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Data Sheet—Friday, June 12, 2015

Good morning, Data Sheet readers. Hours after digesting the revelation that 84-year-old media mogul Rupert Murdoch is finally retiring (kind of), the social media world got an even bigger shock: the abrupt resignation of Twitter CEO Dick Costolo. Plus, software company Citrix Systems has attracted the attention of the same activist investor that has made waves at EMC and Riverbed Technology.

For a mid-afternoon break, watch Fortune Live at 3 pm Eastern. This week’s episode features more scuttlebutt about Murdoch’s retirement decision plus an interview with Intel President Renee James. Enjoy a superior weekend!


The trouble with Twitter. Less than a month after pooh-poohing the notion he would/could/should step down, Twitter CEO Dick Costolo did just that. He isn’t even sticking around long enough to help with the search for his replacement, prompting speculation about a potential takeover. Hence, the board’s decision to recall co-founder and former CEO Jack Dorsey for the interim, even though his day job at Square already keeps him pretty busy.

Now, the speculation begins about a successor. Fortune’s Mathew Ingram riffs on why two candidates likely to be mentioned often—Twitter CFO Anthony Noto and its sales head Adam Bain—are problematic choices. Beyond that, there are no obvious frontrunners, which doesn’t speak well to Costolo’s succession planning skills.

Then again, he obviously wasn’t prepared to leave as recently as a month ago. Which leads to the obvious question: Where did Dick Costolo go wrong? After all, he engineered one of the smoothest IPOs in tech history during his five years as CEO.

Be sure to read the thoughtful analysis by Fortune’s Erin Griffith for the answer. Costolo’s single biggest sin, apparently, was a failure to appease the short-term mentality of many Wall Street investors. “The lesson of Dick Costolo’s tenure is clear: Do not go public unless you are wildly profitable and growing like gangbusters,” Griffith writes.

Finally, the Wall Street Journal has published both Costolo’s “goodbye” staff missive and Dorsey’s pledge not to mess with strategy during the CEO search. I’m sure we’ll refer back to them often in weeks to come.



Watch out, Citrix. The software company is officially on notice from activist investor Elliott Management, the same hedge fund that has questioned the strategies of EMC, Riverbed Technology, and Novell. Elliot is pushing for a stock price of $100 by the end of 2016. Citrix shares closed just above $70 on Thursday.

How can Citrix get there? Dump some “underperforming” software lines, overhaul sales and marketing, and put more research and development money into core products. That’s for starters.

“Elliott is prepared to push for change directly, but the far better course is for Citrix to embrace this offer of cooperation and for us to proceed collaboratively, and quickly, together,” writes Elliott’s senior portfolio manager Jesse Cohn in a rather detailed and public letter.

Facebook: Here’s a peek at Oculus Rift. The social media company showed off the first commercial version of the virtual reality goggles at an event in San Francisco. Plus, a surprise: it has scored an important distribution deal with Microsoft.

Net neutrality is officially in effect, at least temporarily, after the telecommunications industry’s attempts to delay the new era of Internet rules failed this week in federal court. Here’s what coming next.


5 things that keep tech execs up at night

Pity the poor soul at your company who is in charge of technology decisions. Whether that person is the CIO, the director of engineering, vice president of IT, or holds some other title, this person faces a thankless task. If things go smoothly, no one really notices. But if they go sideways, as they often do, guess who gets blamed?

Heck, not even CEOs are not immune from the finger pointing. Fortune’s Barb Darrow reports on five nightmare scenarios that have corporate technology specialists watching their backs.


Alibaba’s Jack Ma may be downplaying plans to compete with eBay and Amazon on their home turf, but he still has plenty of big ideas for winning U.S. business.

Blackberry may put Android on its next smartphone, according to Reuters.

This rather unlikely trade group opposes the latest Congressional efforts to reform patent law. The National Venture Capital Association’s gripe is with certain provisions related to discovery reform and pleading standards. In other words, it wants change, just not this change.

Why Twitter’s decision to remove the 140-character limit on direct messages may be a bigger deal than you think.

T-Mobile CEO John Legere thinks smaller wireless carriers (aka his company) should get special consideration during the upcoming auction. He’s being characteristically vocal about it. Plus, the Dish and T-Mobile talks are still under way: the satellite company may seek up to $15 billion in financing to make it happen, reports The WSJ.

Uber is now screening potential drivers via a mobile game that simulates driving scenarios they might really face on the street.

Someone has to be first. Security specialist Rapid7 is planning an $80 million IPO, setting the stage for a flood of related activity.

If you weren’t at Facebook’s annual shareholder meeting, you didn’t miss much.

More questions for eBay and PayPal. And now, the FCC is launching its own investigation into the legality of their new data privacy and usage policies. New York was first.

Smoke and mirrors? Well-backed augmented reality company Magic Leap is trying to do something that even Intel has struggled to commercialize. There’s reason to believe it might eat up its roughly $700 million in venture money really fast, reports MIT Technology Review.

The new regulations in New York governing virtual currency have already prompted one startup,, to stop doing business in the state.

Upheaval at social analytics company Dataminr. Its CFO Tania Secor has resigned abruptly, reports Reuters. The startup, which disclosed a $50 million round in January, hasn’t offered an explanation or a replacement.


How Red Bull is investing in eSports athletes by John Gaudiosi

Jack Welch says doing these 2 things will get you a big promotion by Laura Lorenzetti

Product Hunt, a tech enthusiast community, launches games-focused spin-off by Kia Kokalitcheva

Nobel laureate Tim Hunt’s “girls” in science comments underscore a deep-seated sexism by Katherine Reynolds Lewis

Millions of people still pay for dial-up internet, DVDs by Claire Groden


Welcome to the “1099 economy.” More than half of the people offering services on sites such as TaskRabbit or Uber have college degrees—and no special benefits. How the sharing economy is creating a “perverse” system of employment.


Red Hat Summit: Energize your enterprise. (June 23 – 26; Boston)

Brainstorm Tech: Fortune’s invite-only gathering of thinkers, influencers and entrepreneurs. (July 13 – 15; Aspen, Colorado)

LinuxCon North America: All about open source. (Aug. 17 – 19; Seattle)

VMworld: The virtualization ecosystem. (Aug. 30 – Sept. 3, 2015; San Francisco)

Dreamforce: The Salesforce community. (Sept. 15 – 18; San Francisco)

.conf2015: Splunk’s “get your data on” gathering. (Sept. 21 – 24; Las Vegas)

Cassandra Summit: Largest gathering of Cassandra database developers. (Sept. 22 – 24; San Francisco)

BoxWorks 2015: Cloud collaboration solutions. (Sept. 28 – 30; San Francisco)

Workday Rising: Meet and share. (Sept. 28 – Oct. 1; Las Vegas)

HP Engage: Big data, big engagement. (Oct. 4 – 6; San Diego)

Gartner Symposium ITxpo: CIOs and senior IT executives. (Oct. 4 – 8; Orlando, Florida)

Grace Hopper Celebration of Women in Computing: World’s largest gather of women technologists. (Oct. 14 – 16; Houston)

Oracle OpenWorld: Customer and partner conference. (Oct. 25 – 29; San Francisco)

TBM Conference 2015: Manage IT like a business. (Oct. 26 – 29; Chicago)

QuickBooks Connect: SMBs, entrepreneurs, accountants and developers. (Nov. 2 – 4; San Jose, California)