Data Sheet—Tuesday, October 18, 2016

Oct 18, 2016

I’m often a slow reader. It has taken me about two weeks, for instance, to finish Tad Friend’s remarkable profile of Y Combinator head Sam Altman in The New Yorker. Amusingly titled “Adding a Zero” in print and “Sam Altman’s Manifest Destiny” online, the piece is long (13 magazine pages), dense, and ambitious. It is also a delightful read. Indeed, Fortune’s Nicholas Varchaver called it the “most pleasurable business feature” he’d read the week before last.

It’s also maddening to devote all of these words to a 31-year-old, socially awkward futurist. Still, if you have a hankering to understand Silicon Valley in all its glory (and all its pity), I highly recommend you read this article. Y Combinator, YC for short, is an “accelerator” that invites classes of startup companies, called “batches,” to go through its program and compete for funding from venture capitalists.

Altman, a modestly successful entrepreneur himself before taking over YC, aims to be far more than a teacher of entrepreneurs. He is a master networker, a warrior for the battle for the human race against the destructive potential of artificial intelligence, and an empire builder. The ideas that come out of his mouth, without a trace of irony, are what make Silicon Valley simultaneously fascinating and tedious. For example, he wants to give every human a stipend once robots are doing all our work, a payment that “will free up that one person in a million who can create the next Apple.”

Speaking of Apple, an item in The Economist caught my eye the other day. At the urging of the prime minister of Italy, the smartphone maker has set up a new “app academy” in Naples. There must be 20 other regions of the world that will want one of those.

By the way, if you’re not already reading Fortune’s CEO Daily newsletter on weekdays for Alan Murray’s insightful commentary and on Saturdays for Tory Newmyer’s incisive analysis of Washington, you have another great reason to subscribe: Varchaver’s weekly review of great business writing, which I referenced above. It will make you smarter. Maybe not startup-accelerator-chief smart. But still…

Adam Lashinsky
@adamlashinsky
adam_lashinsky@fortune.com

BITS AND BYTES

Tech torn over Thiel and Trump. After news broke this weekend that Peter Thiel, a billionaire venture capitalist and Trump surrogate, donated $1.25 million to Republican presidential candidate, his business relations had to handle the fallout. Sam Altman of the startup accelerator Y Combinator, where Thiel serves as a "part-time partner," said he stands by the contrarian investor, though Altman personally opposes Trump. Two prominent Silicon Valley women—Ellen Pao and Tracy Chou, for whom diversity in the tech industry has been a rallying cry—have cut ties with YC as a result. (Fortune)

Samsung under fire in China. When reports began rolling in that Samsung's Galaxy Note 7 phones were spontaneously combusting, the Korean conglomerate said it would pull the devices from affected markets. At first the company said that the Chinese versions used a different battery and didn't pose any danger. Reports of igniting phones in China soon forced Samsung to expand its recall, causing it to take a severe brand hit in the already xenophobic market where upstarts like Xiaomi, Huawei, and other phone makers pose serious competition. (New York Times)

Forrester predicts the puck's whereabouts. The market research firm expects spending on tech to tick upward 5.1% next year, a slight increase over the 4.4% growth it forecasted for this year. Forrester's analysts cited steady economic growth and businesses' continuing transition to the cloud as contributing factors. The projection hinges on Democratic presidential candidate Hillary Clinton being elected to the the executive office, its analysts said. "Should Donald Trump win the election or alternatively the Democrats take control of both the House and the Senate, our forecast for the U.S. tech market in 2017 would be quite different," wrote analyst Andrew Bartels in a blog post. (Forrester)

Earnings roundup: IBM & Netflix. Revenue fell at Big Blue for the 18th consecutive quarter by 0.3% to $19.32 billion, though beating analyst expectations of $19 billion. The company's cloud services unit, a critical piece of CEO Ginni Rometty's transformation plan, grew 42% to $3.4 billion. Netflix, on the other hand, crushed its quarterly earnings. The video streaming service said it added more than 50% more subscribers than expected as people joined to watch original programming, such as its hit show Stranger Things. The company's stock soared more than 20% in after-hours trading on Monday, adding $10 billion to the company's market capitalization. (FortuneFortune, Wall Street Journal, Wall Street Journal)

THE DOWNLOAD

Apple retail chief Angela Ahrendts made a rare speaking appearance at Fortune's 18th Most Powerful Women Summit. The former Burberry CEO views the company’s newly redesigned retail outlets not just as stores, but as the company’s next big products, she explained on Monday night in her first interview about Apple’s retail redesign. In fact, she and Apple view these stores as potential town squares within each of the cities they reside. "The store is now the biggest product we produce and we have five new features [for iPhones and iPads]. Accessories are avenues, and the huge digital screen in each store is the forum," Ahrendts said. Read (and watch) more on Fortune.com.

ONE MORE THING

Can Mark Zuckerberg conquer China? Facebook has been blocked in China since 2009, but the social network's chief exec seems intent on reversing that ban. To have any shot, Facebook will have to learn to coexist with the country's immensely popular WeChat messaging service—and government censorship. (MIT Technology Review)

This edition of Data Sheet was curated by Robert Hackett.
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