The Briefing by Martin Peers, Jessica Lessin and the team at The Information

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The Briefing

By Martin Peers, Jessica Lessin and the team at The Information

Get smarter about the day’s news in tech, media and finance by following Silicon Valley’s most-read executive newsletter.

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Recent Editions

Buzzfeed COO Jonah Peretti. Photo by Bloomberg

Buzzfeed’s Quest For Media Partners

By Tom Dotan and Martin Peers · Jul 30, 2015 1:47pm PDT

Discussions between new and traditional media companies are heating up but in a way that highlights the profitability and audience problems afflicting each side. The negotiations that seem to be in vogue these days involve an online video outlet partnering up with a television network to get TV ad dollars and subscription fees. The TV companies... Discussions between new and traditional media companies are heating up but in a way that...

Fitbit CEO James Park. Photo by Bloomberg.

The Tax Accounting Behind Fitbit’s Big Profit Swing

By Alfred Lee · Jul 30, 2015 7:00am PDT

When Fitbit filed to go public this spring, investors focused on its dramatic swing to profitability—a narrative that helped launch one of the most successful IPOs of the year. The stock has more than doubled since its June debut on Wall Street. Some of that attention is warranted: First quarter profits soared on higher sales of the... When Fitbit filed to go public this spring, investors focused on its dramatic swing to...

Art by Matt Vascellaro.

The Big Interview

Sebastian Thrun’s Big Business Model Shift

By Steve Nellis · Jul 29, 2015 10:47am PDT · 2 comments

Over the past few years, investors have dumped hundreds of millions of dollars into online education, and now companies like Coursera, Udemy and edX are searching for profitable long-term business models. That’s led Udacity founder Sebastian Thrun to abandon his initial approach of charging for videos and to instead charge for degrees in... Over the past few years, investors have dumped hundreds of millions of dollars into online...

Source: Pitchbook

How to Avoid the Series A Crunch

By Peter Schulz and Reed Albergotti · Jul 28, 2015 10:12pm PDT

Source: Pitchbook

How to Avoid the Series A Crunch

By Peter Schulz and Reed Albergotti · Jul 28, 2015 10:12pm PDT

It’s no secret everyone wants to build an app company and lots of investors want to fund one. But new data show the degree to which individual firms in the sector face taller odds of raising the next round of funding compared with startups other areas like financial software and network management. The Information asked Pitchbook, which collects... It’s no secret everyone wants to build an app company and lots of investors want to fund one. But...

SugarCRM CEO Larry Augustin. Contributed photo.

Navigating a Startup’s Awkward Teenage Years

By Steve Nellis · Jul 28, 2015 7:00am PDT

The $23.2 billion market for sales software is ripe for consolidation. Five big players—Salesforce.com, SAP, Oracle, Microsoft and IBM—dominate the market, but about half is controlled by a slew of smaller companies. Perhaps the most prominent of those smaller players is Cupertino-based SugarCRM, whose rapid growth in the past few years could... The $23.2 billion market for sales software is ripe for consolidation. Five big players—...

A Sergey Brin-backed synthetic burger. Photo by Bloomberg.

Google Bid for ‘Cheeseburger’ Company Impossible Foods

By Jessica E. Lessin and Amir Efrati · Jul 27, 2015 3:42pm PDT

Google is showing an appetite for the food business. The company recently tried to buy Impossible Foods, maker of a plant-based cheeseburger, for between $200 million and $300 million, according to two people with knowledge of the deal. A deal wasn’t reached—one person said Impossible Foods wanted a higher price—and whether Google will look... Google is showing an appetite for the food business. The company recently tried to buy...

Chart by Sam Lessin.

Modest Proposals

The Hidden Costs of Pivoting

By Sam Lessin · Jul 27, 2015 10:00am PDT · 2 comments

Instagram was famously a pivot from Burbn, a failed check-in app. Twitter was a pivot from Odeo, a failing podcasting platform. Slack was a pivot out of a failing game company. The successful pivot is revered in Silicon Valley. But, while some entrepreneurs snatch victory from the jaws of defeat, I think the Valley would be a far healthier... Instagram was famously a pivot from Burbn, a failed check-in app. Twitter was a pivot from Odeo,...

