This $44 smartphone isn’t as good a deal as it sounds

South Africa’s—and indeed Africa’s—biggest mobile operator, MTN, this month released the “Steppa,” an Android phone for 499 South African rand. At present exchange rates that is a few cents over $44, and is “unlocked,” meaning the purchaser doesn’t have to buy a mobile contract. It comes with full 3G and it’s still more than $50 cheaper than Nokia’s much-hyped Asha 501, which uses an in-house operating system and operates on the slower 2G network.

The catch is that the Steppa runs an ancient version of Android software that cannot be upgraded but “has been tailored to the needs of the modern MTN subscriber.” It also has a relatively weak processor, inferior camera and hardly any memory. None of that matters much. The Steppa is meant for first-time smartphone users, as is apparent from MTN’s step-by-step guide, complete with a handy graphic explaining what the heck this thing is. If you’ve never used a smartphone before, you are likely to be astonished by the power of a low-end model because it’s still far superior to anything your old feature phone could offer.

But you will also enter an online world that is less interested in allowing you to explore and more keen on selling you things. The point of the device is to get users to spend money on data. That’s why the phone, a generic model from chip-maker Qualcomm, is branded by MTN, which is most likely selling it at cost or a loss. To get new data customers, the phone comes with Facebook, WhatsApp and other popular apps preloaded. It is also “bundled with an MTN PayAsYouGo starter pack including free social and email smartphone services.” That’s up to a ceiling of 150 mb, and includes a little browsing, instant messaging services such as Mxit, and access to Wikipedia (but only through a particular browser.) In addition, the phone has advertising enabled by default, though reading through an online Q&A can help users turn it off.

In essence then, MTN may as well just give the phone away for free, as Google and Facebook do with their online services, in exchange for allowing users to spend money on other things and to be advertised to. There is nothing evil about wanting to add more data customers or make money from the people using your services. Digicel, for example, has made a solid business out of selling mobile connections in some of the poorest parts of the world. It is now selling them data and online entertainment. In India, Airtel is coming up with ingenious ways to convince people to get online. But dressing it up as a great deal does a disservice to the people who will have their first experience of the internet on an ad-cluttered, very corporate web.

This $44 smartphone isn’t as good a deal as it sounds

How to win followers and thinkfluence people

For many, Twitter has become a useful tool for increasing the scope and impact of their work. For others, it can be something of a mystery, with users feeling clueless as to how they might transition from one of the followers to one of the followed. Here are tips on how to maximize your Twitter influence without turning into a spambot, from computer scientist Randal Olson:

1. Make sure you know what influence means, because you probably don’t understand it

What’s the end goal on Twitter? To get people interacting with your tweets: Favoriting, retweeting, and replying. If the online influence measurement tool Klout, which crunches data on how many people interact with you on social sites like Twitter, has taught us anything, it’s this: Influence in real life doesn’t translate directly into influence on any social media, let alone Twitter. If you can get more people retweeting you than Bill Gates does, you’re better at Twitter. End of story. So grit your teeth, get intimate with your Klout score, and figure out what tweets have really made it spike.

2. Become an expert in something trendy

Find something you care about that already has a hashtag attached to it (an active one) and start speaking your mind. That puts you on the screens of people likely to care about what you’re saying. And remember, Olson writes on his blog, that no one cares what you ate for breakfast. Save that for when you’re a Twitter celebrity. And for goodness sake, make sure you’re writing well.

3. Follow, follow, follow

“Followers are the currency of Twitter,” Olson writes, and he’s spot on. The more people you have following you, the faster you’ll get more followers—and the more people you’ll have interacting with you, sharing your tweets with their own followers. But don’t use a service that lets you buy a bunch of bot followers: They won’t give you the interaction you need to grow further. Follow likeminded Twitter users, and feel free to unfollow them if they don’t follow you back within a few days. Of course, there’s nothing wrong with following a big influencer just to benefit from their point of view on the topics you care about. Olson has a free script you can use to mass follow and unfollow based on interests, and whether or not you’re followed back.

4. Find great content

Populate your Twitter feed with at least two to three great links a day. If you have trouble finding interesting things to share, check out social news web sites like reddit and digg for inspiration. Perusing the Quartz Daily Brief isn’t a bad idea, either.

5. Play favorites

Favorite tweets by people you’re hoping to get some interaction with: It offers the nudge of a retweet without diluting the voice of your feed with someone else’s. Olson recommends his free Python script to automatically favorite tweets under your hashtag of choice, but keep in mind that hashtags can be quickly co-opted by internet trolls, and that your favorites are visible to anyone who goes looking for them. So if you want to be sure you’re not going to favorite something deplorable, stick to doing it manually.

How to win followers and thinkfluence people

This company says its technology could have detected Snowden’s intrusions

Government servants are hardly the best paid employees in the world, even if they are spies. But the older ones do have pensions of the sort most young people could never imagine. So why would a 30-year veteran of Britain’s secret service, with a “gold-plated” pension to look forward to, leave his position as deputy director for cyber defense operations at GCHQ (The Government Communications Headquarters, Britain’s equivalent to the US’s National Security Agency) for a start-up with no history and no security?

According to 50-year-old Andy France, as of today the CEO of Darktrace, it’s because when he first saw his company’s technology he was convinced it was “like the invention of radar for cybersecurity.” France says that unlike conventional information security measures, Darktrace does not aim to protect your computer from threats. This is a quixotic goal. Instead, Darktrace looks for unusual activity on a network, whether that is manifested as flows of data that wouldn’t normally move around, individual machines acting in uncharacteristic ways, or users attempting to access parts of the network they have business looking at. Moreover, the system includes a “honey pot,” which if accessed by anyone is a giveaway that they’re up to no good.

