Tech Weekly Newsletter: April 24, 2016

Quick thoughts

So Benchmark General Partner Bill Gurley wrote a blog post entitled On the Road to Recap: Why the Unicorn financing market just became dangerous.. for all involved on Thursday that a lot of people are talking about. Gurley always breaks things down in a very thoughtful and comprehensive manner and I encourage everyone to give it a read. One observation that I’ll just add to everything he outlined is that the number of companies that are now raising their “last round until profitability” is pretty staggering. There’s a big leap of faith that investors are being asked to make with “we’ve been burning $[xx]M a month, but give us $[xx]M more and we’ll be able to control our own destiny.” For the good companies, these rounds will get done, but there’s going to be pain that comes with it. 

I’ll also say that for the first time in recent memory, Series Bs of SaaS businesses are actually being tied to metrics (Tweet). The Series As are still (and should be) kind of a function of capital needed and dilution, but Bs have shifted from simply being based on what the market dictates the appropriate step-up from Series A is, to actually tied to a multiple of ARR. The conversion period (chasm if you will) from when a round gets done based on financial metrics vs. prior round had seemed to shift all the way to either the IPO itself or a pre-IPO round over the last few years, but seeing it move all the way to the Series B is healthy for companies and investors alike. 

Last week, today

  • 4/14 – Oracle has acquired device identification company, Crosswise, for $50M (Times of Israel)
  • 4/17 – Verizon tops the list of potential buyers for Yahoo (which might only be a list of one). Others who are definitely not bidding include Time, Google, Comcast, AT&T and IAC (WSJ). Other firms that actually submitted bids include TPG, Bain Capital/Vista Equity coupled with former interim Yahoo CEO Ross Levinsohn, Ken Fuchs and Bill Weiss, and YP Holdings (formerly Yellow Pages) (Re/Code)
  • 4/18 – In the “not really surprising news” category goes Theranos now being subject to a criminal probe by federal prosecutors on whether their team misled investors about the state of its technology (I have my guess given everything that has come out on it to date) (WSJ)
  • 4/18 – Alert Logic has acquired Click Security, which had raised $24.7M from Sequoia and Lightspeed. Click Security was founded by the former team from TippingPoint Technologies which was acquired by 3Com for $442M then sold to HP then sold to TrendMicro (follow all that?) (Silicon Hills)
  • 4/18 – Hyundai Motor and Cisco are teaming up to help build a “high-performing computer on wheels” (Reuters)
  • 4/18 – Apax takes a majority stake in Duck Creek, buying the business from Accenture (which will retain 40%). Accenture bought the business in 2011. Duck Creek was originally funded by FirstMark Capital (The Middle Market)
  • 4/18 – Mesosphere is going to start offering its “data center operating system” for free, which is a big pivot in strategy and business model from where it was (The Information – paywall)
  • 4/18 – MetLife put a specific price tag on what it seems to think the value of Dropbox would be in a sale – $6.8B of “strategic asset value” according to the Information. The Information speculates that Microsoft or IBM could make logical acquirers for the business (The Information – paywall)
  • 4/18 – Legendary board member/advisor (and former CEO of Intuit) Bill Campbell passed away at 75 after a long battle with cancer (Re/Code). Ben Horowitz wrote a really nice tribute to Campbell who was a friend (Medium). Kara Swisher aggregates a number of tributes here (Re/Code)
  • 4/18 – Verizon and Hearst have agreed to acquire Complex Media for between $250-300M (WSJ)
  • 4/18 – Mike Vernal, one of Facebook’s top executives who oversaw Facebook’s search and developer products, reporting directly to Mark Zuckerberg, is leaving to join Sequoia as a partner (Re/Code)
  • 4/18 – Deloitte has released its insolvency report on Powa Technologies and how the Company managed to blow through all of its money. Business Insider has the details (Business Insider) and a great summary on all of the stuff that went wrong (Business Insider)
  • 4/18 – HP has sold its content management business to OpenText for $170M. OpenText expects the business to generate $85-95M in its first year, meaning this was pretty cheap (TechCrunch)
  • 4/19 – Even Uber can’t make the economics of delivery work, killing off its UberEats business in New York (QZ)
  • 4/19 – AWS announced a new product called Application Discovery Services that will help customers discover the software that they are using internally. They also announced that Amazon Inspector (security vulnerability solution) is now generally available (Fortune). Basically if you don’t work at Amazon, you should be scared of Amazon. And like even if you do work there. So everyone should be scared of Amazon. Except people in grocery delivery.
  • 4/19 – Delphix, which has raised nearly $120M from firms like Greylock, Battery, Lightspeed and Icon among others, has replaced founding CEO Jedidiah Yueh (who will move to Executive Chairman) with Chris Cook, who served as President and COO of New Relic (The Register)
  • 4/19 – Visa is fixing the single thing that annoys me on a daily basis, which is the software processing time of the chip technology (Fortune)
  • 4/19 – The European Commission has officially filed a formal antitrust complaint against Google over its mobile operating system Android (Business Insider)
  • 4/19 – LinkedIn completely revamps its Recruiter platform, which makes up the largest part of the Company’s largest revenue stream and incorporated the Connectifier product that it bought for $100M earlier this year (TechCrunch)
  • 4/19 – EBay Enterprise (backed by Permira and Sterling Partners) merges with Innotrac, a global e-commerce fulfillment provider, to become Radial (TechCrunch)
  • 4/20 – Uber more than doubled its spend on lobbying in the first quarter of 2016 (Buzzfeed)
  • 4/20 – Snapchat is getting a lot of backlash for creating a Bob Marley filter (on 4/20) that turned people’s faces into “digital blackface” (Business Insider)
  • 4/21 – Business Insider has a Q&A with the CEO of Pinterest Ben Silberman on topics like going public and private markets (Business Insider)
  • 4/21 – Eventbrite has announced a new CEO and it’s the wife (and co-founder) of former CEO Kevin Hartz, Julia Hartz. Kevin took a medical leave (and is 100% better according to the Company), but Julia is the new full-time CEO after operating in that capacity after his illness (Fortune)
  • 4/21 – In the ‘probably more interesting than accurate’ bucket goes the rumor that Microsoft is looking at a takeover of LinkedIn, which caused shares to rise for LNKD (Street Insider)
  • 4/21 – Uber settles class-action lawsuit for $100M ($84M now and $16M later) to keep drivers classified as independent contractors in both California and Massachusetts (TechCrunch)
  • 4/21 – Felicis Ventures closes on $200M (close to 2x its last fund raised less than two years ago) (TechCrunch)
  • 4/22 – Google and Microsoft agree to drop regulatory complaints against one another (Re/Code)
  • 4/23 – SecureWorks has a lackluster IPO with shares trading just below its offer price of $14 a share after initially marketing a range of $15.50 to $17.50 (NYT)
  • 4/23 – Former North Bridge General Partner James Goldstein is out raising a $100M fund called Pillar according to an SEC filing (SEC.gov)
  • 4/24 – Google is launching a new corporate incubator that will allow them to help develop new companies internally (The Information – Paywall)

