The sordid backstory behind a Bulgarian bank run

It’s generally wise to ignore any instructions that come via unsolicited emails, texts, and Facebook messages. But when thousands of Bulgarians recently received mysterious missives warning them that local banks were in trouble, they were spooked enough to line up at branches and withdraw their savings. Before long, the sight of these lengthening queues—and more breathless messages—encouraged others to take out their deposits, just in case the rumors proved true. This is how a bank run begins.

Today Bulgaria established an emergency credit line worth 3.3 billion levs ($2.3 billion) to backstop the two lenders under attack. Fibank and Corpbank are the country’s third- and fourth-largest banks, respectively—Corpbank was taken over by the central bank a few days ago and Fibank was forced to close early at the end of the week as it struggled to cope when some 800 million levs were withdrawn in a single today.

The frenzy appeared to die down somewhat today, although savers remain on edge. Fibank’s shares, which tumbled at the end of last week, regained much—but not all—of their lost ground:

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Bulgaria’s central bank said the runs were driven by “an outbreak of rumors and malicious public statements,” and several arrests have been made in connection with the supposed plot. As far as anyone can tell, the turmoil appears to stem from a spat between the businessman Tzvetan Vassilev, chairman of Corpbank, and the parliamentarian Delyan Peevski. The one-time business partners reportedly fell out over control of the country’s former tobacco monopoly, a variety of unpaid debts, and abrupt corporate account closures at Vassilev’s bank, which was the first to see a run on deposits. Oh, and each has also accused the other of plotting his assassination.

The theory goes that shadowy forces are taking advantage of the turmoil to destabilize the banking system and force officials to break the lev’s rigid peg to the euro, put in place after a brutal banking crisis in 1996-97 led to a bout of hyperinflation. Or, at least, that’s how Vassilev’s theory goes—as he told the Financial Times (paywall), “I suspect the involvement of political figures and businessmen with huge debts they want to melt away.”

The financial upheaval comes amid political instability—the two are rarely far apart in Bulgaria—as popular discontent has forced the current government to call for early elections for October after just over a year in power. A caretaker government will assume power ahead of the poll. When the credit rating agency Standard and Poor’s downgraded Bulgaria’s government bonds earlier this month, the country’s dysfunctional politics were the main point of worry, particularly the inability of officials to temper “rampant graft,” according to Reuters.

It could be worse: Although Bulgaria is both the EU’s poorest and one of its most corrupt member states (pdf), its relatively small banking system is well capitalized and public debt is relatively low. The government managed to sell a 10-year euro-denominated bond last week at an interest rate of just over 3%, despite the burgeoning banking turmoil. Like other EU states, deposits up to €100,000 ($134,000) are guaranteed whatever happens to the bank where they are held.

This evening Bulgaria’s central bank issued a series of measures: easing liquidity requirements, proposing automatic jail sentences for spreading false information about banks, and declaring that the country’s banking system “has returned to its normal functioning.” Even if the crisis was largely manufactured—given its murky origins, it could be some time before we know all the details—the episode demonstrated the shallowness of Bulgarians’ trust their banks.

Boiko Borisov, a former prime minister whose party is leading in the polls, says he wants to call in the International Monetary Fund to help the country—not necessarily for extra funds, which Bulgaria has proved it can raise on its own or with the help of the EU, but “mostly for expertise so that the country can calm down,” he says. Indeed, if all it takes is a few anonymous text messages for savers to drain their accounts in haste, this country seems to have a case of the jitters.

The sordid backstory behind a Bulgarian bank run

The biggest financial stories of the first half of 2014

As we approach the halfway point of 2014, here’s a quick run-down of some of the biggest ongoing stories that dominated the discussion around financial markets.

High-frequency flare-up

• Michael Lewis’s book Flash Boys reignited discussion about the perils of high-frequency trading, whether or not US equity markets are “rigged” and what regulators should do about it.

The decline and fall of Wall Street trading

• Once a major moneymaker for banks, new regulations and somnolent markets have hammered the profitability of the bank trading business known as fixed income, currencies, and commodities, prompting widespread downsizing of US trading desks.

The tech-stock tumble

• Amid a largely unexplained shift in sentiment, the froth in US technology stock markets fizzled fast earlier this year, prompting a sharp selloff in technology shares that disrupted what had been otherwise a successful run for tech stock IPOs.

The valuation bubble

• Giant deals involving startups—such as Facebook’s $19-billion acquisition of WhatsApp—helped drive start-up valuations to fresh heights. And it’s not just traditionally well-connected Silicon Valley venture firms that are playing the game. Mutual funds, which manage money for average folks, are playing a bigger role in helping burgeoning tech companies such as Airbnb and Uber raise tons of cash before they become publicly-traded entities, something of a departure for these large asset managers.

Settlement surge

• Last year was marked by JPMorgan Chase’s $13-billion settlement (paywall) that helped the giant US bank put a smorgasbord of problems behind them. However, the first half of this year has been notable for other pending big settlements at Bank of America and Citigroup, as well as a raft of fines at European firms. These include an $8.9-billion fine to be announced by BNP Paribas and a separate $2.6-billion settlement by Credit Suisse, which came with rare admissions of guilt.

Inversion invasion

• M&A is booming. According to Dealogic there were $1.7 trillion worth of deals announced through mid-June, topping the $1.2 trillion announced over the same period last year. Behind much of the recent surge has been a spate of so-called tax-inversion deals, in which companies seek mergers with entities in low-tax countries in order to take advantage of a US tax loophole. The US-based medical device company Medtronic’s $42-billion merger with the Ireland-based Covidien became the largest company to seek a tax inversion. That party may be over soon though: Regulators appear acutely interested in doing something to stop the flood of corporate tax revenue out of the US.

The biggest financial stories of the first half of 2014

Google is shutting down its original social network but not because of Facebook

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Orkut in happier times.Google/Orkut

Before the many-headed hydra that is Google+, before Google Wave, before even Google Buzz, there was Orkut, a surprise hit of a social network created by a Google engineer in his spare time. Today Google announced that it is shutting it down. That is no surprise. Indeed, it is more surprising for many that Orkut was still around.

What spurred this decision? Was it the onslaught of Facebook, now a 1.27-billion-user behemoth straddling the world? Was it Twitter, the slow-burning but still influential social network? Was it WhatsApp, the sleeper hit that’s all the rage in the developing world?

Nope, nope, and nope. “Over the past decade, YouTube, Blogger and Google+ have taken off,” according to Google, and “because the growth of these communities has outpaced Orkut’s growth, we’ve decided to bid Orkut farewell.” That and perhaps the fact that the last few places where Orkut was popular—India and Brazil—are now the second- and third-largest contributors of Facebook users respectively, with the the US in first place. Indeed, in India, those few souls remaining on Orkut are known as “orkutiyas,” a mash-up of the name of the social network and a common Hindi swear word.

Google will keep a public archive of some parts of Orkut. Fortunately, though, it makes it easy to erase memories of your embarrassing past. Ex-users who don’t want their posts or names to be included in the archive can permanently delete their information by following these instructions.

