WeWork making cuts; Fadell leaves Nest; BitTorrent spins out Sync

All sorts of changes going on:

  • WeWork plans to cut around 7% of its staff, according to Bloomberg’s Ellen Huet, and has paused hiring. The $16B coworking/coliving startup raised $430 million a few months ago led by Chinese investors, and plans to expand in Asia. It seems that WeWork might be responding to the advice of many investors to cut back on burn as the economy seems to be cooling.
  • Tony Fadell has left Nest following months of bad press and growing friction within Alphabet/Google, which acquired the company in 2014 for $3.2 billion. Positioned as a ‘transition’, the move is more likely the case of Fadell being pushed out. The new Nest CEO is Marwan Fawaz, who was a Motorola Mobility executive vice president, and who oversaw the sell off of that company after Google’s acquisition of Motorola. Looks like Alphabet/Google is positioning Nest for a sale, since Google’s developed its own line of smart home products that don’t play nice with Nest’s technologies.
  • BitTorrent has spun out Sync, its file sync and share technology, into a new firm, Resilio, and Sync will be renamed as Connect. Former BitTorrent CEO Eric Klinker will be heading up the new company, after trying to repositioning BitTorrent as an enterprise software company. It now seems the existing BitTorrent company will focus on a new live streaming app.

Why adopt a mobile-first development strategy?

“We think mobile first,” stated Macy’s chief financial officer Karen Hoguet, in a recent earnings call with financial analysts.
A quick glance at the US department store chain’s 2015 financial results explains why mobile technologies might be occupying minds and getting top priority there. Sales made by shoppers over mobile devices were a definite bright spot in an otherwise disappointing year for the company. Mobile revenues more than doubled, in fact, thanks to big increases in the number of shoppers using smartphones and tablets not only to browse, but also to buy.
So it’s no surprise that Macy’s hopes to maintain this trend, by continuing to improve the mobile experience it offers. In the year ahead, Hoguet explained, this ‘mobile first’ mindset will see Macy’s add new filters to search capabilities, clean up interfaces and fast-track the purchase process for mobile audiences.
Other consumer-focused organisations are thinking the same way and the phrase ‘mobile first’ has become something of a mantra for many. One of its earliest high-profile mentions came way back in 2010, in a keynote given by Eric Schmidt, the-then Google CEO (and now Alphabet executive chairman), at Mobile World Congress in Barcelona.
“We understand that the new rule is ‘mobile first’,” he told attendees. “Mobile first in everything. Mobile first in terms of applications. Mobile first in terms of the way people use things.”
The trouble is that, for in-house development teams, a mobile-first strategy still represents something of a diversion from standard practice. They’re more accustomed to developing ‘full size’ websites for PCs and laptops first, and then shrinking these down to fit the size, navigation and processing-power limitations posed by mobile devices.
The risk here is that what they end up with looks like exactly what it is: a watered-down afterthought, packing a much weaker punch than its designed-for-desktop parent.
A development team that has adopted a mobile-first strategy, by contrast, will start by developing a site for mobile that looks good and works well on small form factors, and then ‘work their way up’ to larger devices, adding extra content and functions as they go.
That approach will make more and more sense as more ‘smart’ devices come online and the desktop PC becomes an increasingly minor character in our day-to-day lives. Take wearables, for example: many CIOs believe that headsets, wrist-mounted devices and the like hold the key to providing workers with relevant, contextual information as and when they need it, whether they’re up a ladder in a warehouse or driving a delivery van.
Developing apps for these types of devices present many of the same challenges associated with smartphones and tablets: minimal screen real estate, limited processing power and the need to integrate with third-party plug-ins and back-end corporate systems. Then there’s a lack of standardised platform for wearables to consider, meaning that developers may be required to adapt their mobile app to run on numerous different devices. For many, it may be better to get that hard work out of the way at the very start of a project.
In a recent survey of over 1,000 mobile developers conducted by InMobi, only 6% of respondents said they had created apps for wearables, but 32% believe they’re likely to do so in future.
The same rules apply to a broader category of meters and gadgets that make up the Internet of Things, from meters for measuring gas flow in a utilities network, to products for ‘smart homes’, such as the Canary home-monitoring device, to virtual reality headsets, such as Samsung’s Gear VR, as worn by attendees at Facebook CEO Mark Zuckerberg’s keynote at this year’s MWC.
As the population of ‘alternative’ computing devices grows, developers will begin with a lean, mean mobile app, which functions well despite the constraints of the platform on which it runs, having made all the tough decisions about content and function upfront. Then, having exercised some discipline and restraint, they’ll get all the fun of building on top of it, to create a richer experience for desktop devices.
More importantly, they’ll be building for the devices that consumers more regularly turn to when they want to be informed, entertained or make a purchase. In the US, digital media time (or in other words, Internet usage) on mobile is now significantly higher at 51% than on desktop (42%), according to last year’s Global Internet Trends Report by Mary Meeker of Silicon Valley-based venture capital firm Kleiner Perkins Caufield & Byers (KPCB).
In other words, developers should go mobile first, because that’s what we consumers increasingly do.
 