Earnings

  • 4/18 – IBM fell 5% in after-hours after reporting meh earnings across the board. The business remains in transition for the 16th consecutive quarter (NYT)
  • 4/18 – Netflix shares fell 10% after-hours after meeting subscriber growth expectations, but guiding lower for future quarters’ growth (Re/Code)
  • 4/19 – VMware stock shot up 9% in after-hours trading after the Company reported earnings and announced a $1.2B stock buyback (WSJ)
  • 4/19 – Intel plans slash 12,000 jobs and take a $1.2B charge as a result. The Company beat on earnings and revenue, but gave weak revenue guidance. It also announced that CFO Stacy Smith will step down. Shares dropped (and were ultimately stopped) in after-hours, but remained mostly flat (Business Insider)
  • 4/19 – Yahoo reports flat earnings (TechCrunch)
  • 4/20 – Citrix gained 7.3% in after-hours after raising guidance and topping expectations (MarketWatch)
  • 4/20 – ServiceNow spiked 11.5% in trading after reporting great earnings. The Company announced that it now has 249 customers paying more than $1M in annual contract value (HFS!!). Subscription revenue was up 48.6% y/y (Seeking Alpha)
  • 4/20 – EMC missed earnings expectations but says Dell deal remain on track to close by the end of October (WSJ)
  • 4/20 – Check Point released disappointing earnings and the stock slid 4% (Fortune)
  • 4/20 – Qualcomm’s shares were roughly flat after reporting slightly better than expected earnings (Re/Code)
  • 4/20 –  SAP officially released earnings (after pre-releasing them two weeks back) and reiterated guidance for the year (WSJ)
  • 4/21 – Google missed on the top and bottom line, reporting weaker than expected growth and the stock fell 8%. Google’s “Other Bets” reported revenue of $166M (double a year ago of $80M), but losses widen to $802M (up from $633M a year ago) (Business Insider has more details here)
  • 4/21 – Microsoft’s cloud business didn’t meet investor expectations falling significantly (7%) and losing $30B in market cap (USA Today)

