Data Sheet—What Apple Pay Head Jennifer Bailey Learned at Netscape

Good morning from San Francisco, where I moderated a panel Wednesday at Salesforce’s developer conference, Dreamforce. The speakers were Steve Nelson, CEO of UnitedHealthcare, and Genya Dana, head of the World Economic Forum’s policy initiative on precision medicine. Here’s the short version: The reinvention of health care isn’t nearly as far along as industry professionals (and marketers) would like it to be.

Meanwhile, our Fortune team wrapped an outstanding Brainstorm Reinvent conference in Chicago Tuesday evening. We spent the better part of two days exploring multiple angles of corporate, government, and personal reinvention.

Here are three themes that made an impression:

1. It’s not just about “digital.” A recurring theme of the conference was that companies have passed the point of needing a digital expert for the sake of having a digital expert. In fact, an absence of digital expertise now is like lacking financial acumen or basic operating skills. It is table stakes, not a specialty. And any company that thinks it can solve its product problems by hiring a digital expert is kidding itself. Greg Hayes, CEO of industrial conglomerate United Technologies, took matters a step further, acknowledging that his “will never be a digital company.” Said Hayes (see him here): “It is impossible to take an industrial company and make it a software company.” That was a knock on GE, but it also was his way of advocating for focus. Digital matters, but it isn’t necessarily a thing unto itself.
2. Focus on the customer. Mark Thompson, CEO of The New York Times, gave a riveting account of his company’s success with digital subscriptions, including, improbably, killer apps for crosswords and recipes. He said the Times got there by first obsessing over the experience and needs of its customers. Then it focused on the dreaded “m” word: monetization. He marveled that he used to be the token “dinosaur” on panels with the likes of Buzzfeed’s Jonah Peretti and Vice’s Shane Smith. Now conference hosts want to hear why The New York Times is standing tall while those other companies, which rose and fell with the once-brilliant strategy of giving away their content to Facebook and building large audiences with cheap tricks, are suddenly less interesting.
3. Don’t pick an uneconomic fight. Jennifer Bailey, the Silicon Valley executive who runs Apple Pay, once worked at Netscape. Toward the end of my interview with her Tuesday I asked for her thoughts on why that iconic company didn’t stand the test of time—in contrast to the staying power of her current employer. On the latter, Apple Pay is a good example of Apple’s own reinvention. On the former, Bailey observed “it is difficult for startups to compete with free products.” She was referring to Netscape’s losing battle with Microsoft’s Internet Explorer. But it’s a good lesson for startups competing against cash-flow gushing incumbents and stymied stalwarts going up against venture-funded and money-losing startups: Make sure the economics of your reinvention plan work. If they don’t, find another one.

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Shares of SurveyMonkey jumped on their initial public offering Wednesday. (Investors were far more impressed than I was.) Ben Spero, a SurveyMonkey board member and partner at investor Spectrum Equity (and a friend of mine), wrote this touching blog post about his firm’s long-term relationship with the company and its former CEO, Dave Goldberg, who died far too young three years ago. It’s easy to be cynical or snarky about the various players in Silicon Valley. But sometimes successful businesses really do involve nice people who like working with each other on products that helps users work and live.

NEWSWORTHY

Not the feud over memories you were expecting. We had a link yesterday to the interview WhatsApp founder Brian Acton gave to Forbes wherein he blasted his former employer, Facebook, and its CEO, Mark Zuckerberg. Shortly thereafter, another top Facebook exec, David Marcus, took to the web to post a sort of rebuttal to Acton. The Forbes interview "contained statements, and recollection of events that differ greatly from the reality I witnessed first-hand," Marcus wrote. "As a result, I felt compelled to write about the actual facts."

Cause and effect. The Federal Communications Commission on Wednesday adopted rules limiting the fees that cities and towns can charge wireless carriers for installing small cell transmission equipment. FCC Chair Ajit Pai said the limits would speed the deployment of 5G networks and bring better wireless coverage to rural areas. New York City CIO Samir Saini was not impressed, writing that the new rules were "handing taxpayer-owned assets over to multi-billion dollar telecommunications companies, and encouraging them to run wild on our public rights of way." Expect litigation shortly.

Cash for cash handlers. Payments startup Stripe said it raised $245 million of private capital in a deal that valued the company at $20 billion, more than double its previous valuation. Investors may have gotten giddy about Stripe's value after competitor Adyen went public in June and zoomed to a stock market value of over $18 billion.

