TheChek News Flow

I don’t know I’ve reached Snap’s global headquarters until I am standing in front of them, leaning on the handle of my rolling suitcase and puzzling over a map app. A baby-faced security guard in braces approaches me. “I’m here to see Evan Spiegel,” I tell him.

Earlier, when I’d asked for a tour of Snap’s offices, the company spokesperson said it would be hard. This doesn’t make sense until I am on campus, which is marked by a door mid-block with a small wooden sign that says in nearly invisible script: Snap Inc. It’s designed to be missed. The building’s last tenant was the actor Matthew McConaughey and, fun fact, McConaughey’s former bedroom is now a conference room called Cuttlefish. The campus is really just a half-dozen unmarked buildings up the street from the Venice Beach Boardwalk, each about the size of McConaughey’s former abode, with white shades pulled down over the windows.

Yet it’s extraordinary that I’m here at all, considering how the company has interacted with the public—which is not very much. Since Snap launched six years ago, founders Evan Spiegel and Bobby Murphy have preferred to keep a very low profile. “I really am trying to do a better job communicating,” Spiegel told an audience at the Vanity Fair conference last week. “You know, we run a survey across our company and...overwhelmingly this year it was like, we want to hear more from you and I’m like...really? All right.”

As CEO, Spiegel has given few on-the-record interviews to the press, and even within the company, he has preferred to work with small, product-focused groups. In contrast to the large tech companies to which Snap is often compared, which create press events out of product launches and use conferences and interviews to allow their founders to become the company’s public face, Spiegel has preferred to let Snap’s products speak for themselves. For a long time, that strategy worked, allowing Spiegel to parlay the service into a global messaging app with 173 million daily active users who publish three billion photo and video “Snaps” every single day.

But that was before Snap went public. In the seven months since, the stock has lost nearly 40 percent of its value as investors question its strategy and its growth prospects. One of the most significant demands of a public company is that its leaders communicate—constantly—about their plans for the future and the progress they are making. The challenge Spiegel now faces is that he must help a much broader variety of people—investors, analysts, reporters, potential hires, and its current employees—to understand Snap’s vision, and persuade them of its capabilities without losing the company’s long-term focus on innovation.

Spiegel knows it means he has to change. “I think evolving really quickly is part of the job here,” he tells me. We sit in a lofted conference room in a building across the street, and he is dressed in black jeans and a t-shirt with white sneakers, one leg crossed over the other, smiling. “In the beginning, the most valuable thing for me to be doing was work on the product, and now one of the most valuable things for me to be doing is communicate. I’ve had to really shift my perspective for what I consider valuable.”

That perspective shift is why I have come. Today, Snapchat is launching Context Cards, which allow users to swipe up on some Snaps to find out more information and connect to other services such as Lyft or OpenTable. Snap has always based its product on the idea that images are their own context—that in the mobile era, they’re evolving into their own form of communication. By adding words and information, Spiegel is elevating them further, inviting Snap’s users to act on what they see by searching and discovering directly through images.

It’s not yet clear that Spiegel will have what it takes to build Snapchat into the type of company that competes with the likes of Google and Facebook. It’s not clear that he’ll be able to expand beyond his core user base—young people, particularly those under 25, who spend an average 40 minutes every day on Snap, according to the company. (That’s more than Instagram, which recently announced that its users in the same age range spend 32 minutes daily on the service.)

But what is clear is that Spiegel knows something about how to build products for this fundamental communication shift. From the moment he turned down Facebook’s $3 billion acquisition offer, the behemoth social network has been copying it. Stories has become embraced as a format for sharing mobile visual information just as Facebook’s News Feed became the dominant format for the last decade of social services. So when Spiegel, who had the foresight to grok this change, offers to talk, it makes sense to listen.

Spiegel’s vision for Snap begins with the assumption that most pictures aren’t precious. Rather, images are evolving into a new language, and as the tools to capture and manipulate them become more ubiquitous, we are able to express ourselves more frequently and fully. That’s why the app he launched opens to the camera, and that’s why he calls Snap a “camera” company. Like phone calls, Snaps aren’t intended to be stored so much as they’re meant to be absorbed, decoded, and released.