Google is shutting down its original social network but not because of Facebook

These are the things people want Google to forget about them

Last week, Quartz wrote about Forget.me, a service that aims to make it easier for Europeans to request Google to de-list search results to information about them that is “irrelevant, outdated, or otherwise inappropriate.” (The European Court of Justice recently laid down (pdf) when Google must comply with such requests.) A week in, Forget.me has received 1,106 applications asking for 5,218 links to be taken down. Here’s what people don’t want other people to know about them.

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The largest single complaint has to do with invasion of privacy, which breaks down to the following categories:

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The largest number of “defamation” complaints were made by people who said their names have “been mentioned in matters which I am completely extraneous to”:

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These are the things people want Google to forget about them

Facebook’s second biggest market contributes just 0.23% of its revenue

In the year ending March 31, 2013, Facebook made $5.49 billion in global revenue. Nearly half of that came from the United States and Canada, which the company counts together. But the second-largest pool of Facebook users, in India, contributed just 756.4 million rupees, or $12.57 million—less than one quarter of one percent of the total.

This week, Facebook’s operations head, Sheryl Sandberg, is in India to try to change that equation. According to reports in the Indian press, she is scheduled to meet members of the press, owners of small and medium businesses, government officials, and the new prime minister, Narendra Modi.

India is high on everybody’s list of priorities right now. Last week, Google signaled its seriousness about India with a way for makers of cheap smartphones to offer better products—and give Google greater control over its mobile operating system in what is becoming the world’s second-largest phone market. As we wrote then, it is no surprise that Google launched the project in India: With its huge, young population and low smartphone penetration, India is the single most attractive market for phone companies today. Apple is trying a variety of offers and discounts to drive iPhone sales in India. Amazon and eBay are pouring millions into the market.

Yet for all the investment and optimism, returns so far have been weak. Facebook’s revenue has historically been disproportionately reliant on the US. In the year to March of 2013, the latest for which India-specific numbers are available from the Ministry of Corporate Affairs’ registrar of companies, about an eighth of Facebook’s revenue came from Asia, even though it was home to just under a third (pdf) of Facebook’s 1.11 billion users at the time. India accounted for 78 million, or 7%, of those users at the end of March 2013.

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Few other foreign tech firms fare better. Over the same year, LinkedIn reported profit (not revenue) of Rs 47 million, $782,000 in today’s dollars. By way of comparison, LinkedIn’s global profit before interest, taxes, depreciation and amortization for the first quarter of 2013 alone was $83.3 million (pdf). Google managed a more respectable Rs 20.77 billion in Indian revenue—$331 million at the time—according to the Business Standard newspaper. But that was still only 0.6% of its 53.5 billion global revenue over the year.

These numbers do not paint the whole picture; parsing the accounts for these companies’ unlisted foreign subsidiaries can be tricky. For example, tech firms can (and do) legally claim to make next to no money in the United Kingdom because billing is generally handled by their Dublin offices in order to benefit from Ireland’s favorable tax rates. Such financial engineering is easier in the European Union thanks to the principle of the free movement of goods and services across national borders. But that doesn’t stop companies from trying it elsewhere too. Indeed, Nokia has been fighting a long-running battle in India over non-payment of taxes for downloads on phones.

Still, $12 million in revenue from a country that had 78 million Facebook users (16 cents per user, compared with just under $14 per user in the US for the same period) is nothing to write home about—except to ask for reinforcements. That explains what Sandberg is doing in Hyderabad and Delhi this week, and particularly why her agenda is said to include meetings with small businesses, traditionally Facebook’s biggest advertisers. According to the Economic Times, another Indian newspaper, 900,000 small businesses in India already have a presence on the platform. “Facebook is the communication to grow economies and we are pretty important in growing small businesses,” the paper quotes her saying, adding that Facebook is the “most potent answer to the needs of SMBs. [small and medium businesses].”

What she forgot to mention is that those SMBs in India are also the most potent answer to the needs of Facebook.

Facebook’s second biggest market contributes just 0.23% of its revenue

The outrage is not so much over inequality but all the dubious ways the rich got richer

Concern about income inequality, and the even more striking inequality in wealth in the United States, is a key theme for the 2014 US congressional elections and has made Thomas Piketty’s book Capital in the Twenty-First Century a surprise bestseller. There are many reasons to be concerned about wealth inequality itself, regardless of the source of that inequality, but it is hard to pursue a discussion on the topic for long before someone makes a claim about whether the wealthy acquired their money in a deserving way. Partisans on the political left and right know which side of this argument they are supposed to emphasize: many who feel the government needs more revenue conveniently argue as if almost all wealth comes from underhanded, unscrupulous skullduggery, while many who feel the government needs less revenue conveniently argue as if almost all wealth were created by the likes of Steve Jobs, who brought us i-everything. But unlike these partisan stories, in every list of 1,500 or so billionaires, many deserve their wealth while others deserve very little of the wealth they have. While in some cases the principles for whether wealth is deserved or not are obvious, in other cases they are quite subtle.

To start with an easy category, wealth obtained by deceit is illegitimate. For example, given the way tobacco companies lied about the dangers of smoking,the gigantic legal judgments against them seem appropriate (though it is too bad how big a share of that money went into the pockets of lawyers). And although the magnitude of the crime might not be as great, GM’s recently outed behavior in hiding problems with ignition switches has a disturbing resonance with the earlier behavior of the tobacco companies. As these examples make clear, standard legal principles often make it possible to take away wealth obtained by deceit once that deceit is well established. But a greater hatred of deceit on the part of juries, judges, and legislators would help in further neutralizing this form of wealth.

If undeserved wealth always arose in cases where the logic was as simple as that for deceit, and were similarly reprehensible from a criminal or civil law point of view, then the issue of undeserved wealth could be appropriately handled in the courts. In an IMF paper, Harvard Economics professor Michael Kremer and Northwestern University Economics professor Seema Jayachandran make the intriguing proposal that debt incurred by a non-democratic government after the appropriate international organization has declared that the debt is not in the interests of the people of a country should be considered “odious debt” that later (and hopefully better) governments of that country need not pay back. This would be a new form of economic sanction that would be hard to get around, since no one would want to lend to a government if international financial norms said that the debt need not be paid back, and no one would lift a finger to help get that debt paid back.

We could similarly talk about “odious wealth”—wealth that is hateful in its origin. But our instincts about the merits of different means of acquiring wealth often go astray. Let me take two extreme examples: old songs that people love and the kind of “vulture capitalism” whose reputation helped sink Mitt Romney’s chances in the 2012 presidential election.

There is currently a dispute over whether songs recorded before 1972 should continue to earn royalties. By naming their bill to extend royalties to pre-1972 recordings, the “Respecting Senior Performers as Essential Cultural Treasures Act or “RESPECT” Act, congressmen George Holdings and John Coyners are using the fact that the musicians who recorded songs before 1972 (that we still listen to 42 years later) inspire feelings of gratitude, since songs of lasting popularity give many listeners much more pleasure than those listeners have paid for the right to listen to those songs. But the prospect of that very gratitude, plus 42 years of royalties, would have provided more than enough motivation for musicians to work hard back in 1971 to make great songs, if they had the ability.