Google CEO Larry Page. Photo by Bloomberg.

Tough Climb for Google’s Cloud Revenue

By Amir Efrati and Steve Nellis · Jul 27, 2015 7:00am PDT · 2 comments

Google CEO Larry Page. Photo by Bloomberg.

Tough Climb for Google’s Cloud Revenue

By Amir Efrati and Steve Nellis · Jul 27, 2015 7:00am PDT · 2 comments

Urs Hölzle, the man in charge of Google’s high-profile cloud-computing business, likes to tell colleagues that five years from now, they’ll “laugh about what the cloud was like” in 2015 because it will have evolved so drastically. How much Mr. Hölzle shapes that evolution will determine whether Google will have a big business in selling... Urs Hölzle, the man in charge of Google’s high-profile cloud-computing business, likes to tell...

Three Signs the Optimism is (Slowly) Ending

By Jessica E. Lessin · Jul 24, 2015 7:00am PDT

Something changed this week. Last week, after on-demand cleaning company Homejoy announced it was shutting down, my phone was going off with emails and texts predicting more failures on the horizon. “This is only the beginning,” one VC told me. Concern about unsustainable expectations—and margins—is nothing new in Silicon Valley. But... Something changed this week. Last week, after on-demand cleaning company Homejoy announced...

Photo by Bloomberg.

China’s Stock Market Troubles Threaten Private Funding

By Tom Dotan · Jul 23, 2015 12:08pm PDT · 1 comment

As the valuations of Chinese tech companies continue to rise, tech investors in the country are starting to grumble about the high prices. And China’s volatile stock market seems to be making the problem worse. Investors are worried that the market volatility could hurt future IPOs in China at the same time that investors are starting to balk at... As the valuations of Chinese tech companies continue to rise, tech investors in the country are...

Google CFO Ruth Porat. Photo by Bloomberg.

Google’s Gross Margin Mystery and Takeaways from Tech Earnings

By Alfred Lee · Jul 23, 2015 7:00am PDT

Google’s market cap has climbed nearly $60 billion after beating earnings estimates last week. But the narrative in the tech press crediting tougher spending controls—fewer moonshots, slower headcount growth—is incomplete. As a percentage of revenue, operating expenses (excluding cost of revenues) are still up quarter-over-quarter,... Google’s market cap has climbed nearly $60 billion after beating earnings estimates last week....

Snapchat CEO Evan Spiegel

Why Google’s Cloud Needs Snapchat

By Tom Dotan, Amir Efrati and Steve Nellis · Jul 22, 2015 7:00am PDT · 2 comments

Snapchat CEO Evan Spiegel

Why Google’s Cloud Needs Snapchat

By Tom Dotan, Amir Efrati and Steve Nellis · Jul 22, 2015 7:00am PDT · 2 comments

When Evan Spiegel and Bobby Murphy first released Snapchat in 2011, they ran the service atop Google’s cloud computing service App Engine out of necessity. Tapping the Mountain View giant, whose cloud business was just getting off the ground, was the easiest way to outsource Snapchat’s infrastructure while its small team built the app’s product... When Evan Spiegel and Bobby Murphy first released Snapchat in 2011, they ran the service atop...

Source: Meelo Logic.

A Lesson for Advertisers on Facebook

By Tom Dotan and Peter Schulz · Jul 21, 2015 10:35am PDT · 1 comment

The simple text-only status post may be the fastest way for brands to reach out to their fans on Facebook. But, as a proportion of responses, people aren’t interacting with them all that much. Instead, it’s the media-heavy posts like videos and to a lesser extent photos that are driving the most comments, likes and shares for brands. That fact... The simple text-only status post may be the fastest way for brands to reach out to their fans on...

FCC Chairman Tom Wheeler. Photo by Bloomberg.