With Context Cards, Spiegel is attempting to rethink the way we discover new information. Currently, he explains, people find stuff on the internet by typing queries into search boxes and following hyperlinks to the content. Consider a YouTube video. “You upload the video, and you tag it with a bunch of text,” says Spiegel. “If you want to go find that video again, you type in the text and it surfaces the video.” In other words, the text directs you to video.

On mobile devices, Spiegel believes that the order is inverting. Users will instead begin with images and video that will direct them to text—and more images and video. He pulls out his Samsung J5. (He regularly switches up his phone, but, he says, “I’m kinda stuck on this phone for now.”) Spiegel opens Snapchat and taps on a story featuring a restaurant with the miniscule “more” icon at the bottom. He swipes up to reveal a card that looks a lot like the screens that pop up on Google Maps when you search for, say, a drugstore. It offers contact information, hours of operation, and directions to the venue, as well as reviews, maps, tips, and more information about whatever is in the Snap. Want a ride to that beach bonfire where your friends are roasting marshmallows right now? Care for a reservation at that fried chicken joint you stumbled across on Snap Map? Snap has struck partnerships with a host of services including Lyft and Uber, Tripadvisor, OpenTable, and Foursquare to offer services and information.

Context Cards in action.COURTESY OF SNAP

Many of the locations will also have Stories integrated into the cards. These Stories will feature Snaps that users send to the public “Our Story” option, curated through machine learning and human selection in the same way they’re curated for Snap Map. In some cases, Snaps will disappear after 24 hours, but in other cases they may remain longer. In time, partners may also choose to provide images. It’s clear that Context Cards will appeal to advertisers looking for new ways to win attention from Snap’s users. And, of course, they may appeal to investors looking for new business opportunities within the service. Snap will wait to see how users embrace this new approach to discovery before the company attempts to make money off of it.

That is, assuming Snapchatters embrace Context Cards at all. There are good reasons to assume they will. Like Twitter or Facebook or any social service, Snap’s design can be confusing to people coming to it for the first time. For one, it relies on a network effect, which means it’s a lot more interesting when you discover that your friends are already there and using it. Also, there are no directions for a new user; you figure it out by messing around on it. But just as Twitter’s users eventually figured out the hashtag and the significance of adding a period before the “@” sign in a Tweet, Snap’s users have grown up inside of it and grown accustomed to its design. They visit it, on average, 20 times each day. They aren’t blindsided when they open up to a camera. They’re used to swiping up in order to discover new things because they’ve been swiping up on the Discover page to see more content, and swiping up on channels like Vulture or the New York Times to read longer articles. It’s not inconceivable that they’ll also swipe up on the Context Cards, though Snap will wait to review their interactions before developing it further.

What’s more, these cards are a recognition of how people are already using images in social. Social has ushered in the age of the digital influencer, in which we make decisions about everything from where to eat to what dining room table to buy by scrolling daily through our feeds. We are living in the age of the Instagram restaurant. People are seduced by a personal story, and want the information to make it happen for themselves. In that way, the cards are a less of an innovation than a recognition of the power already embodied in Spiegel’s product.

Spiegel takes pride in choosing to embrace ideas that run counter to those taken up by his Bay Area-based competitors. Among them is the need for speed in releasing new products. “One of the things that happens when you’re an innovator is there’s actually no benefit to being really, really fast,” he says. “You’re the one creating the new stuff, so there’s no one who’s racing you. It’s actually very important that you are slow and deliberate.” He says that when people join Snap from the Valley, they often want to ship products right away. “It’s like, why?” he says. “That just doesn’t make sense.”

Growth, too, is not something Snap has valued above all else. Instead, driven in part by the fact that Snap rents its computing infrastructure from Google and Amazon and seeks to control its costs, Spiegel prioritizes attracting economically valuable users. In its most recent quarterly earnings, the company reported it had grown its user base by just 21 percent over the past year. But most of those users came from the lucrative North American market where Snapchat was also able to increase the amount of revenue it made per user.