Financings

  • 4/18 – ClassDojo, a five-year-old, San Francisco-based feedback platform that connects educators to students’ parents to communicate more consistently about student’s activities, social and behavioral development at school, has raised $21 million in Series B funding led by General Catalyst Partners
  • 4/18 – Transactis, a 13-year-old, New York-based maker of electronic billing and payment software,  has raised $30 million in Series E funding from Capital One, Fifth Third, PNC, TD Bank, Wells Fargo and Safeguard Scientifics
  • 4/19 – Betaout, a three-year-old, New York-based marketing automation platform for e-commerce companies, has raised $1.5 million in new seed funding from a variety of investors including Beenext and Stanford Angels
  • 4/19 – Curbside, a three-year-old, Palo Alto, Ca.-based company whose app searches real-time local inventory across retailers and alert stores when a customer is arriving for a pickup, has received an undisclosed amount of funding from the drugs store giant CVS
  • 4/19 – Diamanti, a 14-month-old, San Jose, Ca.-based data center infrastructure startup led by former Cisco exec Jeff Chou, has raised $12.5 million in Series A funding from Goldman Sachs, CRV, DFJ, and GSR Ventures
  • 4/19 – FusionOps, an 11-year-old, Sunnyvale, Ca.-based company that makes a supply chain analytics tool, has raised $25 million in Series C funding led by the Canadian firm Georgian Partners
  • 4/19 – Gradescope, a two-year-old, Berkeley, Ca.-based cloud-based educational grading platform, has raised $2.6 million in seed funding from Freestyle Capital, Bloomberg Beta, The House Fund, and Reach Capital, with additional participation from earlier backer K9 Ventures
  • 4/19 – HomeLight, a five-year-old, San Francisco-based platform that matches homebuyers with real estate agents, has raised $11 million in Series A funding led by Zeev Ventures
  • 4/19 – Insightly, a seven-year-old, San Francisco-based online CRM application for small businesses, has raised $25 million in Series C funding led by Scott Bommer, venture investor and former founder of SAB Capital
  • 4/19 – Rinse, a three-year-old, San Francisco-based startup that picks up and cleans anything in its customers’ closets, has raised $6 million in Series A funding led by Javelin Venture Partners
  • 4/19 – Sharper Shape, a three-year-old, Helsinki, Finland-based that makes software for automated drone-based asset inspections, has raised $3.25 million in funding led by Straightforward Capital
  • 4/19 – TapInfluence, a seven-year-old, Boulder, Co.-based platform that connects brands with influencer marketers to promote their content online, has raised $14 million in Series B-1 funding led by Noro-Moseley Partners
  • 4/19 – Threat Stack, a 3.5-year-old, Boston-based maker of cloud security and compliance management software, has raised $15.3 million in Series B funding led by Scale Venture Partners
  • 4/19 – Waltz Networks, a 2.5-year-old, San Francisco-based startup focused on automatic real-time network control, has raised $6.75 million in Series A funding from New Enterprise Associates
  • 4/20 – SkySafe, a six-month-old, San Diego, Ca.-based company whose technology can disable drones that are flying where they shouldn’t, has raised $3 million in seed funding. Andreessen Horowitz led the round 4/20 – Brighter, a 4.5-year-old, Santa Monica, Ca.-based online marketplace that allows members to compare dentists by price and reputation, has raised $21 million in Series D financing led by General Catalyst Partners
  • 4/20 – Bugcrowd, a four-year-old, San Francisco-based company focused on crowdsourced security for the enterprise, has raised $15 million in Series B funding round led by Blackbird Ventures
  • 4/20 – Lodgify, a four-year-old, Barcelona, Spain-based startup that makes site builder software that enables vacation rental owners to create their own branded sites and accept online bookings, has raised €1.4 million in funding. The round was led by Nauta Capital
  • 4/20 – PicsArt, a five-year-old, San Francisco-based company behind a photo-editing app of the same name, has raised $20 million in new funding from Siguler Guff & Company and DCM Ventures
  • 4/20 – PrecisionHawk, a 5.5-year-old, Raleigh, N.C.-based startup that helps companies use drones for different commercial purposes without getting into airspace where they can’t fly safely or legally, has raised $18 million in Series C funding from Verizon Ventures
  • 4/20 – Zengaming, a year-old, Tel Aviv, Israel-based professional network for e-sports gamers, has raised $2.8 million in seed funding led by Crown Resorts
  • 4/21 – Acorns, a four-year-old, Newport Beach, Ca.-based robo advisory company whose app targets young investors, making it simple for them to buy into a diversified group of exchange-traded funds, has raised $30 million in funding from PayPal
  • 4/21 – Forter, a three-year-old, San Francisco-based fraud prevention company, has raised  $32 million in Series C funding led by Scale Venture Partners
  • 4/21 – Framebridge, a two-year-old, Lanham, Md.-based online custom framing company, has raised $9 million in Series B funding from SWaN & Legend Venture Partners
  • 4/21 – MemSQL, a five-year-old, Sam Francisco-based in-memory database platform, has raised $36 million in Series C funding led by new investors REV and Caffeinated Capital
  • 4/21 – NurseGrid, a three-year-old, Portland, Ore.-based company behind an online platform for staffing management and communication among nursing teams, has raised $2.5 million from investors, including Toba Capital and returning investor Excelerate Health Ventures
  • 4/21 – Preempt Security, a 1.5-year-old, Bay Area-based startup that’s still operating in stealth, has raised $8 million in Series A funding led by General Catalyst Partners
    4/21 – The RealReal, a five-year-old, San Francisco-based consignment site that focuses on authenticated, high-end resale items for women, men, and the home, has raised $40 million in Series E funding led by Greenspring Associates
  • 4/22 – Anomali, a three-year-old, Redwood City, Ca.-based threat intelligence platform, has raised $30 million in Series C funding led by Institutional Venture Partners
  • 4/22 – Bridgit, a four-year-old, Kitchener, Ontario-based maker of construction project management software, has raised C$2.2 million ($1.73 million) in seed funding led by Hyde Park Venture Partners
  • 4/22 – CareerFoundry, a nearly three-year-old, Berlin-based online learning platform for aspiring developers, has raised $5 million in Series A funding from Tengelmann Ventures, Bauer Venture Partners and IBB Beteiligungsgesellschaft
  • 4/22 – Medium, the nearly five-year-old, San Francisco-based social publishing platform, has raised a fresh $50 million from investors, just months after raising $57 million. Spark Capital has led the company’s newest round.

