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Data Sheet—Thursday, February 11, 2016

February 11, 2016, 1:36 PM UTC

Imagine you run a company that’s growing revenues at a nearly 50% clip, to the tune of more than $700 million in the fourth quarter alone. Well over 300 million people use your product each month, and though that number isn’t growing, your sales team has been convincing customers that a new kind of ad product—in this case related to video—is worth spending more money on. Your company loses money, as you’ve expected, but it lost considerably less last quarter than in the year-earlier period.

You might be pretty happy to find yourself in that situation, which just happens to be Jack Dorsey’s reality. It’s unlikely that Dorsey, CEO of Twitter, is too happy though, because investors and critics are so focused on that lack of user growth they can’t consider anything else.

Twitter is so unloved that its stock is down more than 70% from its high. Then again, it’s now worth a cool $10 billion. That’s not bad for a fledgling company that loses money, has a confusing product, suffers from comparisons to competitors Google and Facebook, and isn’t growing its user base.

It’s just the latest example of the surreal nature of the markets and the tech world. Any company in any other industry would be dancing for joy if it could grow year-over-year revenues by 50% without adding new users. Most companies in any other industry would be delighted to have a $10 billion valuation on a little over $3 billion in annual sales and no profits.

What’s more, there some evidence Twitter is righting its ship. It is pushing a dynamic video streaming product, Periscope. It has begun presenting tweets users missed when they were logged off. It’s “human-curated” Moments feature may be gaining traction.

Silicon Valley is too quick to write off yesterday’s cool kid who hasn’t kept up. That’s fine when financial results have gone south—think of Zynga—or when a company is trying all sorts of things that simply aren’t working. (Yahoo comes to mind.)

Twitter is not done. Nor is it done growing. Imagine that opportunity.

Adam Lashinsky


Cisco beats quarter, surprises investors with $15 billion buyback plan. The networking equipment giant logged $11.8 billion in revenue for its second fiscal quarter, even though sales declined within its core data center businesses. It also managed per-share profits of 57 cents. That news, along with a $15 billion stock buyback plan, sent Cisco's shares 7% higher in after-hours trading. Its outlook for the current quarter, however, is highly conservative. That sentiment was echoed by telco equipment provider Nokia, which refused to issue guidance despite strong fourth-quarter results of its own. (Fortune, Re/code, Wall Street Journal)

Google soothes European privacy concerns. The Internet company reportedly will honor "right to be forgotten" requests more aggressively than it originally intended. Now, when a European citizen asks for a link to be removed, it will vanish from search results everywhere—not just the country where the request originated. (Reuters, New York Times)

JetBlue opens Silicon Valley tech incubator. The airline seeks technologies for improving interactions with customers and employees, improving logistics, and wrangling huge volumes of data. Other big companies—including General Electric, General Motors, and Walmart—have established a presence in Silicon Valley but JetBlue is the first U.S. airline to do so. (Wall Street Journal)

Feds take Google's side in debate over driverless car regulations. It's legal for a computer guided by artificial intelligence to "drive" a car, according to the chief lawyer for the National Highway Transportation and Safety Administration. That opinion is at odds with rules being proposed in California, which require the presence of a human driver. The crux of the matter is concern over traffic safety. (New York Times, Fortune)

eBay thinks more like a retailer in quest to best Amazon. There are more than 800 million items for sale on the marketplace, but it's hard for would-be buyers to find what they're seeking. During remarks Wednesday at a technology conference in San Francisco, eBay CEO Devin Wenig says better search technology is a high priority along with better reviews and feedback forums. (Fortune)

Tesla promises great 2016 after big fourth-quarter loss. The electric car maker missed earnings expectations by a mile last quarter, recording a $320.4 million loss. But car buyers can start placing orders for the highly anticipated Model 3—a $35,000 vehicle for the mass market—in March. Tesla is betting big on that introduction, which it hopes will push results into the black this year. (Wall Street Journal, Ars Technica, The Verge)

Marc Andreessen apologizes over offensive tweets. The venture capitalist, who is a Facebook director, vented his frustration over India's decision to effectively ban the social network's free Internet service. But his misguided comments prompted criticism so fierce that both Facebook and its CEO Mark Zuckerberg felt compelled to disavow them, prompting Andreessen to apologize Wednesday. It's a good reminder for all of us: think before you tweet. (Fortune, New York Times)


Is a maid an employee? Looking for a third way in the 'on-demand' economy. When most people think of contractors, they don’t picture someone with a mop and broom. But for the startup Handy, an army of these contractors—maids, in common parlance—are indispensable to its home-cleaning service in 28 cities.

This is a problem for Handy because some say its unskilled workers aren’t contractors at all, but ordinary employees. The classification is critical because many “on-demand” startups rely on it to avoid certain labor costs and could collapse without it. A spate of lawsuits, on the other hand, argue the contractor strategy isn’t a real business model, but is simply illegal and exploitive instead.

In November, the controversy led some executives to suggest another model—one that provides “portable benefits” for those who work part-time but are not employees. Fortune's Jeff John Roberts reports on the implications. (Fortune)


Jack Dorsey's vision for Twitter becomes clear by Erin Griffith

Amazon shares rise on share buyback plan by Leena Rao

Network virtualization is VMware's next frontier by Barb Darrow

Underdog Marketo sees marketing software price war by Heather Clancy

Can Check Point founder Shlomo Kramer strike again? by Michal Lev-Ram

YouTube releases first original content lineup by Kia Kokalitcheva

Here's when you can buy a computer capable of running the Oculus VR headset by Jason Cipriani

Twitter's new algorithmic filtering is here, and it's optional
by Kia Kokalitcheva


Watch Steve Jobs unveil his biggest product failure. A long-lost video documents the "grand" unveiling of the late entrepreneur's ill-fated NeXT Computer. Only 50,000 were sold. (Fortune)


This edition of Data Sheet was curated by Heather Clancy: