TIME Companies

This Is the Company Behind the Coolest New Star Wars Character

BB-8 Star Wars
Alberto E. Rodriguez—2015 Getty Images BB-8 onstage during Star Wars Celebration 2015 on April 16, 2015 in Anaheim, California.

Iger is credited with discovering the tech company responsible for the robot character’s movement

A little-known startup got a big shout-out at this week’s Star Wars Celebration in Anaheim, Calif., thanks to Walt Disney CEO Bob Iger.

Iger, whose media empire bought Star Wars creator Lucasfilm for $4.05 billion in 2012, kept a low profile at the bi-annual gathering of the space saga’s hard-core fans. But he was sitting right in the front row of the massive convention center auditorium where a star-studded panel took place on Thursday morning, the first day of the four-day-long event.

One by one, Lucasfilm president Kathleen Kennedy, director J.J. Abrams, actors Carrie Fisher and Mark Hamill and others took the stage to disclose more details on the next installment of Star Wars, much to the delight of the lightsaber-toting crowd. When an adorable free-rolling robot named BB-8—a new character in the upcoming installment of the series—joined them in the spotlight, it too received a fervent round of applause. The audience went even wilder when Kennedy, who took over for company founder George Lucas in 2012, mentioned that BB-8’s graceful (and real-life) maneuverings were at least partly enabled by a small company discovered by none other than Iger.

Kennedy didn’t mention the name of the startup on stage, but when asked in an interview with Fortune she revealed that the company is Boulder, Colo.-based Sphero, which bills itself as a “connected play company, fusing digital and physical play by creating toys and robots that you control with a smart device.”

It turns out that the startup, headed by CEO Paul Berberian, was selected for Disney’s accelerator program last year, along with nine other companies. According to Disney’s website, the three-month-long program picks tech startups who want to “make an impact on the world of media and entertainment,” giving them upwards of $120,000 in investment capital. It also matches each startup with a mentor from within Disney’s executive ranks. Sphero’s mentor? You guessed it: Iger. When the tech-savvy CEO saw Sphero’s technology in action, he realized the potential application for BB-8 and connected the startup with the masterminds of the Star Warscharacters.

Executives at Sphero couldn’t be reached for comment, but the company’s website describes its signature product as an app-controlled ball that does it all. The same underlying technology, which was licensed to create the version of BB-8 that graced the stage at the Star Wars Celebration (Kennedy calls it the “Red Carpet BB-8″), allows the little bot to glide around on a ball-like structure, literally running circles around R2-D2.

What’s interesting is that Sphero also appears to be working with Disney on a Star Wars-themed toy (who wouldn’t want their own, fully-functional BB-8 rolling around their home?) It’s also worth noting that while Iger’s involvement in the film franchise has often been behind the scenes, he is deeply involved in many ways. At the same time, he’s managed to assuage the fears of apprehensive fans—Iger has a good track record when it comes to acquiring companies and letting them be, and so far he has protected Star Wars from any overt “Disneyfication.” He also has an admirable history withmaking bold bets on up-and-coming technologies, across Disney’s diverse divisions.

Sphero, of course, is still a relative unknown, and it’s not clear what other applications its technology may have within Disney or elsewhere. But after this week, the little company behind the adorable new robot might get a little more attention—and the effusive, laser-focused adulation of the Star Wars masses.

This article originally appeared on Fortune.com.

TIME Companies

Workplace Collaboration Startup Slack Valued at $2.8 Billion

Stewart Butterfield, co-founder and chief executive office of Slack.
Slack Stewart Butterfield, co-founder and chief executive office of Slack.

Slack CEO thinks the funds will serve as "a good hedge about what might happen in the future"

Workplace collaboration platform Slack today made official what has been rumored for weeks: It has raised $160 million in new venture capital funding at a post-money valuation of $2.8 billion.

But one big question remains: Why?

Slack raised $120 million just last October at a $1.12 billion valuation and, at the time, didn’t even need the money. Instead, it simply wanted to join the (then less) exclusive unicorn club. So why go back to the well?

Company co-founder and CEO Stewart Butterfield explains: “We’re kind of in the best environment ever to raise money and while things could always get better and we’ll wish we had waited another six months, having a couple hundred million bucks in the bank is a good hedge about what might happen in the future.”

