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Box acquires Butter.ai to make search smarter
Box announced today that it has acquired Butter.ai, a startup that helps customers search for content intelligently in the cloud. The terms of the deal were not disclosed, but the Butter.AI team will be joining Box.
Butter.AI was started by two ex-Evernote employees, Jack Hirsch and Adam Walz. The company was partly funded by Evernote founder and former CEO Phil Libin’s Turtle Studios. The latter is a firm established with a mission to use machine learning to solve real business problems like finding the right document wherever it is.
Box has been adding intelligence to its platform for some time, and this acquisition brings the Butter.AI team on board and gives them more machine learning and artificial intelligence known-how while helping to enhance search inside of the Box product.
“The team from Butter.ai will help Box to bring more intelligence to our Search capabilities, enabling Box’s 85,000 customers to more easily navigate through their unstructured information — making searching for files in Box more contextualized, predictive and personalized,” Box’s Jeetu Patel wrote in a blog post announcing the acquisition.
That means taking into account the context of the search and delivering documents that make sense given your role and how you work. For instance, if you are a salesperson and you search for a contract, you probably want a sales contract and not one for a freelancer or business partnership.
For Butter, the chance to have access to all those customers was too good to pass up. “We started Butter.ai to build the best way to find documents at work. As it turns out, Box has 85,000 customers who all need instant access to their content. Joining Box means we get to build on our original mission faster and at a massive scale,” company CEO and co-founder Jack Hirsch said.
The company launched in September 2017, and up until now it has acted as a search assistant inside Slack you can call upon to search for documents and find them wherever they live in the cloud. The company will be winding down that product as it becomes part of the Box team.
As is often the case in these deals, the two companies have been working closely together and it made sense for Box to bring the Butter.AI team into the fold where it can put its technology to bear on the Box platform.
“After launching in September 2017 our customers were loud and clear about wanting us to integrate with Box and we quickly delivered. Since then, our relationship with Box has deepened and now we get to build on our vision for a MUCH larger audience as part of the Box team,” the founders wrote in a Medium post announcing the deal.
The company raised $3.3 million over two seed rounds. Investors included Slack and General Catalyst.
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Tableau gets AI shot in the arm with Empirical Systems acquisition
When Tableau was founded back in 2003, not many people were thinking about artificial intelligence to drive analytics and visualization, but over the years the world has changed and the company recognized that it needed talent to keep up with new trends. Today, it announced it was acquiring Empirical Systems, an early stage startup with AI roots.
Tableau did not share the terms of the deal.
The startup was born just two years ago from research on automated statistics at the MIT Probabilistic Computing Project. According to the company website, “Empirical is an analytics engine that automatically models structured, tabular data (such as spreadsheets, tables, or csv files) and allows those models to be queried to uncover statistical insights in data.”
The product was still in private Beta when Tableau bought the company. It is delivered currently as an engine embedded inside other applications. That sounds like something that could slip in nicely into the Tableau analytics platform. What’s more, it will be bringing the engineering team on board for some AI knowledge, while taking advantage of this underlying advanced technology.
Francois Ajenstat, Tableau’s chief product officer says this ability to automate findings could put analytics and trend analysis into the hands of more people inside a business. “Automatic insight generation will enable people without specialized data science skills to easily spot trends in their data, identify areas for further exploration, test different assumptions, and simulate hypothetical situations,” he said in a statement.
Richard Tibbetts, Empirical Systems CEO, says the two companies share this vision of democratizing data analysis. “We developed Empirical to make complex data modeling and sophisticated statistical analysis more accessible, so anyone trying to understand their data can make thoughtful, data-driven decisions based on sound analysis, regardless of their technical expertise,” Tibbets said in a statement.
Instead of moving the team to Seattle where Tableau has its headquarters, it intends to leave the Empirical Systems team in place and establish an office in Cambridge, Massachusetts.
Empirical was founded in 2016 and has raised $2.5 million.
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Splunk nabs on-call management startup VictorOps for $120M
In a DevOps world, the operations part of the equation needs to be on call to deal with issues as they come up 24/7. We used to use pagers. Today’s solutions like PagerDuty and VictorOps have been created to place this kind of requirement in a modern digital context. Today, Splunk bought VictorOps for $120 million in cash and Splunk securities.
It’s a company that makes a lot of sense for Splunk, a log management tool that has been helping customers deal with oodles of information being generated from back-end systems for many years. With VictorOps, the company gets a system to alert the operations team when something from that muddle of data actually requires their attention.
Splunk has been making moves in recent years to use artificial intelligence and machine learning to help make sense of the data and provide a level of automation required when the sheer volume of data makes it next to impossible for humans to keep up. VictorOps fits within that approach.