This sounds fairly straightforward. Indeed, there exist “intrusion detection systems” for that very purpose. But they have proven unreliable. What makes Darktrace different, says France, is the way it combines various algorithms, including those that draw on Bayesian statistics and Monte Carlo algorithms to allow the machine to learn what is and what is not normal activity. It can detect intrusions or unusual insider activity, such as a Snowdenesque systems administrator poking around in top-secret files or attempting to access the “honey pot.”

“If your IT security guy comes in and says ‘I’m running a secure network,’ sack him. It’s a lie. It’s impossible to do,” says France. The point is to leave the network relatively open, rather than to wrap in a bubble, which is impracticable. It is not possible to keep the bad guys out while letting the good guys in so Darktrace’s answer is to let everybody in and watch what they do.

Darktrace was founded by Stephen Huxter, an ex-MI5 man, and is funded by Invoke Capital, an investment fund started by Mike Lynch, formerly of software group Autonomy. In September 2013, Darktrace became the first company to gain investment from Invoke, which aims to commercialize the hard science research going on at Britain’s universities. Darktrace’s technology comes from a group of mathematicians at Cambridge University, as does Invoke’s second investment, Taggar.

France claims multinational companies are lining up around the block to use his system but that he has not sold it to any government as yet. Asked in a follow-up email whether it would be possible for an intelligence agency such as GCHQ to subvert or in any other way bypass Darktrace’s technology, France did not respond.

This company says its technology could have detected Snowden’s intrusions

Why high-flying tech investors are putting their money in a coffee shop

When San Francisco-based coffee retailer Blue Bottle announced a $25.75 million investment round on Jan. 29 from some of Silicon Valley’s biggest investors, the jokes were easy:

Blue Bottle is getting $25 million because it is pretty good coffee that happens to be located next door to tech companies.—
Kevin Roose (@kevinroose) January 29, 2014

@BenDWalsh @kevinroose @TimFernholz This is either like Caligula making his horse a senator, or like Warren Buffet buying the Omaha Herald.—
Tom Gara (@tomgara) January 29, 2014

But they also reveal a fairly commonplace assumption: That “venture capital” entails an investment in a tech company, or that only tech companies grow fast enough to be worth it. But the reality is that private equity is private equity, and when funds line up to put their money into a privately owned company, they’re just looking for the right return at the right risk.

“The reason that they invested is they are investors,” Blue Bottle CFO David Bowman tells Quartz. “Any of our traditionally tech-oriented investors, I don’t think they are under any confusion that it’s 100x money in a year and a half. In what we’re doing, if we’re growing a lot more than 40%, 50% maybe, year on year, we’re at risk of the wheels falling off and we’re just not executing.”

Bowman highlights the twin realities: Nothing has the growth and profit margin potential of a successful online company, where the raw materials are essentially time and people and the potential customer base is limitless. But that doesn’t mean a retailer can’t be a high-growth company. Working with physical objects complicates things and makes it harder to scale up fast, but that doesn’t make it impossible.

“A retail food business is super risky in the beginning when you pour money in the first store. But it gets easier as you add locations and replicate the model. It’s the opposite for tech, where it often gets riskier over time as there are more crucial and binary decisions as the product gets more complex,” writes Andrew Chau, the co-founder of San Francisco tea start-up Boba Guys—and whose day job is at LeapFrog, an online education company—in an email. “In practical terms, a food retail business that has three cafes/juice bars/bakeries already open, the projection of $2M revenue/20% EBITDA might look more attractive than a startup with no revenue streams, but 500K users (like many startups here in Silicon Valley).”

US burrito chain Chipotle is maybe the best example of this. When it looked for capital to expand beyond its first 16 stores in 1998, it got no love from venture funders, so McDonald’s financed its expansion to 500 locations. In 2006, Chipotle’s IPO netted the burger chain a $560 million profit. Today, Chipotle has 1,500 locations and its stock trades at around $500.

Venture capitalists have taken notice of Chipotle’s success. Maveron, a consumer-focused venture fund, has found winners in frozen yogurt chain Pinkberry and sandwich provider Potbelly; in the past, venture funds have put their money behind Starbucks, Asian-food chain P.F. Chang’s, and Jamba Juice.

This also reflects changes in the venture capital world: As more and more money is ploughed into start-ups in the maturing tech sector—and now that a new law in the US lets start-ups also raise money via crowd-funding—the chances of getting into the next Facebook early are reducing. “Venture funds” originally intended for start-ups are now part of hundred-million-dollar financing rounds for existing companies, and the idea of “growth equity”—capital to accelerate a company’s expansion, whatever stage it’s at—is becoming increasingly popular.

Think of two other Silicon Valley firms that, like Blue Bottle, have won $25 million investments in recent memory: The apparently troubled payments start-up Clinkle, which raised a $25 million “seed round” (traditionally a much smaller funding stage) in June but has yet to release a product, and Medium, the blogging platform that no one can explain, which scored the same amount in its first outside funding this week. If your main line of work was taking gambles such as these, wouldn’t you want to diversify into a company with an actual product that could, if it matches Chipotle, grow 3,000% in a decade?

Why high-flying tech investors are putting their money in a coffee shop

US to China: “Happy New Year.” China to US: “Give us our money back.”

When outgoing American ambassador to China Gary Locke wished 700,000 followers on Sina Weibo a happy Chinese New Year (registration required), he received an overwhelming response: Pay back the money you owe us.

Internet users are fond of reminding Locke that China is America’s largest foreign creditor, reflecting the unease that regular Chinese, as well as some officials and economists, feel about the increasingly inextricable links between the two economies. China now holds a record $1.317 trillion in US government bonds.

