Tech Brew Ride Home - Tuesday, July 3, 2018 - Dell Returns!

Episode Date: July 3, 2018

A big problem with Samsung Messages, Dell comes back to the public markets, more machinations in the transportation shuffle, more NSA shenanigans, and the 10th anniversary of the App Store. Links:Dell to Return to Public Markets With Tracking Stock (NYTimes)Alphabet adds to transport bets with scooter deal (FT)N.S.A. Purges Hundreds of Millions of Call and Text Records (NYTimes)IPO Market Posts Blistering First Half (WSJ)In Q2 2018, Global VC Scales Tipped In Favor Of Chinese Startups Over North America (CrunchBase)These are the top iPhone apps of all time (Tech Crunch)“Perhaps it is simpler to say that Intel…was disrupted” (Steven Sinofsky) Learn more about your ad choices. Visit megaphone.fm/adchoices

On April 4th, 2023, around 2 in the morning, a man was found stabbed multiple times on a sidewalk in downtown San Francisco. Hey, who did this to you? What happened next turned the story into a political firestorm. Reports have identified the victim as Bob Lee, the founder of Cash App. From Bloomberg Podcasts, this is Foundering, the Killing of Bob Lee, beginning April 16. Welcome to the TechMeme Right Home for Tuesday, July 3rd, 2018. I'm Brian McCullough. Today, a big problem with Samsung messages. Dell comes back to the public markets, more machinations in the transportation shuffle, more NSA shenanigans, and the 10th anniversary of the App Store.

Here's what you missed so far this week in the world of tech. Samsung phone owners, beware. Your messages texting app might be randomly sending photos to. people in your contacts list. Messages is the default texting app on Samsung devices, and Samsung says it's aware that there's an ongoing issue. The reports have surfaced on Reddit and on Samsung's official forums. One user even saying that it's not just random pictures being sent either. His entire photo gallery was sent to a contact in the middle of the night. And this is apparently a really pernicious thing because if your phone has sent photos to people, you might not be able to

get any indication that it's done so until someone tells you about it. In a statement to Gizmodo, Samsung said, quote, we are aware of the reports regarding this matter and our technical teams are looking into it. Concerned customers are encouraged to contact us directly at 1-800 Samsung, end quote. To be clear, this doesn't appear to be happening to everyone, but it does seem to happen more often to owners of late model phones like the Galaxy Note 8 and Galaxy S-9. One intermediate, immediate fix you could try seems to be to go to your phone's app settings and revoke the ability for Samsung messages to access storage. But until there's an official fix, you might want to proactively delete any photos you wouldn't want someone else seeing just to be on the safe side.

Dell is going to become a public company once again, but it's not going to be through an IPO. In fact, it's a little complicated. Five years after it was taken private in a leveraged buyout, Dell will return to the public markets by buying out a special class of shares for $21.7 billion. These special shares were created in 2016 when Dell purchased the networking company EMC. Since that time, the shares have effectively tracked the 82% of the networking software company VMware, which Dell got as a part of the EMC purchase. So that tracking stock, DVMT, will effectively become the new Dell after a share and cash swap. Got that? Me neither. And believe me, there's a lot more to it. Special dividends. Shareholders can

choose which class of shares to convert them into, etc., etc. But who cares? Bottom line is, Dell is back, and with a special corporate structure that means that Michael Dell himself is back, at least on the public markets. The whole reason that Dell went private was to avoid public market scrutiny during the existentially transformational period where the PC market was becoming less primal to both the technology industry on the whole and to Dell as a company in particular. Michael Dell and Silver Lake, the investment firm that has been Michael Dell's partner throughout this whole transformation, will now have a firm controlling say on what happens with Dell as the company goes forward. Here's how the New York Times sums up how this whole saga has

shaken out. Quote, the transaction represents in some ways the culmination of a nearly $100 billion bet by Mr. Dell and Silver Lake that, away from the harsh glare of public markets, they could retool a company best known for making personal computers and traditional servers for an age of smartphones and cloud computing. Dell still supplies the machines that sit on the desks inside many office buildings and has also found a ready market selling equipment and software to the kinds of networked computing services that were once thought to spell its end. In 2012, people were saying the PC was dead. It wasn't, Mr. Dell said. in a telephone interview to the Times.

