This is the Bullish Data Newsletter - Number 52. Read more or subscribe at More details at the bottom of this message.
Good morning. As you may have noticed, I decided to make some format changes to this newsletter. Namely, I’ve abandoned the weekly cadence, and I’m shifting from providing a “links with commentary” email to a “commentary with links” message. Most of you already follow tech news, and probably don’t need me to remind you of what’s happened each week. Rather, my goal for this newsletter is to add something to the conversation, and hopefully make you think differently about something in the industry. Like everything else, this is a work in progress. Let me know you think I’m doing.

How do you evaluate work?

All the debate recently about how compensation negotiations are conducted in the tech industry has gotten me thinking a lot about how we measure employee performance. Ellen Pao got rid of salary negotiations in Reddit’s recruiting process (which, I wrote, was a mistake), and there’s been much consternation voiced in Twitter's tech VC community about how the pressure for tech talent is not only driving up compensation, but also creating a “mercenary” culture in which, bizarrely, workers gravitate towards employers who offer the best compensation and benefits. (Weird, right?)
We often hear from the tech VC community, as well as from many executives, that employees should “trust the system” in their companies to distribute raises, bonuses and promotions fairly, instead of speaking up to ask for them (or negotiating hard on the way in). The problem, as I see it, is that this idea assumes that those prizes are distributed on the basis of a fair and accurate internal evaluation of performance, instead of, well, politicking. I wrote this week about why this often just isn’t the case, both because of how work gets done in the knowledge economy and the natural, inescapable foibles of human psychology. We need a new way to measure performance. In the meantime, though, negotiation is going no where.

Adobe is a rocket ship

Adobe’s Q2 report came out on Monday, and I updated my running chart of financial performance for the company and Marketing Cloud specifically. The company is on a tear. While their P/E multiple is still at eye-watering levels, in 2015 they’ve nearly doubled their operating margin from where it was in 2013/2014 and begun to ramp up net income in a big way. The fruits of their pivot to a cloud model are beginning to show.
One day, Adobe should be a case study candidate for a company that has successfully done two extremely difficult things well - simultaneously. First, they pivoted from an on–prem software model to mostly cloud. The transition to Creative Cloud, while ceasing the sale of their on-prem creative products, involved swapping out one source of revenue for another (recurring) one, which distorted the optics of their revenue growth for several years. It’s a tribute to their strong leadership and clear communication that they were able to do it as a public company. 
Second, they built an industry-leading digital marketing line of business from virtually nothing. Starting with the Omniture acquisition in 2009, Adobe has deftly managed its marketing tech acquisitions in such a way as to build enormous value around the portfolio as a whole, and not just through the sum of its parts. (Can you tell I’m trying to avoid saying “synergy?”) Very, very few companies have done this nearly as successfully.

Facebook refocuses

Facebook announced that its Messenger app hit 700 MAUs. Re/code pointed out that this would indicate a gain of 200 million users in just the last seven months – wow. Of course, DAUs would be a better metric for such a service that fills users’ instantaneous needs, but in the meantime, the growth of this messaging platform (and don’t forget WhatsApp!) is a big red sign about where Facebook intends to focus the company.
Meanwhile, as I predicted a while back, Facebook is backing away from ambitious earlier plans for satellite-based internet connectivity. The problem just came down to cost and efficacy – satellite internet services are slow, expensive and require tremendous upfront investments and ongoing maintenance costs. I expect the same to happen for’s drone-based connectivity scheme.

And Etsy is doing… crowdfunding

“Fund on Etsy” is a new feature that allows sellers crafters to boostrap financing for manufacturing of their goods by crowdfunding among the site’s tens of millions of customers. As an entrepreneur, your customers are already there – why not use them to help provide capital, and not just product selection? This is one of the big advantages of being a two-sided marketplace like Etsy, as opposed to simply another ecommerce site: you can charge fees on either end.


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Stay classy out there. Have a great week!
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