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snapchatdollar640

Only a few months after closing a Series B round of $60 million that valued the ephemeral messaging company at $800 million, Snapchat has been in talks for another funding that values it at up to $3.6 billion, according to sources close to the situation.

Sources also added that the funding itself would be in the hundreds of millions of dollars and that the lead investor might be a strategic party from Asia.

Such a deal could still fall apart, of course, but the effort has become well known among several Silicon Valley venture firms, who have considered investing.

A spokeswoman for Snapchat declined to comment.

The investor is neither China’s Alibaba Group nor Japan’s Rakuten, which has put a lot of money in Silicon Valley startups of late, said sources. One interesting possibility would be China’s Internet giant Tencent, which makes money from in-app transactions.

The move by the Los Angeles-based company comes on the heels of another massive funding round raised by social scrapbooking company Pinterest, which announced earlier this week that it just raised $225 million at a $3.8 billion valuation.

Besides the huge piles of investment dough being poured into them, here’s what else the pair have in common: Little to no revenue.

That does not seem to have stopped a panoply of venture and other investors from jumping in and ponying up with huge amounts of cash for the privilege of investing in several fast-growing startups, hoping to grab ahold of the next Twitter or Facebook early.

Launched in 2011, Snapchat has grown wildly popular in a relatively short span of time, effectively creating an entirely new genre of messaging category with its “ephemeral” pictures and videos that last for only a matter of seconds.

Snapchat’s last round – which it called a “scaling round” for infrastructure improvements – was announced in late June, led by Institutional Venture Partners, with participation from General Catalyst Partners and SV Angel. Previous investors Benchmark Capital and Lightspeed Venture Partners also participated. With that round, the company had raised around $75 million in total.

Snapchat's Evan Spiegel

Snapchat’s Evan Spiegel

All the fervor has been due to Snapchat’s fast growth and younger demographic. Only a few months ago, co-founder and CEO Evan Spiegel boasted that the service had more than 200 million snapped pictures and video taken by its users on a daily basis, up from 150 million just months before. Then in September at the TechCrunch Disrupt conference, he said that the number had grown to 350 million self-destructing messages daily.

At the time, there was also an additional $20 million in a secondary offering just four months ago.

At the time of the June funding, in an interview with AllThingsD, Spiegel noted: “We’re excited about in-app transactions because of what we’ve seen in the Asian markets.”

A clue!

Snapchat has clearly been a phenom of late.

Indeed, the app has proved so popular – and potentially worrisome to established social players – that sources said when Spiegel continually rebuffed Facebook CEO Mark Zuckerberg’s acquisition offers, Zuckerberg cloned the app outright with a service called Poke. Zuckerberg’s offering famously flopped, while Snapchat continues to grow.

Most recently, Snapchat has begun to experiment with features outside of its core ephemeral messaging service. The company launched its Stories product last month, essentially a long-form play on Facebook’s status update in the form of a picture or video. And recently, Spiegel has grown more keen on the idea of monetization, experimenting with bands and listening to music inside the app.

The company, however, has not been without its problems. Early on in its history, Snapchat had to fight the perception that it was a “sexting service” for tweens, a fly-by-night app used to easily spread lewd photos. And it is still involved in ongoing litigation with Frank Brown, a collaborator from the service’s early days, who is suing the company he was pushed out of.

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Nextdoor, the locally driven private social network for neighborhoods, announced on Tuesday that it raised a round of funding, adding another set of high-profile venture firms to the list of the company’s backers.

The $60 million round was led jointly by new investors Kleiner Perkins Caufield & Byers and Tiger Global Management, with participation from Comcast Ventures and existing investors Benchmark, Greylock Partners and Shasta Ventures.

The move, which comes just as Nextdoor celebrates its second anniversary since launch, brings the total amount of funding raised to about $100 million over the last 18 months, according to the company. CEO Nirav Tolia positions it as a strategic move, bolstering the company’s coffers as it gears up for a push into international expansion.

“We needed first of all to make sure we had our domestic house in order; then, second, to get the right talent in building,” Tolia said, pointing to Minna King, his hire for VP of International. “Third for us is to be demand-driven about our international road map. Where are we receiving most demand in foreign countries?”

Nextdoor plans to move into English-speaking countries in the first part of 2014, targeting places such as Canada, the United Kingdom and South Africa before moving on to other areas, like Brazil and Japan, which Tolia said are next on the road map. The company, which does not disclose specifics on its user numbers, said it was now being used in more than 22,000 neighborhoods across the U.S., with nearly half of its members regularly contributing content. Earlier this year, Nextdoor released its first smartphone apps for consumers.

