Benner on Tech: Costolo's Twitter Fate and Beats Gets Sued

Katie Benner is a Bloomberg View columnist who writes about technology, innovation, and the cult and culture of Silicon Valley. She lives in San Francisco.
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People are Talking About…

All we are saying...is give Dick a chance.

One of the most common prognostications of all the 2015 tech industry predictions so far is  the idea that Dick Costolo will soon be ousted from Twitter. The rumblings started in earnest last October, after stock pundit Jim Cramer started agitating for the board to fire Costolo, and they got louder when the Wall Street Journal published a long story about just how bad a job he’s done at the helm of the company.  SunTrust analyst Robert Peck has said that Costolo won’t last another year and now Ross Levinsohn (whom Peck floated as a potential CEO candidate) has taken to CNBC to give the company a little strategic advice.

“Honestly, I think Twitter should go buy Yahoo,” Levinsohn, the guy who didn’t get Marissa Mayer’s job, told CNBC yesterday with a straight face.

Amid all the rumbling, Twitter board member Peter Currie publicly endorsed Costolo this week, which was a nice gesture but, well, hardly enough to satisfy the pundits and talking heads who love the Costolo-must-go meme.

Listen, I get it. Twitter isn’t growing users as fast as investors want (a metric that the company’s co-founder thinks is dubious at best); and it is finally dawning on Wall Street that the company isn’t going to be Facebook 2.0.

But as with the other big tech CEO question of the moment, Marissa Mayer's fate at Yahoo, I don’t think that changing leaders is gonna provide the easy growth fix that people seem to want. Twitter needs to figure out the look and feel of the product. It needs to figure out who the audience is and the best way to monetize that user base. And it will disappoint users to some degree as it changes and shifts to make more money.

As I wrote in November, the longer it takes Twitter to show improvements, the more likely it is that Costolo will, indeed, get the boot. But I highly doubt that his departure will do more than create a lot of chaos, and delay even further the company’s ability to figure out what it wants to be when it grows up.

Ventureland

Uber received a court order that it must suspend operations in five of its six dispatch bases in New York City for failing to provide data about passenger pick ups to the New York Taxi and Limousine Commission, the Wall Street Journal reports. The company will continue to operate in the city, despite the partial ban.

23andMe, the personal genetics company that has been stymied by the Food and Drug Administration, has struck a deal with Genentech that includes an upfront payment of $10 million, Forbes reports. The startup has been working to sign deals with big pharmaceutical and biotech companies to find ways to use data from customers who have bought 23andMe’s DNA test kits.

Kickstarter has decided to drop Amazon Payments for payments processing in favor of Stripe.

NetDragon, a Chinese mobile development company that owns an online education subsidiary, raised $52.5 million in Series A funding from IDG Capital, Vertex Venture, and Alpha Animation, TechCrunch reports. With this funding round, the subsidiary will be worth $477.5 million.

83North has spun out of Greylock Partners and announced a new $200 million fund for Israeli and European startups, the Wall Street Journal reports. The firm was formerly known as Greylock IL, an international affiliate of Greylock Partners.

The valley of death, that gap between funding rounds that kills so many early stage companies, has usually occurred after a Series A financing when a company underestimated how much money it would need to get off the ground. Research firm VC Experts explains why this gap is happening even earlier now.

People and Personnel Moves

The Winklevoss twins (or "Winklevii," per Aaron Sorkin) talk venture investing, bitcoin and AngelList in Connie Loizos’ daily venture newsletter Strictly VC.

Bitcoin may have lost some of its novelty buzz, but today it lives in meaningful business and technology headlines more than ever. Let’s not forget that less than a year ago the majority of media stories were busy lampooning Bitcoin as a ponzi scheme and/or a safe haven for money laundering that was on the brink of being outlawed. Now, serious Bitcoin news and developments are reported by the minute in the most respected and well-read publications and blogs around the world. If some of the frenzy has ceded to a calmer, more earnest narrative, then I think that is a positive development.

Companies

Amazon…

Every time I forget that the Fire Phone ever existed, another story comes out to remind me that it did, in fact, exist and that it was a disaster. This time Fast Company has an in depth look at just what went wrong, including the fact that CEO Jeff Bezos - a former Wall Street guy who isn’t known for his electrical engineering, industrial design or hardware chops - largely micromanaged the product.  

Apple…

** Audio company Monster has sued Beats Electronics, reports USA Today. The suit alleges that Beats pirated the technology for the Beats By Dr. Dre headphones, which was created by Monster.

** The Apple Watch is on track to ship in the United States by the end of March, 9to5 Mac reports.

** 9to5 Mac has the specs for the all new Macbook Air and the machine, of course, looks amazing. But I can’t help but wonder why no touchscreen.

Facebook…

WhatsApp says that it now has 700 million monthly active users who have sent more than 30 billion messages a day, Mashable reports.

Google…

** Google TV is finally dead, SlashGear reports. The company will now focus on Android TV and Chromecast.

** The company has also taken part in a $188 million investment in a huge renewable energy project in Utah, the Wall Street Journal reports. Other investors in the Utah Red Hills Renewable Energy Park include Scatec Solar and Prudential Capital Group.

HTC…

The Taiwanese hardware maker posted its first quarterly revenue growth in more than three years, Bloomberg reports. The company got a boost from a series of mid-price handsets and tablets for customers in developing markets. Fourth-quarter sales hit NT$47.9 billion ($1.5 billion) from NT$42.9 billion a year earlier.

Intel…

The company has pledged to set aside $300 million to hire and retain more women and minorities, with an eye toward dramatically increasing workforce diversity by 2020, reports Jessica Guynn at USA Today.

Samsung…

The company is releasing a pair of mid-range Galaxy smartphones to appeal to consumers in India, reports the Wall Street Journal.

Cybercrime Blotter

Gogo Inflight, the wifi service that keeps us connected in the air, is using fake Google SSL certificates that let it spy on net traffic and prevent passengers from accessing video streaming services, the Register reports.

Media Files

"The Interview” has raked in $31 million in revenue from online rentals or purchases, making it the #1 online film of all time, CNN/Money reports. The movie cost $44 million to make and it has also made $5 million in a limited theater release.

The U.S. home-entertainment business fell 1.8 percent to $17.8 billion in 2014 due to DVD sale and rental declines and a drop in video-on-demand rentals, the Wall Street Journal reports.

News and Notes

The Internet of Things is risky business. Federal Trade Commission head Edith Ramirez warned the crowd at the Consumer Electronics Show that risks will abound once deeply personal data about ourselves is constantly tracked and collected, including the obvious risk that our devices could be hacked, the New York Times reports.

When your existence becomes a meme. The Washington Post looks at what life is like for Bad Luck Brian. “Builds courage to send naked picture...sends to mom.”

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the editor on this story:
Timothy L. O'Brien at tobrien46@bloomberg.net