Author: azeeadmin

TechCrunch has spilled much digital ink tracking the fate of VMware since it was brought to Dell’s orbit thanks to the latter company’s epic purchase of EMC in 2016 for $58 billion. That transaction saddled the well-known Texas tech company with heavy debts. Because the deal left VMware a public company, albeit one controlled by Dell, how it might be used to pay down some of its parent company’s arrears was a constant question.

Dell made its move earlier this week, agreeing to spin out VMware in exchange for a huge one-time dividend, a five-year commercial partnership agreement, lots of stock for existing Dell shareholders and Michael Dell retaining his role as chairman of its board.

So, where does the deal leave VMware in terms of independence, and in terms of Dell influence? Dell no longer will hold formal control over VMware as part of the deal, though its shareholders will retain a large stake in the virtualization giant. And with Michael Dell staying on VMware’s board, it will retain influence.

Here’s how VMware described it to shareholders in a presentation this week. The graphic shows that under the new agreement, VMware is no longer a subsidiary of Dell and will now be an independent company.

But with VMware tipped to become independent once again, it could become something of a takeover target. When Dell controlled VMware thanks to majority ownership, a hostile takeover felt out of the question. Now, VMware is a more possible target to the right company with the right offer — provided that the Dell spinout works as planned.

Buying VMware would be an expensive effort, however. It’s worth around $67 billion today. Presuming a large premium would be needed to take this particular technology chess piece off the competitive board, it could cost $100 billion or more to snag VMware from the public markets.

So VMware will soon be more free to pursue a transaction that might be favorable to its shareholders — which will still include every Dell shareholder, because they are receiving stock in VMware as part of its spinout — without worrying about its parent company simply saying no.

Almost exactly a month ago, Peloton CEO John Foley wrote an open letter about the the company’s treadmill. “I’m reaching out to you today because I recently learned about a tragic accident involving a child and the Tread+, resulting in, unthinkably, a death,” it begins. “While we are aware of only a small handful of incidents involving the Tread+ where children have been hurt, each one is devastating to all of us at Peloton, and our hearts go out to the families involved.”

Today, the U.S. Consumer Product Safety Commission issued a warning, telling users to stop using the Tread+. Citing 39 incidents, included the aforementioned death, the CPSC writes, “The Commission has found that the public health and safety requires this notice to warn the public quickly of the hazard.”

Peloton followed up with its own strongly worded statement writing, “The company is troubled by the Consumer Product Safety Commission’s (CPSC) unilateral press release about the Peloton Tread+ because it is inaccurate and misleading. There is no reason to stop using the Tread+, as long as all warnings and safety instructions are followed.”

The commission’s warning includes multiple injuries involving small children and a pet. Specifically, the note calls for users with children at how to cease using the product, a more stern warning than the initial suggestions outlined by Foley back in in March, who at the time told users to keep children and pets away from the system and store the device out of reach after using. Peloton has since added that there have been 23 incidents involving children, 15 with objects and, as the CPSC noted, one with a pet. The company added that it had not revealed the specifics previously out of privacy concern.

“If consumers must continue to use the product, CPSC urges consumers to use the product only in a locked room, to prevent access to children and pets while the treadmill is in use,” the organization notes. “Keep all objects, including exercise balls and other equipment, away from the treadmill.”

For its part, the connected fitness maker adds,

Peloton invited CPSC to make a joint announcement about the danger of not following the warnings and safety instructions provided with the Tread+, and Foley asked to meet directly with CPSC. CPSC has unfairly characterized Peloton’s efforts to collaborate and to correct inaccuracies in CPSC’s press release as an attempt to delay. This could not be farther from the truth. The company already urged Members to follow all warnings and safety instructions. Peloton is disappointed that, despite its offers of collaboration, and despite the fact that the Tread+ complies with all applicable safety standards, CPSC was unwilling to engage in any meaningful discussions with Peloton before issuing its inaccurate and misleading press release.

Welcome back to The TechCrunch Exchange, a weekly startups-and-markets newsletter. It’s broadly based on the daily column that appears on Extra Crunch, but free, and made for your weekend reading. If you want it in your inbox every Saturday morning, sign up here. 

Ready? Let’s talk money, startups and spicy IPO rumors.

This week, Scale AI raised a $325 million Series E. The company, as TechCrunch has written, works in the data labeling space. And it has been on a fundraising tear over the last few years. In 2019 TechCrunch wrote about how the company’s then-22-year-old CEO had put together a $100 million round. Then in December of 2020, it raised $155 million at a roughly $3.5 billion valuation. Now it’s worth more than $7 billion.