Picture Credit: Farzad Nazifi

Why Google is taking a closer look at disrupting health care

In its first investment since the announcement that Google would become Alphabet, Google Capital has put a major vote of confidence into the future of health care in the tech sector.

A vote of confidence to the tune of $32.5 million.

Google Capital, a growth equity fund and part of Google/Alphabet’s investment arm, has previously backed ventures like Duolingo, Survey Monkey, and Glassdoor, as the Wall Street Journal points out in its report. Now, Oscar Health Insurance Corp. joins those ranks, but there’s reason to believe Google’s interests in health care go beyond the investment.

Oscar is a health insurance startup that hopes to change the way that people buy and interact with their health care coverage by using technology paired with simple and intuitive design. By clearly laying out coverage options, connecting customers directly to providers, and keeping track of care, Oscar already sets itself apart from the pack of large health insurance providers, which continue to lean on outdated technology that drives a wedge between customers and their coverage.

Health care is slow to change, and the tech is outdated,” says Forrester Research health care analyst Kate McCarthy. “New competitors help push large payers forward and are a good way to test the market to see what works.”

Oscar isn’t the only startup attempting to push the health insurance industry forward, though. Accordion Health‘s customer-facing insurance solution Pistachio helps customers explore their options by comparing Medicare Advantage plans side-by-side.

“I think Oscar is a starting point for a huge change in health care, and we are working just as hard (or harder) in bringing about consumerism within health care through our tools, such as Pistachio,” says Accordion Health CEO Sriram Visiwanath. “We have a fraction of the resources of Oscar, but the same shared goal of making health plan risk management way more operationally, financially efficient, consumer-driven and UX-centric.”

Startups have a habit of moving industries forward (usually), and the health insurance industry is no exception. As companies like Oscar enter the marketplace and provide customers with options and transparency, expectations within the open market shift.

Health coverage is already moving in two directions,” says McCarthy. “More plans are being offered with high deductibles. This shifts much of the upfront investment in health expenses to the patient… In turn, this is pushing patients/consumers to expect more options in health plans and greater transparency on cost and quality outcomes. Startups that can be good patient navigators and agents of price transparency have a big spaaaaaace to fill in the industry.”

Google Capital’s $32.5 million investment boosts Oscar’s valuation up to $1.75 billion, according to a source from the WSJ report.  Though certainly a new direction for Google in the health care space, the recent investment is far from the company’s only foray into the health industry. For instance, Google Life Sciences, which is focused on technologies that push health care technology forward (like glucose-monitoring contact lenses), very recently hired Dr. Thomas R. Insel, who was previously the director of the National Institute of Mental Health.

Google (Alphabet) is clearly making a play to expand their presence in the health care marketplace,” says McCarthy. “Oscar represents an opportunity to invest in a model consumers are responding positively to and is a smart choice for Google.”

For now, Oscar is only available in New York and New Jersey, but plans to extend service to California and Texas beginning in 2016.

Google’s logo gets redesigned for the Alphabet era

Search giant Google unveiled an updated version of its logo today, which last saw a significant change back in 1999.
The redesigned logo was done to mark a new era for Google, the company said in its announcement. Last month Google Inc. restructured and rebranded as Alphabet — a holding company that owns a slightly slimmed down version of Google as well as several other organizations like Nest, Google X, and Calico. The company states: “As you’ll see, we’ve taken the Google logo and branding, which were originally built for a single desktop browser page, and updated them for a world of seamless computing across an endless number of devices and different kinds of inputs (such as tap, type and talk).”
The new logo should debut across all of Google’s products and services in the near future, the company said. Check out the video embedded below for a quick look at all the past versions.