Time for Snap to Prove It's Bigger Than Snapchat

Spiegel believes Snap’s value is wrapped up in its ability to advance transformative new ideas. In the S-1 document that the company filed to go public, Spiegel wrote, “Our strategy is to invest in product innovation and take risks to improve our camera platform.”

But it’s not yet clear that innovation is a strong enough strategy for Snapchat to beat out competitors over the long run. Both Facebook and Google have made a practice of copying Snap’s most significant developments. After Instagram launched a mimic of its Stories feature in August 2016, the service saw engagement escalate considerably, and Facebook has now rolled out a Stories clone in Messenger, WhatsApp and its flagship app. Meanwhile, Google is reported to be working on its own version of the multimedia format, codenamed “Stamp.”

And more, it’s not yet clear whether Context Cards qualify as an innovation, or if Spiegel is simply adopting the best aspects of other visual services. There are many social services that invite users to click on images to discover more information, from Instagram and Google Maps to Pinterest and Houzz.

If Spiegel’s approach does take off among Snap’s users, he runs the risk he always runs—which is that Snap has the vision to create new products in line with how a new generation wants to create on their phones, but it ends up being copied and spread by a company with a more user-friendly open façade and a broader user base.

Spiegel, at least, is certain his approach will work. He’s betting the company’s future on the fact that Snap will be capable of reinventing itself and its service over and over again to become the dominant tool for communication on the visual web. “We have an opportunity to really change things,” he tells me, when I ask specifically about Snapchat’s current culture. “If you look at the past five or six years, in every category—whether it’s communication or media—we have absolutely transformed the technology landscape.” He ticks through the impact he believes Snap has had on technology to date, including the shift in how we use cameras to communicate and the rise of new formats like Stories. “There is no better place to be than Snap right now,” he says.

We shake hands and I stumble out to the sidewalk where, apart from the jovial security guard, there’s little trace of the $17 billion tech company just a few feet away. This, too, will change. Many of the company’s engineers have already moved to a much larger office a lot farther from the beach in neighboring Santa Monica in a building where Matthew McConaughey would likely never choose to live. Some time next year, Spiegel will join them in the new headquarters. The sign on the door—Snap Inc—will likely remain small.

France has hardened its position against any changes to international banking rules that would result in higher capital ratios, just days before crunch talks.

France’s finance minister, Bruno Le Maire, said on Tuesday that France would oppose any increase in capital requirements for banks. He was speaking just days before policy makers meet at the International Monetary Fund’s meeting in Washington later this week, where it is hoped a longstanding technical disagreement over how banks model for risk can be resolved. The argument is holding up a whole swath of long-awaited reforms intended to stop banks gaming exiting post-crisis rules.

“We do not want any increase in capital requirements; this is the constant position of the French government,” Mr Le Maire said after a meeting of EU finance ministers in Luxembourg. “We will have new discussions in Washington; it will be up to the central banks to build a compromise on that.”

The unequivocal position of France will be greeted with dismay by policy makers. They met last week as the Basel Committee for Banking Supervision, and yet again failed to agree on the so-called output floor, which limits the extent to which banks can use their own models to calculate the riskiness of their lending. Insiders pointed to the fringes of the IMF’s meeting later this week as another opportunity to try to resolve the debate.

Banks have dubbed the wider reform package “Basel IV” — a reference to the post-crisis rules called Basel III that drastically increased their capital — because they fear the reforms will force them to set aside more capital by stealth; something the committee has denied.

The Basel Committee is a group of policy makers from around the world that agrees by consensus global standards for banks that are then implemented locally. Its prominence grew during the financial crisis. But as memories of the crisis fade, politicians have become more concerned about economic growth and job creation.

A person close to the French finance ministry told the Financial Times that France was most concerned that any change to the rules could choke growth and put European banks at a disadvantage to their US rivals.

Transatlantic tensions over the last 18 months around the output floor have threatened to derail the committee’s most recent package of reforms.

In a surprise move to everyone who is alive, Google said it's going to buy Apple for $9 billion. Google Chief Executive Larry Page had secret talks with the now-deceased Steve Jobs in 2010 to firm up the deal. The deal was announced when Jobs's will was read in Cupertino, Calif.