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The very nature of the service, however, makes growth a particularly interesting challenge. Positioned as a privacy-focused network for those within neighborhoods to communicate with one another around local issues, the startup strictly limits communication to those within the same general nearby areas. Identity, too, is checked through address verification or other methods.

For these high-profile venture firms, it is a big continued bet on a startup focused on the local space, a problematic area that has seen many companies try – and fail – to solve it. (AOL’s cash-bleeding Patch initiatives immediately come to mind.) Nextdoor makes no revenue to speak of as of yet, though it will have $90 million in the bank to expand abroad after this round.

Kleiner’s John Doerr, who is bullish on the social-local-mobile sector, and will take a position as a special adviser with the new investment, thinks Nextdoor is uniquely positioned to approach the issue of local – especially when contrasted against Patch.

“There’s nothing inherently social about Patch, no viral properties that go along with it,” Doerr said in an interview. “While Patch owns the content, it doesn’t really own the graph,” he said, referring to a common term first made popular by Facebook’s large map of social members, and later by LinkedIn’s professional user base. “The converse is true for Nextdoor. There are strongly viral properties, neighbors are strongly encouraged to invite others.”

Kleiner’s Mary Meeker will also help advise Nextdoor as part of the investment, while Tiger Global’s Lee Fixel will focus mostly on helping the startup’s international growth efforts – his firm’s particular area of expertise.

It’s well-established at this point that the U.S. National Security Agency obtains data about people from their Internet service providers through its secret court systems. But the NSA also has a backdoor to Google and Yahoo data centers, according to the Washington Post, which has fresh documents from whistleblower Edward Snowden.

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The report details a project called MUSCULAR that grabs data from fiber-optic cables. That would be illegal on U.S. soil, but it takes place overseas. Google has said it is actively working to encrypt data flowing between its data centers, while Yahoo has not.

It’s unclear how useful MUSCULAR has been, but the Post reports that it “has produced important intelligence leads against hostile foreign governments.”

Google sounds freaked out in its statement to the Post. The company is “troubled by allegations of the government intercepting traffic between our data centers, and we are not aware of this activity. … We have long been concerned about the possibility of this kind of snooping, which is why we continue to extend encryption across more and more Google services and links.”

Yahoo’s statement is more circumspect: “We have strict controls in place to protect the security of our data centers, and we have not given access to our data centers to the NSA or to any other government agency.”

empty wallet shutterstock

Want to sell your startup to Facebook or Google? Don’t try doing it in late summer.

Both Web giants, which have been very active acquirers for the last few years, slowed down considerably in the third quarter of the year.

Facebook, which had spent $246 million buying companies in the first six months of 2013, spent $14 million in the next three months. Google had a similar pattern: In addition to Waze, the mapping startup it bought for $1 billion, Google bought 15 other companies for $344 million in the first half of 2013. But Google only shelled out $25 million, on five purchases, in Q3.

Two quick off-the-cuff theories to explain the slowdown, which aren’t mutually exclusive:

  • Perhaps both Google and Facebook have concluded that the startup shelves have been pretty picked-over, and there’s not a lot else they need to buy.
  • Bankers need breaks, too.

(Image courtesy of Shutterstock/PTstock)

Google’s Motorola unit on Monday sent out a “save the date” announcement, tipping Nov. 13 as the launch date for its rumored low-cost Moto G phone.

Moto G globe-feature

The invite, as is typical, didn’t say much. But it depicted a lush-looking globe, perhaps an indication that the company has global ambitions for this phone, as contrasted with its Moto X phone, which was aimed at regaining share in North America.

Motorola CEO Dennis Woodside indicated during his D11 appearance that the company was interested in bringing out lower-cost devices as part of its efforts, a point he reiterated in an August interview.

“Without giving too much away, one area that I talked about at D was this massive market for devices that are super high-quality, but also reasonably priced,” Woodside told AllThingsD at the time of the Moto X launch.

As part of its quarterly earnings last month, Google said its Motorola unit had $1.18 billion in revenue, down from $1.78 billion a year earlier.

Moto G invite

BlackBerry is giving up its effort to sell itself to a large investor, and will replace CEO Thorsten Heins, the company said on Monday.

The company said that, rather than bid for it, Fairfax Financial will lead a group of investors pouring $1 billion into the troubled handset maker, with Fairfax CEO Prem Watsa becoming lead director. Former Sybase CEO John Chen will serve as interim CEO and executive chairman once the investment is completed, which BlackBerry said should be within the next two weeks.