Forty-two years is a long time. And money coming in the near future looks (and is) more valuable than money coming in the more distant future. And even songs that last typically get more play in their early years. So at the time a musician is working hard on a song, the prospect of 42 years of royalties and undying fame should, to a surprisingly close approximation, be just as motivating as, say, 80 years of royalties and undying fame. So we don’t need to extend royalties to pre-1972 recordings to bolster the confidence of musicians making songs now that they will be properly rewarded for their efforts. And on the downside, charging royalties for pre-1972 songs has the potential to inhibit the development of internet and satellite radio—and in particular how often people get to listen to the best pre-1972 songs on internet and satellite radio. So there is a lot of  of downside, not much upside to extending royalties to pre-1972 recordings. But the folks who would earn those royalties, if they are still alive, are attractive recipients of the money, even in cases where they are relatively wealthy.

By contrast, few ways of getting wealth seem less attractive than acquiring companies and then making them more profitable by laying off many of the employees. In August 29, 2012, Matt Taibbi wrote in the Rolling Stone essay “Greed and debt: the true story of Mitt Romney and Bain Capital:”

A man makes a $250 million fortune loading up companies with debt and then extracting million-dollar fees from those same companies, in exchange for the generous service of telling them who needs to be fired in order to finance the debt payments he saddled them with in the first place. …

Instead of building new companies from the ground up, we took out massive bank loans and used them to acquire existing firms, liquidating every asset in sight and leaving the target companies holding the note.

This is what I am calling “vulture capitalism.” But vultures have an important place in the ecosystem. Just like literal vultures, who help clear away dead carcasses, vulture capitalists help in the difficult process of moving workers from making and doing things that people don’t need as much anymore to making and doing things that people are eager to pay for. For example, Mitt Romney helped unwind K-B Toys, whose toys could no longer compete with video games. This was enormously painful for the employees of K-B Toys, who were ultimately sent on their way in an arduous transition to new jobs (and some to early retirement). But an enormous amount of good work has been accomplished by former employees of K-B Toys in new jobs with efforts that would have been squandered on trying to make unwanted toys if K-B Toys had been kept limping along for a few more years.

Since they are unlikely to get much gratitude from their brutal but useful work, vulture capitalists have to be rewarded with money. Otherwise, who would want to do that task of dismantling companies that should be letting go of people and other resources that should be devoted to other purposes?

None of this is to say that the incentives for vulture capitalism are precisely right. It is unfortunate when, as is too often the case, the efforts of highly trained professionals are focused on transactions that make sense only because of quirks of the tax law. But the basic idea that the old must sometimes be dismantled to provide the human and non-human building blocks for new things is sound. And if something that painful is going to happen, it sometimes makes sense to say as Jesus said to Judas: “What you are about to do, do quickly.” The wealth earned by vulture capitalists may then look like the 30 pieces of silver Judas was given for betraying Jesus, but it must be considered legitimate, nonetheless, because the job needs to be done.

There are two points to take away. First, it is not right to treat all large fortunes as odious wealth (or as otherwise illegitimate in origin) or to treat all large fortunes as beneficent wealth. Second, without careful analysis, our instincts will often lead us astray about which is which.

Although people complain a lot about wealth and income inequality, I suspect that a great deal of that anger comes from how the rich made their fortunes. An ideal version of capitalism—the version in the economic models taught taught in introductory economics classes around the world—would make it impossible to get rich without doing great good for society. There are certainly areas where doing great good for society is not understood and therefore not appreciated. But there are also many areas where the wrong things are rewarded because of market distortions, or where the government piles on rewards beyond those that are needed.

Among market distortions, lies and deception are a key category. But it is also a problem that the legal remedies available to deal with lies and deception are not matched by any ability to bring a legal tort claim for, say, raising the planet’s temperature by burning coal.

Among excessive rewards caused by the government, bailouts without increases in equity requirements big enough to prevent future bailouts are especially unfair. But actions by the government to protect the profits and business models of firms already in place by standing in the way of firms doing new things in new ways  can in the long run be just as damaging.  And in the digital age, copyright law is long overdue for reevaluation.

Wealth and income inequality are a topic of perennial fascination. But the heat has been turned up not only by increases in such inequality, but also by the feeling that the 2008 financial crisis and the Great Recession suggest that something is fundamentally wrong with our economic system. Among the many reasons to redesign the monetary plumbing of our economic system to avoid a repeat of the Great Recession, one of the most important is to help us gain clarity on the many long-run issues we face, of which economic inequality is one of the most difficult to deal with.

Follow Miles on Twitter at @mileskimball. We welcome your comments at ideas@qz.com.

The outrage is not so much over inequality but all the dubious ways the rich got richer

With new Pomelo photo app, successful Chinese startup goes after a global audience

A Chinese startup that had a smash hit in its home country with a highly configurable photo app, which has so far accumulated over 200 million downloads and 10 million active users, is trying something new and different in order to win over people outside of China.

That’s why the makers of the popular MeituXiuXiu app launched the brand-new Pomelo (pictured) earlier this month. With a more minimal UI – and a much more accessible name – the startup hopes to find a whole new audience. “At the moment, most of [our] products’ users are from Asia,” says Meitu’s Lisa Lynn. “Our goal is to acquire more users from US, European and other markets in the future.”

Pomelo comes with filters arranged in five groups – LOMO, Pola, Film, Vintage, and B&W. Within each group there are eight variations, and there’s also a slider for changing the intensity of the filter. Additionally, the app has a VSCOcam-style slide-up panel that reveals tweaks for temperature, brightness, tilt-shift, and a few other things. The app shows live filters while the camera is on, but if you add a filter this way you lose the ability to see the interesting variations or use the slider for greater subtlety. As with most photo apps, it makes more sense to edit the image afterwards. It looks like this:

There are two extra filter packs now available for free inside Pomelo, but one of those needs to be unlocked by recommending the app via Facebook. “We will consider adding in-app purchases in the future. But user acquisition is our priority at the moment,” says Lynn – which explains why they want people to share news of the app.

See: 5 of China’s coolest homegrown smartphones: INFOGRAPHIC

So far that tactic is working. In the 10 days since the launch of Pomelo, the new photo app has racked up over three million downloads.

As this Chinese startup ventures overseas, it would do well to look at the success of China-made Camera360, which has 60 million active users around the world – half of which are outside China.

Meitu, which was founded in 2008, built an app empire around fun apps focused on photos, GIFs, and videos. Many of them are aimed at women, as is the case with MeituXiuXiu. The startup – which now has 200 employees – capitalized on its expertise and brand name among China’s female web users to launch an Android-based smartphone in mid-2013, available in only pink or white, that featured a huge 8MP camera on the front for taking selfies. That phone, the MeituKiss, is now replaced by its successor, the even more pink Meitu 2.

Yes, Chinese startups move quickly – and in mysterious ways.

Pomelo is free for iOS and Android.

