If you crave further confirmation that Silicon Valley is a magical place where magical thinking reigns, consider the tale of Roku, the video streaming company that filed to go public Friday, when alert people everywhere were headed out for a long weekend.
Roku, as it relates in its IPO filing with the U.S. Securities Exchange Commission, is 15 years old. That time span omits an interesting detail, nowhere present in the filing, that Roku once was a part of Netflix. According to a fascinating history in Fast Company, Netflix’s visionary CEO Reed Hastings suddenly decided in 2007 that a hardware device to stream the Internet didn’t fit inside video purveyor Netflix. So he spun it off, a shrewd move considering that Netflix has been far more successful without Roku.
Some data points to consider, from Roku’s filing:
* For its entire history Roku has an “accumulated deficit” of $244 million. It doesn’t make money now, either.
* Roku collects money two ways: by selling hardware, which it calls “players”; and by selling advertising and taking a cut of revenues from the video publishers on its platform. The player business, which constitutes the majority of Roku’s revenues, is declining. The ad business is growing, but …
* Roku gets next to no revenue from Netflix, which accounts for a third of its usage. It gets no revenue whatsoever from Google’s YouTube, “the most viewed ad-supported channel by hours streamed” on its platform. (Video publishers everywhere chagrined by the paltry payouts they get from YouTube can rejoice in comparison.)
Get Data Sheet, Fortune’s technology newsletter.
For all this, Roku has a future. Its “long tail” business of providing an on-ramp to streaming video publishers without their own networks shows promise. Roku also has consistently surfed the technological streaming wave and managed to stay afloat over an impressively long time.
It’s an oft-told story of Silicon Valley. Neither a success nor by any means a failure, Roku will nevertheless ask public investors for money because they too have a right to dream that magic will become reality one day.
| Adam Lashinsky | |
| @adamlashinsky | |
| adam_lashinsky@fortune.com |
NEWSWORTHY
Zapped. Hackers have burrowed their way inside parts of the critical infrastructure of the U.S. electrical grid and the threat of cyberattack-induced power outages in the west has elevated from a theoretical concern to a legitimate one, warns cybersecurity giant Symantec. "We're talking about activity we're seeing on actual operational networks that control the actual power grid," Eric Chien, technical director of security technology, tells Fortune.
Total opposition. Tech companies rose to the defense of the "dreamers" after President Trump revoked an executive order known as Deferred Action for Childhood Arrivals or DACA that protected them from deportation. Microsoft president Brad Smith declared that government attempts to deport the company's workers would "have to go through us."
Staying put. Hewlett Packard Enterprise reported better-than-expected quarterly revenue of $8.2 billion, a 3% rise and more than the $7.5 billion analysts had forecast. CEO Meg Whitman took the opportunity to explain that while she was asked to apply for the top job at Uber, she just wanted to stay at HPE. "I am actually not going anywhere," she said. HPE shares were up 2% in premarket trading on Wednesday.
Slap on the wrist. Why do companies pay so little heed to their U.S. customers' privacy and security? Maybe because the penalties are so low when they get caught in a violation. Lenovo agreed to pay $3.5 million to settle charges that spyware advertising software it preinstalled on almost 1 million laptops without customer consent was able to access consumers' sensitive information, like Social Security numbers.
It's different over there. In Europe, companies will have to be more clear about worker privacy rights in email. Europe’s Grand Chamber of the European Court of Justice ruled that companies must disclose email monitoring and establish "adequate and sufficient safeguards against abuse."
Coins between the seat cushions. Turo, the startup dubbed the "AirBnb of cars," raised $92 million and will acquire Croove, a similar service based in Germany. Started in 2009, Turo says it now has more than 170,000 cars listed as available to share/rent among its 4 million users. Some vehicles are popular enough that a few days rent can cover the monthly car payment. A new Tesla Model S owner can make $1,000 in seven days, about the same as the monthly payment to buy the electric car, Turo says.
FOOD FOR THOUGHT
IBM has touted its Watson machine learning and artificial intelligence system as the solution to a wide range of the world's most vexing problems, from developing new drugs to improving teaching. It's been hard to pin down just how well Watson is doing, or how much revenue it really generates for IBM.
A reporting team at medical news site Stat dug into one of IBM's claims for the system, that it could become an important tool in treating cancer, and found little to support the company's view.
After three years, only a few dozen hospitals are using Watson's cancer suggestions and IBM has not published any peer-reviewed scientific papers on the system's impact on patient care or outcomes. Some doctors outside of the United States that have reviewed Watson think it over-emphasizes U.S. treatment approaches. Dr. Leif Jensen, who oversees the oncology department at Rigshospitalet in Copenhagen, is among the critics.
"We had a discussion with [IBM] that they had a very limited view on the international literature, basically, putting too much stress on American studies, and too little stress on big, international, European, and other-part-of-the-world studies," Jensen told Stat.
IN CASE YOU MISSED IT
Facebook’s Ad Metrics Come Under Scrutiny Yet Again by David Meyer
How Gamers Made Over $1 Million on Minecraft by Jonathan Vanian
Maersk and Microsoft Tested a Blockchain for Shipping Insurance by Robert Hackett
Why Samsung’s Note 8 Face Lock May Not Be So Secure by Aaron Pressman
Apple’s Longstanding Music Festival Won’t Get an Encore by Don Reisinger
Nintendo: Mario’s No Longer a Plumber by Chris Morris
HPE Shopping Spree Continues With Purchase of This Cloud Specialist by Barb Darrow
BEFORE YOU GO
Houston will need years to recover from the devastation of Hurricane Harvey and now an even more powerful storm is churning through the Caribbean heading towards Florida. For an incredible view of Hurricane Irma, with the highest wind speeds ever recorded in the Atlantic, NASA has posted a video shot from the International Space Station.