‘T’ should be for Twitter

Alphabet isn’t even a week old, but that doesn’t mean we can’t stir the broth and see what might be in store for the company that runs Google and other, less-established businesses like the health-focused Calico and Life Sciences.
And whenever I stir that bowl of alphabet soup, I can’t help but eventually see T-W-I-T-T-E-R.
This might seem like a strange idea, given that Google all-but-extricated itself from the business of social by killing the only thing people liked about Google+, — that’s in addition to announcing that an account with the moribund social network will no longer be required to “share content, communicate with contacts, create a YouTube channel” or use Google’s many other services. But there are many reasons why it would make sense, especially now that the company formerly known as Google Inc. isn’t nearly as committed to a social network that was never a hit with consumers.

A perfect fit

Rumors about Google acquiring Twitter have abounded since 2009. And since Twitter went public in November 2013, its share price has risen whenever rumors about an impending Google takeover percolate back to the top of Techmeme’s homepage as investors show their approval of such a deal.
A deal would also make sense because Google and Twitter have gotten closer in the last year. The two companies announced in February  that would bring tweets into Google’s search results — a rekindling of a relationship that smoldered out in 2011, when the companies’ original partnership expired.
There are other benefits to Alphabet acquiring Twitter. It would no longer have to worry about making money on its own — something with which Twitter has struggled in the past — and could instead focus on giving users the best-possible experience rather than capitulating to business needs.
And then there’s Twitter leadership, which has shifted every couple years since 2008. The search for a new chief executive seems to be all anyone is talking about when Twitter is brought up. In it’s new role as a holding company, Alphabet might be beneficial in preserving continuity while making sure the service continued innovating.
Twitter has long struggled as an independent company. Perhaps joining Alphabet’s pseudo-autonomous portfolio of companies could give it the support it needs without shackling it to another company’s interests.

Evolving beyond 140 characters (aka Google+ done right)

Then there’s the impression that Twitter will become a lot more like Google+ now that it’s removed the 140-character limit from users’ direct messages. Until yesterday direct messages felt like a nearly forgotten add-on, almost as if the service preferred that its users share things in public instead of in private. (For proof, just look at Twitter’s restrictions on sending links via direct messages.)
Removing the 140-character limit from direct messages was, according to Twitter, one of its most-requested features. The character restriction is fine for the public feed; remove it, and all you’re left with is Medium. But people want a little more freedom to communicate however they please in private.
Combine that with the ability to message a group of people on Twitter and you end up with something that looks a lot like the “circles” that allowed Google+ users to share information with discrete groups of people. The two services are starting to seem less differentiated than they ever have before.
To be honest, this move is actually better than Twitter attempting to become the next Facebook. I’ve written in the past that Twitter’s a better copycat than Mark Zuckerberg’s blue juggernaut, but that doesn’t mean that trying to become more like Facebook will do Twitter any favors with most consumers. At that point, why wouldn’t they just keep using the same service as their friends?
On the other hand, Facebook seems just as determined to copy Twitter. Business Insider reported earlier this week that Facebook is working on a “Twitter-like app” that would let publishers “send mobile breaking news alerts to the masses.” Twitter has the advantage here; it should use it. (And it should probably do so before Facebook figures out how to make Twitter a feature within its own service.)

Challenging Facebook on social advertising

Besides owning a social service that doesn’t remind people of a graveyard whenever they visit, an Alphabet-owned Twitter would be in a much better position to compete for social advertising dollars currently being hogged by Facebook.
Additionally, Alphabet could give its other properties full access to all the information shared on Twitter (perhaps even the info contained in direct messages, similarly to how data is collected from Gmail). Provided there are mechanisms allowing Twitter users to keep their data out of the hands of any acquirer, — which I’ll admit is far from a given — it seems like most of the parties involved would get what they want. Alphabet gets more data and a better position on social media. Twitter gets to focus on itself, and Twitter users get the product they want.
For those who decide to let Alphabet keep their data, it isn’t hard to imagine a world where Twitter’s ads are more relevant than ever before. (Surely I’m not the only person who sees promoted tweets unrelated to any of his interests.) Then, tie the advertising infrastructure into Google’s services, combine some of the data Alphabet has from those that use Google products, and watch the social ad revenues trickle in.
But even if Alphabet elects to keep Twitter data separate, it could be successful in driving more regular activity to the service. One of Twitter’s biggest problems is that not enough people are signing up, and many of those that do never return. Being connected to some of the most popular services in the world — from Google search and YouTube, to AdWords and Gmail — couldn’t hurt matters.
No matter how Twitter is related to Alphabet’s other advertisements — whether it’s helping its parent company show them or taking advantage of them to get more users, or convince people to give it another shot — it isn’t hard to see that the companies will probably work better together than apart.

