Software
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Why is SAP spinning Qualtrics out via an IPO?
Over the weekend, software giant SAP announced that it will take Qualtrics public, with the German software company retaining a majority stake in the Utah-based “experience management” firm after its forthcoming debut.
SAP paid $8 billion in cash for Qualtrics back in 2018, right before the smaller firm was set to go public. Chatting with the CEOs of both companies around the time of the deal, they were pretty pumped about the combination. Since then, SAP has swapped CEOs.
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At the time, the deal not only made waves within the business realm, it also helped put Utah’s startup scene on the map. (An $8 billion deal makes an impact.)
Current commentary on the spin-out idea seems to rotate on the idea of unlocking value: That if SAP can float a good chunk of Qualtrics’ shares, the market may give that equity a good price. Then, the value of Qualtrics that SAP will retain will gain implicit value, perhaps boosting the value of its own shares. Making the point, CNBC quoted analysts from Bernstein Research, which said it believes “many SAP investors do not fully understand Qualtrics,” and that the spin-out might “help at least as it relates to better understanding its value.”
What is Qualtrics worth? If we can understand that, we’ll know if the current commentary regarding the spin-out makes sense. So this morning, let’s remind ourselves how big Qualtrics was heading into its IPO, what it might have been worth, how much it has have grown since and what that might be worth at today’s super-high software valuations.
Did SAP overpay? Did it get a deal? Let’s find out what Qualtrics might look like in 2020.
2018
Before SAP stole it from the public markets, Qualtrics was looking for $18 to $21 per share on the public markets, valuing the company at around $3.9 billion to $4.5 billion. SAP had to pay up for Qualtrics stock, obviously, to get the deal done given how hot the Utah-based firm was at the time.
Qualtrics had growth and profits, two things that combine to create lots and lots of market value. Here are some key Qualtrics numbers from the time:
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Atlassian brings a table view to Trello
Atlassian today announced a number of updates to both its Confluence workspace and its Trello collaboration and project management tool. The focus here, the company says, is on supporting “the next phase of remote work.” Trello alone saw a 73% rise in signups in mid-March 2020, just as companies started shifting to work-from-home, compared to the same time a year ago.
The actual new features are pretty straightforward. The highlight for Trello users is surely the beta version of a table view. This marks the first time the service is giving users this spreadsheet-like overview of what is happening across their various Trello boards. It reminds me quite a bit of Airtable, but what’s maybe more important here than the feature itself is that the Trello team says this is the first of a series of new ways to view data across multiple projects in the application.
Image Credits: Atlassian
As for Confluence, a lot of the new features here are about saving users time (or measuring it). Coming soon, for example, is a bulk content management feature that will allow users to do things like archive multiple pages with a single click, label them or export them, among other things.
Available now are Confluence Smart Links that let you preview content from across the web so that users don’t have to leave their workspace to see important information, as well as real-time feedback on the content in Confluence, with the ability to view, create and resolve in-line comments while in the service’s edit mode.
Image Credits: AtlassianThe last new Confluence feature is Page Insights, which is all about metrics. With this, Confluence adds estimated read time to its page view counts, “making it easier to form quick decisions about when and how to consume content in a busy workday. […] This simplifies the mental process of navigating the endless sea of content.” Who still has the time and energy to read all of those long documents, after all?
“Teams around the world were forced into working remotely, but now many organizations are considering a permanent move to a more distributed work environment,” said Pratima Arora, head of Confluence at Atlassian. “With so many work streams across departments and individuals, it becomes impossible to rely on the old system of email chains as a vehicle for planning and managing work. Leaders need to look at whether they have the right work management system to support collaboration across the organization for the long term.”
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Docker partners with AWS to improve container workflows
Docker and AWS today announced a new collaboration that introduces a deep integration between Docker’s Compose and Desktop developer tools and AWS’s Elastic Container Service (ECS) and ECS on AWS Fargate. Previously, the two companies note, the workflow to take Compose files and run them on ECS was often challenging for developers. Now, the two companies simplified this process to make switching between running containers locally and on ECS far easier.