(If this argument sounds familiar, it’s probably because we put it forth last month)

Butterfield, who says Slack still has not tapped any of last October’s $120 million, adds that he’s not terribly concerned that macro pullback might lead to Slack later raising new capital at a lower valuation. “There’s always some downside risk to any business deal, but we’re very capital efficient and never really need to raise money again,” he says. “This valuation helps us recruit new employees and gives a high value to our stock when contemplating acquisitions… It would have been imprudent of me not to take it when it was offered.”

Does that mean Butterfield would raise another $160 million at a larger valuation in six months?

“If we could double our valuation again, I’d certainly think about it,” he says.

New investors on this funding round include Li Ka-shing’s Horizons Ventures, DST Global, Index Ventures, Spark Capital and Institutional Venture Partners. Return backers were Andreessen Horowitz, The Social+Capital Partnership, Google Ventures and Kleiner Perkins Caufield & Byers.

This article originally appeared on Fortune.com.

TIME Companies

Netflix Membership Soars Past 60 Million

The online video streaming company’s growth continued last quarter as revenue jumped 24% and membership surpassed 60 million global users

Netflix posted a 24% sales gain in the most recent quarter as the video streaming company’s subscriber base topped 60 million worldwide. However, an unfavorable exchange rate caused profits to dip. Here are the key points from Wednesday’s first-quarter earnings report.

What you need to know: Improving quarterly revenue by nearly 24% year-over-year rarely qualifies as a disappointment, but, in Netflix’s case, the company merely met Wall Street’s lofty expectations. Netflix reported $1.57 billion in quarterly revenue, in-line with analyst predictions, according to Thomson Reuters. The company’s revenue growth failed to reach the level achieved in the previous quarter, when Netflix posted a 26% gain.

Meanwhile, Netflix’s profits fell by more than half to $23.7 million, or 39 cents per share. The company reported profits of $53.1 million, or 89 cents per share, during the same period last year. Netflix blamed the lower profits on “currency-related transaction losses,” becoming just the latest company to say that the strong U.S. dollar negatively affected international revenue.

Despite the dip in profits, investors reacted positively to Netflix’s revenue bump and another substantial subscriber increase. Though Netflix shares fell slightly Wednesday afternoon in regular trading, the stock gained 12% in after-hours following the earnings release.

Netflix shares have gained more than 40% so far in 2015. As The Wall Street Journal pointed out Wednesday afternoon, Netflix’s recent stock surge has left the tech company with a larger market value than some of its rivals in the traditional media market, including CBS and Viacom, among others.

The big number: As usual, one of the most anticipated details in Netflix’s earnings was the number of total subscribers. Not surprisingly, Netflix led off its letter to shareholders by noting multiple milestones: more than 40 million U.S. streaming subscribers and plus more than 20 million overseas.

In total, Netflix added a record 4.9 million new subscribers in the quarter, which beat the 4.3 million added in the previous quarter. The company’s global streaming membership is now 62.3 million, and Netflix said it outpaced its own forecasts both domestically and overseas when it came to adding new members.

In its letter to shareholders, Netflix attributed its growth to an expanding portfolio of original shows. The most recent quarter saw the company’s release of the third season of popular series House of Cards along with a variety of new releases, including series Unbreakable Kimmy Schmidt and Bloodline. The company said it expects to add another 2.5 million new subscribers in the current quarter, which would represent an increase over the 1.7 million subscribers added during last year’s second quarter.

What you might have missed: Netflix, as it often does, used the earnings release as a forum to talk about rivals in the streaming content market. While Time Warner’s HBO released its standalone streaming service earlier this month, Netflix reiterated that it believes there is plenty of room in the market for both HBO Now and Netflix to succeed “given differing content.” The company also isn’t too worried about paid subscription services such as the Dish Network’s Sling TV and Sony’s Playstation Vue, along with a service rumored to be coming from Apple soon, all of which Netflix views as more of a threat to traditional cable companies and their “pay TV bundle” system.

Meanwhile, Netflix’s dwindling DVD-by-mail segment had 5.5 million members, down from 5.8 million in the previous quarter, the company said. Netflix also repeated its plan to seek shareholder approval for a stock split, which it first announced in a regulatory filing with the SEC last week.