Random Long Reads
So I’m not going to just turn this into a Prince memorial, but if you do a single thing, watch Jimmy Fallon recount the story of SNL’s 40th show after party and then watch the performance. Just do it. It’s eleven minutes of your life that you won’t regret. I promise.
 
(and if you want to do a dive on Prince tributes)

  • Why There Will Never Be Another Prince (Playboy)
  • “That Wesley Snipes character? That would’ve been me,” Prince said. “You run that video in your mind. The first line in that song is ‘Your butt is mine.’ Now, I was saying, ‘Who’s gonna sing that to whom? ’Cause you sure ain’t singin’ that to me! And I sure ain’t singin’ that to you. Right there, we got a problem.’” (Vanity Fair)
  • Throwback profile of him from Q in 1994 (Q)
  • Prince Knew What He Wanted: Sex, Soul and You (NYT)
  • Bruce Springsteen playing a Purple Rain in Concert (YouTube)

 
Online Dating and the Death of the “Mixed-Attractiveness” Couple (Priceonomics)A detailed look into the factors that have contributed to “mixed-attractiveness” couples (spoiler alert – it’s mostly when you’re in the friend-zone first so keep on just eating that ice cream and watching those rom coms with her!!!) and the likely decline of this mis-match with the rise of internet dating.  This chart in particular is telling, where you can see the drastic rise in online-related relationships. Two excerpts that were interesting:

  • “There are women who 95% of men say yes to, and there’s nothing like that for men. A man is really attractive if 40% of women say yes.”
  • At the start of the semester, they asked students in small classes to rate the desirability of their classmates. (Desirability could incorporate non-physical attributes as well as good looks.) When the researchers looked at the ratings, they found that most students agreed on who was hot and who was not. Three months later, though, the researchers asked the same students to rate their classmates again. Lo and behold, many of the ratings had changed: the students’ opinions of who was datable had been informed by time together in class. Over time, personality had more of an impact on how desirable someone was. More importantly, the students no longer agreed. Their rankings reflected their personal preferences about the non-physical attributes of the other people in the class. Where one classmate might find a student’s earnestness in class endearing, another might dislike it.

The Untold Story of Magic Leap, the World’s Most Secretive Startup (Wired) – I still don’t have a good (or any) appreciation for what a world with virtual/augmented/mixed reality will look like and I can’t help but think about how goofy Google Glass were, but people a lot smarter than me have pumped billions of dollars into the technology and have sworn it is coming and will be extremely disruptive. Wired has the definitive account on Magic Leap and the state of the industry.. how we got here and where we’re going next.  It’s worth a read if you’re a participant in technology whatsoever if only because so many people are pouring so much money into it.
 
The Secret History of Tiger Woods (ESPN) – I can only hope to be a fraction as good at my job as Wright Thompson, currently a senior writer at ESPN, is at his. If you’ve wondered what happened to Tiger and what makes (/made) him tick, Thompson dives deep into the last decade of Woods’ life – from the death of his father, to the scandals with porn stars to the weird training with Navy Seals, you’ll never need to read another thing about Tiger Woods after this one. A long read, but a great one if only because of how fascinating this Woods saga is and how much Thompson has mastered storytelling. 
 

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