“With a large number of containers being built using Docker, we’re very excited to work with Docker to simplify the developer’s experience of building and deploying containerized applications to AWS,” said Deepak Singh, the VP for compute services at AWS. “Now customers can easily deploy their containerized applications from their local Docker environment straight to Amazon ECS. This accelerated path to modern application development and deployment allows customers to focus more effort on the unique value of their applications, and less time on figuring out how to deploy to the cloud.”
In a bit of a surprise move, Docker last year sold off its enterprise business to Mirantis to solely focus on cloud-native developer experiences.
“In November, we separated the enterprise business, which was very much focused on operations, CXOs and a direct sales model, and we sold that business to Mirantis,” Docker CEO Scott Johnston told TechCrunch’s Ron Miller earlier this year. “At that point, we decided to focus the remaining business back on developers, which was really Docker’s purpose back in 2013 and 2014.”
Today’s move is an example of this new focus, given that the workflow issues this partnership addresses had been around for quite a while already.
It’s worth noting that Docker also recently engaged in a strategic partnership with Microsoft to integrate the Docker developer experience with Azure’s Container Instances.
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Suse acquires Kubernetes management platform Rancher Labs
Suse, which describes itself as “the world’s largest independent open source company,” today announced that it has acquired Rancher Labs, a company that has long focused on making it easier for enterprises to make their container clusters.
The two companies did not disclose the price of the acquisition, but Rancher was well funded, with a total of $95 million in investments. It’s also worth mentioning that it has only been a few months since the company announced its $40 million Series D round led by Telstra Ventures. Other investors include the likes of Mayfield and Nexus Venture Partners, GRC SinoGreen and F&G Ventures.
Like similar companies, Rancher’s original focus was first on Docker infrastructure before it pivoted to putting its emphasis on Kubernetes, once that became the de facto standard for container orchestration. Unsurprisingly, this is also why Suse is now acquiring this company. After a number of ups and downs — and various ownership changes — Suse has now found its footing again and today’s acquisition shows that its aiming to capitalize on its current strengths.
Just last month, the company reported the annual contract value of its booking increased by 30% year over year and that it saw a 63% increase in customer deals worth more than $1 million in the last quarter, with its cloud revenue growing 70%. While it is still in the Linux distribution business that the company was founded on, today’s Suse is a very different company, offering various enterprise platforms (including its Cloud Foundry-based Cloud Application Platform), solutions and services. And while it already offered a Kubernetes-based container platform, Rancher’s expertise will only help it to build out this business.
“This is an incredible moment for our industry, as two open source leaders are joining forces. The merger of a leader in Enterprise Linux, Edge Computing and AI with a leader in Enterprise Kubernetes Management will disrupt the market to help customers accelerate their digital transformation journeys,” said Suse CEO Melissa Di Donato in today’s announcement. “Only the combination of SUSE and Rancher will have the depth of a globally supported and 100% true open source portfolio, including cloud native technologies, to help our customers seamlessly innovate across their business from the edge to the core to the cloud.”
The company describes today’s acquisition as the first step in its “inorganic growth strategy” and Di Donato notes that this acquisition will allow the company to “play an even more strategic role with cloud service providers, independent hardware vendors, systems integrators and value-added resellers who are eager to provide greater customer experiences.”
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The great stink in software pipelines
It’s the summer of 1858. London. The River Thames is overflowing with the smell of human and industrial waste. The exceptionally hot summer months have exacerbated the problem. But this did not just happen overnight. Failure to upkeep an aging sewer system and a growing population that used it contributed to a powder keg of effluent, bringing about cholera outbreaks and shrouding the city in a smell that would not go away.
To this day, Londoners still speak of the Great Stink. Recurring cholera infections led to the dawn of the field of epidemiology, a subject in which we have all recently become amateur enthusiasts.
Fast forward to 2020 and you’ll see that modern software pipelines face a similar “Great Stink” due, in no small part, to the vast adoption of continuous integration (CI), the practice of merging all developers’ working copies into a shared mainline several times a day, and continuous delivery (CD), the ability to get changes of all types — including new features, configuration changes, bug fixes and experiments — into production, or into the hands of users, safely and quickly in a sustainable way.