“The combination of machine data analytics and artificial intelligence from Splunk with incident management from VictorOps creates a ‘Platform of Engagement’ that will help modern development teams innovate faster and deliver better customer experiences,” Doug Merritt, president and CEO at Splunk said in a statement.
In a blog post announcing the deal, VictorOps founder and CEO Todd Vernon said the two companies’ missions are aligned. “Upon close, VictorOps will join Splunk’s IT Markets group and together will provide on-call technical staff an analytics and AI-driven approach for addressing the incident lifecycle, from monitoring to response to incident management to continuous learning and improvement,” Vernon wrote.
It should come as no surprise that the two companies have been working together even before the acquisition. “Splunk has been an important technical partner of ours for some time, and through our work together, we discovered that we share a common viewpoint that Modern Incident Management is in a period of strategic change where data is king, and insights from that data are key to maintaining a market leading strategy,” Vernon wrote in the blog post.
VictorOps was founded 2012 and has raised over $33 million, according to data on Crunchbase. The most recent investment was a $15 million Series B in December 2016.
The deal is expected to close in Splunk’s fiscal second quarter subject to customary closing conditions, according to a statement from Splunk.
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Workday acquires Rallyteam to fuel machine learning efforts
Sometimes you acquire a company for the assets and sometimes you do it for the talent. Today Workday announced it was buying Rallyteam, a San Francisco startup that helps companies keep talented employees by matching them with more challenging opportunities in-house.
The companies did not share the purchase price or the number of Rallyteam employees who would be joining Workday .
In this case, Workday appears to be acquiring the talent. It wants to take the Rallyteam team and incorporate it into the company’s engineering unit to beef up its machine learning efforts, while taking advantage of the expertise it has built up over the years connecting employees with interesting internal projects.
“With Rallyteam, we gain incredible team members who created a talent mobility platform that uses machine learning to help companies better understand and optimize their workforces by matching a worker’s interests, skills and connections with relevant jobs, projects, tasks and people,” Workday’s Cristina Goldt wrote in a blog post announcing the acquisition.
Rallyteam, which was founded in 2013, and launched at TechCrunch Disrupt San Francisco in September 2014, helps employees find interesting internal projects that might otherwise get outsourced. “I knew there were opportunities that existed [internally] because as a manager, I was constantly outsourcing projects even though I knew there had to be people in the company that could solve this problem,” Rallyteam’s Huan Ho told TechCrunch’s Frederic Lardinois at the launch. Rallyteam was a service designed to solve this issue.
Last fall the company raised $8.6 million led by Norwest Ventures with participation from Storm Ventures, Cornerstone OnDemand and Wilson Sonsini.
Workday provides a SaaS platform for human resources and finance, so the Rallyteam approach fits nicely within the scope of the Workday business. This is the 10th acquisition for Workday and the second this year.
Chart: Crunchbase
Workday raised over $230 million before going public in 2012.
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M17 delays IPO debut after pricing this morning on NYSE
M17 Entertainment, a Taipei-based live streaming and dating app group, priced its IPO this morning on the NYSE and was expected to open trading today according to their final press release. But with just a little more than two hours to go before market closing, it’s still not trading, and no one seems to know why.
An interview I had scheduled with the CEO earlier this afternoon was canceled at the last minute, with the company’s representative saying that M17 couldn’t comment since its shares were not yet actively trading, and thus the company remains under an SEC-mandated quiet period.
M17 has had a rocky non-debut so far. Originally targeting a fundraise of $115 million of American Depository Receipts (shares of foreign companies listed domestically on the NYSE), the company concluded its roadshow raising less than half of its target, for a final investment of $60.1 million. The company priced its ADR shares at $8 each, with each ADR representing 8 shares of the stock’s Class A security.
My colleague Jon Russell has covered the company’s rapid growth over the past three years. It was formed from the merger of dating app company Paktor and live-streaming business 17 Media. Joseph Phua, who was CEO of Paktor, became CEO of the joint M17 company following the merger. Together, the two halves have raised tens of millions in venture capital.
M17 provides live-streaming and dating apps throughout “Developed Asia”
The company’s main product is a live-streaming product where creators can build their fan bases and brands. Fans can purchase virtual gifts to send to their favorite artists, and those points are proving to be extraordinarily lucrative for the company. The company, according to its amended F-1 statement, has seen tremendous revenue growth, netting $37.9 million of revenue in the first three months of this year. The company has also been able to attract more live-streaming talent, increasing its contracted artists from 999 at the end of December 2016 to 7,719 at the end of March this year.
