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What's Next: Masa Son's
moment. Japan's richest businessman has shaken the tech
investment industry to its core. His $100-billion SoftBank Vision Fund
is the most influential force in Silicon Valley and is radically
changing the scale and speed at which firms invest.
For good or bad? The VCs
and investors I talk to are split:
• Some
are excited by the immense infusion of cash into
startups, which allows them to remain independent instead of being
acquired by big tech companies like Alphabet, Amazon and Facebook, or
their corollaries in China.
• Some
are worried about how fast Son invests and how much money he spends.
They say Son's investments are driving valuations to unreasonable
levels, raising costs for other firms and putting the
entire industry at risk.
Khosla
Ventures' Ben Ling texts:
•
"Capital alone doesn’t create a winner, but it can easily make
other competitors lose."
The Big Picture, via the Economist:
• "To compete with the Vision Fund ...
incumbents are having to bulk up. Sequoia Capital, one of Silicon
Valley’s most famous names, is raising its biggest-ever fund in
response."
• "Son is pumping money into 'frontier technologies' from robotics
to the internet of things. ... In five years’ time the fund plans to
have invested in 70-100 technology unicorns."
• Son's $100-billion war chest "far exceeds the $64 billion that
all VC funds raised globally in 2016; it is four times the size of the
biggest private-equity fund ever raised."
Where Vision Fund gets its money: • Saudi Crown Prince Muhammad bin Salman: $45 billion •
Son's SoftBank: $28 billion. • Abu Dhabi's Mubadala: $15 billion • plus
Apple, Qualcomm, Foxconn and Sharp.
Where Vision Fund invests its money: Uber,
Nvidia, WeWork, Flipkart, and dozens of other tech companies ... but
also in more unexpected projects like creating the world's biggest solar
power plant and the world's largest
international soccer tournament.
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PACIFIC
The Agenda
Good morning. Just
in: Facebook is planning to
create its own cryptocurrency, per Cheddar's Alex Heath.
How to spend it: On your mom. Sunday is
Mother's Day.
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Ethics in
Streaming
Did Spotify blow it?
Spotify's decision to stop promoting
music by R. Kelly and XXXTentacion
has set off a fierce debate over the line between responsibility and
censorship, and raised questions about the logic behind Spotify's
decision:
• Spotify introduced a new "Hate Content and Hateful
Conduct" policy on Thursday to target music that
"incites hatred or violence" or artists "who have
demonstrated hateful conduct personally."
• Spotify then announced it would stop promoting music by R. Kelly (who
faces a history of sexual abuse claims) and XXXTentacion (who faces
charges of aggravated battery).
Spotify's decision is riddled
with inconsistencies:
• The artists' music is still available on Spotify, it's just not being
promoted or featured in Spotify's playlists.
• The artists are hardly the only musicians with a history of
allegations. In an email to NYT's Joe
Coscarelli, a spokeswoman for XXXTentacion asked if Spotify
would also remove Miles Davis, Michael Jackson, Dr. Dre and 16 other artists
who have been accused of violence or sexual misconduct from its
playlists.
What Spotify said: “As you can imagine this
is a complicated process with room for debate and disagreement, so we
can’t get into an artist-by-artist discussion. In general we work with
our partners and try to make decisions on a case-by-case basis.”
The Big Picture: Policing hate speech is an
immense challenge for every platform company. But if you are going to
wade into it, you need a thorough and consistent policy.
Just in: Pandora says it will
stop promoting R. Kelly's music as well.
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Out of the
Woods
Facebook's nightmare
is over
The release of 3,000
Russian-bought Facebook ads yesterday came and went.
Meanwhile, Facebook shares returned
to pre-Cambridge Analytica levels.
Facebook is now out of the woods. The
so-called data privacy "scandal" has not undermined the
company's business model nor stopped it from profiting off your data.
Several sources inside the company say their hardest days are behind
them.
The Big Picture: Antonio García-Martínez,
the former Facebook product manager and author of "Chaos
Monkeys," talks to Recode:
• “Here’s the reality: Most people don’t care about privacy.
... Media elites care about it, underemployed Eurocrats care about it.
And the entire privacy-industrial complex -- there’s an entire set of
very loud voices who are constantly beating the drum and building media
careers around this."
• “For those who doubt, here’s a pop quiz: When in the past two or
three months did Facebook reach the highest point in app rankings in
the Android app store? Literally the day after the #deletefacebook
hashtag went viral.”
One note of caution: Often the real damage
of controversy is that it distracts from innovation. If Microsoft
hadn't spent the late 90s bogged down in antitrust battles, it may not
have missed the mobile phone.
Facebook is fine now. Ten years from now we may look back and see what
Facebook missed while fighting to fix its public image.
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Snap Out of It
Snapchat redesigns,
again
My colleague Jordan Valinsky emails:
Snapchat has rolled out the redesign to its
highly hated redesign in an attempt to appease angry users and reverse
its stock slide.
The Verge's Thuy Ong explains what's changed.
The Big Picture: The previous redesign was a dud with
millennials. Snap’s stock has tanked more than 20%
since its earnings report on May 1.
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VALLEYSPEAK
Valinsky's top links
Amazon stops buying Google ads (Bloomberg)
The Facebook-Google
duopoly faces limits (Digiday)
Tech
leaders push White House on AI (WashPost)
Dropbox
beats Wall Street estimates (Recode)
Elon Musk's
Boring tunnel is nearly done (Teslarati)
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Talk of
Tinseltown
Why MoviePass is
tanking
The parent company of MoviePass -- the
subscription service that offers nearly unlimited access to movie
theaters for $10 a month -- is tanking due to a cash shortage. My
colleague Jill Disis says
it "might not be around much longer."
What happened?:
• The MoviePass business model was unsustainable from the get-go.
• It found investors because people -- and the media -- are susceptible
to narratives centered on disruption.
• It did one good thing, which is force theater chains to think about
dynamic pricing, subscription models and making moviegoing more
affordable.
The Big Picture: For every success story
like Netflix there is an endless parade of highly celebrated startups
like Aereo, Meerkat and
MoviePass that promise to reshape industry and then disappear.
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No Cannes Do
Is Cannes a bust?
Three days into the
Cannes International Film Festival the most notable
thing is the lack of any big acquisitions for the US market.
Which has some folks wondering if Netflix's decision to skip
the event may be an indication of where things are
headed.
Manohla Dargis in today's New York Times:
• Netflix CEO Reed Hastings recently
told "an audience at a television festival (ahem) that ... the
company was 'not trying to disrupt the movie system; we are trying to
make our members happy.' Put differently, Netflix is a multinational
corporation that delivers an incessant visual flow to its 125 million
or so subscribers. Cannes shows movies to other industry professionals seeking
to serve their own audiences."
It's still a helluva party though. If you
are there, let us know how things go at Jamie Rueben and
Michael Kives' dinner/party on Sunday night.
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What Next: The weekend. Enjoy it.
See you Monday.
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