With new Pomelo photo app, successful Chinese startup goes after a global audience

There is a secret ingredient in your burgers: wood pulp

There may be more fiber in your food than you realized. Burger King, McDonald’s and other fast food companies list in the ingredients of several of their foods, microcrystalline cellulose (MCC) or “powdered cellulose” as components of their menu items. Or, in plain English, wood pulp.

The emulsion-stabilizing, cling-improving, anti-caking substance operates under multiple aliases, ranging from powdered cellulose to cellulose powder to methylcellulose to cellulose gum. The entrance of this non-absorbable fiber into fast food ingredients has been stealthy, yet widespread: The compound can now be found in buns, cheeses, sauces, cakes, shakes, rolls, fries, onion rings, smoothies, meats—basically everything.

The cost effectiveness of this filler has pushed many chains to use progressively less chicken in their “chicken” and cream in their “ice cream.” McDonald’s ranks highest on the list with cellulose integrated into 14 of their menu items including their renowned fish fillets, chicken strips and biscuits, with Burger King ranking second on the list with 13 menu items  containing cellulose. Moreover, many cellulose-laden ingredients (such as honey mustard, bbq sauce, and cheese blends) can be found in multiple items throughout the menu making the filler difficult to avoid.

Data retrieved from publicly available nutritional information from McDonald’s, Burger King,Wendy’s, Taco Bell and Carl’s Jr.

All of these cellulose-based ingredients are non-digestible wood pulp possessing no nutritional value. Though some studies suggest that microcrystalline cellulose may have adverse effects on cholesterol, the FDA has approved powdered cellulose for human consumption in moderate doses.

Studies on the effects of microcrystalline cellulose are continuing, but meanwhile, so is the adoption of wood pulp-based fillers.

Follow Devin on Twitter @devvtones. We welcome your comments at ideas@qz.com.

There is a secret ingredient in your burgers: wood pulp

Quartz Daily Brief—Americas edition—GlaxoSmithKline sex tape, ISIL’s caliphate, Facebook research backlash, Auschwitz selfies

Good morning, Quartz readers!

What to watch for today

Argentina’s debt deadline. The country may enter into technical default if it can’t figure out a way to settle with bondholders, after a US judge ruled that its attempt to pay off its restructured bondholders was illegal. The deadline may be extended another month to July 30th.

BNP settles over sanction violations. The bank will agree to pay a record $8.9 billion (paywall) for concealing some $30 billion in transactions for clients in US-sanctioned countries like Sudan, Iran, and Cuba, and won’t be allowed to clear US dollar transactions for up to a year.

The future of US public-sector labor. The US Supreme Court is set to rule on Harris vs. Quinn, and could overturn the requirement that public-sector workers must pay a “fair share” of union dues even if they are not members. That would greatly undercut unions’ power to engage in collective bargaining.

GM unveils a compensation scheme. Attorney Ken Feinberg will announce the details of a fund for the victims of a faulty ignition switch and their families. There will be no limit on the size of the fund, since the number of total victims is unknown.

Canada releases its GDP figures. A quiet week for financial data means Canada’s monthly economic expansion will receive a little more attention than usual. Expectations are that the economy grew between 0.1% and 0.4% in April.

World Cupdate. France v Nigeria is at 12pm EDT; Germany v Algeria is at 4pm.

Over the weekend

An ex-Procter & Gamble CEO was tapped to fix Veterans Affairs. Bob McDonald, a West Point graduate and longtime P&G executive, is the White House’s choice to clean up “significant and chronic system failures” in VA hospitals.

ISIL declared a “caliphate” in the Middle East. The Sunni extremist group declared the formation of an Islamic state stretching from Aleppo in northern Syria to Diyala province in eastern Iraq, in an implicit challenge to Al Qaeda, its one-time ally.

GlaxoSmithKline’s bribery scandal started with a sex tape. The drugmaker said its China chief was secretly filmed in his own home for a video that was anonymously sent to Glaxo’s CEO and other top executives. Shortly afterwards, Glaxo was accused of making illicit payments to Chinese doctors and officials.

Euro zone inflation was unchanged at 0.5%. The European Central Bank’s newly aggressive monetary stimulus hasn’t had much time to take effect.

Facebook triggered a negative emotional response. A research study that exposed users to positive and negative emotional content and measured their responses was criticized as an abuse of the social networking company’s vast powers.

China’s state-owned news agency filed for an IPO. Xinhua released a preliminary prospectus (paywall) on its plans to offer shares in its digital arm on the Shanghai Stock Exchange. The company plans to raise some $241.2 million.

Carlos Slim is buying out AT&T, purchasing the 8.3% stake that AT&T has long held in his company, América Movil, for $5.57 billion. The deal was necessary because AT&T is acquiring DirectTV, which competes with América Movil for pay-TV customers in Latin America.

Quartz obsession interlude

Gwynn Guilford on why the movie Frozen strikes a very lucrative chord in Japan. “Undoubtedly, Japanese audiences are responding to the same qualities that have turned Frozen into a global phenomenon. Not only is the music catchy, but the story is morally nuanced enough that adults seem to enjoy it as well as children. And then there’s the fact that Frozen revolves around the relationship between strong, commanding female characters who defy the “Disney princess” stereotype (even though they technically are monarchs). That latter point is what makes Frozen’s unexpected popularity—particularly among Japanese women—so striking.” Read more here.

Matters of debate

Slow growth is here to stay. Most global economies are advanced, and that means growth over 1.5% per year is just not that likely.

Actually, it’s a little more complicated than that. Some techno-optimists believe we’re in for a major boost in human productivity.

The American IPO is dying. Burdensome regulation and aggressive short-sellers have made it much harder to go public.

It’s no surprise that few CEOs are openly gay. Most are of a generation that grew up in an extremely anti-gay environment.

The conventional wisdom on conventions is wrong. Over-optimistic assumptions mean city-funded facilities usually fail to deliver.

Surprising discoveries

A Martian flying saucer landed off the coast of Hawaii. Yes, really: NASA’s Low-Density Supersonic Decelerator is being tested for future Mars flights.

The UK is lobbying the US over haggis. The £15 million ($26 million) industry has been banned from exporting to the US since 1971.

Chinese dissidents are forced to take free “vacations.” They are escorted on holiday during important national events.

Auschwitz selfies are popular with Israeli teenagers. But not everyone thinks posing with your pals under an “Arbeit macht frei” sign is cool.

Sour drinks can cure garlic breath. Beverages with a pH level below 3.6 kill the enzymes that create odoriferous exhalations.

Our best wishes for a productive day. Please send any news, comments, garlic breath cures, and flying saucer sightings 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—GlaxoSmithKline sex tape, ISIL’s caliphate, Facebook research backlash, Auschwitz selfies

Terra Motors’ new $4,000 electric motorcycle can deliver a pizza from Tokyo to Mt. Fuji on a single charge

Starting tomorrow, Terra Motors, the Tokyo-based electric vehicle (EV) startup that specializes in eco-friendly scooters and tuk-tuks, will offer a commercial motorcycle with a range of 150 kilometers on a single charge – three times greater than currently existing alternatives, according to the company. The motorcycle, dubbed BIZMO II, can carry a load of up to 30 kilograms (66 pounds) using front- and rear-mounted carrying containers, making it suited to a variety of delivery applications.