This article originally appeared on Fortune.com

TIME Companies

Etsy Prices IPO at $16 Per Share, Valuing Company at $1.78 Billion

The company will begin trading Thursday on Nasdaq

Etsy has priced its initial public offering at $16 per share, a price that values the online marketplace at $1.78 billion. The price is the top end of the company’s proposed range. The company, known for selling handcrafted and vintage goods and apparel, will begin trading shares on Nasdaq tomorrow morning with the ticker symbol “ETSY.”

The company has taken the unusual step of setting aside a share participation program for its sellers.

As Fortune outlined earlier this month:

Etsy’s community of buyers and sellers is an important part of its success, so the company has made plans to reserve up to 5% of shares it is issuing in the IPO for individual investors. Morgan Stanley is executing the participation program, which allows users to invest as much as $2,500 each in the IPO.

Etsy does not earn a profit and its losses have widened in recent years. Revenue from sales has slowed. Still, the company has a beloved brand and is responsible for shepherding in the “maker movement.” Many of Etsy’s sellers make a full-time living by selling their goods on the site.

Still, the company must protect its brand. In its S-1 filing, Etsy noted the importance of “authenticity of our marketplace and connections within our community,” as one of the cornerstones of its business. The filing noted that losing its authenticity was a risk factor.

Fortune noted last month that the risk increases as Etsy grows:

A few years ago, Etsy lifted some of its stricter sales requirements, including a ban on sellers using certain manufacturing techniques and hiring staff that had been put into place to maintain the site’s homespun image. This gave the sellers that had made their Etsy shops into a full-time job the ability to expand, but critics warned that it might cause the site to lose what makes it special.

Upon its IPO, Etsy will be one of two publicly-traded companies headquartered in Brooklyn.

This article originally appeared on Fortune.com

TIME Companies

Google to Face Antitrust Charges in Europe

The Google logo is seen inside the company's offices in Berlin on Mar. 23, 2015.
Adam Berry—Getty Images The Google logo is seen inside the company's offices in Berlin on Mar. 23, 2015.

European Union regulators will charge Google with anti-competitive behavior

After a five-year antitrust investigation of Google, European regulators are said to be ready to file formal charges against the company as soon as Wednesday.

The European Commission plans to accuse the online search giant of violating the region’s antitrust laws, according to reports from the Financial Times and The Wall Street Journal. European Union regulators will charge Google with anti-competitive behavior such as diverting online traffic away from rival companies toward its own services.

The European Commission has spent half a decade investigating Google’s online behavior in an effort to find evidence that the company takes advantage of its dominant position in the online search market. Google could end up facing a fine of up to $6.6 billion in what would be one of the EU’s largest-ever antitrust battles.

EU Competition Commissioner Margrethe Vestager is expected to announce the formal charges against Google in a statement Wednesday that will follow a meeting with other EU commissioners, according to the FT.

Rumors surfaced last month that the EU was wrapping up its investigation and that charges could be brought as soon as this month. WSJ reported earlier this month that the European Commission was requesting confidential information pertaining to Google’s online practices from companies that previously filed lawsuits against the U.S. tech company.

Last fall, European Parliament members voted overwhelmingly to approve a non-binding resolution that called for the break-up of Google in Europe, where the company has a nearly 90% market share, which is larger than its share of the U.S. market.

Google’s shares dipped 1.6% Tuesday afternoon before rising slightly in after-hours trading.

This article originally appeared on Fortune.com.

MONEY salary

MSNBC’s Mika Brzezinski: What Women Do Wrong When Negotiating Their Salary

MSNBC Morning Joe co-anchor Mika Brzezinski explains the mistake that she and other women have made when asking for a raise.

MONEY salary

How MSNBC’s Mika Brzezinski Responded to Being Underpaid

When Morning Joe co-anchor Mika Brzezinski learned she was making less money than her on-air partner, she tried to fix that.