That’s where the good news ends for the company. Despite that revenue growth, operating losses are torrential, with the company losing $24.8 million in the first three months of this year. The company in its statement says that it has $31.4 million in cash and cash equivalents, giving it limited runway to continue operations without a strong IPO debut.
User growth has been mostly stagnant. Active monthly users has increased from 1.5 million to 1.7 million between March 31 of 2017 and 2018. What the company has succeeded in doing is monetizing those users much better. The percentage of users paying on the platform has more than doubled over the same time period, and the value of those users has increased more than 40 percent to $355 per user per month.
The big challenge for M17 is revenue quality. Live streaming represents 91.4 percent of the company’s revenues, but those revenues are concentrated on a handful of “whales” who buy a freakishly high number of virtual gifts. The company’s top 10 users represent 11.8 percent of all revenues (that’s $447,220 per user in the first three months this year!), and its top 500 users accounted for almost a majority of total revenues. That concentration on the demand side is just as heavy on the supply side. M17’s top 100 artists accounted for more than a third of the company’s revenue.
That concentration has improved over the past few months, according to the company’s filing. But Wall Street investors have learned after Zynga and other whale-based revenue models that the sustainability of these businesses can be tough.
Finally, one complication for many investors wary of the increasing use of dual-class stock issues is the governance of the company. Phua, the CEO, will have 56.3 percent of the voting rights of the company, and M17 will be a controlled company under NYSE rules according to the company’s amended filing. Class B shares vote at a 20:1 ratio with Class A share voting rights.
All of this is to say that while the company has had some dizzying growth in its revenue numbers over the past 24 months, that success is moderated by some significant challenges in revenue concentration that will have to be a top priority for M17 going forward. Why the company priced and hasn’t traded remains a mystery, and we have reached out for more comments.
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Microsoft promises to keep GitHub independent and open
Microsoft today announced its plans to acquire GitHub for $7.5 billion in stock. Unsurprisingly, that sent a few shock waves through the developer community, which still often eyes Microsoft with considerable unease. During a conference call this morning, Microsoft CEO Satya Nadella, incoming GitHub CEO (and Xamarin founder) Nat Friedman and GitHub co-founder and outgoing CEO Chris Wanstrath laid out the plans for GitHub’s future under Microsoft.
The core message everybody on today’s call stressed was that GitHub will continue to operate as an independent company. That’s very much the approach Microsoft took with its acquisition of LinkedIn, but to some degree, it’s also an admission that Microsoft is aware of its reputation among many of the developers who call GitHub their home. GitHub will remain an open platform that any developer can plug into and extend, Microsoft promises. It’ll support any cloud and any device.
Unsurprisingly, while the core of GitHub won’t change, Microsoft does plan to extend GitHub’s enterprise services and integrate them with its own sales and partner channels. And Nadella noted that the company will use GitHub to bring Microsoft’s developer tools and services “to new audiences.”
With Nat Friedman taking over as CEO, GitHub will have a respected technologist at the helm. Microsoft’s acquisition and integration of Xamarin has, at least from the outside, been a success (and Friedman himself always seems very happy about the outcome when I talk to him), so I think this bodes quite well for GitHub. After joining Microsoft, Friedman ran the developer services team at the company. Wanstrath, who only took over the CEO role again after its last CEO was ousted after harassment scandal at the company, had long said that he wanted to step down and take a more active product role. And that’s what’s happening now that Friedman is taking over. Wanstrath will become a technical fellow and work on “strategic software initiatives” at Microsoft.
Indeed, during an interview after the acquisition was announced, Friedman repeatedly noted that he thinks GitHub is the most important developer company today — and it turns out that he started advocating for a closer relationship between the two companies right after he joined Microsoft two years ago.
During today’s press call, Friedman also stressed Microsoft’s commitment to keeping GitHub as open as it is today — but he also plans to expand the service and its community. “We want to bring more developers and more capabilities to GitHub, he said. “Because as a network and as a group of people in a community, GitHub is stronger, the bigger it is.”
Friedman echoed that in our interview later in the day and noted that he expected the developer community to be skeptical of the mashup of these two companies. “There is always healthy skepticism in the developer community,” he told me. “I would ask developers to look at the last few years of Microsoft history and really honestly Microsoft’s transformation into an open source company.” He asked developers to judge Microsoft by that and noted that what really matters, of course, is that the company will follow through on the promises it made today.