Three years ago, people were saying that everything was going to the public cloud. Turns out that was completely wrong, too. Remember how I mentioned last week that if half of the VC world was lining up to invest in Byrd, that was because the other half was already invested with Lyme. Well, with this story, that, but even more so. According to the Financial Times, Alphabet, which is, of course, Google's parent company, will invest directly in e-scooter startup lime as a part of a $300 million round

that will soon close and value Lyme at a $1.1 billion post-money valuation. GV, formerly known as Google Ventures, is joining in as well. So this is complex, and because it is, it's interesting. As the Financial Times notes, quote, GV was an early investor in Uber,

while Alphabet also has a stake in rival Lyft through capital G. Both Uber and Lyft has signaled their interest in entering the scooter market, which threatens to take away ride-sharing customers for shorter trips around town. Lime is already competing with Uber and Lyft, as well as several other companies for a permit to operate a scooter service in San Francisco. Then there's Waymo, Alphabet's Autonomous Driving Company, and Sidewalk Labs, its Smart Cities Unit, that already has various projects focused on tackling urban transit, end quote. As the Financial Times, as Tim Bradshaw also pointed out on Twitter, quote, Then there's the Alphabet Founders Personal Transport Investments. Larry Page is doing flying cars with Kitty Hawk.

Sergei Bren has a giant blimp project at Moffat Airfield, LTA, which paid Alphabet $423,000 to use their facility last year. Bradshaw concludes by asking, how does it all fit together? Does it all fit together? P.S., since we've been following the last, this whole create a utility belt of transportation options and subsume it all into one single app for a while. And also because this had been rumored before, it's interesting to note that Lyft is officially buying the core operations of Motivate, which is the parent company of several

bike sharing operations in several cities, most prominently City Bike in New York. Financial terms were not disclosed, but it had been rumored previously that the deal would be in the $250 million range. The business will be renamed Lyft bikes and will be renamed Lyft bikes and will keep its contracts running in the cities that Motivate was already operating in. Uber, of course, got into the bike-sharing game by acquiring Jump for something in the neighborhood of $200 million. The NSA says it is deleting all phone records that it has acquired since 2015 under the FISA regime because of a technical glitch that resulted in some unauthorized data collection. The records in question are so-called call detail records, and according to the New York Times,

number of records that the NSA is deleting is in the hundreds of millions. This is how the Times described the issue. Quote, Glenn S. Gerstel, the National Security Agency's General Counsel, said in an interview that because of several complex technical glitches, one or more telecom providers, he declined to say which, had responded to court orders for targets records by sending logs to the agency that included both accurate data and also some numbers of people the targets had not been in contact with. As a result, the agency then fed those phone numbers back to the telecoms to get the communications logs of all the people who had been in contact with its targets.

The agency also gathered some data of people unconnected to the targets. The National Security Agency had no authority to collect their information. If the information was incorrect, even though on its face it looked like any other number, then when we fed that back out, by definition we'd get records back on the second hop that we did not have authority to collect. Gerstel told the times, end quote. The NSA has been authorized to collect phone and text records under the 2001 USA Patriot Act passed in the immediate aftermath of 9-11. But then came the Edward Snowden revelations, and in the wake of that, the 2015 USA Freedom

Act was passed, which stipulated that bulk data had to remain in the hands of the telecon companies, and the NSA is only allowed to access the laws of a specific surveillance target, and anyone that person has communicated with, and even then only with the okay of a judge. As Alex Abdo, formerly of the ACLU and currently an attorney at the Knight First Amendment Institute, tweeted, Evergreen tweet. The NSA recently discovered technical irregularities in its surveillance of U.S. persons that led to collections Congress didn't authorize. A couple of quick pieces here to keep you updated on the state of play as we enter the second half of 2018. Remember last week when I was talking about the increased rate of ICOs and mentioned briefly how IPOs had been doing unusually well as of late? Well, according to Deal Logic, I was right.