The deal, which is expected to close tomorrow, gives each Google shareholder nine shares of Apple stock. Obviously Google will move into Apple's fancy headquarters.

Google employees said, "Yay."

Investors are stocking up on Walmart shares on Tuesday after the big box retailer issued upbeat earnings guidance and announced a new $20bn share buyback programme ahead of its annual investor day in Bentonville, Arkansas.

The stock rose as much as 2.6 per cent in pre-market trading, putting it on track to extend its year to date gain to over 17 per cent.

In a trading update, Walmart reiterated its guidance for the current 2018 fiscal year. However it said it expected earnings to climb 5 per cent in the next fiscal year as its investment in ecommerce continues to pay off. Net sales are expected to grow 3 per cent for the fiscal 2019 year, driven by same store growth as well as what it predicts will be a 40 per cent jump in US online sales.

“We have good momentum in the business, we’re executing our strategy and moving with speed to win with the customer, who is more connected than ever and embracing tools that will save them both time and money,” said chief executive Doug McMillon.

Walmart has been making substantial investments in ecommerce in its battle for US retail dominance against Amazon, buying Jet.com for $3.3bn last summer and niche websites including ModCloth, a women’s clothing seller, and Moosejaw, an outdoor gear site.

The company said it planned to spend $11bn this fiscal year and next in capital expenditure as it pushes ahead with store remodeling and continues to ramp up its digital drive.

In a sign that it plans to leverage its physical presence as a bulwark against Amazon’s foray into food retailing, Walmart is also planning to add 1,000 online-grocery locations to help fill orders from customers buying their food on Walmart.com.

“We’re combining the accessibility of our stores with eCommerce to provide new and

exciting ways for customers to shop,” said Mr McMillon.

Walmart added the new $20bn share repurchase programme announced on Tuesday will be done over a 2 year period.

Group withdraws about £300m after string of share price falls dent performance

One of the UK’s biggest fund investors, Jupiter, has pulled out hundreds of millions of pounds from Neil Woodford’s flagship income fund, after two decades of backing the renowned equity manager.

John Chatfeild-Roberts, head of Jupiter Asset Management’s Merlin funds range, withdrew the vast majority of his investment from the Woodford Equity Income fund during September, according to people close to the managers.

The move is a setback to Mr Woodford, who has suffered a torrid few months after the share prices of a number of his holdings, including Provident Financial, have fallen sharply.

Mr Chatfeild-Roberts was one of Mr Woodford’s longstanding backers and among the first seed investors to back the manager when he departed from Invesco Perpetual in 2013 to establish his own fund boutique, Woodford Investment Management.

“I can’t remember a time when John hasn’t supported Neil,” said one person in the industry.

Jupiter had invested in Mr Woodford’s £8.9bn Income fund through its Merlin Growth, Balanced and Income funds. The Merlin redemptions are understood to be just under £300m.

Mr Woodford rose to prominence during the financial crisis at Invesco Perpetual, when he shunned banking stocks. He developed a stellar reputation after he turned a £1,000 investment into £25,000 over his 26 years running the Invesco Perpetual High Income fund.

But Mr Woodford has been hit by a series of woes since 2016. One of his holdings is troubled doorstep lender Provident Financial, where he is the second-largest shareholder. Provident’s share price plunged nearly 70 per cent on August 22 due to a botched restructuring of its home credit businesses.

Last month, Mr Woodford apologised to investors after losing hundreds of millions of pounds on the back of sliding share prices in investments including pharmaceutical company AstraZeneca and intellectual property group Allied Minds, as well as Provident.

In a video Mr Woodford said: “It’s been a difficult period. And I’m very sorry for the poor performance that we’ve delivered really now since 2016.”

The £8.8bn fund has lost 0.3 per cent over 12 months, compared with returns of 10 per cent for the wider IA UK equity income benchmark, according to Trustnet, the data provider.

The Jupiter withdrawal raises concerns over liquidity, as Mr Woodford holds large positions in certain companies. Any significant investor redemption would make it harder for Mr Woodford to sell his investments.

Woodford IM said: “The transaction was concluded in September and the current assets under management of £8.9bn reflect this.”

Jupiter declined to comment.