One commenter said, “If America doesn’t pay back the money, this is using money to raise a dog that bites,” seemingly alluding to competition between the two countries. In theme with celebrating the year of the horse, several told the ambassador to ma shang, or immediately, return the money,” ma, being a homonym for the word “horse” in Chinese. Another responded to Locke’s well wishes with: ”Happy New Year. Pay back the money, pay back the money, pay back the money…” 

During the US government shutdown last year, Chinese economists questioned how much China should be at the whims of American political gridlock and risk of default. In November, a Chinese central bank official said it was no longer in the country’s interest to build up its foreign reserves, and that China would cut back on its dollar purchases. China has been buying US treasuries as a way to control the value of the yuan, but as officials pledge to intervene less in the currency, that may become less necessary.

But another consideration, according to David Li, a professor at Tsinghu and former adviser to the Chinese central bank, is diplomatic ties. “The only explanation for the Chinese government’s interest in Treasuries is its relationship with the US,” Li wrote in an editorial in October. “China’s holding represents both a “hostage” scenario and a bonding instrument for the two largest economies in the world.”

One blogger said, “If America paid China back earlier, Sino-US relations could improve. Comrade, Locke, why don’t you help nudge them along?” Given that Locke is soon to leave China and will be replaced by US senator Max Baucus, who voiced some strong criticism of China during his confirmation hearings this week, it’s probably a little late for all that.

US to China: “Happy New Year.” China to US: “Give us our money back.”

Why companies and charities can’t share celebrities

Scarlett Johansson is grappling with a flurry of criticism over her fallout with global charity Oxfam International. Her dual role as a goodwill ambassador for the charity and product pusher for the controversial Israeli soda machine company SodaStream proved too irksome for Oxfam. (The company’s factory in the Israeli settlements in the West Bank clashes with a growing boycott of goods produced in Jewish settlements in Palestinian territories.)

Johansson scrambled to justify her dual role on her blog before resigning from her Oxfam post, but she isn’t the first celebrity to run into branding wars between companies and charities that shimmy up to a shared glitzy endorser. Here are other examples of the endorsement battles between brands and humanitarian groups over their celebrity ties:

1. Kristin Davis: Ahava vs. Oxfam

Sex and the City star Kristin Davis faced a similar falling out with Oxfam after partnering with cosmetics company Ahava Dead Sea Laboratories back in 2009. Ahava, as Oxfam cited in severing ties with the celebrity, also manufactured goods in the disputed West Bank territory.

2. Angelina Jolie: St. John vs. Angelina’s charity extravaganza

In Angelina Jolie’s case, her own charitable brand simply became unwieldy. Apparel company St. John decided to dump her as its spokesperson after Jolie’s stature as an actress and do-gooder began to overshadow that of the company.

There’s also her famed Louis Vuitton ad, which featured the actress in Cambodia, a poor country, with a £7,000 ($11,500) bag. While Jolie ended up donating a significant portion of her advertising earnings to charity, the stunt  ultimately attracted negative press for both the actress and the apparel brand.

3. Charlize Theron: a fashion fallout with watchmaker Raymond Weil

In 2008, Actress Charlize Theron was sued by Raymond Weil after the actress breached an endorsement deal with the watchmaker that precluded her from wearing any jewelry other than Weil watches. Among Theron’s mistakes with this brand—there appear to have been many—was the actress’s participation in a charity event hosted by the Entertainment Industry Foundation. Theron was pictured holding a Montblanc necklace (which was photoshopped onto her wrist) in a promotional piece for the event (Montblanc was the event’s sponsor).

Such controversies have raised questions about whether glam endorsements ultimately trivialize good causes. On the one hand, charity-celebrity partnerships can raise a lot of money for an otherwise little-known cause. Save the Children, according to CEO John Forsyth , owes much of its success to the efforts and participation of celebrities like Bono and Richard Curtis.

But the rise of social media marketing and celebrity news coverage has raised the profile of celebrities and made their opinions, business dealings and personal habits inseparable from their personal and professional brands. As Emily Greenhouse notes in the New Yorker, because celebrity ambassadors for charity aren’t trained in the art of diplomacy, hanging moral causes on their image is a risky bet. Especially since the press’s main motivation for following celebrities is to catch their biggest blunders, not their good deeds.

Why companies and charities can’t share celebrities

Quartz Daily Brief—Americas edition—Russia slows, Europe holds steady, Japan inflates, the 1% freak out

What to watch for today

The Fed’s first female chair. It’s Ben Bernanke’s last day in the hot seat, as Janet Yellen steps up to the US central bank’s top position on Saturday. Her mission: Wind down the Fed’s stimulus without damaging the economy.

Russia’s slowing growth. Analysts predict that Russia’s economy expanded by 1.5% in 2013, the weakest growth in four years. The country relies heavily on oil and gas exports, which suffered from low demand due to Europe’s economic woes.

Kerry’s Ukraine talks. The US secretary of state is set to meet with Ukrainian opposition leaders at a security conference in Munich. President Viktor Yanukovych is currently on “sick leave.”

Mexico’s interest-rate decision. Most expect no change from the Bank of Mexico meeting, but policymakers will somehow have to find an answer to rising inflation, which hit 4.6% this month.

Thailand braces for elections. Prime minister Yingluck Shinawatra’s government is pressing forward despite the risk of violent clashes with protesters who have vowed to disrupt Sunday’s vote. Here’s how it could all play out.

While you were sleeping

Euro zone inflation edged down to a paltry 0.7% in January—less than half the European Central Bank’s target—and unemployment held steady at 12%. The news could prompt an interest rate cut next week.

Fashion’s back in fashion. Luxury goods firm LVMH Moet Hennessy Louis Vuitton’s shares surged after sales of high-end apparel and leather goods rebounded in the fourth quarter.

Michael Bloomberg’s encore. The ex-New York City mayor will reportedly be named as a special UN envoy on cities and climate change.

Detroit creditors: Separate but equal? The bankrupt city is planning to divide its unsecured creditors into pensioners, who would get cash, and general obligation bondholders, who would receive paper, reports the New York Times.