US Tech IPOs excluding Spotify's listing raised around $12.2 billion over 28 deals in the first half of 2018. That is nearly double the volume from the same period last year. And the broader picture is good as well. Overall, 120 companies had IPOs so far this year in North America raising $35.2 billion, making this the highest volume of initial public offerings since 2014, and the fourth busiest year on record since 1995, so essentially since the dawn of the modern web-slash-internet era. On average, companies that have IPOed in the U.S. this year are trading 22% above their IPO price, and tech companies are up 53% above their IPO.

IPO price. Evan Damast, global head of equity and fixed income syndicate at Morgan Stanley, told the Wall Street Journal, quote, our global IPO pipeline is stronger now than it's been since the financial crisis, end quote. There's one other wrinkle here that I wanted to point out, though. Let's zoom out and consider the overall VC money that is funding these companies that will eventually go public. According to Crunchbase, in Q2 of this year, Chinese startup, accounted for 47% of all reported VC dollar volume versus 35% for North American companies. So on aggregate, if you project a few years in the future, it seems that the IPOs of the future might someday be mostly outside the U.S.

Now, there's a big caveat worth mentioning, though, that Q2 number included Ant Financial's recent mega round of $14 billion that it raised for its Series C, which was the largest raise of all time. Without and financial, Chinese startups would have raised only slightly more than they did in Q1. But as Crunchbase says, quote, all this being said, China's venture capital market is growing in absolute and relative terms. The number of reported rounds raised by Chinese startups in Q2, 2018, is up 395% from the same period last year. And the 10th anniversary of the App Store is coming next week, July 11th. So a quick check-in on the state of the app ecosystem.

According to App Annie, Clash of Clans, the App Store's most downloaded game of all time has earned a grand total of $4 billion over the course of its lifetime in the iOS App Store. The most downloaded app ever in the iOS App Store over these past 10 years has been Facebook, which was downloaded 700 million times in total. Since the App Store opened, there have been more than 170 billion downloads, and more than $130 billion spent on apps since July 2010. As of this moment, the iOS App Store includes some 2.2 million different apps. In the list of the top 10 app downloads of all time, Facebook is number one, of course, and its Messenger app is number two.

YouTube comes in at number three, Instagram number four, WhatsApp number five, and Google Maps comes in at number six. The rest of the top ten is rounded out by Snapchat, Skype, Skype, WeChat and QQ. If you'll remember last week, Ben Thompson had a great summary post about the situation Intel finds itself in as it searches for a new CEO. And when I shared that story with you, I also gave you a link to a tweet storm by Stephen Sinovsky that was in dialogue with Thompson's post. Well, Sinovsky has a post up on Medium that fleshes out more of his arguments.

If you're not familiar with Steven Sinovsky, he was at Microsoft for a little over two decades, pretty much at the height of the so-called Wintel duopoly over the technology industry, but also through the tail end of the 2010s, as that paradigm was comprehensively breaking down. So let's just say that he's had some dealings with Intel over the years from a pretty interesting perspective. Quoting from Sinovsky's piece, Ben's Post nails the idea that Intel thought, no matter what, it could out-manufacture everyone. And that was true for a very long time. It was just as true that Microsoft could out software, most anyone. But the problem is,

those have to be pointed in the right direction. When you're being disrupted, these skills and processes developed and optimized turn out to be no longer relevant, end quote. Later on, he goes on to say, so first thing, if innovation is focused on first and foremost being proprietary versus solving problems people have, then I think you'll always run into trouble. In an ecosystem play, this is always a risk. People hate being locked in, especially when it's obviously the intent, end quote. I could honestly read you his whole piece.

There's lots of great behind-the-scenes stuff about the TikTok of various product cycles and how, from Sinovsky's perspective, Intel was just too stubborn. So very much worth a read. Please check the link in the show notes. And that's all for today. Greetings from Northern Michigan, everybody.

If you're in the U.S. and not on vacation yet, hopefully this podcast at least catches you on your way to somewhere fun. As I said, we'll check back with you on Friday. In the meantime, keep those fireworks pointed away from you. And don't forget to reapply your sunscreen. Oh, this is funny. I'm missing again right now. Maybe wish everyone a happy Fourth of July. Happy Fourth of July, everyone.

I hope you have a good day. good person why. Bye-bye, everyone. This is turning.