It makes sense

Plenty of others have pointed out that a Twitter sale just doesn’t seem likely, whether it be because of anti-trust concerns or because it doesn’t seem like a “Larry-sized problem.” That doesn’t mean it still wouldn’t make a lot of sense, especially if this Alphabet restructuring means slimming Google down to what its best at. Pushing social — and in some instances media (news aggregation, user-generated video) — to a company that’s primarily concerned with social could strengthen Alphabet’s main source of revenue, Google.
As I said at the top: If “G” is for Google, then “T” should be for Twitter.

Google-Alphabet may signal an end to the cloud price wars

Google boldly goes where no tech giant has gone before. The company’s stunning restructuring from Google to Alphabet signals a profound transformation in how the company will operate. The Alphabet structure should enable Google to continue growing its core ad business (which gushes cash) and provide multiple paths for top talent to run their own businesses. It’ll also allow the very smart, very rich Larry Page and Sergey Brin to finally have the focus they want to uncover new ways of impacting the world using data, movement, biology, and the electrical signals that now seem to link everything and everyone.

But what does it mean for Silicon Valley’s startup scene? In the short term, probably an end to the artificially low-priced cloud services Google has been pushing.

Buying marketshare

Google is one of the leaders in IaaS — infrastructure as a service — though it lags behind Amazon Web Services (AWS), Microsoft (Azure) and IBM. It’s Google, however, that has repeatedly shown a willingness to cut prices significantly to grow marketshare.

Will this continue?

For now, that’s hard to say, but it seems unlikely. At least, price cuts in excess of actual reductions in cost due to scale and Moore’s Law seem unlikely.

IaaS services are where a third-party provider, such as Google Cloud or Microsoft Azure, hosts the critical network infrastructure — the hardware, software, data storage and other elements — that allows companies to cost-effectively run their operations, test out new applications, and scale their business instantly. IaaS provides data storage, data backup, test environments, security, user management, and provides guaranteed uptime. These are all critical. Even large companies are transitioning their work away from on-premise servers and infrastructure and onto the cloud. For startups, IaaS is a must. They pay only for what they need. There is very little capital or upfront cost required, yet they can leverage the expertise, resources, and scale of a giant cloud provider. Build it, test it, unleash it onto the world. IaaS makes this possible.

According to Synergy Research Group, which tracks the IaaS market, AWS, Microsoft, IBM and Google “control well over half of the worldwide cloud infrastructure service market.” Their combined share is 54 percent — and it’s growing.

 cloud leaders

It’s Google’s marketshare, however, that’s growing faster than everyone else except Microsoft — which has made growing its cloud business a strategic focus. Indeed, before being named CEO, Satya Nadella ran Microsoft’s Azure business. A big reason for Google’s growth is undercutting the competition, which has proven particularly attractive to start-ups and small businesses.

CIS_Q414_final

John Dinsdale, Chief Analyst and Research Director at Synergy Research Group, told me that Google “absolutely” uses price cuts as a tool to garner marketshare from AWS and Microsoft. If the price cuts stop, no doubt the competition will gladly follow suit.

Building a better cloud

While the end of artificial price cuts may harm start-ups who have long benefitted from an IaaS cloud price war, it may also mean that ultimately everyone else gets a better product.

As Synergy’s Dinsdale told me, Google Cloud “is a high-growth business that has some decent scale to it, which sets it apart from a lot of the exploratory and highly speculative efforts that Google has been pushing.”

With Page and Brin now more focused on the big picture stuff, Google CEO Sundar Pichai could give the Google Cloud business the technical and business focus it demands — and which the market desires.

This sentiment was echoed by Jeff Ferry, analyst and founder of DailyCloud, a business site focused on the enterprise cloud market. Ferry told me that Google’s “cloud business has suffered from not being as glamorous as some of the moonshot projects.” Under this new structure, however, Ferry thinks that the Google leadership can focus on turning the “enterprise cloud business into a more important new opportunity.”

Ferry says that when it comes to the cloud, it’s less about “think big” because businesses that rely upon the service want to deal with someone fully focused on their unique needs and challenges. “They may admire technological geniuses,” he says, but they don’t buy from them.”

Transparency is good

In the official announcement, Larry Page said that “our company is operating well today, but we think we can make it cleaner and more accountable,” and that he intends to “improve the transparency and oversight of what we’re doing.”