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The investment will come in the form of a debt sale, BlackBerry said, with Fairfax itself putting $250 million into the company.

“Today’s announcement represents a significant vote of confidence in BlackBerry and its future by this group of preeminent, long-term investors,” current BlackBerry chair Barbara Stymiest said in a statement. “The BlackBerry Board conducted a thorough review of strategic alternatives and pursued the course of action that it concluded is in the best interests of BlackBerry and its constituents, including its shareholders. This financing provides an immediate cash injection on terms favorable to BlackBerry, enhancing our substantial cash position. Some of the most important customers in the world rely on BlackBerry and we are implementing the changes necessary to strengthen the company and ensure we remain a strong and innovative partner for their needs.”

Monday was the deadline that the company had set for investor Fairfax Financial to put in a formal bid for the company. In September, BlackBerry had announced a deal to sell itself to Fairfax for $4.7 billion, however the deal was nonbinding and contingent on the investment company lining up capital to finance the bid. BlackBerry had also been seeking other buyers.

The announcement marks the end of the company’s strategic review, BlackBerry said. However, it leaves the company’s future as uncertain as ever; confidence in BlackBerry from investors and customers has been waning, despite reassurances from the company that it and its products are here to stay.

In addition to ceding the CEO post, Heins will step down from the board of directors, as will director David Kerr.

The move was reported earlier Monday by Canada’s Globe and Mail, citing sources.

alex rainert

Foursquare is saying goodbye to its product head, a longtime employee whose ties to CEO Dennis Crowley go back many years.

Yesterday, Crowley told employees that Alex Rainert, who was the mobile discovery app’s 10th hire, is leaving. Crowley is also reorganizing his product team, and will split Rainert’s duties between lieutenants Noah Weiss, who had previously overseen Foursquare’s ad products, and Jon Steinback, the company’s VP of marketing.

The move comes while Foursquare is in the middle of its most significant product rollout: A new version of the app that will automatically offer users tips about places they’re visiting, without requiring them to check in with the app itself. And it comes seven months after Foursquare raised $41 million in debt financing.

Crowley said the new version of the app, which the company refers to internally as “Pilgrim,” is “working really well. It’s working better than we expected it to work.” The update is now available to all Android users and a limited set of iOS users.

Crowley said the reorg, which doesn’t include any other departures besides Rainert’s, is supposed to help the company “figure out what the Foursquare of 2014 will look like.”

Rainert and Crowley met in graduate school, and the two men co-founded Dodgeball, the location startup that Google acquired in 2005. Four years later, they were back again with Foursquare.

If there is a Twittery backstory here, neither Crowley or Rainert are letting on. Both describe the move as a product of discussions that started up in the last few weeks, prompted in part by the fact that Rainert’s wife is returning to work after a maternity leave.

The fact that he doesn’t have another job or company lined up is natural, Rainert said.

“The past four years have been so intense that I don’t even know how I would think about something else until I went full stop,” he said. “The last thing I want to do is jump into something else without thinking about what I’ve learned in the last four years. Which is a lot.”

(Update: Here’s Rainert describing his departure in his own words.)

Facebook’s mobile image took a bit of a beating in the weeks that followed the April launch of its Home software for Android.

Ondrejka, right, with Facebook CTO Mike Schroepfer

Ondrejka, right, with Facebook CTO Mike Schroepfer

But, more than six months later, Facebook mobile engineering VP Cory Ondrejka said that the company learned a lot from the experience – knowledge that is going into both improving Home and into developing other mobile products.

“We will keep iterating on Home,” he said during an interview at this week’s Techonomy conference near Tucson, Ariz. “We really have a better understanding of where to take Home in the future.”

One of the most recent changes is the capability to add photos from other services to be part of the Facebook Home experience (Home replaces the standard Android lock screen and home screen). That and other improvements mean that those who try Home now may have a more favorable impression than those who did so in its early days.

“Most people have never seen Home,” Ondrejka said. “They may have heard about it.”

More broadly, Ondrejka said the Facebook Home experience has helped the company better develop overall Android software. By digging deeply into the operating system, Ondrejka said the company has a keen understanding of the kinds of products it can create going forward.

Google has also turned on options in its Google Play Store that let the company simultaneously offer early alpha and beta versions of its products to willing testers while maintaining an earlier version for general consumers. That is a big deal, he said, since even a large company like Facebook can’t possibly internally test on all the different combinations of devices and operating system versions that the software will be run on after release.