While contemporary software failures won’t spread disease or emit the rancid smells of the past, they certainly reek of devastation, rendering billions of dollars lost and millions of developer hours wasted each year.
This kind of waste is antithetical to the intent of CI/CD. Everyone is employing CI/CD to accelerate software delivery; yet the ever-growing backlog of intermittent and sporadic test failures is doing the exact opposite. It’s become a growing sludge that is constantly being fed with failures faster than can be resolved. This backlog must be cleared to get CI/CD pipelines back to their full capabilities.
What value is there in a system that, in an effort to accelerate software delivery, knowingly leaves a backlog of bugs that does the exact opposite? We did not arrive at these practices by accident, and its practitioners are neither lazy nor incompetent so; how did we get here and what can we do to temper modern software development’s Great Stink?
Ticking time bombs
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Hasura launches managed cloud service for its open-source GraphQL API platform
Hasura is an open-source engine that can connect to PostgreSQL databases and microservices across hybrid- and multi-cloud environments and then automatically build a GraphQL API backend for them, making it easier for developers to then build their own data-driven applications on top of this unified API . For a while now, the San Francisco-based startup has offered a paid version (Hasura Pro) with enterprise-ready reliability and security tools, in addition to its free open-source version. Today, the company launched Hasura Cloud, which takes the existing Pro version, adds a number of cloud-specific features like dynamic caching, auto-scaling and consumption-based pricing, and brings those together in a fully managed service.
Image Credits: Hasura
At its core, Hasura’s service promises businesses the ability to bring together data from their various siloed databases and allow their developers to extract value from them through its GraphQL APIs. While GraphQL is still relatively new, the Facebook-incubated technology has quickly become extremely popular among many development teams.
Before founding the company and launching it in 2018, Hasura CEO and co-founder Tanmai Gopal worked for a consulting firm — and like with so many founders, that’s where he got the inspiration for the service.
“One of the key things that we noticed was that in the entire landscape, computing is becoming better, there are better frameworks, it is easier to deploy code, databases are becoming better and they kind of work everywhere,” he said. “But this kind of piece in the middle that is still a bottleneck and that there isn’t really a good solution for is this data access piece.” Almost by default, most companies host data in various SaaS services and databases — and now they were trying to figure out how to develop apps based on this for both internal and external consumers, noted Gopal. “This data distribution problem was this bottleneck where everybody would just spend massive amounts of time and money. And we invented a way of kind of automating that,” he explained.
The choice of GraphQL was also pretty straightforward, especially because GraphQL services are an easy way for developers to consume data (even though, as Gopal noted, it’s not always fun to build the GraphQL service itself). One thing that’s unusual and worth noting about the core Hasura engine itself is that it is written in Haskell, which is a rather unusual choice.
Image Credits: Hasura
The team tells me that Hasura is now nearing 50 million downloads for its free version and the company is seeing large and small users from across various industries relying on its products, which is probably no surprise, given that the company is trying to solve a pretty universal problem around data access and consumption.
Over the last few quarters, the team worked on launching its cloud service. “We’ve been thinking of the cloud in a very different way,” Gopal said. “It’s not your usual, take the open-source solution and host it, like a MongoDB Atlas or Confluent. What we’ve done is we’ve said, we’re going to re-engineer the open-source solution to be entirely multi-tenant and be completely pay-per pricing.”
Given this philosophy, it’s no surprise that Hasura’s pricing is purely based on how much data a user moves through the service. “It’s much closer to our value proposition,” Hasura co-founder and COO Rajoshi Ghosh said. “The value proposition is about data access. The big part of it is the fact that you’re getting this data from your databases. But the very interesting part is that this data can actually come from anywhere. This data could be in your third-party services, part of your data could be living in Stripe and it could be living in Salesforce, and it could be living in other services. […] We’re the data access infrastructure in that sense. And this pricing also — from a mental model perspective — makes it much clearer that that’s the value that we’re adding.”
Now, there are obviously plenty of other data-centric API services on the market, but Gopal argues that Hasura has an advantage because of its advanced caching for dynamic data, for example.
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Clockwise CEO Matt Martin: How we closed an $18M Series B during a pandemic
Matt Martin is CEO and co-founder of Clockwise, a San Francisco-based software company.