Impressive, yeah? Well, as I learned earlier this week, AI startups in general are having one hell of a year. From the start of 2021 to April 12th, there were 442 AI-startup deals in the U.S. worth $11.65 billion, according to PitchBook data. And the recent Microsoft-Nuance AI deal may accelerate things even more.

Sapphire Ventures’ Jai Das weighed in on the AI venture market for The Exchange. He answered our question regarding how competitive the space was in the first quarter by saying that “investment activity in AI/ML startups has been absolutely insane” during the first quarter.

Per Das: “AI/ML startups are routinely getting 5-6 term sheets from top-tier VC firms and they are able to raise their financings at 150-250X of current ARR.”

Chew on that for a moment. We’ve seen public software multiples reach new heights in the last year, but even for aggressive startup rounds, those are some bonkers numbers. Imagine an AI-focused startup with $1 million in recurring revenue being valued at a quarter of a billion dollars. Damn.

But what about pace among AI investing? We’ve heard that the time from a round opening to its closing among many startups has been compressed and compressed again. Das helped explain the situation, saying in an email that “most firms are completing their due diligence way before the financing actually happens,” which means that there is “no need to do any due diligence during the financing.”

That actually makes some sense? If rounds are largely preemptive — something that Das underscored later on in his comments — you have to do pre-diligence. Otherwise you’ll always be investing blind or missing out on deals due to other firms moving more quickly.

This week The Exchange also dug into the broader domestic venture capital market, with a special focus on seed deals, and the super late-stage investments that dominate headlines. A comment on the earlier-stages of venture investing that just missed our piece on the matter came from Jeff Grabow, EY’s U.S. Venture Capital lead.

In his comments on pre-seed, seed and post-seed deals, something stood out to us — a prediction of sorts. Here’s Grabow:

[Q1 2021] was a strong quarter for pre-seed funding when you compare it to prior years, and we expect the overall environment to remain strong given the abundance of capital available and plethora of investable themes that tap into new markets via technological solutions. It paints a rosy picture for the post-COVID environment.

That tracks with our internal estimates. Q1 2021 was so hot for at least American venture capital activity (expect more international coverage soon) that it seems likely that the year itself will be a record in many respects. Provided that things don’t slow too much, records will be broken. And here Grabow flat-out anticipates a pretty attractive climate for venture after COVID-19 is behind us.

So, records will be broken. The question is by how much.

More notes on Coinbase’s direct listing

Not to whomp the equestrian deceased too much, but I have a few more notes for you on the Coinbase direct listing.

Public.com, the Robinhood consumer trading rival, helped The Exchange better understand just how much retail interest there was in the stock. Per its ever-present spokesperson Mo, on April 14th, Coinbase “was the most popular stock on public,” measured by number of transactions. And perhaps more notably, on the same day “social activity (measured by the number of posts) increased by 70% compared to the day prior.”

I do not know how long the consumer trading boom can last, but that’s a pretty impressive set of metrics.

Similarweb also had a few data points to share, including that visits to coinbase.com reached 86.4 million in January. Hot damn. And during that month new visitors bested returning visitors. That data helps explain how Coinbase wound up with the epic first quarter that it did. Now the question is if it can keep up its bull run or, frankly, if consumer interest in trading in crypto specifically will outlast the equities trading boom or not.

Coinbase Series D lead investor Tom Loverro, who we’ve mentioned a few times this week, including on the podcast, said that we’re still merely in the second inning of crypto. So expect these topics to keep coming up again and again. And again.

Various and sundry

Trying to actually stick to our word count target for once, here are some final notes on the IPO market from the week.

First, the AppLovin IPO did not go according to plan. After modestly pricing at $80 per share, the middle of its range, the mobile-app focused tech company saw its value fall during its first two days’ trading. It’s now worth $61 per share as of the end of Friday.

The Exchange spoke with AppLovin CFO Herald Chen on its IPO day. Chatting with the finance executive, our read from the conversation is that the company could accelerate its acquisition game more now that it is public. Having a liquid stock means that it can be even more acquisitive than before. And AppLovin claims that it can buy companies, run them through its business process, and juice their revenues per its S-1 filing.

If that bears out, the public markets may be giving the company a bit too hard of a time. It was a bit odd to see a software company struggle post-IPO in today’s climate.

Chen also told The Exchange that his firm didn’t see any pushback regarding its multi-class share structure during its roadshow. The multi-class share miasm is something I’ve written about with our own Ron Miller. The CFO did note that no single person has complete control of the company, even with several different classes of equity with disparate voting rights. That matters, frankly.

We’ll keep tabs on AppLovin as it trades. (Our earlier coverage of its numbers is here.)