Meanwhile, a project to preinstall Home on phones appears to still be in hiatus. Facebook touted a wide range of expected hardware partners when it launched Home, but the effort was put on hold after initial critiques of Home and slow sales of the HTC First, the lone device to ship with Home preloaded. AT&T eventually sold through the initial batch of HTC First devices, following price cuts.

Ondrejka said that preloading Home has become less necessary after a range of changes that Google has made in recent updates to Android.

Instead, Facebook has been focusing on its core app, as well as companion programs such as Facebook Messenger.

“It’s certainly something we are always exploring,” Ondrejka said.

powershell

The leaks were right – Logitech has a gamepad case for the iPhone and iPod touch, and it will be widely available in early December.

The PowerShell is part of the gaming-focused G Series, costs $99.99 and contains a standard directional pad; four main buttons, labeled A, B, X and Y; two trigger buttons; a dedicated pause button; and a 1500 mAh battery that charges the iPhone/iPod. It works with the iPhone 5 and 5s and the fifth-generation iPod touch on iOS 7.

Notice what’s missing from that list? Logitech said the case won’t work with the new iPhone 5c because the 5c is 0.4-1.37 mm bigger in all dimensions. In order to accommodate the iPod touch, which is 1.5 mm thinner than the phones, the case includes a removable sheet of padding.

Global product marketing manager Mark Starrett said Logitech has been working with Apple since before the official announcement of iOS 7′s third-party controller support at this year’s WWDC. That OS-level support means the accessory manufacturer has not had to work with developers to ensure their games’ compatibility, but is talking with a handful about marketing partnerships.

Logitech is not currently planning to make a comparable gamepad case for Android devices, even though Google has offered third-party controller support on its OS for much longer. With “four or five” competing standards, “Android is just a mess,” Starrett said.

Unlike the Moga Ace Power gamepad case, also unveiled this week, the PowerShell does not collapse for portability. The rigid case is designed to be used in landscape mode, with the home button pointing toward the user’s right hand.

At launch, about 300 games will work with the case, but they’ll be universal, meaning that PowerShell owners won’t have to download different versions of the apps for touch and non-touch gameplay. Starrett said Logitech has already tested dozens of those games with the PowerShell, and expects Apple to roll out a new section in the iOS App Store for gamepad-compatible games.

Facebook CEO Mark Zuckerberg at the Facebook Home launch event.

Imitation is the sincerest form of flattery. Until, that is, it starts to get annoying.

Facebook has definitely reached that point with some look- and act-alike sites outside of the U.S., according to Mark Zuckerberg. So much so, in fact, that it has hurt the company’s international growth prospects.

“Clones actually end up being a pretty big nuisance. People have made such great clones of Facebook outside the U.S., it made us harder to grow,” Zuckerberg said at the Y Combinator Startup School event over the weekend. Russia in particular, he pointed out, has done the best job of mimicking Facebook’s abilities.

“They’ve made such an awesome clone of Facebook it’s been hard to beat them,” he said. “It’s almost been 10 years since we started Facebook, and we still haven’t beaten them in Russia.”

Zuckerberg gave interesting reasons for the struggle. Besides the fact that the so-called “clones” were first to market in home countries like Russia, he said, many startups would make Facebook lookalikes and then introduce the sites to European countries. From there, Zuckerberg said, the first-movers would appreciate the network effects of viral growth, and make it that much more difficult for Facebook to grow.

One other thing: Some Facebook “clones,” like the ones in Russia, are also home to illegal file-upload hosting services, which makes it a more attractive proposition for those seeking free music and movies to pirate.

Indeed, if you compare Facebook’s quarterly European user-growth rate to other regions (like Asia, which also hosts stiff competition to Facebook with homegrown social sites), it has slowed quite a bit over the past year. Europe, in particular, is important to Facebook, as it is home to far more consumers with money to spend than, say, developing-world nations that are also slowly being introduced to Facebook.

In other words, it’s a big problem that Facebook needs to solve.

One solution? The “lockdown” approach, started in Facebook’s early days by Zuckerberg and co-founder Dustin Moskovitz – basically stopping just short of literally locking the employees inside the building until they come up with a way to fix a problem (though I imagine this isn’t kosher with OSHA).

Or there’s another approach: If you can’t beat ‘em, join ‘em. Facebook has cloned competing services in the past (Snapchat, Quora, Foursquare). Perhaps the company could take a few cues from what its foreign competitors are doing well.

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