As for the product itself, Friedman noted that everything GitHub does should be about making a developer’s life easier. And to get started, that’ll mean making developing in the cloud easier. “We think broadly about the new and compelling types of ways that we can integrate cloud services into GitHub,” he noted. “And this doesn’t just apply to our cloud. GitHub is an open platform. So we have the ability for anyone to plug their cloud services into GitHub, and make it easier for you to go from code to cloud. And it extends beyond the cloud as well. Code to cloud. code to mobile, code to edge device, code to IoT. Every workflow that a developer wants to pursue, we will support.”
Another area the company will work on is the GitHub Marketplace. Microsoft says that it will offer all of its developer tools and services in the GitHub Marketplace.
And unsurprisingly, VS Code, Microsoft’s free and open source code editor, will get deeply integrated GitHub support.
“Our vision is really all about empowering developers and creating a home where you can use any language, any operating system, any cloud, any device for every developer, whether your student, a hobbyist, a large company, a startup or anything in between. GitHub is the home for all developers,” said Friedman. In our interview, he also stressed that his focus will be on making “GitHub better at making GitHub” and that he plans to do so by bringing Microsoft’s resources and infrastructure to the code hosting service, while at the same time leaving it to operate independently.
It’s unclear whether all of these commitments today will easy developers’ fears of losing GitHub as a relatively neutral third-party in the ecosystem.
Nadella, who is surely aware of this, addressed this directly today. “We recognize the responsibility we take on with this agreement,” he said. “We are committed to being stewards of the GitHub community, which will retain its developer-first ethos operate independently and remain an open platform. We will always listen to develop a feedback and invest in both fundamentals as well as new capability once the acquisition closes.
In his prepared remarks, Nadella also stressed Microsoft’s heritage as a developer-centric company and that is it already the most active organization on GitHub. But more importantly, he addressed Microsoft’s role in the open source community, too. “We have always loved developers, and we love open source developers,” he said. “We’ve been on a journey ourselves with open source and the open source community. Today, we are all in with open source. We are active in the open source ecosystem. We contribute to open source project and some of our most vibrant developer tools and frameworks are open-sourced when it comes to our commitment to all source judges, by the actions we have taken in the recent past our actions today and in the future.”
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Airbnb CEO said company will ‘be ready to IPO next year’ but might not
Airbnb brings in billions of dollars of revenue annually and is profitable on an EBITDA basis, so many wonder if and when the home-sharing company will go public. At the Code Conference today, Airbnb CEO Brian Chesky said the company will “be ready to IPO next year, but I don’t know if we will.”
He added that he wants to make sure it’s a major benefit to the company when Airbnb does go public. Following some more probing, Chesky said he has “no issues with [going public] at all. It could happen.”
Meanwhile, Airbnb has been struggling from a regulatory standpoint since at least 2010. Specifically, San Francisco and New York are two of the most difficult cities from a regulatory standpoint, Chesky said.
In New York, for example, there has been a standstill since 2010. At this point, Chesky said he expects it to take a few more years to overcome the challenge in New York.
“It doesn’t seem like the end is in sight with that challenge,” Chesky said. That challenge, Chesky said, involves the hotel industry and unions that “have galvanized people in these perpetual battles.”
Another general critique of Airbnb is its effect on rising rent costs and displacement. Chesky added that if it was simply a business decision, “it probably wouldn’t be worth it to stay there” in New York. But Chesky said there are hosts who have come to rely on Airbnb to earn income.
At Code, Chesky also touted Airbnb’s experiences product and how it’s growing 10x faster than its homes product. Airbnb Experiences sees 1.5 million bookings a year, Chesky said. Experiences, which Airbnb started testing in 2014 and officially launched in 2016, is Airbnb’s product that helps travelers find things to do in cities throughout the world.
When it first launched, Airbnb didn’t verify the experiences, but after some bad experiences, Airbnb has started verifying them.
“They’re doing incredibly well,” Chesky said. He added that the “experience economy” is growing and “there will probably be a massive economy around experiences.”
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Rackspace acquires Salesforce specialist RelationEdge
Rackspace today announced that it has acquired RelationEdge, a Salesforce implementation partner and digital agency. The companies did not disclose the financial details of the acquisition.
At first, this may sound like an odd acquisition. Rackspace is still best known for its hosting and managed cloud and infrastructure services, after all, and RelationEdge is all about helping businesses manage their Salesforce SaaS implementations. The company clearly wants to expand its portfolio, though, and add managed services for SaaS applications to its lineup. It made the first step in this direction with the acquisition of TriCore last year, another company in the enterprise application management space. Today’s acquisition builds upon this theme.
Gerard Brossard, the executive VP and general manager of Rackspace Application Services, told me that the company is still in the early days of its application management practice, but that it’s seeing good momentum as it’s gaining both new customers thanks to these offerings and as existing customers look to Rackspace for managing more than their infrastructure. “This allows us to jump into that SaaS management practice, starting with the leaders in the market,” he told me.