Finally, autonomous trucking company TuSimple went public this week, and Similarweb filed to go public. We’re also watching the broader IPO market as UiPath either raises its price range or note. We have a guess on that score.

And just as the week was closing, Squarespace dropped its S-1. Notes here with more to come.

Good vibes and nothing other than the best from here,

Alex

Say it louder for the people in the back: As tech grows bigger by the minute and venture capital adds dollar signs by the day, a startup hub’s success is not an either/or situation. The next Silicon Valley is a tired narrative, when in reality startups look, innovate and create differently all over the world.

On that note, my colleagues spent the past few months digging into the market in Detroit, Michigan:

• The StockX EC-1
• How StockX became the stock market of hype

While StockX is the startup darling that may have put the region in the generalist spotlight, I soon learned that the sneaker marketplace company wasn’t at all where the city’s story started and ended. Instead, it started a little more at ground level.

Detroit techies consistently point to billionaire Dan Gilbert, the co-founder of Quicken Loans and the owner of the Cleveland Cavaliers, as the reason behind the region’s startup growth. It made me immediately wonder if all it takes to create a startup ecosystem is deep pockets.

Turns out it’s a little more complicated than that.

Gilbert has poured at least $2.5 billion into rehabilitating buildings in the core of Detroit. Then he invested in the companies that took office space in those buildings, the restaurants that would feed those new families in the area and the retailers that would fill up the side blocks. It wasn’t one check by one billionaire, but instead a measured and consistent approach to try to reestablish Detroit as a city of innovation within the United States.

I think one founder put it best: “there are a lot of people who hate him, but the reality is that, while he wasn’t the only billionaire in town, he’s the only one who heavily invested in Detroit.”

Beyond Gilbert, the vitalization is spread throughout different sectors. There’s a 12-year-old early-stage venture firm that was one of the first to ever bet on mobility as an investment thesis; there’s a thriving garden startup; and there’s a hardware company that, despite remote work, is finding space to scale:

• Detroit’s native son, billionaire Dan Gilbert, makes the case for his town
• Hardware is still hard in the Motor City
• Building tech for worker safety, Guardhat Technologies is a company that could only come from Detroit
• A quick peek inside Fontinalis, one of Detroit’s best-known young venture firms

We’ll continue exploring emerging tech hubs, so throw us suggestions as we virtually (and one day physically) road trip across the country.

 

In the rest of this newsletter, we’ll talk about Tiger Global, IPOs and a few exciting upcoming events. Make sure to follow me on Twitter @nmasc_ to hang during the week.

Tiger Global has a spending problem

This week on Equity, we talked about Tiger Global’s aggressive investment approach and what it could mean for early-stage firms and founders.

• Alexa Von Tobel outlines how founders should manage personal finances
• How Pilot charted a course of raising not too much money

Here’s what to know: One of the reasons Tiger Global is feeling spendy is that it just closed one of the biggest venture funds ever. In 2020, the firm closed $3.75 billion in capital commitments. In 2021, it nearly doubled its own record, with $6.7 billion raised for its latest fund.

And if you don’t believe me, below is a list of just some of the New York-based firms’ recent activity:

• HighRadius’ $300M Series C
• Cityblock Health’s $192 million Series C
• 6sense’s $125 million Series D
• Groq’s $300 million financing event
• Outschool’s $75 million Series C
• Tiger Global goes super aggressive in India

Crypto’s Coinbase moment

Cryptocurrency trading giant Coinbase went public this week. The company opened at $381 per share, valuing the exchange at nearly $100 billion. It was a massive exit for the company, which underwent scrutiny last year when it banned politics at work.

Here’s what to know: It’s fairly obvious that Coinbase’s successful IPO was a big moment for fintech and crypto startups, as well as the decentralized finance movement. My colleagues Alex Wilhelm and Anna Heim dug into how the crypto ripple effect could look from the perspective of a few venture capitalists. There are too many good bits for me to choose an excerpt, so read it for yourself here, and a take sneak peek below:

So while there is an ocean of bullish sentiment that the Coinbase listing will lead to rising venture capital investment into crypto startups, there’s also some caution to be had; how much of the growing market that Coinbase can capture and control is not yet clear, though IVP’s Loverro was very bullish during our interview about the company’s expanding feature set — things like staking Tezos, or buying Uniswap. Its backers think that Coinbase is well-positioned to absorb future market upside in its niche.

Around TechCrunch

As always, we have a ton of exciting events coming up. Here’s just a taste:

• Tamika Butler, Remix’s Tiffany Chu and Revel’s Frank Reig to discuss how to balance equitability and profitability at TC Sessions: Mobility
• Greylock GP Mike Duboe to discuss growth, growth and more growth at TechCrunch Early Stage in July

Across the week

Seen on TechCrunch

Pakistan temporarily blocks social media

Republican antitrust bill would block all Big Tech acquisitions

Can the tech trade show return in 2021?