Japanese inflation sped up. Prices rose 1.3% in December, a shot in the arm for the Bank of Japan’s goal to reach 2% inflation, but stubbornly falling wages made things tough for consumers.

The year of the horse began. Asians marked the lunar new year with fireworks and dancing dragons. In China, hundreds of millions of people traveled home for the celebrations, making air pollution even worse.

Quartz obsession interlude

Heather Timmons on life after banking in Hong Kong. “Rather than leaving Hong Kong in search of the next banking hot-spot, a growing number of finance pros have started businesses, from last-minute hotel booking websites to crowd-funding groups to organic farms. The career-hopping has helped push start-ups to 16% of new investments in Hong Kong last year, from 11% in 2010, Bloomberg reported today. In many cases, they’re going directly after their old employers’ business.” Read more here.

Matters of debate

The one percent are freaking out. Bank bashing and Obama’s push on income inequality are driving America’s wealthiest to mass paranoia.

The Super Bowl doesn’t boost the US economy. Predictions of multi-million dollar cash injections are usually just hype.

China can’t let its housing bubble pop. The damage to household wealth and consumption would be devastating.

Puerto Rico got a back-door bailout. A crucial excise tax to attract corporate dollars to the island was actually billed to  the US Treasury (paywall).

Surprising discoveries

South of the border, Blockbuster lives. There’s still a thriving video-rental market in Mexico.

The gynecologist will see you now, sir. The American Board of Obstetrics and Gynecology relaxed its ban on male patients.

The Seinfeld cast is re-uniting. In the timeless words of George Constanza, “I’m back, baby, I’m back!“

16 months adrift in the Pacific. An emaciated Mexican man finally made landfall in the Marshall Islands; he reportedly survived by eating turtles, birds and fish, and drinking their blood. 

Our best wishes for a productive day. Please send any news, comments, Seinfeld quotes and castaway diet fads to hi@qz.com. You can follow us on Twitter here for updates throughout the day.

Sign up for the Quartz Daily Brief here, tailored for morning delivery in Asia, Europe & Africa, and the Americas.

Quartz Daily Brief—Americas edition—Russia slows, Europe holds steady, Japan inflates, the 1% freak out

It looks like there really has been a mass exodus of Sina Weibo users, but it’s still not clear why

As Tencent’s WeChat messenger grows in popularity across China, many followers of Chinese consumer technology have kept their eyes glued to the evolution of Sina Weibo – the desktop-first, Twitter-esque social network that launched in 2009 and saw its biggest boom around 2011. Several reports have surfaced over the past six months indicating a decrease in activity on Sina Weibo, but today Malcolm Moore and his team at The Telegraph have published the most thorough study yet demonstrating how many active users are abandoning the service.

The study, which the Telegraph commissioned out to the Institute for Data Science and Engineering of East China Normal University, analyzed the activity of 1.6 million Sina Weibo users from January 2011 through December 2013.

The research revealed two key data points.

In March 2012, 430,000 users within the sample were posting 40 times a day. By December 2013, the number of users posting 40 times a day had fallen to 114,000, marking a 43 percent decline.

Meanwhile, activity within a segment described as “highly active” declined over the period as well. In March 2012 this group tweeted 68 million posts, but that figure fell to 17.9 million by December 2013, marking a decline of 74 percent.

But what’s even more interesting is that of the three graphs the Telegraph has published – one tracking the number of “highly active users,” one tracking the number of posts made by “highly active users,” and one which appears to broadly track “use” – all show a steep decline in activity starting in July 2013, around the time when the Chinese government began the so-called “crackdown on rumors.” While Chinese government and media publicly framed this initiative as an attempt to curb the spread of misinformation – conspiracy theories, scams, and the like (in addition to politically sensitive information, which goes without saying) – in practice it served as a premise under which authorities could detain or taunt users that were high-profile and prone to airing grievances towards the government.

According to the study, two weeks after the arrest of Charles Xue, a prominent venture capitalist on Weibo, the daily number of tweets from the sample group was halved.

What’s behind the drop?

This report follows two other studies reporting similar drops in Sina Weibo activity. Earlier this month the China Internet Network Information Center reported a nine percent drop in users of Chinese microblogs, though that study analyzed Sina Weibo and the competing Tencent Weibo together. Meanwhile, last July, Chinese tech blog Huxiu published a graph showing declining activity among Weibo’s “Big V” verified users.

Of course, the question one wants to ask is, “Did activity on Weibo drop after July because of the crackdown on rumors? Have the highly-publicized pressures on Big-V accounts signaled users to cut back their activity? Or is Weibo simply less popular than it used to be?”

Questions like these seldom receive decisive answers, but the Telegraph’s release of the study – the best one of its kind, thus far – indicates that the answer might be “Yes, and yes.”

The extreme drop in activity after the arrest of Charles Xue certainly leads one to interpret the events as causally related, and marks the best evidence to date for those who want to attribute Sina’s decline to the crackdown on rumors. After the arrest of Xue and the detention of other Big Vs, ordinary active users might have decided Sina Weibo was no longer a safe place to socialize online, or at the very least, would no longer be a very interesting place to socialize.

But amidst the crackdown on rumors and before Charles Xue’s arrest, Tencent rolled out its 5.0 update for WeChat, which brought games, stickers, and voice-to-text functionality to the already-popular messaging app. While those additions might sound like marginal improvements on paper, they can help drive virality and cement adoption – perhaps, in some cases, deeply enough to turn Weibo and WeChat dabblers into full-time WeChat users. Couple the souped up WeChat with the unresolved pitfalls of Weibo – complicated UI, annoying ads, and ghost accounts – and making the switch becomes even easier.

