The most shocking events in social, and media, in 2015

Steven Loeb · December 24, 2015 · Short URL:

Yahoo split up, Google changed its name and daily fantasy sports took a massive hit

It's easy to try to predict what's going to happen in the coming year. Sometimes we're right (I predicted that Google Glass would go the enterprise route) and sometimes we're very wrong (I said that Travis Kalanick would have resigned by now. D'oh!)

Some things, though, we just did not see coming. Here are some of the most shocking developments in social, and in media, in 2015.

1. Dick Costolo gets the boot

The most surprising moment of the year was also the biggest for the social media space: the sudden resignation of Dick Costolo, and the subsequent hiring of Jack Dorsey.

Maybe this shouldn't have been all that surprising, though, considering that Twitter had seen stagnating user numbers over the last few quarters before the announcement was made. And investors were starting to revolt. 

After the company missed badly in its Q1 2015 earnings, with advertising revenue coming in much lower than expected, Twitter shareholder Chris Sacca wrote a scathing blog post in which he blamed the company, without naming Costolo directly, for not having a bold enough vision to impress Wall Street.

"Trying to pin blame on anyone for why Twitter hasn’t made these moves sooner is unproductive. I want Twitter to press forward. I am glad to say there are positive signs that Twitter is once again becoming an organization that can and will ship innovation," he wrote.

"Despite that, my biggest concern is the abundance of public doubt and misunderstanding when it comes to Twitter’s vision and the near future for the service. It’s hard to blame Wall Street or the press. Twitter has failed to tell its own story."

And, even though Costolo also resigned from the board of directors as well, meaning that he officially has no ties to the company he ran for nearly five years, don't feel too bad for him: Costolo has already said that will be back very soon with a new company in the personal wellness space.  

2. Yahoo splits up 

One of my predictions for 2015 was that Marissa Mayer would keep her job, despite all the calls for her to step down. While that turned out to come true (at least for now), there was another piece of news about Yahoo that I did not predict.

The original plan was for Yahoo to spin off its stake in Alibaba into its own company. However earlier this month the company announced it was scrapping those plans in favor of what it called a "reverse spin off."

That means that Yahoo’s assets and liabilities, other than the Alibaba stake, will be transferred to a newly formed company, the stock of which would be distributed pro rata to Yahoo shareholders resulting in two separate publicly-traded companies.

The reverse spin off is expected to happen early next year and will require, among other things, third party consents, preparation of audited financial statements, shareholder approval, and SEC filings and clearance, including under the Investment Company Act of 1940. 

So then what happens? The speculation is that Yahoo, and all of its assets, will be sold off, with Mayer staying in charge of the Alibaba stake only.

Yahoo as we know it is going to be very different soon.

3. Google becomes Alphabet

Yahoo isn't the only company to radically alter itself in 2015.

In August Google revealed that it was restructuring, putting all of its assets, Google included, under a new umbrella called Alphabet. The company is being headed by Google CEO Larry Page, with Google co-founder Sergey Brin as its president.

 Basically what ots means is that, instead of calling everything Google, each division will its own separate company that all report to Alphabet. So Page is no longer be CEO of Google; that role went to Sundar Pichai, the former head of Android, Chrome, and Apps.

"What is Alphabet? Alphabet is mostly a collection of companies. The largest of which, of course, is Google. This newer Google is a bit slimmed down, with the companies that are pretty far afield of our main Internet products contained in Alphabet instead," said Page in a blog post.

"Fundamentally, we believe this allows us more management scale, as we can run things independently that aren’t very related. Alphabet is about businesses prospering through strong leaders and independence. In general, our model is to have a strong CEO who runs each business, with Sergey and me in service to them as needed."

Alphabet will report on each segment of the business by the fourth quarter of this year, while Google financials will be provided separately than those for the rest of Alphabet businesses as a whole. Google, however, will no longer be a publicly traded company, and will be be replaced by Alphabet. Not to make this confusing or anything, but shares will continue to trade on Nasdaq as GOOGL and GOOG. 

Frankly it's all a little confusing, epecially when it comes to what we are going to call the company from now on. Honestly, we're all still calling it Google, aren't we?

4. Unicorns deflate 

2015 wasn't only an odd year for public companies, but private ones as well.

It was a big year for unicorns, as there were 47 new ones in the U.S. alone, for a 38 percent increase over 2014. There were also 28 new unicorns outside of the U.S., a 100 percent increase over the 14 from last year, for a total of 78. That equals 1.5 new unicorns every single week for the year.

And, yet, this was also the year when investors paniced over ballooning valuations, leading them to devalue come of the biggest companies in the world.

Fidelity, for example invested in Snapchat's $538 million round this past May, which valued the company at $15 billion, a round that made Snapchat the fourth most valuable private company in the United States, behind Uber, Airbnb and Palantir. Then, earlier this moth firm decided to write down the value of its stake by 25 percent, dropping it from $13.9 billion to $10.4 billion.

The firm also cut the value of its shares in Zenefits by 48 percent, and marked down the value of its share in Dataminr by 35 percent.

The same thing happened to Dropbox earlier this year, when of its investors, BlackRock, cut its estimate of the company’s per-share value by 24 percent.

Is the unicorn trend really over, or is this just a hiccup? We'll only know the answer to that a year from now.

5. Daily fantasy sports comes crashing down

Everything seemed to be going fine for daily fantasy sports leagues DraftKings and FanDuel? Wasn't it basically gambling? Sure, but nobody seemed to care. Both were raising gobs of money, with FanDuel raising $361 million in venture capital, including a $275 million round in July, and DraftKings raising $375 million in funding, including a $300 million round in July.

And then it all came crashing down. 

In October, the Attorney General of New York launched an investigation into whether the companies committed fraud after a DraftKings employee named Ethan Haskell inadvertently admitted that he had bet on FanDuel using insider information on NFL lineups before they had been publicly posted. He won $350,000 on the site.

He sent letters to both companies, asking both of them for internal data, as well as details, on how they prevent fraud. He also asked for details on any internal investigations that the companies have done into their employees.

Both companies responded by banning their employees from playing in daily fantasy leagues, along with creating advisory boards to help them sort through legal matters.

That was not enough, however, and in his press release announcing that he was seeking an injunction to stop the two website from operating in the state altogether, Schneiderman said that both FanDuel and DraftKings were “plainly illegal” and “nothing more than a rebranding of sports betting." 

Earlier this month a judge granted those injuctions, effectively banning them from operating in New York, though they can still do business since DraftKings has appealed.

Either way, these once mighy companies have most certainly taken a bit hit. And who could have predicted that would happen a year ago?

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