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Never has the notion of swimming outside one’s lane been so exciting.
Accenture, the spawn of Arthur Andersen turned consultant turned marketing guru, is buying Droga5, a buzzy advertising agency. Odd fit? Maybe. But consultants increasingly have been veering into the business of marketing. Clients that need IT strategies need marketing strategies that happen to be IT strategies these days.
Incidentally, the seller of nearly half of Droga5 is Endeavor, formerly known as WME and before that William Morris Endeavor. The point is that Endeavor at its core is a master lane switcher, a TV talent agency that bought a sports agency (IMG) and a stake in an ad business, too. Endeavor is staked by private-equity firm Silver Lake and has been rumored to be plotting an IPO. It bought the Droga5 stake for a reported $115 million in 2013. Selling out now for far more than that—terms weren’t divulged, but Droga5 is said to cooking with gas—would help pay down Endeavor’s debt before an offering.
The biggest metamorphosis expert in the land, of course, is Amazon, the cloud software enterprise that also sells books and a few million other things. It was the elephant in the room all week at Fortune’s Brainstorm Health conference in San Diego. Morgan Stanley investment banker Cheri Mowrey noted that Amazon has been out slyly sucking up information throughout the healthcare industry and already has shown a bit of its strategy with the purchase of online pharmacy PillPack. Haven, the secretive joint venture Amazon has formed with J.P. Morgan and Berkshire Hathaway, isn’t a for-profit company—and it is scaring the daylights out of healthcare services companies anyway.
On a final note, please check out this wonderful piece in the Financial Times by onetime journalist and current Suecophile Michael Moritz. It’s about a Swedish newspaper group that has thrived not by splashing into someone else’s lane, but by getting smart about its own digital business while prudently continuing to print newspapers.
Conscious uncoupling. Low earth orbit, the space up to about 1,200 miles high, could get pretty crowded. Getting even further out of its lane, Amazon confirmed a plan called Project Kuiper to loft more than 3,200 satellites to provide worldwide Internet service. SpaceX, OneWeb and others have similar plans. In other Amazon-adjacent news, Jeff and MacKenzie Bezos revealed that, under the terms of their divorce, MacKenzie will get 25% of the family’s Amazon stake (worth about $35 billion) but voting control for the shares will remain with Jeff. Those votes may come in handy, as the Securities and Exchange Commission ruled that Amazon shareholders should be allowed to vote on a proposal to ban the company from selling its facial recognition software to governments if it endangers human rights
I’m not sure how healthy bacon is in general. Speaking of dissolutions, Google said it would un-form its A.I. ethical advisory board about a week after it was formed. Beset with controversy over some of the members, Google is “ending the council and going back to the drawing board,” a spokesperson told Vox. Meanwhile, Google stirred a new controversy by testing a program to put advertisements on the home screens of some smart TV sets, including multi-thousand-dollar 4K Sony devices. Not cool, Google, not cool.
Kicked out of our school. Tough times at Samsung. Slipping smartphone sales and falling prices for LCD panels and memory chips combined to put a crunch on profits, which will fall 60% from a year earlier to about $5.5 billion, the company said.
You just make it work. In a victory for responsible PC owners, Microsoft is changing the Windows update process. Home users will have the option to pause updates for 35 days and delay larger updates.
The balance between cigarettes and tofu. The British royals have a problem with battle royale. Prince Harry, speaking at a YMCA in West London, criticized the popular video game Fortnite. “The game shouldn’t be allowed,” he said. “It’s created to addict. An addiction to keep you in front of a computer for as long as possible. It’s so irresponsible.”
I am who I am. There was no verdict in the case of SEC v. Elon Musk on Thursday. The agency wanted a judge to hold the Tesla CEO in contempt for tweets that may have violated an earlier settlement agreement. But District Judge Alison Nathan was having none of it, telling both sides to “put their reasonableness pants on” and get back to her in two weeks.
FOR YOUR WEEKEND READING PLEASURE
A few longer reads that I came across this week that may be appealing for your weekend reading pleasure:
When Tech’s Hottest Names Go Public, This Is Who They Call (Wall Street Journal)
Julie Gao advised on stock sales that raised more than $20 billion last year, including seven of the 10 largest Chinese tech IPOs
The Women Who Nod At Death And Say Let’s Go (Deadspin)
Although there is still no women’s bronc riding event sanctioned by any of the largest rodeo organizations of the U.S., the tours…brought together nearly two dozen women who regularly compete and who have become card-carrying members of his association.
25 Years Later: Interview with Linus Torvalds (Linux Journal)
“I’m actually one of those people who thinks that anonymity is overrated. Some people confuse privacy and anonymity and think they go hand in hand, and that protecting privacy means that you need to protect anonymity. I think that’s wrong.”
Actor Damian Lewis: ‘There’s a Clown in the British Character’ (The Financial Times)
The Billions star on schooldays with David Cameron, playing conflicted characters — and rumours of 007.
FOOD FOR THOUGHT
Lyft went public last week and a bunch of other well-known private tech companies are right on its heels, including Uber, Slack and Airbnb. But Bloomberg’s Sarah Ponczek and Ryan Vlastelica have a cautionary tale in a story examining the initial public offering of Blue Apron. Spoiler alert: the prepared meal company’s stock, which was priced at $10 in the IPO less than two years ago, now trades for $1.02.
Part of the issue with these companies is that while they have generated a lot of buzz, their business models aren’t anything special. “Lyft smacks of technology, but under the hood it’s still just people in cars,” says Bill Stone, chief investment officer of Avalon Advisors, which has $8.5 billion in assets under management. “Blue Apron was sexy for a short time because Wall Street loves the subscription model; it seemed to be the perfect intersection between tech and subscriptions, but so far, it isn’t working out.” Blue Apron hasn’t posted a single profitable quarter. Neither has Lyft or Uber, which could be valued at as much as $120 billion.
IN CASE YOU MISSED IT
IBM’s Big Bet on Artificial Intelligence Training By Anne Fisher
The Hidden Price of Cashless Retail By Charlie Thaxton
BEFORE YOU GO
Verizon raced to let actual customers onto its 5G mobile network in a few parts of Chicago and Minneapolis this week so it could claim bragging rights over some South Korean carriers. CNET’s Jessica Dolcourt raced herself on a rainy day in Chicago to try out the new service. She measured download speeds over 500 megabits per second, but found the service spotty, battery-draining and a bit confusing. “It was more like a wild goose chase,” she concluded. But it is day one. Hang in there, Jessica.