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It all started with an email from a customer: “Do you know why Bain Capital Ventures is reaching out to me about Clockwise?”
That email would mark the beginning of a journey toward closing $18 million in new funding that will dramatically accelerate my company, Clockwise . It would require getting to know a partner in lockdown, long nights assembling a pitch deck and many bleary-eyed Zoom calls with some of the best VCs in the world.
Here’s how Ajay Agarwal from Bain Capital Ventures and I established trust online, how I made high-stakes decisions in extreme economic uncertainty and how we were able to turn the pandemic’s constraints into opportunities.
Let’s start at the beginning.
Building momentum: 2016 to 2020
Clockwise was founded in late fall of 2016. We realized that, as personal as time is, our schedules inside modern work environments are intertwined by a network of calendar events and attendees. People schedule meetings without considering the preferences of colleagues by simply hunting for any available “white space” (read: time to do real work). The net effect is that our most valuable resource, time, is easy to take and almost impossible to protect.
More than two years later, in June of 2019, we launched Clockwise to the public. After years of experimentation and refinement, we delivered to the world an intelligent calendar assistant that frees up your time so you can focus on what matters. Workers soon confirmed our hunch that they’re hungry for a tool that gives them more productive hours in their day. Our rapid user growth carried throughout 2019.
By January of 2020, we were on fire. Since January 1, our user base has grown by more than 90%, expanding at a clip of well over 5% week-over-week. As people sought remote tools during shelter-in-place, our rate of growth accelerated even further.
Our growth, incredible team, top-tier existing investors (Accel and Greylock) and strong cash position meant we didn’t need to raise additional capital until the fall of 2020. While COVID-19 certainly sent shock waves through the community, I was in regular communication with a few highly engaged investors who still seemed eager to invest in the future of productivity. I felt cautiously confident more capital could wait.
But, you know, best-laid plans.
Establishing trust while sheltering in place
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Mozilla goes full incubator with ‘Fix The Internet’ startup lab and early-stage investments
After testing the waters this spring with its incubator-esque MVP Lab, Mozilla is doubling down on the effort with a formal program dangling $75,000 investments in front of early-stage companies. The focus on “a better society” and the company’s open-source clout should help differentiate it from the other options out there.
Spurred on by the success of a college hackathon using a whole four Apple Watches in February, Mozilla decided to try a more structured program in the spring. The first test batch of companies is underway, having started in April an 8-week program offering $2,500 per team member and $40,000 in prizes to give away at the end. Developers in a variety of domains were invited to apply, as long as they fit the themes of empowerment, privacy, decentralization, community and so on.
It drew the interest of some 1,500 people in 520 projects, and 25 were chosen to receive the full package and stipend during the development of their MVP. The rest were invited to an “Open Lab” with access to some of Mozilla’s resources.
One example of what they were looking for is Ameelio, a startup whose members are hoping to render paid video calls in prisons obsolete with a free system, and provide free letter delivery to inmates as well.
“The mission of this incubator is to catalyze a new generation of internet products and services where the people are in control of how the internet is used to shape society,” said Bart Decrem, a Mozilla veteran (think Firefox 1.0) and one of the principals at the Builders Studio. “And where business models should be sustainable and valuable, but do not need to squeeze every last dollar (or ounce of attention) from the user.”
“We think we are tapping into the energy in the student and professional ‘builder communities’ around wanting to work on ideas that matter. That clarion call really resonates,” he said. Not only that, but students with canceled internships are showing up in droves, it seems — mostly computer science, but design and other disciplines as well. There are no restrictions on applicants, like country of origin, previous funding, or anything like that.
The new incubator will be divided into three tiers.
First is the “Startup Studio,” which involves a $75,000 investment, “a post-money SAFE for 3.5% of the company when the SAFE converts (or we will participate in an already active funding round),” Decrem clarified.
Below that, as far as pecuniary commitment goes, is the “MVP Lab,” similar to the spring program but offering a total of $16,000 per team. And below that is the Open Lab again, but with 10 $10,000 prizes rather than a top 3.