TIME Technology & Media

An Ad-Free Paid Version of YouTube Is Definitely Coming

An employee at the Google Inc.'s YouTube Space studio in Tokyo, Japan.
Bloomberg via Getty Images An employee holding recording equipment walks past Google Inc.'s YouTube logo displayed at the company's YouTube Space studio in Tokyo, Japan, on Saturday, March 30, 2013. In Japan, YouTube's biggest regional success story in Asia, the company is recruiting online stars to bolster its local-language channels with more-targeted original programming and higher production values. Photographer: Kiyoshi Ota/Bloomberg via Getty Images

The service is expected to launch by the end of the year

YouTube said Wednesday it will soon launch a new subscription-based service that will let users watch videos on the website without annoying ads interrupting the clips.

The streaming video website, which is owned by Google, reportedly disclosed the planned paid service in an e-mail sent to producers of top video content and obtained by various media outlets. The e-mail did not say how much the subscription would cost or when it would become available. However, Bloomberg cited an anonymous source who said the paid service would be available before the end of this year.

YouTube also reportedly plans to update its terms of service for video partners, effective in June, to give them a 55% cut of subscription revenues, according to TechCrunch. Current YouTube content creators — including social media stars like Michelle Phan — already get a similar share of ad revenues.

Last fall, reports surfaced claiming YouTube was considering an ad-free, paid service as part of its effort to boost revenue (and, eventually, turn a profit), but the company had offered no confirmation until now.

The subscription will be Google and YouTube’s latest attempt to diversify beyond the ad-based business model for the more than a billion users who visit the streaming video site monthly. In November, YouTube introduced a test version of Music Key, the website’s ad-free, subscription music service that will cost $9.99 a month. YouTube already offers top-flight videos on certain paid channels and users can also rent or buy moves through the site.

Wednesday’s disclosure comes at a time when Google and YouTube are facing stiffer competition than ever from rival online streaming services, such as Netflix and Hulu. Netflix, in particular, has been adding original content including television series and movie deals with big names like Adam Sandler to better compete with more traditional media outlets. Amazon has followed suit, adding critically acclaimed original content to its own Prime Instant Video service.

Meanwhile, traditional media outlets like HBO and CBS are also building their own subscription-based services, while startups such as Vessel — a paid video site created by former Hulu CEO Jason Kilar — are taking aim directly at YouTube’s users.

This article originally appeared on Fortune.com.


TIME Gadgets

The Apple Watch Is Flawed But You’ll Probably Still Want One

Read what the reviewers are saying

The first wave of reviews — from Apple’s short list of hand-picked reviewers — hit the Web at 8:00 a.m. Eastern.

I’ve excepted the bits that gave me the best feel for what it was like to live with the thing for a week. More coming.

Farhad Manjoo, New York Times: Apple Watch Bliss, but Only After a Steep Learning Curve. “It took three days — three long, often confusing and frustrating days — for me to fall for the Apple Watch… As you learn the taps over time, you will begin to register some of them almost subconsciously: incoming phone calls and alarms feel throbbing and insistent, a text feels like a gentle massage from a friendly bumblebee, and a coming calendar appointment is like the persistent pluck of a harp. After a few days, I began to get snippets of information from the digital world without having to look at the screen — or, if I had to look, I glanced for a few seconds rather than minutes.”

Geoffrey Fowler, Wall Street Journal: If you can tolerate its flaws, you can wear the future on your wrist and keep your iPhone in your pocket.[The] emphasis on quick interactions requires you to learn a new sign language. Alerts and information appear only when you need them, and then disappear on their own—no need to dismiss them. Instead of pinching to zoom, there’s a digital crown to turn. And there’s two ways to tap on the screen, regular and “force touch,” which shows more options… The Apple Watch isn’t quite the gatekeeper to my digital life that I wanted. Take app alerts—there’s a fine line between being in the know and having your wrist jiggle all day. It never got horrible for me, because Apple lets you assign VIP status to individual contacts and specify which apps can trigger alerts. But setting up all of this is a tedious—and unfortunately ongoing—chore.”

Nilay Patel, The Verge: A Day in the Life. “Let’s just get this out of the way: the Apple Watch, as I reviewed it for the past week and a half, is kind of slow. There’s no getting around it, no way to talk about all of its interface ideas and obvious potential and hints of genius without noting that sometimes it stutters loading notifications. Sometimes pulling location information and data from your iPhone over Bluetooth and Wi-Fi takes a long time. Sometimes apps take forever to load, and sometimes third-party apps never really load at all. Sometimes it’s just unresponsive for a few seconds while it thinks and then it comes back.”