So there’s two narratives at play. One tells a story of users abandoning Sina Weibo due to political intimidation, the other tells a story of users abandoning Sina Weibo because WeChat has grown bigger and badder. Intuitively, neither narrative feels satisfying on its own, and more research – both qualitative and quantitative – will be needed to tell a complete story. In any case, the study from the Telegraph suggests that the political narrative may not be unfounded.

Observers are correct when they point out that WeChat, as it stands now, will not become the online public square that Sina Weibo once was. There’s no means for tracking the spread of information and virality on WeChat. Articles posted on WeChat can be shared with friends on the service, but there’s no commenting feature in place. It’s not even possible to see how many followers a particular user or public account has. WeChat is way more than a messaging app, but it’s a messaging app at heart, not a forum for spreading information.

With over 60 million daily active users as of November (though some of those could be ghost accounts), Sina Weibo doesn’t appear to be dead just yet. And when the company reports staggering numbers of tweets during Spring Festival or New Year’s Eve, one is reminded that it’s still a powerful player in Chinese social media. But at the very least, Sina Weibo’s heydey of scandals uncovered and corruption exposed appears to be grinding to a halt.

(Source: The Telegraph)

(Editing by Paul Bischoff)

(Image via Flickr user stevec77)

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It looks like there really has been a mass exodus of Sina Weibo users, but it’s still not clear why

Why France is so afraid of Netflix

Oh, France. You hate new things. You hate foreign things, particularly American things (or so you like to say). You hate business. Of course you’re going to hate Netflix.

Netflix is currently expanding around the world, and it wants to set up shop in France. The company has said it has aggressive expansion plans in Europe, and the French press has reported that executives from the company have met with President Hollande’s staff twice. To Reed Hastings I say: good luck, you’re going to need it.

Since the era of Jean-Baptiste Colbert, Sun King Louis XIV’s Minister of Finance, the French economy has functioned as a government-managed oligopoly. Consumers exist to reward friends of the state. This is why France’s socialist government has sicced tax inspectors on virtually every significant US tech company that has a presence in France (Microsoft, Google, Facebook…), and created rules preventing Amazon from offering free shipping on certain orders, to protect bookstores from competition, nevermind that it makes it harder for actual people to buy and read books, which one would think would be the goal of a cultural policy.

The taxes, regulation, and protectionist mindset that make doing business in France a nightmare are well-known. But there’s something else. Netflix is not just coming in as a foreign, innovative American company, thus presumed untrustworthy. It is wandering into another minefield: what the French like to call l’exception culturelle, the cultural exception. In the story France tells itself about itself, France is exceptional because it is so cultured. What does that mean? It means that the French government supports French movies and TV shows and other cultural products, and mandates that a certain percentage of programs on TV and radio be French.

This is actually one of the least offensive parts of the French compact. After all, French cinema does produce a regular smattering of masterpieces and, looking at the rest of Europe, it’s hard to believe that this vitality would be there without government support, however wasteful and occasionally corrupt.

But the way this all is funded is through a set of taxes paid by French TV networks. Basically, if you want to operate a TV network in France, you are mandated by law to also become a movie producer and set aside a percentage of your profits to produce movies. Does Netflix count as a TV network? Netflix has described itself that way before; its French competitors—and the French government (which, if you’ve been paying attention, is the same thing)—certainly think it should count as one for those burdensome rules. France’s culture minister has said that the government would not accept Netflix as a “stowaway” in the French market. They might, for example, set up shop outside France’s borders, offer their online service from there, and not be bound by French rules. But is the alternative for Netflix to set up a film-producing company in France especially for France?

There’s another problem for Netflix: net neutrality. In France, the important technology companies are not the internet services companies—they are the telcos. The biggest one, Orange, used to be a state company. The state is still a major shareholder and usually picks the CEO. The current CEO, Stéphane Richard, was previously chief of staff to then-Finance Minister Christine Lagarde (Colbert lives!). Orange has also made it clear that it views itself as having a future in media. Telcos don’t like that Netflix sucks away their bandwidth even as it threatens their business model. In the US, while the government is certainly not immune from regulatory capture, there is no national broadband company. In France, the ISP Iliad/Free already deliberately slows down YouTube’s traffic.

France has been in a bad place for 30 years. Slow growth, mass unemployment. Countries that go into this kind of funk become resentful and fearful of foreigners and new things. This will be the mindset that Netflix will have to navigate.

Now, none of this means no one will buy Netflix. That’s the big paradox. In this matter, it’s as if there were two Frances. You have the sort of Platonic France—the idea of France, the one lived by the upper-middle classes, the cultural world, and government elites, where people eat fancy food, dislike anything vaguely American and write off the internet (still, yes, today) as a fad, and spend their time sitting at cafés sipping on espressos. Then you have the France that actually exists, where the most thriving restaurant company is McDonald’s and 8 of the 10 top-grossing movies last year were made in Hollywood. French people, like people everywhere else, are fine with innovation that makes their lives easier.

Netflix’s value proposition, with the cheap subscription, the good-enough content, and the convenience of being able to watch whatever you want on whatever platform, will surely appeal to plenty of French consumers.

I just don’t envy the endless headaches Netflix France’s management team will suffer.

You can follow Pascal on Twitter at @pegobry. We welcome your comments at ideas@qz.com. 

Why France is so afraid of Netflix

What an incredibly popular Lunar New Year’s gift tells us about China’s economy

This year’s top Lunar New Year gift pack on China’s massive e-commerce website Tmall is a “Three Squirrels” brand nut assortment, which has racked up more than 150,000 sales.  A boxed set of seven packs of pecans and hazelnuts, decorated with a cartoon squirrel riding a horse, it weighs nearly 1,700 grams, or almost four pounds.

Aside from a propensity for delicious nuts, what can Three Squirrels tell us about China?

Online entrepreneurship is alive and well in China. Startup Anhui Three Squirrels Electronic Commerce just introduced the Three Squirrels brand online in 2012. Within less than three months, it was a runaway online hit, and it was Tmall’s best nut seller last year. Overall, online gift purchases this Near Years are up 48% from last year, according to Yihaodian.