“Traditionally, electric motorcycles were considered a mobility solution for short distances due to their lack of battery capacity and power,” Toru Tokushige, Terra Motors’ founder and CEO, said in a statement. “BIZMO Ⅱ is the world’s first electric motorcycle which fully satisfies the needs of commercial use.”

Terra Motors also says that BIZMO II has an operating cost that is less than one-tenth of a gas-powered motorcycle. Its in-wheel electric motor has a regenerative function that charges the battery when decelerating. In addition to cutting petrol costs and reducing carbon emissions, the near-silent motor could dramatically reduce sound pollution created by traditional motorcycles, a common nuisance in quiet residential neighborhoods.

BIZMO II offers three driving modes: high-speed, normal, and energy saving. On high-speed mode, it is capable of speeds up to 55 kilometers per hour (34 miles per hour). Without cargo boxes, it weighs 85 kilograms (187 pounds) and can climb a 14-degree incline (without cargo). The vehicle’s frame is steel reinforced to promote rigidity when carrying a full load and its rear cargo deck is positioned low to aid balance.

See: How Japan’s Terra Motors wants to plug developing nations into e-bikes

While most electric motorcycles are equipped with 48V20Ah (960Wh) batteries, good for around 40 to 50 kilometers per charge, BIZMO II uses a removable 72V44Ah (3168Wh) power source that more than triples its range in comparison. Terra Motors’ head of PR, Tetsuya Ohashi, told Tech in Asia that it has been in development for four years and will cost approximately US$4,000. The retail price will change for markets outside of Japan, Ohashi says, based on individual distributors.

In May, Terra Motors received US$10 million in funding led by Mizuho Capital (which was partially used to develop BIZMO II) and including investment from Fenox VC, Shinsei Bank, SMBC Venture Capital, and Aizawa Securities. While the company has primarily focused on Southeast Asia with previous EVs, BIZMO II will debut exclusively in Japan. Terra Motors, founded in 2010, says it will seek out overseas expansion potential as soon as possible and hopes to move 100,000 units globally by 2015.

(Disclosure: Fenox VC invests in Tech in Asia. Read our ethics page for more information.)

Terra Motors operates overseas affiliates in Vietnam and the Philippines and is considered a poster child for Japan’s burgeoning startup ecosystem. Noteworthy investors include Nobuyuki Idei (former president of Sony), Koichiro Tsujino (former president of Google Japan), and Kenji Yamamoto (former president of Apple Japan).

Terra Motors’ new $4,000 electric motorcycle can deliver a pizza from Tokyo to Mt. Fuji on a single charge

Rakuten just launched a $100M fund for startups. Here’s why the company is more than just “Japan’s Amazon”

Saemin Ahn, managing partner at Rakuten Ventures, speaks at a Tech in Asia meetup in Singapore

As Alibaba prepares for its IPO and Tencent aggressively pushes its WeChat messenger all over the world, it’s easy for folks in the west to forget that there’s another Asian internet giant gunning for a broader global presence – Japan’s Rakuten. Founded in 1997, the Tokyo-based firm earned a name for itself domestically with Rakuten Ichiba, a marketplace that sells virtual store space for vendors looking to reach online customers. Rakuten Ichiba’s success helped it gain the reputation as “Japan’s Amazon,” the firm quickly proved to be about more than ecommerce – it successfully branched into the banking, securities, and travel industries. It even created a juggernaut baseball team in northern Japan.

As for its international operations, Rakuten runs ecommerce stores in South America, Europe, Southeast Asia, and the US – some of which it built from the ground up, others which it obtained through acquisitions. Also, over the past two years it’s made a stream of acquisitions in some high-profile consumer tech firms – Spanish video streaming site Wuakai.tv, e-reader Kobo, chat app Viber, and “Hulu for the world” Viki.

Now, the company is betting on startups with a new US$100 million fund under its Rakuten Ventures investment branch. Launched in 2013, Rakuten Ventures started small – opening with a US$10 million fund focusing on startups in southeast Asia. Under the leadership of Saemin Ahn, who joined the company after five years at Google, Rakuten Ventures led seed and series A rounds in a wide range of startups including peer-to-peer marketplace Carousell, payments facilitator Coda Payments, image recognition startup ViSenze, and the awesome file transfer service Send Anywhere.

Rakuten Ventures states that its new fund will assist firms not only in Southeast Asia, but in the US and Israel, and greater APAC as well. In other words, if you’ve got a startup, Rakuten might be coming to your neighborhood.

In an effort to understand the Rakuten Ventures and its relationship to its domestic parent company, Tech in Asia sat down with Ahn to discuss Rakuten’s legacy in Japan, it’s global ambitions, and why an ecommerce firm might invest in a messaging app. Below is an edited transcript of the conversation.

Rakuten is best known to internationals as a Japanese ecommerce firm and not much else. It’s not a company that is well-known in living rooms outside of Japan – even startup savvy living rooms. Why does Rakuten need US$100 global-facing investment fund?

That’s a very good question. For me, I wouldn’t brand Rakuten as an ecommerce company, but as a Japanese ecommerce conglomerate. If you can see what Rakuten has done in Japan over the past four years, it’s been nothing but disruption – not just in ecommerce, but in online banking for credit card businesses, to online brokerage business, to insurance. It’s been very very aggressive in terms of how it has seen the marketplace and how it can move into certain subsectors.

In that way, when Mikitani-san [Hiroshi Mikitani, chairman and CEO of Rakuten] and I look at overseas business, we think together – what kind of units do we want to actually push out overseas, and how can we challenge ourselves in terms of our ability to perform? One thing that we saw as a really big opportunity and a challenge is: “How can we do venture capital well?” In Japan there might not be such a big need for it because we have such a strong base. But if we can execute venture capital correctly, this not only provides a huge financial upside for the corporation, but overall, if we can do this in a democratic and judicial way, there’s huge branding effects for the company itself.

Whenever an ecommerce firm like Rakuten or Alibaba invests in or acquires a smaller company, it’s easy for one to assume that the end goal of the purchase is to tie the product or service back to ecommerce. For example, tech media outlets will write things like “Rakuten purchased Viber, which is kind of like Line and WeChat… Line and WeChat both sell stuff.. so in a year Viber will probably start selling stuff from a Rakuten partner.” To what extent must a Rakuten Ventures investment tie back to ecommerce?

Rakuten in Japan has an amazing moat and castle strategy. We have a castle that’s named ecommerce, and we have multitudes of moats that enable us to acquire and aggregate customers at a very low cost, while giving them the benefits that they need and desire. In many ways, we’re looking at how we can create a moat strategy outside of Japan. For a lot of the businesses we have, the actual transferral costs might provide high internal barriers and high costs. So we’re always looking at the next step for how we can touch new customers for new growth. In many ways the Viber acquisition and the Viki acquisition were kind of an organic step towards that.