Why sell RelationEdge, a company that has gained some good traction and now has about 125 employees? “At the end of the day, we’ve accomplished a tremendous amount organically with very little funding,” RelationEdge founder and CEO Matt Stoyka told me. “But there is a huge opportunity in the space that we can take advantage of. But to do that, we needed more than was available to us, but we needed to find the right home for our people and our company.” He also noted that the two companies seem to have a similar culture and mission, which focuses more on the business outcomes than the technology itself.
For the time being, the RelationEdge brand will remain and Rackspace plans to run the business “with considerable independence under its current leadership.” Brossard noted that the reason for this is RelationEdge’s existing brand recognition.
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Google to acquire cloud migration startup Velostrata
Google announced today it was going to acquire Israeli cloud migration startup, Velostrata. The companies did not share the purchase price.
Velostrata helps companies migrate from on-premises datacenters to the cloud, a common requirement today as companies try to shift more workloads to the cloud. It’s not always a simple matter though to transfer those legacy applications, and that’s where Velostrata could help Google Cloud customers.
As I wrote in 2014 about their debut, the startup figured out a way to decouple storage and compute and that had wide usage and appeal. “The company has a sophisticated hybrid cloud solution that decouples storage from compute resources, leaving the storage in place on-premises while running a virtual machine in the cloud,” I wrote at the time.
But more than that, in a hybrid world where customer applications and data can live in the public cloud or on prem (or a combination), Velostrata gives them control to move and adapt the workloads as needed and prepare it for delivery on cloud virtual machines.
“This means [customers] can easily and quickly migrate virtual machine-based workloads like large databases, enterprise applications, DevOps, and large batch processing to and from the cloud,” Eyal Manor VP of engineering at Google Cloud wrote in the blog post announcing the acquisition.
This of course takes Velostrata from being a general purpose cloud migration tool to one tuned specifically for Google Cloud in the future, but one that gives Google a valuable tool in its battle to gain cloud marketshare.
In the past, Google Cloud head Diane Greene has talked about the business opportunities they have seen in simply “lifting and shifting” data loads to the cloud. This acquisition gives them a key service to help customers who want to do that with the Google Cloud.
Velostrata was founded in 2014. It has raised over $31 million from investors including Intel Capital and Norwest Venture partners.
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Pivotal CEO talks IPO and balancing life in Dell family of companies
Pivotal has kind of a strange role for a company. On one hand its part of the EMC federation companies that Dell acquired in 2016 for a cool $67 billion, but it’s also an independently operated entity within that broader Dell family of companies — and that has to be a fine line to walk.
Whatever the challenges, the company went public yesterday and joined VMware as a separately traded company within Dell. CEO Rob Mee says the company took the step of IPOing because it wanted additional capital.
“I think we can definitely use the capital to invest in marketing and R&D. The wider technology ecosystem is moving quickly. It does take additional investment to keep up,” Mee told TechCrunch just a few hours after his company rang the bell at the New York Stock Exchange.
As for that relationship of being a Dell company, he said that Michael Dell let him know early on after the EMC acquisition that he understood the company’s position. “From the time Dell acquired EMC, Michael was clear with me: You run the company. I’m just here to help. Dell is our largest shareholder, but we run independently. There have been opportunities to test that [since the acquisition] and it has held true,” Mee said.
Mee says that independence is essential because Pivotal has to remain technology-agnostic and it can’t favor Dell products and services over that mission. “It’s necessary because our core product is a cloud-agnostic platform. Our core value proposition is independence from any provider — and Dell and VMware are infrastructure providers,” he said.
That said, Mee also can play both sides because he can build products and services that do align with Dell and VMware offerings. “Certainly the companies inside the Dell family are customers of ours. Michael Dell has encouraged the IT group to adopt our methods and they are doing so,” he said. They have also started working more closely with VMware, announcing a container partnership last year.
Photo: Ron Miller
Overall though he sees his company’s mission in much broader terms, doing nothing less than helping the world’s largest companies transform their organizations. “Our mission is to transform how the world builds software. We are focused on the largest organizations in the world. What is a tailwind for us is that the reality is these large companies are at a tipping point of adopting how they digitize and develop software for strategic advantage,” Mee said.
The stock closed up 5 percent last night, but Mee says this isn’t about a single day. “We do very much focus on the long term. We have been executing to a quarterly cadence and have behaved like a public company inside Pivotal [even before the IPO]. We know how to do that while keeping an eye on the long term,” he said.
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