While China’s banking system continues to prop up bloated state companies, to the detriment of private enterprise, there are other sources of capital out there. In July of last year, Anhui Three Squirrels attracted a $1.5 million investment from US venture firm IDG Capital, followed by another $6 million from Capital Today Group, a Shanghai private equity investor.

Austerity drives aren’t just for the government: An official crackdown on ostentatious government spending has cut sales of everything from baijiu liquor to luxury cars in China this year. Online shopping promotional events like Yihaodian’s New Year Gourmet Street and Tmall’s Laba New Year Products Festival feature steep discounts for food, beverages and electronics, sometimes as much as 70% off. The Three Squirrels nut pack is reduced from 315 yuan to 159 yuan ($26).

Chinese consumers love the cuteness. Three Squirrels now has 480,000 followers on T-mall, which contributed 87% of its sales last year. That’s largely thanks to the brand’s carefully cultivated “cute” image, which includes referring to customers as “master” and purchases as “adoptions.”

 

What an incredibly popular Lunar New Year’s gift tells us about China’s economy

Sina Weibo users tweet a record 860,000 posts in first minute of Chinese New Year

Sina Weibo users tweeted 863,408 posts within the first minute of the year of the horse last night, breaking the previous record set on January 1 of this year.

It also beat last year’s Chinese New Year record by a 130,000 post margin.

Traffic was boosted due to Sina Weibo’s cooperation with state-run broadcaster CCTV during the televised Spring Festival Gala. Throughout the customary live entertainment, Sina Weibo’s QR code was displayed in the bottom corner of the screen.

Within 30 minutes of midnight, Chunwan (春晚), the colloquial name of CCTV’s program, was tagged in over 45 million posts.

By 2 a.m. the official account that the QR code linked to had five million followers.

Despite reports about Weibo’s decline,  Sina’s most recent quarterly report states that its user base is still growing.

(Editing by Josh Horwitz)

The post Sina Weibo users tweet a record 860,000 posts in first minute of Chinese New Year appeared first on Tech in Asia.

Sina Weibo users tweet a record 860,000 posts in first minute of Chinese New Year

Quartz Daily Brief—Europe edition—Russia slows, Bernanke exits, Japan inflates, the 1% freak out

What to watch for today

The Fed’s first female chair. It’s Ben Bernanke’s last day in the hot seat, as Janet Yellen steps up to the US central bank’s top position on Saturday. Her mission: wind down the Fed’s stimulus without damaging the global economy.

Russia’s slowing growth. Analysts predict that Russia’s economy expanded by 1.5% in 2013, the weakest growth in four years. The country relies heavily on oil and gas exports, which suffered from low demand due to Europe’s economic woes.

The state of Europe’s job market. The euro zone’s unemployment rate has hardly budged for the last year, hovering around 12.1%, and markets aren’t holding their breath for a shocker today. But even a tiny drop would point toward a post-crisis recovery.

Mexico’s interest-rate decision. Most expect no change from today’s Bank of Mexico meeting, but policymakers will  somehow have to answer to Mexico’s rising inflation, which hit 4.6% this month.

Thailand braces for elections. Prime minister Yingluck Shinawatra’s government is pressing forward despite the risk of violent clashes with protesters who have vowed to disrupt Sunday’s vote. Here’s how it could all play out.

While you were sleeping

Japanese inflation sped up. Prices rose 1.3% in December, a shot in the arm for the Bank of Japan’s goal to reach 2% inflation. Some analysts remain skeptical it can go much beyond that.

Microsoft moved closer to a new chief. Satya Nadella, the company’s head of enterprise and cloud computing, is set to replace outgoing CEO Steve Ballmer. If he takes over, expect Nadella to aim Microsoft squarely at Google and Amazon in the cloud services wars.

Amazon made a profit and still disappointed investors. Though revenue grew 20%, it was the slowest increase since 2009, and the fact that profit more than doubled didn’t mollify the markets; perhaps they’re used to Amazon’s penchant for sacrificing profit for growth.

Libya sued Goldman Sachs for outsmarting it. The country’s sovereign-wealth fund filed a lawsuit accusing Goldman of showering the fund’s staff with gifts and smooth-talking them into “worthless” trades that netted Goldman a hefty profit.

Good news for US growth. The economy expanded by 3.2% in the fourth quarter, buoyed by the country’s highest consumer spending in three years.

The year of the horse began. Asians marked the lunar new year with fireworks and dancing dragons. In China, hundreds of millions of people travel home for the celebrations (but pets hate them).

Quartz obsession interlude

Heather Timmons on life after banking in Hong Kong. “Rather than leaving Hong Kong in search of the next banking hot-spot, a growing number of finance pros have started businesses, from last-minute hotel booking websites to crowd-funding groups to organic farms. The career-hopping has helped push start-ups to 16% of new investments in Hong Kong last year, from 11% in 2010, Bloomberg reported today. In many cases, they’re going directly after their old employers’ business.” Read more here.

Matters of debate

The one percent are freaking out. Global bank bashing and Obama’s push against income inequality are driving America’s wealthiest to mass paranoia.

The Super Bowl doesn’t boost the US economy. Predictions of multi-million dollar cash injections are usually just hype.

China can’t let its housing bubble pop. If it does, the damage to household wealth and consumption would be devastating.

Stop listening to Tony Blair on the Middle East. He’s usually on the wrong side of history.

Surprising discoveries

Blockbuster lives south of the border. There’s still a thriving video-rental market in Mexico.

The gynecologist will see you now, sir. The American Board of Obstetrics and Gynecology relaxed its ban on male patients.

