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Data Sheet—Wednesday, October 7, 2015

More often than not, at least one of my weekly briefings centers on significant financing for a disruptive marketing-tech company. (I usually skip the pure advertising plays.) I’m already at quota this week, and it’s only Wednesday.

The motivation is pretty simple: chief marketing officers spend a lot of money annually. The amount dedicated to technology will grow substantially over the next decade. One projection, from Foundation Capital, puts the figure at $120 billion by the end of that timeframe.

Marketers are evolving from “mad men” to “math men,” said Foundation Capital general partner Ashu Garg, when we chatted about this phenomenon several weeks ago. He noted: “There is an inflection point that is being driven by consumer behavior. … That nature of the dialogue has been one way, but we’re moving from dictation to conversation. Marketers tell great stories, but consumers expect the stories to be backed by data, facts and research.”

Naturally, Foundation Capital has an interest in this topic, one that it outlines in recent analysis of the category, “The Decade of the CMO.” The VC firm’s current portfolio includes retargeting company AdRoll, “viewer experience” platform Conviva, app marketing play Localytics, and lead intelligence company InsideView. Prior investments include Responsys (bought by Oracle) and Tealeaf (IBM). The names I’ve mentioned aren’t all-inclusive.

In Garg’s my mind, there are several factors that favor the rise of mar-tech startups. In particular, CMOs are seduced by the best-of-breed message. “Very few of them will put their spend in one place, or with one vendor,” he said. They also appreciate cloud services that can be flipped on or off at will. “Marketers can easily try and use the best software for their particular problem.”

Generally speaking, there are five sorts of marketing technologies on Foundation Capital’s radar:

  1. Software for measuring campaign effectiveness
  2. Tools for automating media buys programmatically, even for offline properties
  3. Platforms for distributing “authentic” content
  4. Software for reaching “infinite segments of one”
  5. Predictive sales and lead generation technologies

“Innovation is so rapid that incumbents can’t keep up,” Garg said.

Speaking of being left behind, I wonder how Hewlett-Packard, Lenovo and other personal computer makers feel about Microsoft’s Surface Book, the software giant’s combination tablet-notebook. Plus, can a Disney-mentored startup turn your brain into a computer interface? Read on for the answer, and have a terrific Wednesday.

TOP OF MIND

Samsung’s profit outlook brightens. The world’s largest smartphone maker expects to post year-over-year earnings growth of almost 80% for its third quarter, putting an end to almost two years of declines. Most of the turnaround is attributable to strong results for its mobile chip unit and smartphone display business. (Fortune)

TRENDING

Here’s how big technology is for Starbucks. The coffee giant just hired its first chief technical officer, calling out her experience in cloud computing, big data analytics, mobile, and security as perfect credentials. Gerri Martin-Flickinger left the CIO job at software company Adobe for her new post. She also worked at security companies VeriSign and Network Associates (aka McAfee). (New York Times)

Surprise! Microsoft just introduced a notebook computer. The Surface Book is a hybrid model. Priced starting at $1,499, it doubles as either a tablet or traditional laptop. The software giant also introduced some high-end Lumia smartphones, a new fitness band, and a developer kit for the HoloLens virtual reality headset. (Fortune, Wired)

Watch for today’s Pure Storage IPO. The flash-storage company’s offering was priced at $17 per share Tuesday, right in the middle of the anticipated range. The deal will raise approximately $425 million at likely market valuation of $3.1 billion. (Journal)

Adobe projects slower growth. During a briefing Tuesday with financial analysts, the digital media software company forecast compound annual growth of 30% over the next three years. Its preliminary targets for fiscal year 2016 were lower than anticipated. Shares slid overnight in sympathy. (Reuters)

Huge late-stage investment for cloud software company AppDirect. The $140 million infusion led by JP Morgan values the company at slightly more than $1 billion. The startup’s speciality is virtual stores that organize cloud applications such as Box or Salesforce. Customers include AT&T and Deutsche Telekom. (Fortune)

 

THE DOWNLOAD

Disney wants a wearable for the brain to be the next hit gadget

You know that cute, round robot from the upcoming Star Wars movie? The one that sold out on Amazon last month, just 13 minutes after it went on sale? Sphero, the startup behind the free-rolling, commercialized version of the adorable droid, BB-8, has been developing robotic toys for years. But the company really took off after the Walt Disney Co. selected it to participate in its inaugural, three-month accelerator program for startups for last year. The Mouse House is about to “graduate” its next class of startups. As Fortune‘s Michal Lev-Ram reports, one of the most promising of the bunch is Emotiv, a startup that makes wearables for your brain.

BITS AND BYTES

Twitter’s plan for winning over new users? Human-curated news. (Fortune)

Here’s one way to get around the nullification of Safe Harbor. Apple, Alphabet, Amazon, Microsoft and NetSuite are among those finishing new data centers on the other side of the Atlantic. Another high-profile cloud software company, Workday, opened a new European headquarters in Dublin this morning. (Journal)

Let this be a warning to commercial drone companies. SkyPan International, which collects aerial images, was fined a whopping $1.9 million for flying without FAA permits. (Fortune)

Facebook-famous Winklevoss brothers get bitcoin go-ahead. Their exchange, called Gemini, was greenlighted by New York regulators. (Times)

Another big chipmaker merger, because scale matters. Apple supplier Skyworks is paying $2 billion for PMC-Sierra, a data center specialist. Some shareholders are squawking that the deal is inadequate. (Fortune)

Former IBM cloud exec emerges at stealthy startup. Lance Crosby is behind StackPath, which is working on securing the Internet of things. (Fortune)

 

 

MY FORTUNE BOOKMARKS

Marco Rubio wants to be a friend to the on-demand economy by Kia Kokalitcheva

Bosch is making Switzerland’s largest rail freight operator smart by Stacey Higginbotham

Keeping track? Cloud software reshapes project management by Heather Clancy

 

 

ONE MORE THING

 

Meet the “cord nevers.” Close to 20% of U.S. consumers have never subscribed to a pay-TV service. (Fortune)