There are no hard numbers on how many teams will make up the two subsidized tiers, but think 20-30 total as opposed to 50 or 100. Meanwhile, collaboration, cross-pollination and open-source code is encouraged, as you might expect in a Mozilla project. And the social good aspect is strong as well, as a sampling of the companies in the spring batch shows.
Neutral is a browser plugin that shows the carbon footprint of your Amazon purchases, adding some crucial guilt to transactions we forget are powered by footsore humans and gas-guzzling long-distance goods transport. Meething, Cabal and Oasis are taking on video conferencing, team chat and social feeds from a decentralized standpoint, using the miracles of modern internet architecture to accomplish with distributed systems what once took centralized servers.
This summer will see the program inaugurated, but it’s only “the beginning of a multiyear effort,” Decrem said.
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IPOs, crypto funds and other things I missed this week
Hello and welcome back to our regular morning look at private companies, public markets and the gray space in between.
What a week it’s been. I’m exhausted. Not only are we another cycle deeper into the COVID-19 quarantine, but there seems to be more news than ever to sift through. I’ve fallen behind. So, today, this little column is taking look back at things that it missed but wanted to cover. (There may come a day when we run out of stuff to talk about, but it’s not coming any time soon.)
So let’s talk about a16z’s new crypto fund, recent economic data, the Ebang F-1, Lime’s layoffs, Procore’s IPO delay and fresh valuation, stocks, Luckin, and, if we have time, Twitter’s changing jobs data. Let’s get this all out of our heads and into the world.
Odds, ends
To annoy my editors, we’re using bullet points this morning. Bullet points are great way to convey a bloc of information in a neat format. Let the haters hate, we have a lot of ground to cover:
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Facebook to launch ‘virtual dating’ over Messenger for Facebook Dating users
Facebook will soon allow users to go on “virtual dates,” the company announced today. The social network is planning to introduce a new video calling feature that will allow users of its Facebook Dating service to connect and video call over Messenger, as an alternative to going on a real-world date. This sort of feature is much in demand amid the coronavirus pandemic, which has forced people to stay home and practice social distancing.
But for online dating apps, which aim to connect people in the real world, it’s a significant challenge for their business.
For the time being, government lockdowns have limited the places where online daters could meet up for their first date. Restaurants, malls, bars and other retail establishments are closed across regions impacted by the coronavirus outbreak. But even when those restrictions lift, many online dating app users will be wary of meeting up with strangers for those first-time, getting-to-know-you dates. Video chat offers a safer option to explore potential connections with their matches.
When the new Facebook Dating feature goes live, online daters will be able to invite a match to a virtual date. The recipient can either choose to accept or decline the offer via a pop-up that appears.
If they accept, the Facebook Dating users will be connected in a video chat powered by Facebook Messenger in order to get to know one another.
As the feature is still being developed, Facebook declined to share more specific details about how it will work, in terms of privacy and security features.
Facebook is not the first online dating service to pivot to video as a result of the pandemic. But many rival dating apps were adopting video features well before the coronavirus struck, as well.
Bumble, for example, has offered voice and video calling in its app for roughly a year. The feature there works like a normal phone call or Apple’s FaceTime. However, users don’t have to share their phone number or other private information, like an email address, which makes it safer.
The company says use of the feature has spiked over the last two months as users embrace virtual dating.
Meanwhile, Match Group has more recently rolled out video across a number of the dating apps it operates.
This month, the Match app added video chat that allows users who have already matched to connect over video calls. Match-owned Hinge also rolled out a “Dating from Home” prompt and is preparing its own live video date feature, as well, Match says. Plenty of Fish (PoF), another Match property, launched live-streaming in March, giving singles a new way to hang out with friends and potential matches.
Match Group’s flagship app Tinder has not yet embraced live video dates, but still offers a way for users to add video to their profiles. The company couldn’t comment on whether or not video dating was in the works for Tinder, but in the post-COVID era, it would be almost bizarre to not offer such feature.
Other dating apps have also launched video dating, including eHarmony and a number of lesser-known dating apps hoping to now gain traction for their video dating concepts.
Facebook says the feature will roll out in the months ahead and will be available everywhere Facebook Dating is available.
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