What about Send Anywhere, which you invested US$1 million in? That’s a startup that doesn’t really have an obvious link back to ecommerce.

Well, I’m very thankful that Rakuten has given me a lot of horizontal movement and also vertical movement. For example, Send Anywhere has a lot of parallels that you can look at in terms of content transfer. If you look at that, if you have a critical mass of Send Anywhere users, you can think of it as a giant content solution platform, not unlike Bittorrent. Bittorent has more users than Twitter, and even though their monetization could be better, they deliver tremendous value to their users.

To be very direct here, we don’t expect all of these partners to work with us as Rakuten all the time. If it makes sense, great, you can work together with us. If it doesn’t, then we’ll help you as much as possible with product development. Business decisions aren’t always black and white, often they’re a very desirable shade of grey.

See: Viber was the enigma of the mobile messaging wars. Why did Rakuten buy it for $900 million?

Even before Rakuten Ventures was established in 2013, Rakuten had made several investments in overseas companies, most notably in Pinterest. What distinctions, if any, can we draw between Rakuten Ventures’ investments and these previous investments?

Well, if it’s actually invested by Rakuten Ventures we’ll specifically state it. If it’s done by Rakuten Group, it’s most likely done by the strategic investment office. We are pretty separate in terms of how we operate. But if you look at our overall philosophy, I think that there is somewhat of a distinction in that the strategic investment office has more of a direct linkage in terms of how ecommerce will be used. Whereas for me, it doesn’t necessarily have to be in that vector. We are separate in terms of how we operate. Neither side has any influence on the other, but we are in very tight communication in terms of what happens on each side.

Let’s talk a little about Viber. Rakuten’s purchase of Viber will likely rank among this year’s biggest acquisitions. At the time, it affirmed the value of mobile messaging even before Facebook bought WhatsApp. What made Viber an appealing acquisition for Rakuten?

About three years ago, talk at Google and in the tech industry was all about owning the identity. But if you actually look at it right now, it’s become more about owning and participating in the conversation as much as possible. I saw an opportunity where a lot of these messaging platforms will become very successful, not necessarily by sticking to their original business plans, but by creating concentric ecosystems that relate to consumption, financial transfers, and games.

In that manner I was looking at companies I wanted to invest in, and I always had my eye on Viber. Even when I was at Google the company was growing hand over foot, extremely aggressively. So I really wanted to reach out to them to find out what their plans were, and how I could prove myself worthy of their investment. I take a very deferential model with regard to approaching the companies we want to invest in. I first talked to them to see how I could help them. I asked them and said ‘Hey, are you interested in doing operations in Southeast Asia?’ and they said ‘Yes! We’re really popular in the Philippines.’ So I started to help them out in terms of looking at strategy and making some connections, that naturally rolled into an investment discussion, but the discussions went so well that it evolved into an acquisition.

See: Rakuten Ventures’ Saemin Ahn: “No one should tell you what your vision is about.”

Any countries in particular you’re bullish towards? To what extent is Rakuten Ventures an Asia play, versus a global play?

We are very excited about Israel. Viber is actually an Israeli company and my office is inside Viber. For me, I love the deal flow in Tel Aviv. The density is really amazing, the founders are great, the overall technical ability of these guys and how they look at the market is very global facing.

For me I would like to find all the innovative companies inside Asia and in Israel. But i think that we’ll take a very long sustained look at the US, consistently to look for good deals. There are certain pockets of verticals where if you look outside the US, you’re at a disadvantage. Things like big data, things like adtech – the US is where it’s happening. So if you want to look at upsides in those verticals, you want to have a good relationship with founders on the ground there.

Does Rakuten intend to become a global brand name? Or is it content to work behind the scenes while the companies they invest in or acquire grow to become their own beasts?

I think those two possibilities are not mutually exclusive. definitely if the company is doing very well and accrues some kind of amazing liquidity, then we’d love to also share the spotlight. But for me as an investor, we’re looking at investing in the companies we believe in to become great companies for the future. I think once we focus on that, our goal points will fall in line naturally.

Rakuten just launched a $100M fund for startups. Here’s why the company is more than just “Japan’s Amazon”

Startup on top, corporate on bottom: how a Singaporean company stays agile in China’s complex payments sector

“This is not futuristic, it’s just necessary,” explains Huang Minglang, CMO of Xinghedushi Science and Technology. “Because it’s necessary, it makes money.”

Xinghedushi is China’s second largest maker of physical payment kiosks and the software that runs them in China. Additionally, its software (dubbed ‘Jiaofeiyi’) can be deployed onto almost any variation of hardware, like cash registers and card readers.

While mobile payments are starting to garner some attention for things like phone top-ups, utility bills, and transport cards, most Chinese people still go to either the bank or a kiosk to make such payments. The leader in the payment kiosk space is Lakala, which can be found at pretty much any 7-Eleven and other chains of convenience stores. But Jiaofeiyi is in a solid second place with over 1,000 kiosks in Beijing alone. Its own brand of kiosks are a common sight in a handful of other cities in China, and it also licenses its software and hardware to other companies, acting as a fulfillment gateway.

Huang admits the payment kiosk business is “increasing at a decreasing rate.” He says more kiosks will be installed for at least another five years, but the company is now looking to leverage its years of experience and networks to shift toward mobile payments.

To that end, Xinghedushi will provide mobile payment solutions before the end of this year. It will start with its own mobile app, but Huang notes this is more to show Jiaofeiyi’s capabilities rather than trying to make a popular consumer product. Like its kiosks, the technology will be white-labeled and licensed to companies who want their own mobile payment platforms.

The biggest obstacle for mobile is “the nature of the legacy system” when it comes to payments in China. Huang says NFC cards, which include Beijing’s transport cards, have very restricted licensing, so NFC-enabled phones cannot be used to transfer money to them yet. Utilities are usually paid using IC cards, which smartphones simply aren’t equipped to deal with. This limits not only Jiaofeiyi, but all companies in the payments space. The progression of mobile has far outpaced the country’s payment infrastructure.

Many opportunities remain, though. Huang points to mobile top-ups as one example. A shop owner with a Jiaofeiyi app could instantly add credit to a customer’s phone, eliminating the need for scratch cards. In addition to a white-labeled app for other companies, Xinghedushi is also building a WeChat official channel that can complete many of the same tasks as its kiosks.

Olympic standards

Xinghedushi’s Singaporean founders broke into China’s payment scenes back in 2006, when the Chinese government was preparing for the 2008 Summer Olympics. Before then, people were forced to line up at banks to make pretty much any sort of payment. China opened up to let private companies jump-start innovation in the sector.

Xinghedushi was one of just a few selected by the government. Huang says most companies were looking to make a quick buck and “underestimated the complexity” of the countries e-payments sector. He says many people’s idea of doing business in China is predicated on guanxi – a common term for a person’s connections and social capital. But Huang argues it’s less about who you know, and “more about being familiar with how things work.”

Huang says in the company’s early days, the team was adamant about creating its own ecosystem. But now that sentiment has changed. “We’re a lot larger when we work with others and enable others, rather than taking on this market on our own,” he says.