The Seinfeld cast is re-uniting. In the timeless words of George Constanza, “I’m back, baby, I’m back!“

The Cronut became the C®onut. Many bakeries worldwide have imitated the croissant-donut hybrid, but now the name is sacrosanct.

Our best wishes for a productive day. Please send any news, comments, Seinfeld quotes and alternative pastry names to hi@qz.com. You can follow us on Twitter here for updates throughout the day.

Sign up for the Quartz Daily Brief here, tailored for morning delivery in Asia, Europe & Africa, and the Americas.

Quartz Daily Brief—Europe edition—Russia slows, Bernanke exits, Japan inflates, the 1% freak out

Xiaomi makes its annual TV appearance during China’s CCTV New Year’s Gala

Up-and-coming phonemaker Xiaomi broadcast a one-minute TV advertisement during last night’s CCTV New Year’s Gala, the annual program that’s known to occupy Chinese living rooms at the start of the Lunar New Year.

Xiaomi seldom engages traditional advertising, opting instead to build buzz through social media and online forums. As a result, Xiaomi’s popularity makes the TV spot itself somewhat of an event, not unlike how Americans will look forward to certain superbowl ads.

Set to rousing violins, the ad captures a dancer, a skateboarder, a rockstar, an athlete and other do-er types generally owning it, all while a narrator espouses the sort of glittering, call-to-action nonsense that one expects from an ad such as this one (translation ours):

Our name is youth. As we chase our dreams, we don’t stop moving forward. We explore. We transform ourselves. We go all-in. Our time has come.

It’s a tonal shift from Xiaomi’s ad during the previous year’s CCTV New Year’s Gala, which happens to kick ass.

Xiaomi, along with Tencent’s WeChat, is one of the few brands that Chinese companies have begun marketing overseas in hopes of gaining loyalty among the young-and-hip consumer segment. Early in January the company confirmed it would launch its smartphones in Singapore this year, which will mark the company’s first entry into a multi-lingual market.

(Editing by Paul Bischoff)

The post Xiaomi makes its annual TV appearance during China’s CCTV New Year’s Gala appeared first on Tech in Asia.

Xiaomi makes its annual TV appearance during China’s CCTV New Year’s Gala

Now a startup in Nepal has made an app like Snapchat that erases your digital footprint

Aditya Bikram Karki is a startup and tech enthusiast. He runs a travel blog and service called Gorgeous Nepal, and is on Twitter as @adityakong.

There’s been a lot of buzz lately about erasable social media. Snapchat is taking the lead, and apps from around the world have drawn inspiration from it, such as BeeTalk from Thailand and Candidly from India. Now a startup in Nepal is looking to push the model forward with the launch of 11Beep.

11Beep launches into private beta today with an app for Android. It’s a mobile-only social network that doesn’t keep your digital history. Its tagline is “Freedom of expression”, so you don’t have to worry about anything you post. That could be useful in a country that’s still quite new to online social media.

The 11Beep app is quite basic right now, but it clearly has elements of Google+ or the Facebook Timeline. New users can search for friends to add within the app from Twitter, Facebook, Viber, WhatsApp, or a Google account.

Startup experience

Bimal Maharjan is 11Beep’s CEO. He has worked at Indian IT giant Infosys in the past, and has experience of starting several startups, including a stint at the Tech Peaks accelerator in Itay. Alongside him is Vivek Bhusal, the CTO, who’s the lead Android developer at Young Innovations, co-founded app developer Appsmunk, and has a range of apps in his portfolio such as the corruption reporter app I Paid A Bribe.

Maharjan and Bhusal have been working together for nearly two years, be it working at Young Innovations or participating together in Startup Weekend events.

Watching you tweet, watching you work, watching you think

Maharjan explained to Tech in Asia that during his time at Tech Peaks in Italy, he used Facebook and Twitter to do some analysis of his competitors. Collecting all their Twitter and Facebook posts in an Excel sheet, Bimal realized he could find out a lot about those people as a whole – not just about the competitive edge that he was looking for. He says:

The idea that even simple Excel sheet analysis could reveal so much, let alone how much machine learning, semantic analysis and all those stuff would reveal, freaked me out.

That research made him realize how easy it is to paint a picture of someone from existing social networks – not just companies like Facebook and Google, but anyone who takes a moment to look into your social stream. That can cause huge problems.

While reading the book Hatching Twitter and seeing its growth – especially Twitter’s role in Arab Spring uprisings across the Middle East – Maharjan became concerned. He says, “Now I wonder what would happen to people who tweeted against their governments and other strong governments in the world.”

Snapchat’s evolution beyond just sexting also made Maharjan consider his own approach to a social network. Putting all these dots together he came up with the idea of 11Beep, made for people who don’t want to worry about leaving a digital footprint.

(See: New job postings show Rocket Internet is set to drive into Nepal)

No stalking

11Beep tries to solve this problem by letting users choose their audience, so they can select which friends can view posts. Plus, the app lets people set a custom delete time for posts, which can actually be quite long. It’s about balancing the permanent and immediately erasable, at a customizable point between Facebook and Snapchat.

That can help prevent employers stalking and firing employees due to their social media activities, and other actions that worry Nepali netizens, such as visa being denied because of a person’s actions on social media, or a university screening people based on what they’ve posted. Of course, the new app can’t do anything about pervasive government surveillance on the web.

The new app has plenty of rivals, and also faces challenges as a startup hailing from Nepal, which some describe as third-world. But Maharjan is optimistic, saying that “the concept of destructive social media has already been accepted and validated by the market,” so now it’s a matter of standing out and being seen.

11Beep’s target market is Southeast Asia and India. According to the World Startup report on India by Bowie Gai, India has about 35 million smartphone users, so that’s a good starting point. Cheap and popular phones by local brand Micromax ensure that it’s a growing market at a wide range of price-tags.

