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Data Sheet—Wednesday, August 3, 2016

Recent numbers show it is becoming tougher for startups to raise money. Someone forgot to send that memo to Silicon Valley accelerators like 500 Startups and Y Combinator.

I spent Tuesday attending events at both seed-stage startup accelerators, and while the current downturn in funding and valuations was brought up, the energetic mood was clearly not impacted. Dave McClure, founding partner of 500 Startups, kicked off his fund’s 17th “Demo Day” donning a sparkly, rainbow-colored wig and unicorn horn. (Yes, unicorns are starting to live up to their name again by becoming scarcer.) “There are still a lot of people deploying capital,” he said enthusiastically to the crowd of investors and startup entrepreneurs, all gathered near the Googleplex at the Computer History Museum.

There are also still a lot of startups trying to innovate—albeit on a tighter budget than in previous years. At the 500 Startups event, a company called Boomerang, which says it is trying to “make email great again,” proclaimed it has grown to 45 million “active installs” on just $400,000 in capital. Later in the day, at Y Combinator’s weekly Tuesday night dinner, about a couple hundred entrepreneurs gathered to network and hear an inspiring talk from Pixar co-founder Ed Catmull. I met one such entrepreneur who started a company that pulls international data to give immigrants access to credit. Pretty cool idea.

To be sure, most of the startups I met will fail—and not just because they won’t be able to raise enough money. That’s always the case in Silicon Valley. Still, it was encouraging to see the energy in both rooms. One note to self (and to readers) though—if you’re expecting to eat at an accelerator event, get to the food line fast. Food, if not financing, tends to dry up fast in a startup crowd.

Michal Lev-Ram is a senior writer at Fortune. Reach her via email.

BITS & BYTES

The five most valuable companies in America are all tech giants. Apple, Google’s parent Alphabet, Microsoft, Amazon, and Facebook boast bigger market capitalizations than any other company (in that order). This happened at the expense of Exxon Mobil and Berkshire, two much older companies in more mature markets that still generate more revenue than the companies that displaced them. (Fortune)

Fitbit shapes up. The fitness gadget maker expects higher margins for the rest of 2016, thanks to new products like the $200 Blaze. That narrative boosted shares by 7% after Fitbit’s second-quarter results were released last night, a marked departure from the reaction over the past four quarters. (Fortune)

Hard drive maker Seagate links future to cloud data centers. The company is moving away from low-margin businesses such as storage for low-end notebook computers, its CEO Steve Luczo revealed on Seagate’s earnings call Tuesday. But it’s still aiming to ship 35 million to 40 million drives per quarter, especially into data centers for data-hungry videos, photos, TV shows, and mobile apps. (Fortune)

Samsung’s latest smartphone sees who you are. The Galaxy Note 7 boasts an iris scanner (for security) along with a 5.7-inch high-definition display that supports a digital stylus. The big U.S. wireless carriers plan to sell the device starting Aug. 19. (Fortune, Ars Technica)

Want to test HoloLens? Now’s your chance. Microsoft has expanded the early adopter program for its augmented reality headset. (Fortune)

PEOPLE & CULTURE

Meg Whitman crosses party lines. Hewlett Packard Enterprise’s CEO is a longtime Republican, but she’s putting “country first” and urging fellow GOP members to “reject” Donald Trump and vote for Democrat Hillary Clinton. (Fortune)

Verizon recruits British exec to lead mobile strategy. Ronan Dunne, the customer-centric, Twitter-loving CEO of British carrier O2, was named executive vice president and group president of Verizon Wireless. He’s a big advocate of social media, which he calls the “digital equivalent of walking the shop floor.” (Fortune)

The 28-year-old who brought down Safe Harbor isn’t happy with the alternative. Max Schrems, the law student who successfully challenged the data transfer pact between the U.S. and Europe on privacy grounds, thinks its replacement is also flawed. The new law took effect Aug. 1, but he anticipates more legal debate. (Bloomberg)

WATCH FOR IT

Get ready for Tesla’s latest pit stop. The electric vehicle maker has plenty to discuss, including its $2.6 billion takeover of SolarCity and a fatality that occurred while one of its cars was being used in self-driving mode. A more immediate concern, however, will be the company’s missed shipment forecast—well under the 17,000 it projected. By the way, GM this week said it has sold 100,000 Chevrolet Volts since the electric car’s 2010 debut. (Fortune)

Square, GoDaddy updates in store. You can also expect second-quarter results from mobile payments company Square (usually a strong quarter) and Internet hosting firm GoDaddy (projections call for $451 million in revenue).

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THE DOWNLOAD

AppDynamics is ready for ‘public microscope.’ “Why was my app offline for nine hours?” When AppDynamics CEO David Wadhwani was greeted with that question from a U.K. bank CEO during his first week on the job, his team wasn’t stumped long. They found the problem, caused by bad software code, in 40 seconds.

That bank is now among the 1,800 companies—including Kraft, Expedia, JetBlue, and Nike—that use AppDynamics software to monitor the performance of the software behind everything from e-commerce sites to customer service centers.

The company’s growth aligns closely with a sea change in how applications and services are written and updated. Fewer companies are releasing bloated, monolithic apps that take months or even years to revise. Instead, they are breaking them up into individual components or “microservices” that handle specific processes. Here’s why that’s both good and bad.

IN CASE YOU MISSED IT

Here’s Why Facebook Is So Desperate to Buy, Copy, or Kill Snapchat, by Mathew Ingram

White House Gives Thumbs Up to Drone Delivery Test by Google’s Parent, by Jonathan Vanian

Read What Yahoo Is Telling Employees About the Verizon Deal, by Robert Hackett

Transatlantic Startup Ceros Is Signing Big Brands for Its Design Software, by Heather Clancy

This New Nike App Is Like a Concierge for Working Out, by John Kell

ONE MORE THING

Famous hacker plans to rate software for vulnerability. The Consumer Reports-style framework suggested by Peiter Zatko (aka “Mudge”) and his wife, Sarah Zatko, could inspire changes that make widely used browsers and business applications more difficult to compromise. (Fortune)

This edition of Data Sheet was curated by Heather Clancy.