The team’s startup attitude led them to beat their competitors, says Huang. After the Olympics, the government’s initiative to update payment technologies continued, and Xinghedushi was on the frontier. Many rivals, like telco China Unicom, realized the huge amount of effort needed to develop in-house solutions and dropped out to eventually become clients of Xinghedushi. It outpaced everybody else in the market, including banks. The government even used the company in a case study to show how quickly IC card readers could be integrated while banks were complaining about the time and costs necessary to do so. As years went by, Xinghedushi went from a competitor to a vendor for several large corporations, and its kiosks are now found in many state-owned banks.

“It’s the equivalent of asking the government of China to pay you to put a machine in their facility,” says Huang, noting the level of knowledge needed to work in such a complicated and bureaucratic environment.

That’s why he sees his company as a top contender to break into mobile payments. Xinghedushi already has the networks, know-how, back-end technology, and scale to be a major mobile payments solution and fulfillment gateway. All it needs now is an app.

Transition from startup to corporate

Eight years later, Huang doesn’t really consider Xinghedushi a startup anymore. The founders, who all have entrepreneurial backgrounds, “have a huge startup mentality when it comes down to things like strategy, business direction, and execution,” he says. At the management level, there’s no top-down system. Everyone is relatively equal.

Among the rest of the staff however, the company looks much more corporate. Employees dress professionally and punch in every morning. As Xinghedushi grew, Huang says the startup culture just wasn’t working out. “We learned this somewhat the hard way,” says Huang.

Huang points out a few problems with trying to run such a large company like a startup. “It eventually becomes an ill-disciplined unit,” he says. “It’s hard to work with government with a startup culture [...] It makes your company look frivolous.”

This startup-on-top, corporate-on-bottom style makes the company efficient, productive, and agile enough to keep competition at bay. However, it has led to some disconnect between management and lower-level staff.

“We move very quickly, sometimes too quickly for the Chinese staff,” says Huang. “It looks as if we’re changing our minds all the time, even though we’re not.”

BDSM

In addition to mobile payments, Xinghedushi also wants to be an out-of-home (OOH) advertiser. Because its software is so common on both its own and other companies’ payment kiosks in public places, it effectively owns thousands of billboards. It can also take advantage of user data to better target audiences.

Originally, the English name for this service was called the “big data sales and marketing” platform. But the team recently realized the acronym spelled BDSM, so they’re working to come up with a new one.

Startup on top, corporate on bottom: how a Singaporean company stays agile in China’s complex payments sector

Quartz Daily Brief—Europe edition—Argentina’s deadline, ISIL’s caliphate, Xinhua’s IPO, Auschwitz selfies

What to watch for today

Argentina’s debt deadline. The country may enter into technical default if it can’t figure out a way to settle with bondholders, after a US judge ruled that its attempt to pay off its restructured bondholders was illegal. The deadline may be extended another month to July 30th.

Inflation data for the euro zone. The European Central Bank’s newly aggressive monetary stimulus will likely take some time to be felt, so today’s inflation figures aren’t likely to show much improvement, but analysts will be watching hopefully anyway.

BNP settles over sanction violations. The bank will agree to pay a record $8.9 billion (paywall) for concealing some $30 billion in transactions for clients in US-sanctioned countries like Sudan, Iran, and Cuba, and won’t be allowed to clear US dollar transactions for up to a year.

The future of US public-sector labor. The US Supreme Court is set to rule on Harris vs. Quinn, and could overturn the requirement that public-sector workers must pay a “fair share” of union dues even if they are not members. That would greatly undercut unions’ power to engage in collective bargaining.

GM unveils a compensation scheme. Attorney Ken Feinberg will announce the details of a fund for the victims of a faulty ignition switch and their families. There will be no limit on the size of the fund, since the number of total victims is unknown.

World Cupdate. France v Nigeria is at 5pm BST; Germany v Algeria is at 9pm.

Over the weekend

ISIL declared a “caliphate” in the Middle East. The Sunni extremist group that has swept across Iraq declared the formation of an Islamic state stretching from Aleppo in northern Syria to Diyala province in eastern Iraq, in an implicit challenge to its former allies in Al Qaeda.

GlaxoSmithKline’s bribery scandal started with a sex tape. The drugmaker said its China chief was filmed in his own home without his knowledge, which eventually led to accusations that Glaxo made illicit payments to Chinese doctors and officials.

Facebook’s research provoked a negative emotional response. A study that exposed users to emotional content and measured their responses was criticized as an abuse of the social networking company’s vast powers.

The central bank for central banks warned about “euphoric” markets. The Bank of International Settlements said central banks have been lured into a false sense of security and warned of signs of banking crises on the horizon.

Bulgaria tried to prevent an anonymous run on its banks. The country’s central bank said there was a deliberate attempt to destabilize the country’s banking system. Emails and text messages were sent by parties unknown, advising members of the public to withdraw their cash.

China’s news agency prepared to go public. Xinhua released a preliminary prospectus (paywall) on its plans to offer shares in its digital arm on the Shanghai Stock Exchange. This comes two years after the IPO of the website of the People’s Daily. The company plans to raise some $241.2 million from the offering.

Carlos Slim is buying out AT&T, purchasing the 8.3% stake that AT&T has long held in his company, América Movil, for $5.57 billion. AT&T is acquiring DirectTV, which competes with América Movil for pay-TV customers in Latin America.

Quartz obsession interlude

Gwynn Guilford on why the movie Frozen strikes a very lucrative chord in Japan. “Undoubtedly, Japanese audiences are responding to the same qualities that have turned Frozen into a global phenomenon. Not only is the music catchy, but the story is morally nuanced enough that adults seem to enjoy it as well as children. And then there’s the fact that Frozen revolves around the relationship between strong, commanding female characters who defy the “Disney princess” stereotype (even though they technically are monarchs). That latter point is what makes Frozen‘s unexpected popularity—particularly among Japanese women—so striking.” Read more here.

Matters of debate

The American IPO is dying. Burdensome regulation and aggressive short-sellers have made it much harder to go public.

It’s no surprise that few CEOs are openly gay. Most are of a generation that grew up in an extremely anti-gay environment.

The conventional wisdom on conventions is wrong. Over-optimistic assumptions mean city-funded facilities usually fail to deliver.

The European Commission just picked the wrong president. Jean-Claude Juncker’s election highlights the many dysfunctions of EU politics.

Prisons should be abolished. GPS-enabled monitoring is more effective at cutting recidivism, and cheaper too.

Surprising discoveries

Chinese dissidents are forced to take free “vacations.” They are escorted on holiday during important national events.

The UK is short on sperm. Fertility clinics are relying on imported semen.

Auschwitz selfies are popular with Israeli teenagers. But not everyone thinks posing with your pals under an “Arbeit macht frei” sign is cool.

The newest potentially habitable planet is a mere 16 light years away. Gliese 832c might have Earth-like temperatures.

Sour drinks can cure garlic breath. Beverages with a pH below 3.6 kill the enzymes that create odoriferous exhalations.

Our best wishes for a productive day. Please send any news, comments, garlic breath cures, and Gliese 832c settlement plans 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—Argentina’s deadline, ISIL’s caliphate, Xinhua’s IPO, Auschwitz selfies

Fresh funds for TripHobo, more itineraries and fewer headaches for travelers

Indian travel startup TripHobo has secured series A funding of over US$1 million from Kalaari Capital. The two-year-old portal lets travelers share itineraries and plan their tours better.

TripHobo currently has more than 25,500 curated and verified itineraries written by travelers, covering about 10,000 tourist hotspots in 170 cities around the globe. The portal lets you pick a user-generated itinerary and edit it to make it your own.

Imagine being in Brazil for the World Cup. You want to take in the sights without missing a minute of soccer. TripHobo lets you see at once how to do that. The free day before this Friday’s quarter-finals, for instance, could be ideal for a trip around Rio. One itinerary goes like this: the Ipanema and Copacabana beaches in the morning, lunch at a local eatery, cable car rides on Sugarloaf mountain for a bird’s eye-view of the city, a stroll in the Jardim botanical garden, and the Tijuca forest in the late evening after dining out in one of the French restaurants at the Arcos De Lapa aqueduct nearby. All in a single day’s tour.

One of TripHobo’s strengths is an algorithm called ‘Trip Optimizer.’ For example, if you go to Paris for a short holiday, you would want to minimize the time spent commuting between your hotel and places on your itinerary. The TripHobo algorithm lets you optimize your trip using a number of parameters, including distance from hotel, opening and closing times of places to visit, etc.

““It’s also a self-learning algorithm. That is, it can keep learning from fresh data without being explicitly re-programmed. This was created in-house from scratch and makes trip planning with TripHobo a lot of fun,” says co-founder Karthik Ramachandra.

See: Big data and machine learning liven up the Indian online travel space

With the fresh infusion of funds, which could go up to US$3.5 million, travelers can expect more itineraries and other resources on TripHobo.com to plan their trips to the last detail, Ramachandra tells Tech in Asia.

Besides creating itineraries, finding interesting places, and booking suitable hotels, the portal also lets you network with other travelers worldwide to share experiences.

Vani Kola, managing director of Kalaari Capital, and Sumit Jain, principal of the fund, will be joining the board of TripHobo now.

Three travel buffs cum marketing MBAs – Praveen Kumar from IIM Lucknow, Karthik Ramachandra from IIM Indore, and Saket Newaskar from MDI, Gurgaon – started TripHobo in 2012 to solve the lack of credible travel planning resources, a problem they had themselves faced frequently.  Being techies, they are hooked on data and used that know-how to figure out solutions to make their trips as efficient as possible.

TripHobo founders Praveen Kumar, Karthik Ramachandra, and Saket Newaskar

Ramachandra recalls an 18-day bike trip in the rugged Himalayan region of Leh when all of them used to work at HCL Technologies. They had plotted every point of the journey meticulously on Excel sheets – a precursor of their Optimizer on TripHobo today. Ramachandra, who is married now, is planning to return to Leh with his wife soon, and is very excited about ‘optimizing’ it.

Tech in Asia first wrote about TripHobo in September, 2013, – except that the startup went by the name JoGuru. The rebranding to TripHobo came from their increasingly global footprint.

“Currently, our user base is growing at 600 percent. With the fresh funds, we will push further. Our aim is to get a million itineraries and cover 3,000 cities within a year,” Ramachandra says.

The Pune-based startup is among the top 30 global companies picked to attend the PhoCusWright travel innovation summit to be held in Los Angeles later this year.

The opportunity for TripHobo is huge. The travel activity booking market is approximately US$100 billion in size, with a growth rate of 9 percent. New startups like 36hrs.in, founded by two graduates from IIT Delhi and Harvard University, have also come up in the travel planning space. This Delhi and Boston-based startup, funded and backed by Startup Chile acceleration program, helps travellers create itineraries, look up recommendations, and discover spots in the cities around the world.

A survey by Red Rocket Media revealed interesting insights into this market:

• 42 percent of shared content on Facebook is travel


• 55 percent are influenced by online searches


• 63 percent are influenced by others’ testimonials

Fresh funds for TripHobo, more itineraries and fewer headaches for travelers

9 startup funding rounds in Asia last week

We’re back for a week of startup funding rounds from across Asia, with big winners Meet You from China and Gunosy from Japan pocketing US$35 million and US$11.8 million respectively to grow their companies. Congratulations!

1. Berry Kitchen | Indonesia

Online food catering startup Berry Kitchen has received an undisclosed amount of seed funding from East Ventures (Disclosure: East Ventures is also an investor in TechinAsia. See our ethics page for more information). Berry Kitchen makes lunch boxes and bento meals, typically for office workers.

2. Gunosy | Japan

KDDI, Japan’s third largest carrier by subscriber base behind Docomo and SoftBank, announced a 1.2 billion yen (US$11.8 million) funding round in news curation app Gunosy, with participation from JAFCO and B Dash Ventures. It earlier provided US$12 million in March to fund a Gunosy television advertisement campaign. Gunosy, which claims to help readers process the day’s top news in just three minutes, is the second most popular news app on both the Japanese App Store and Google Play.

3. Akippa | Japan

DeNA has been identified as the lead investor in parking space reservation app Akippa. Though the terms of this new funding round were not announced, Akippa’s previous round, led by noted private equity firm JAFCO, was for over US$650,000.

4. Meet You | China

Meet You, a Chinese app that originated as a menstruation tracker that since evolved into a social network for all things ladylike, has secured a US$35 million series C investment round led by SIG. In addition helping keep records of periods and other biological metrics, Meet You also lets users connect on its message boards, which cover themes ranging from fashion to relationships.

5. Helpshift | India

Helpshift, an Indian startup that pioneered customer support in mobile apps, has raised US$10 million in series A funding by Intel Capital. Visionnaire Ventures, True Ventures, and Nexus Venture Partners also joined the latest investment round.

6. Any+Times | Japan

Social problem solving service Any+Times raised JPY 51 million (US$500,000) million led by gaming giant DeNA and venture capital firm Incubate Fund. The service is currently accessible only via the web, but this new funding could finally bring the startup to smartphones.

7. Fliplingo | Thailand

After months of beta testing, Fliplingo has gone live to the public with its human-powered Twitter translation service and has accrued $150,000 in seed funding, contributed by its own team members, to help it grow.

8. Twitcasting | Japan

Moi Corporation, the Tokyo-based startup behind Twitcasting, this week revealed a US$5 million series A funding round that will be used to increase the live-streaming platform’s presence outside of Japan. The investment was led by Indonesia’s Sinar Mas, marking the first time that a non-Japanese VC has invested in the company, with participation from East Ventures. Twitcasting also received US$640,000 in seed funding from East Ventures in May 2013.

9. ClearTax.in | India

ClearTax.in, an online platform for filing income tax returns, has raised an undisclosed amount of funding from Silicon Valley startup accelerator Y-Combinatior (YC). This is YC’s first investment in a company that has its entire focus on the India market.

9 startup funding rounds in Asia last week