Coming Soon: More Text Spam

By Steve Nellis · Jul 21, 2015 7:00am PDT

In an overlooked but important change, the Federal Communications Commission earlier this month paved the way for apps to let users blast marketing texts to their contacts. That sort of marketing—increasingly used by ride-hailing apps like Uber and Lyft to send referral codes—has long been a grey area within federal telemarketing rules. Lyft and... In an overlooked but important change, the Federal Communications Commission earlier this month...

Qualcomm CEO Steve Mollenkopf. Photo by Bloomberg.

Qualcomm Braces for Layoffs This Week

By Amir Efrati · Jul 20, 2015 12:53pm PDT · 1 comment

Qualcomm executives are preparing to lay off as many as several thousand employees, according to people inside and outside of the chip maker. The cuts underscore the continued challenges of being in the high-end smartphone business. Prices are falling, and $50 Android smartphones are a reality in countries like India and China. Qualcomm, which... Qualcomm executives are preparing to lay off as many as several thousand employees, according to...

Tesla CEO Elon Musk. Photo by Bloomberg.

The Truth about Tesla’s Cash Burn

By Alfred Lee · Jul 20, 2015 7:00am PDT · 1 comment

Tesla CEO Elon Musk. Photo by Bloomberg.

The Truth about Tesla’s Cash Burn

By Alfred Lee · Jul 20, 2015 7:00am PDT · 1 comment

In its most recent quarter, Tesla Motors reported negative free cash flow of $558 million, raising alarms from analysts that the company could run out of cash by year’s end. Even the announcement of a new $500 million credit facility last month has not quieted speculation that the company will need more money. “They may need access to further... In its most recent quarter, Tesla Motors reported negative free cash flow of $558 million,...

Lonely with the Apple Watch

By Jessica E. Lessin · Jul 17, 2015 7:00am PDT · 2 comments

I’ve begun to notice something odd about the Apple Watch: I don’t see many early adopters wearing it. Now, before you Apple fanboys and girls accuse me of being a hater, consider this. I own and am a fan of the Watch. (I like the notifications.) But unlike other Apple products, which spread through Silicon Valley circles as fast as assistants... I’ve begun to notice something odd about the Apple Watch: I don’t see many early adopters wearing...

Netflix CEO Reed Hastings. Photo by Bloomberg.

The Story that Matters About Netflix Stock

By Martin Peers · Jul 16, 2015 7:01am PDT · 1 comment

Even among boom-fueled tech stocks, Netflix is having a remarkable run. While Google and Facebook have risen 10 and 15 percent respectively since the start of the year, and Amazon is up 48 percent, as of Wednesday, Netflix has doubled in price. If you are looking to understand why, look less to financials and instead towards momentum—a lesson... Even among boom-fueled tech stocks, Netflix is having a remarkable run. While Google and Facebook...

Yahoo CEO Marissa Mayer. Photo by Bloomberg.

The Trouble with Yahoo’s Mobile User Metric

By Amir Efrati · Jul 15, 2015 7:00am PDT · 1 comment

Marissa Mayer has touted her transformation of Yahoo into a “mobile first” company, and each quarter she discloses the number of people per month who visit a Yahoo property through a mobile device. As of April, it was 600 million, and next week she could disclose a slightly higher number during the company’s second-quarter earnings announcement.... Marissa Mayer has touted her transformation of Yahoo into a “mobile first” company, and each...

Twilio CEO Jeff Lawson. Photo by Bloomberg.

Inside the Developer Conference Bubble

By Steve Nellis · Jul 14, 2015 12:42pm PDT · 4 comments

Twilio CEO Jeff Lawson. Photo by Bloomberg.

Inside the Developer Conference Bubble

By Steve Nellis · Jul 14, 2015 12:42pm PDT · 4 comments

Nearly every week in San Francisco, Moscone Center or Fort Mason swell with lanyard-laden nerds toting swag and talking code. It can only mean one thing: Yet another developer conference thrown by a software company. In the past, such conferences tended to be the domain of the biggest tech companies like Google, Apple or Facebook, which use the... Nearly every week in San Francisco, Moscone Center or Fort Mason swell with lanyard-laden nerds...