(Editing by Steven Millward, Josh Horwitz)

The post Now a startup in Nepal has made an app like Snapchat that erases your digital footprint appeared first on Tech in Asia.

Now a startup in Nepal has made an app like Snapchat that erases your digital footprint

During the Bangkok Shutdown, motorcycle delivery is a major selling point for online shoppers

Amid the months of Thailand’s political unrest, Thais have not stopped shopping. Tech in Asia reported before how e-commerce is actually doing well during the protests because, well, that’s what people do when they can’t leave the house. However, in order to keep the online business going, companies must still be able to deliver the products as promised.

As speed and accessibility are the key, deploying motorcycles as a means of delivery is a gimmick e-commerce sites relie on.

One of Thailand’s leading e-commerce portals, Rakuten’s Tarad.com, recently resorted to a hand delivery service within Bangkok, including inside protest areas. Coordinated with Alpha Performance Group, the e-commerce site started a new service called ‘Hotline Express Messenger Post,’ which was initiated to serve people who live or spend time in the protest and face major inconveniences when shopping offline. The new service will allow the company to deliver the products the day after they are ordered.

Smaller online store Pomelo, which aims to bring high-street fashions from Tokyo, Hong Kong, and Seoul to Thailand, also started a hand delivery service using motorcycles this week. But since it’s a fashion brand, a normal motorcycle wouldn’t do. Pomelo chose Vespas, the classic Italian scooters. The startup claims the new service can deliver goods to customers in Bangkok in a record time of three hours. The fashion startup also shared that, regardless of the political situation, Pomelo still receives 8,000 average page views per day.

A platform builder for e-commerce, aCommerce also works with its customers, including Line, to offer one day delivery in the Bangkok area. According to the company, its delivery fleet has managed to achieve its goal of 95 percent on-time delivery, even during protests. aCommerce head of operations James Lamrock in Thailand explains:

We are monitoring the situation very closely, and we always put our employee safety first. Some deliveries have been held back where the drop location was in a heavily-affected area, and for these customers we arranged compensation and/or alternative drop-off arrangements.

(Image credit: Instagram user 3ho8)

(Editing by Paul Bischoff)

The post During the Bangkok Shutdown, motorcycle delivery is a major selling point for online shoppers appeared first on Tech in Asia.

During the Bangkok Shutdown, motorcycle delivery is a major selling point for online shoppers

Box has secretly filed for an IPO

Box, the online storage company, has secretly filed paperwork for an initial public offering, according to a source.

That means Box could start trading as a public company before its chief rival, Dropbox. Both are among the most anticipated tech IPOs of this year.

A new law allows companies with less than $1 billion in annual revenue to confidentially file drafts of their IPO prospectus with the US Securities and Exchange Commission. Twitter is the most prominent company to have taken advantage of this provision of the JOBS Act. We’ve already declared 2014 to be “the year of the secret IPO.”

Box has already tapped banks, including Morgan Stanley, Credit Suisse, and JP Morgan Chase, to help underwrite it stock offering. It raised more than $100 million (paywall) in 2012, at a valuation of more than $1 billion. The venture-backed firm run by under-30 wunderkind Aaron Levie could be looking to raise about $500 million in an IPO.

Enterprise software is a $300B market based on tools built for the industrial era. This number will be dwarfed in the information era.—
Aaron Levie (@levie) January 25, 2014

Dropbox recently raised $250 million in a funding round led by a BlackRock investment fund; its valuation was $10 billion. Dropbox has traditionally focused on consumers but more recently pushed to expand into the corporate world. Box, by contrast, is going after consumers after building an enterprise storage business. It recently offered 50 gigabytes of free storage to users of its new mobile apps.

Box has secretly filed for an IPO

Here’s where Microsoft’s apparent next CEO, Satya Nadella, sees opportunity

Bloomberg reports that Microsoft is getting ready to name Satya Nadella as its next CEO, but Microsoft has yet to confirm. The Indian-born executive presently leads the company’s cloud and enterprise division, which is also the division that helped propel Microsoft to record revenue in its most recent quarter. Quartz interviewed Nadella in December about his vision for the company, which is largely as a “devices and services” company that capitalizes on the power of the cloud. Here’s more of what he said:

“The way I think about what’s happening broadly with technology and business [is that] as a percentage of GDP, IT spend is actually increasing. Sometimes its unclear when you just look at IT budgets, because this notion of ‘software is eating everything‘ is very true. You look at marketing: everything that’s happening in marketing is digitized. Everything that’s happening in finance is digitized. So pretty much every industry, every function in every industry, has a huge element that’s driven by information technology. It’s no longer discrete.

“There’s 2 trillion dollars of IT spend. This is inclusive of everything that’s happening in hardware, networking, software platforms, applications. That is all going to get disrupted by the move to the cloud.

“This notion of digitization of nearly everything, that’s a global phenomenon. As as a a percentage of GDP, IT spend broadly defined is only going to increase. That’s a pretty good spot to be in if you’re a technology provider. Then the next question is what is the shape of that spend? And that’s one of the places that we as a company have bet that there are two forms in which which people will consume technology is in devices and services or in cloud and devices broadly.

“So what used to be these distinct categories are getting mixed up in the move to the cloud. So one of the things is [that] sizing the cloud opportunity is interesting. Because in the past we’re used to sizing it by ‘here is how much is used for storage, here is how much it is for operating systems.’ Whereas in the cloud all of these things come together. It’s much more packaged. So for us, we built a big business here, but we’re still a low share player. We have a significant commercial business but in the big scheme of things, when you say 2 trillion dollars, we’re nothing. So the way we look at it is how do we become part of the fabric which is helping with this digitisation of everything.”

If Nadella does become the CEO of Microsoft, it appears that Microsoft is girding itself to directly battle Google’s and Amazon’s cloud services.

Here’s where Microsoft’s apparent next CEO, Satya Nadella, sees opportunity