Cash for all handlers. Japanese billionaire and SoftBank Group CEO Masayoshi Son plans to raise a new $100 billion investment fund every few years and put $50 billion per year into startups, Bloomberg reports. That compares to the $75 billion that the entire U.S. venture capital market invested in 2016.

Better to mine than to drive. Speaking of high values, Chinese cryptocurrency mining outfit Bitmain filed to go public in China. The company disclosed in its filing first half 2018 revenue of $2.8 billion and profit of $743 million. The company also holds almost $900 million worth of digital currency on its balance sheet. Elsewhere in startup land, The Information got ahold of Lyft's financial results for the first half of 2018 and found that revenue had more than doubled to $909 million while its net lost grew almost 50% to $373 million.

Sausage making. As TechCrunch's Zach Whittaker put it on Wednesday: "Another day, another hearing of tech giants in Congress." He had a good wrap of the Senate Commerce Committee hearing on possible privacy legislation, which included participation from all the biggies. Most of the companies supported some form of a national privacy protection law. Among other revealed tidbits, Google's chief privacy officer Keith Enright said the company is "not close to launching a search product in China.”

Point and click. If virtual reality is ever going to be a thing, it will need better gear, for a start. Facebook's Oculus unit is keeping the industry moving in that direction, announcing a new and improved headset on Wednesday. Dubbed the Quest and priced at $400, the headset does not require a connection to a computer or phone. But it doesn't arrive in customer's hands until next spring.

FOOD FOR THOUGHT

Apple's announcement that its new Series 4 watch was cleared by the Food and Drug Administration was not exactly overlooked but perhaps not sufficiently examined. Silicon Valley stalwart and entrepreneur Steve Blank doesn't want the moment to go unremarked. In a lengthy blog post headlined "The Apple Watch—Tipping Point Time for Health Care," he delves into how Apple got the nod from the FDA and what he sees as the opportunity and the implications. For one, this is not the way the FDA used to operate:

So, the Apple announcement is a visible signal in Washington that the FDA is encouraging innovation. In the last two years the FDA has been trying to prove it could keep up with the rapid advancements in digital health, devices and diagnostics- while trying to prevent another Theranos.

Since the appointment of the new head of the FDA, there has been very substantial progress in speeding up mobile and digital device clearances with new guidelines and policies. For example, in the last year the FDA announced its Pre-Cert pilot program which allows companies making software as a medical device to build products without each new device undergoing the FDA clearance process. The pilot program allowed nine companies, including Apple, to begin developing products (like the Watch) using this regulatory shortcut. (The FDA has also proposed new rules for clinical support software that say if doctors can review and understand the basis of the software’s decision, the tool does not have to be regulated by the FDA.)

This rapid clearance process as the standard – rather than the exception – is a sea-change for the FDA. It’s close to de-facto adopting a Lean decision-making process and rapid clearances for things that minimally affect health. It’s how China approaches approvals and will allow U.S. companies to remain competitive in an area (medical devices) where China has declared the intent to dominate.

IN CASE YOU MISSED IT

Coinbase Wants to Be Too Big to Fail By Jeff John Roberts

The World Bank Just Placed a $1 Billion Bet on Batteries By Lucas Laursen

A New Security Startup Wants to Stop School Shootings with Artificial Intelligence By Renae Reints

Amazon Sends 'Anti-Union' Training Video to Whole Foods Team Leaders: Report By Erin Corbett

New Amazon Store Promises 4 Stars or Better for Every Product Sold By Glenn Fleishman

Sequoia's Jess Lee Backs Maven, a Digital Health Startup for Women By Michal Lev-Ram

Restaurant Startup The Infatuation Secures $30M Investment From Firm Co-Founded by Jeffrey Katzenberg By Rachel King

BEFORE YOU GO

Almost everyone could use a hand setting up a new laptop, apparently even Russia special prosecutor Robert Mueller. He was spotted on Wednesday at the Apple store in the Georgetown neighborhood of Washington, D.C. getting help with a MacBook Pro. The AppleInsider site collected a bunch of silly captions people offered for the picture on Twitter. My fave: “So, I’m trying to edit this indictment and I keep getting a ‘you can’t indict a sitting president’ error message.”

This edition of Data Sheet was curated by Aaron Pressman. Find past issues, and sign up for other Fortune newsletters.