Benner on Tech: Google Ventures, Microsoft and Vice Does Deals
People are Talking About…
Google Ventures, one of two private investment arms at Google, has made a big splash in Silicon Valley since launching in 2009. Investments in Uber, Cloudera and Nest put it on the map, and now the firm is increasing investments health care and life-sciences startups at a time when many venture firms are giving up on the sector altogether. The Wall Street Journal has a nice overview of the firm’s strategic shift, noting that the company is curbing its investment in consumer Internet startups
I briefly spoke with Google Ventures head Bill Maris about what’s in store for the firm in 2015 and got his take on what it means to invest in a good healthcare company. (The text has been edited for clarity.)
BloombergView: Why the move into life sciences?
Bill Maris: Lots of people are investing in things that make you look at your phone more. That doesn’t have to be our specialty.
BV: Other firms avoid healthcare startups because they can’t find a viable business model outside of the insurance companies.
Maris: So, I’m uninterested in who pays. I don’t spend time thinking about reimbursement and insurance.
Over time the world figures out ways to [afford] important innovations. When penicillin was first invented, a course of the drug would have been worth all the money in the world. People still took it. They needed it. Now we can make the drug for less than pennies a pill and there are ways to pay for it. In our portfolio, for example, we have Foundation Medicine. It’s a diagnostic treatment for cancer that right now is very expensive. But it will be less so over time.
Here’s another way to look at it. Right now life sciences companies are becoming IT companies. And you can have a consumer Internet company that has no revenue, that just has users paying nothing for a product. And investors see that product as valuable because it attracts users. They know that ultimately someone will pay. We should think about life sciences startups in the same way. Some of our life sciences companies are building important tech that’s useful to lots of people. They should be valued the same way that tech companies are valued.
BV: What about wearables? Would you invest in consumer products like fitness trackers?
Maris: I’m not really that interested in that space. I’m more interested in hard science. Measuring heart rate and steps is just not that interesting. And the current bunch of wearables are nice for the couple weeks after you get them for Christmas, but then they often end up in a drawer.
What’s more interesting is the trend that wearables are a part of. It’s the idea of knowing what’s happening in your body before something goes wrong. You don’t change the oil in your car when the engine seizes up, but when you see the warning light. The wearables trend is teaching people to treat their bodies same way.
BV: You’ve had 16 exits this year and made 57 new investments. What’s your outlook for 2015. Will the M&A markets hold?
Maris: That’s really just a way to ask if there’s bubble. Listen, if there is, it’s different from the one before. Will market go down by 20% or more? Yes. One hundred percent that day is coming. It always happens. And people want to know whether it’s going to happen soon. If they say they know they’re crazy. And anyway, that’s irrelevant to our investment process. The things we’re building are important in any market.
As for the firm, we started with nothing and now we have $1.6 billion in assets under management and have invested in 280 companies, 57 of which were added this year. This time now and next year we’ll have another $425 million in investable funds.
[Columnist’s note: Google Ventures has only one LP: Google.]
Airbnb is getting more professional in more parts of the world, VentureBeat reports.
Uber gets really concerned when people are late to meetings, as Buzzfeed can attest.
BuildZoom, having exhausted all the options in its attempts to catch a burglar, has turned to Tinder to catch the thief. #swiperightforvigilantejustice
People and Personnel Moves
Ev Williams talks Medium with Fortune’s Erin Griffith.
** An appeals court so far seems sympathetic to Apple as it appeals a 2013 decision that found the company guilty of fixing e-book prices, Reuters reports.
** Jury deliberations have begun in the iTunes antitrust case.
** More companies are warming to Apple Pay, says the New York Times.
** Bose could be getting ready to compete with Beats on streaming music, according to MacRumors.
The company has an empathy team. I missed this entirely. Maybe it’s because I still feel like a user and not like a person.
** The company is thinking about creating a “buy” button that lets users search for things they want to buy and then purchase them without leaving Google’s site, the Wall Street Journal reports. If it were able to successfully introduce a buy button, the search company could go head-to-head with Amazon. The project isn’t such a surprise. Just this past October Google Chairman Eric Schmidt called Amazon his company’s biggest competitor, saying: “People don't think of Amazon as search but if you are looking for something to buy, you are more often than not looking for it on Amazon.”
**Dutch regulators could fine the company up to $18.7 million if it blows a February 2015 deadline to make its privacy and data use policies, reports Bloomberg. For your “how seriously will Google take this fine” reference, the company had almost $56 billion in revenue last year and $13 billion in net income.
** The Nest thermostat now works with a Google app that can use voice commands to set the temperature.
The company is challenging an order to give the U.S. government emails that are on servers at a Microsoft datacenter in Dublin. A long list of tech and media companies including Apple, ABC, Amazon, Cisco, CNN, eBay, Fox News, the Guardian and Verizon have all filed briefs in support of Microsoft’s appeal. A Microsoft loss could set a terrible precedent (with wide-ranging, negative business implications) that no information, no matter where a U.S. company stores it, is out of the reach of the U.S. government.
** The mobile phone maker is getting ready to launch an Apple competitor, Re/code reports.
** The company is also delaying the release of a smartphone that runs its own Tizen operating system.
From my Bloomberg colleagues Jordan Robertson and Michael Riley:
Sony was warned about a year ago that hackers had infiltrated its network and were stealing gigabytes of data several times a week, underscoring a pattern of lapses predating a recent attack that has spilled Sony Pictures’ secrets onto the Internet.
Security researcher Bruce Schneier estimates that more than 700 million people have changed their behavior online thanks to Edward Snowden.
The scariest guy at the NSA is probably the one who dressed as a clown.
Vice Media is going to use its huge $500 million war chest to go on a “deal spree” overseen by former M&A lawyer James Schwab. The company’s CEO Shane Smith also told the Financial Times his company will explore an IPO.
Pandora paid Pharrell Williams $2,700 after his song “Happy” was streamed 43 million times on the service, Fusion reports. The company paid John Legend $3,400 for 55 million plays of “All Of Me.” Putting aside the fact that neither of these songs should ever be played 43 million times, it’s easy to see why people think artists can’t make money off of streaming services.
Sony wants to sue media companies that report on the embarrassing trove of e-mails that were leaked as part of a disastrous cyberattack. The Washington Post says the company probably wouldn’t have a leg to stand on. Bloomberg View's Leonid Bershidsky thinks that it's a bad idea to stop publishing the e-mails, regardless.
Austen Allred’s rant against bad fact checking in the Internet age.
News and Notes
“Silicon Valley’s citizens must start applying their skill at innovation – and their pride in 'breaking things' – to themselves,” writes corporate governance expert Lucy Marcus.
Riverbed Technologies’ long activist investors nightmare seems to have finally ended. The company will be acquired by private-equity firm Thoma Bravo and Canada’s Teachers’ Private Capital for $3.6 billion, Bloomberg reports.
Forget guns. TechCrunch shows that doctors can now 3-D print a knee joint.
Prepare for the coming rise of the drones, says futurist and novelist Zoltan Istvan.
Remember Ask Jeeves? The Washington Post lists the 20 most popular websites every year since 1996.
This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.
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Timothy L. O'Brien at firstname.lastname@example.org