Joshua Topolsky, Bloomberg. You’ll want one, but you don’t need one. “Although it connects deeply with the phone, the watch also has a completely new way of doing things. Because navigation is split between swipes of your finger, scrolling with the crown, and taps of varying pressure, it takes a while to get oriented. One of the crucial pain points I experienced was this constant, subtle battle with myself over whether to engage a notification on my watch or handle it on my phone… Eventually, I figured out that getting the watch to really work for you requires work. I pruned a list of VIP contacts in my mail app to make e-mail notifications more tolerable, I killed several app notifications that I found to be consistently interruptive, and I streamlined my list of applications to those that seemed truly vital to my day.”

Follow Philip Elmer-DeWitt on Twitter at @philiped. Read his Apple coverage at fortune.com/ped or subscribe via his RSS feed.

This article originally appeared on Fortune.com.

TIME Companies

5 Things to Know About the Biggest Oil Deal in a Decade

Shell is buying BG for $70 billion

Royal Dutch Shell Plc is taking over BG Group Plc in a $70 billion deal, the biggest the oil industry has seen in over a decade, and the clearest sign yet of consolidation pressures caused by last year’s collapse in oil prices. Here’s what you need to know.

1. It’s a landmark moment for the sector. Big mergers in the energy industry typically happen when it becomes cheaper to buy oil and gas reserves on the stock market than to drill for them. BG’s shares had fallen over 50% since January last year, and there was no way Shell could develop a comparable portfolio of assets organically for less than what it’s paying for BG today. Even if the number of potential candidates for such deals is smaller than it was 15 years ago, the same logic will surely apply to some other oil and gas companies out there.

2. It’s not about size, it’s about efficiency. The last wave of oil mega-mergers was all about needing a bigger, stronger balance sheet because in order to replace reserves, oil majors were having to go to places which either involved more technological risks (like the Gulf of Mexico or Alaska) or political ones (like Russia, Brazil and Kazakhstan). By contrast, this merger is about squeezing costs out of the supply chain, after a decade in which the industry got fat on the assumption that the demand of China and India for energy could never be satisfied. Shell and BG need to ensure that returns to shareholders can be sustained (Shell was quick to promise higher cash dividends and a $25 billion share buyback program to justify its rationale).

The two companies aim to save at least $2.5 billion a year in costs now and more in years to come. One example of this is in Queensland, north-east Australia, where the two companies have big LNG projects relatively close to each other, and where sharing infrastructure costs will improve the economics of both. Shell had frozen its $20 billion Arrow project (a joint venture with Petrochina) in January, while BG wrote $2 billion off its Queensland Curtis LNG project in December. In all, they expect to squeeze capital expenditure below $40 billion by 2016, from over $45 billion last year. Although the deal will create a bigger gas producer than Exxon, and by far western Europe’s largest integrated player, it will be looking to shed $30 billion of non-core assets within three years. In three years’ time, the company may not end up being much bigger, but it will be a lot leaner.

3. This deal is arguably about gas more than it is about oil. Both companies are big players in the fast-growing global trade in liquefied natural gas (LNG), a trade underpinned by the long-term imperatives of switching China and India to energy sources that pollute less than coal, and giving Europe alternatives to Russian gas. The combined company will be the biggest LNG producer in the world, with a strong portfolio of as-yet undeveloped assets in East Africa and Australia.

4. It’s also about deep-water oil production. Offshore is the other area of business that Shell and BG are prioritising. In a joint presentation Wednesday, they forecast that output from offshore could rise to nearly 600,000 barrels a day by the end of the decade from just under 150,000 b/d today. To do that, they’ll need a big improvement in their fortunes in Brazil, where the development of huge new discoveries has been hobbled by rampant corruption and cost inflation at their partner, Petrobras.

5. It most definitely isn’t about U.S. shale — except inasmuch as cheap shale gas has undermined the math behind the two companies’ investments in importing LNG into the U.S. (where they have no fewer than five regasification terminals). Neither company is a major player in shale from the ‘lower 48′ U.S. states. True, BG has bought acreage in Texas, Louisiana and Pennsylvania, but it produces the equivalent of less than 60,000 barrels of oil a day from them and has repeatedly put off spending big money on developing them.

This article first appeared on fortune.com

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