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Data Sheet—Wednesday, April 12, 2017

Cisco’s recent agreement to buy the software company AppDynamics for $3.7 billion was a head-scratcher at two levels. First, Cisco is a hardware company. Its sales force is adept at pushing gear, not selling digital subscriptions. Second, AppDynamics, a decade-old startup with 2016 revenues approaching $230 million, was hours away from going public as part of a newly rejuvenated IPO market. Selling out to a customer hadn’t been in the cards.

The deal closed recently, and I met with AppDynamics CEO David Wadhwani Tuesday. It isn’t that difficult to understand why Wadhwani agreed to sell. Sixteen times revenue is a rich valuation. AppDynamics competitor New Relic, for example, is worth $2 billion, or a little over eight times its last four quarters of sales. As well, Cisco agreed to abandon its customary practice of integrating its acquisitions and instead allow AppDynamics to continue to run as a standalone business.

AppDynamics sits in the heart of today’s buzzword-frenzied trends, including data science and machine learning. Its software monitors a business customer’s software performance to identify potential problems. A dip in retail sales or a glut of passengers exiting a plane might identify addressable problems in real time. “We watch every line of code in the enterprise and make sure it’s performing the way it should be,” says Wadhwani. “Too often companies only recognize there’s a problem when customers tell them.”

The company’s wares are part of an exciting and also alarming trend: If its software works as well as it should, machines do the analysis previously done by people. “Why are people analyzing anything?” Wadhwani asks. “Shouldn’t all these experiences be defined by the machine analyzing things”

Good, but troubling, question.

As it happens, one group of humans was disappointed by the sale to Cisco, but not in the way you might think. A handful of AppDynamics engineers had bought brand-new suits in preparation for ringing the Nasdaq bell when the company went public, reports Wadhwani. Cisco arranged for them to do it anyway. Everyone is happy. Until a machine eliminates their analytical jobs, that is.

Adam Lashinsky
@adamlashinsky
adam_lashinksky@fortune.com

BITS AND BYTES

Uber’s public relations chief is latest to depart. Rachel Whetstone, a former Googler who joined the ride-sharing company about two years ago, apparently clashed with Uber founder and CEO Travis Kalanick over how to handle crisis communications. She’s the third high-ranking exec to leave in the past month. (Reuters, New York Times)

Lyft just added several new investors. Among those participating in the new $600 million round for the ride-sharing company is famed private equity firm KKR. The new infusion values Lyft at $7.5 billion. (Fortune, Bloomberg)

Samsung reclaims smartphone market lead, and yet. It captured 26.1% of the shipments during the first quarter, compared with Apple’s second-place chunk of 16.9%. But separate data suggests that might not hold true in the future: the iPhone holds sway with a very desirable and powerful demographic, U.S. teenagers. What’s more, Samsung just admitted it will have to delay the release of the English-language version of its voice assistant software, called Bixby. (Fortune, Fortune, Fortune, Wall Street Journal)

Zenefits is hit with another fine for unlicensed insurance sales. New York regulators want the health benefits software company to pay $1.2 million to settle an investigation, an amount that a Zenefits spokeswoman characterized as “fair.” The company previously came to terms with several other states scrutinizing its licensing processes, including California. (Reuters)

Is Snapchat only for rich people? In court papers made public this week, former employee Anthony Pompliano alleges that Snap’s CEO dismissed the company’s growth potential in “poor countries like India and Spain.” Pompliano, who was at Snap for barely three weeks, claims that the company misled investors about its upside and that he was fired after speaking up. Snap says his allegations amount to sour grapes. (Fortune)

Walmart: Want a discount on your e-commerce order? Pick it up. The company is borrowing a tactic from Jet.com, which it bought for $3 billion last year, to cut prices and turn up the heat on its competition. It costs the retailer less to ship to stores than to customers’ homes. (Fortune)

Microsoft and Hewlett Packard Enterprise invest in hacker-for-hire. The two companies were part of a $21.5 million Series C venture round for Synack, a cybersecurity firm that pays hackers to find bugs in its customers’ software. The infusion raises the startup’s backing to about $55 million. (Fortune)

Google is dumbfounded by government accusation that it underpays women. One of the company’s chief human resources executives, Eileen Naughton, denied claims that there is a systemic problem and pledged to resolve the issue with the Department of Justice. (Fortune)

IN CASE YOU MISSED IT

Netflix Has a Surprising New Streaming Rival, by Jennifer Calfas

IPO-Bound Tanium Hires DreamWorks Veteran as No. 2 Exec, by Robert Hackett

Facebook Adds Group Payments to Messaging App, by Leena Rao

Google’s New Way to Keep You Engaged Involves Shopping, by Jonathan Vanian

Startup Honeycomb Vows to Show How Software Runs in the Wild, by Barb Darrow

ONE MORE THING

You can finally say goodbye to Microsoft Vista. The company officially ended support for the 10-year-old operating system, which turned out to be a big disappointment—and inadvertently wound up offering Apple a chance to rebuild its market share in personal computers. (Fortune)

This edition of Data Sheet was curated by Heather Clancy.
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