By making Google — the Google we know and use — one of six separate entities, and pledging greater transparency and accountability, Page may have signaled the end of Google using money to build IaaS marketshare. Instead, these monies will likely go toward the many moonshots and experiments on the Alphabet side of the ledger. This is not necessarily a bad thing, not for Google, not for the market, not for cloud innovation. IaaS may be boring, and it’s no moonshot, but it is vital to our increasingly digital lives and to nearly every business. Building Google Cloud through innovation, not price cuts, may itself prove transformative.

Note: I asked Google for comment on how the restructuring might impact IaaS efforts. They told me that at this time they aren’t providing additional commentary beyond the official statement. 

Uber should fear the company formerly known as Google

Google’s restructuring under the Alphabet umbrella means that there’s nothing standing in the way of it taking on every company in the technology sector. That should give every company pause, but Uber in particular should worry about the possibility of Alphabet continuing a fight Google started.

It never made sense for Google to invest in Uber. Both companies want to experiment with businesses that are only slightly related to their original purposes, and these ambitions have often pit the two against each other.

Just look at some of the headlines from recent months. Uber is trying to make self-driving cars and buying companies to reduce its dependence on Google Maps, while Google reportedly works on its own ride-hailing service.

There are other signs that Google and Uber aren’t getting along as well as many investors and portfolio companies, such as Google’s decision to use data from an Uber competitor, Lyft, in an update to its Google Now service.

A cold war is being fought. Neither company has come right out and said that it’s competing with the other, but both have been working on projects that would give them the upper hand when they finally recognize the conflict.

That war has a chance to heat up now that Google founders Larry Page and Sergey Brin have created Alphabet, a new company of which Google will be a subsidiary, so they can work on things unrelated to Google’s online services.

Alphabet’s creation is a warning to every company in the tech sector. The company formerly known as Google no longer has to try to justify working on things like anti-aging research or wireless networks; it’s free to just do them.

It would make sense for Alphabet to focus on ride-sharing. The company has been working on self-driving vehicle technologies for a while, and if Uber chief executive Travis Kalanick is believed, self-driving cars will replace the human drivers currently utilized by ride-hailing startups in a few decades.

Then there are the already-referenced reports about Google working on its own ride-hailing service. It might have been difficult for the company to introduce that service before, but as one venture capitalist already joked, Alphabet isn’t bound by any promises Google might have made to Uber.

Alphabet is all about giving Page and Brin the freedom to do whatever they want. It was clear even when the company was known as Google that they want to compete with Uber — now that they have a little more leeway to explore that desire, it wouldn’t be surprising to see this cold war get heated.

Google becomes ‘Alphabet’ in major restructuring plan

It’s not often that a company with a market cap of over $400 billion announces a massive operational restructuring plan that will undoubtedly hog the public conversation in tech social circles for months to come. Yet, that’s exactly what Google did today.

Under terms of the restructuring plan announced today by Larry Page, Google is rebranding itself as a new company called Alphabet. The core Google products you’ve come to know and love — YouTube, Android, Google Search, Gmail, Chrome, and Maps — aren’t getting the new branding but they will operate as a single unit under the Alphabet umbrella. The move, according to Page, is intended to provide more transparency to the company’s quarterly operations while also allowing Alphabet to better focus on other large entities such as Nest, Calico, Google X Incubator, and more.

“Our company is operating well today, but we think we can make it cleaner and more accountable,” Page wrote, adding that he’ll stay on as CEO of Alphabet while fellow cofounder Sergey Brin assumes the role of president. “Fundamentally, we believe this allows us more management scale, as we can run things independently that aren’t very related.”

Page said each entity under the Alphabet umbrella will continue to have their own CEOs and management teams, while he and Brin will presumably operate from afar on an as-needed basis. As part of the news, Page also announced that Sundar Pichai will take over as CEO of a “slightly slimmed down” Google.

Also of note, Alphabet will now begin breaking out financials separately for each of the groups it overseas. That means we still won’t really know how much revenue YouTube is generating, but we should be able to see quarterly updates specific to Nest, etc.

Today’s announcement also creates many new questions about how Alphabet will differ from Google — some valid, and some that are more speculation. For example, while Google has previously let it be known that it wasn’t interested in acquiring leadership-deficient social network Twitter, can the same be said of Alphabet? What about Alphabet hopping into other markets (like ride sharing), such as those it showed little limited interest in previously?  Time will tell, but at the very least you’d be hard pressed to call this anything short of interesting.