objectively, Wall Street is not the only place that pays enormous amount of bonuses. Silicon Valley is also one of the cities that emerges higher income disparity in the US. Computer science engineers’ average base salary in recent years have been unparalleled across many industries. And the executives also gets paid equal if not higher pay than what is paid on the street.

Many argue that there is a fundamental difference between two sectors of business that one creates value that contributes to the society while the other is just number crunching jobs that does not do too much for the betterment of the society. My argument for this is that you cannot compare this from the same perspective. Yes, the finance industry had been in trouble for its moral hazardous act, but think about the tech bubble in 2001. There were not much value created through the hands of technology sector. Ultimately it was the fault of people’s greed.

In my opinion, bonuses can be a great motivator for marginal efforts, but there should be somewhat standardized measures. I call it the communist approach that if the wage / salary disparity were not extremely large, many people would choose occupations not simply on how much money they can make, but what they would enjoy doing more — increasing efficiency, fully utilizing human resource and reducing the mismatch of worker-employer relationship. However, this is only my fantasy in the capitalistic world where marginal case for higher pay actually do dictate decisions of most workers.