Garry Kasparov launches a community-first chess platform

Seen on Extra Crunch

What’s fueling hydrogen tech?

Billion-dollar B2B: cloud-first enterprise tech behemoths have massive potential

For startups choosing a platform, a decision looms: build or buy?

Building customer-first relationships in a privacy-first world is critical

The IPO market is sending us mixed messages

Best,

N

In the second episode of our new podcast Found, our guest is Brie Code. Code is the founder and CEO of TRU LUV, a startup based out of Toronto that has its roots in the game industry, but that is taking a radically different approach to designing interactive experiences based on a historically-overlooked motivating paradigm called ‘tend-and-befriend,’ an alternative to the ‘fight-or-flight’ response aimed at by most AAA game studios.

Code’s startup developed #SelfCare, a mobile app that encourages users to explore a variety of interactive experiences that are meant to do more than simply encourage them to engage in competitive behavior either with other players, or with computer-controlled antagonists. The motivation for creating this kind of thing for Code came from recognizing its absence in the existing market, and identifying a huge demand gap that just wasn’t being addressed. Building on her expertise in the game industry engineering interactions for non-player characters (NPCs) and her exploration of academic research on the subject of ‘tend-and-befriend,’ Code set up to build a venture-scalable business to define a new category of entertainment.

TRU LUV’s first touchpoint with users may be its app, but the startup has big ambitions that extend all the way to a larger mission of “healing our relationship with technology.” Chatting with the founder behind that pursuit reveals how deeply that mission runs both with her, and her startup.

We hope you get as much out of this deep and engrossing discussion as we did, and don’t forget to subscribe in Apple Podcasts, Spotify, or your podcast app of choice. We always love to get your feedback, too so please reach out via Twitter or email, and check back next week for our next episode.

In the second episode of our new podcast Found, our guest is Brie Code. Code is the founder and CEO of TRU LUV, a startup based out of Toronto that has its roots in the game industry, but that is taking a radically different approach to designing interactive experiences based on a historically-overlooked motivating paradigm called ‘tend-and-befriend,’ an alternative to the ‘fight-or-flight’ response aimed at by most AAA game studios.

Code’s startup developed #SelfCare, a mobile app that encourages users to explore a variety of interactive experiences that are meant to do more than simply encourage them to engage in competitive behavior either with other players, or with computer-controlled antagonists. The motivation for creating this kind of thing for Code came from recognizing its absence in the existing market, and identifying a huge demand gap that just wasn’t being addressed. Building on her expertise in the game industry engineering interactions for non-player characters (NPCs) and her exploration of academic research on the subject of ‘tend-and-befriend,’ Code set up to build a venture-scalable business to define a new category of entertainment.

TRU LUV’s first touchpoint with users may be its app, but the startup has big ambitions that extend all the way to a larger mission of “healing our relationship with technology.” Chatting with the founder behind that pursuit reveals how deeply that mission runs both with her, and her startup.

We hope you get as much out of this deep and engrossing discussion as we did, and don’t forget to subscribe in Apple Podcasts, Spotify, or your podcast app of choice. We always love to get your feedback, too so please reach out via Twitter or email, and check back next week for our next episode.

In the second episode of our new podcast Found, our guest is Brie Code. Code is the founder and CEO of TRU LUV, a startup based out of Toronto that has its roots in the game industry, but that is taking a radically different approach to designing interactive experiences based on a historically-overlooked motivating paradigm called ‘tend-and-befriend,’ an alternative to the ‘fight-or-flight’ response aimed at by most AAA game studios.

Code’s startup developed #SelfCare, a mobile app that encourages users to explore a variety of interactive experiences that are meant to do more than simply encourage them to engage in competitive behavior either with other players, or with computer-controlled antagonists. The motivation for creating this kind of thing for Code came from recognizing its absence in the existing market, and identifying a huge demand gap that just wasn’t being addressed. Building on her expertise in the game industry engineering interactions for non-player characters (NPCs) and her exploration of academic research on the subject of ‘tend-and-befriend,’ Code set up to build a venture-scalable business to define a new category of entertainment.

TRU LUV’s first touchpoint with users may be its app, but the startup has big ambitions that extend all the way to a larger mission of “healing our relationship with technology.” Chatting with the founder behind that pursuit reveals how deeply that mission runs both with her, and her startup.

We hope you get as much out of this deep and engrossing discussion as we did, and don’t forget to subscribe in Apple Podcasts, Spotify, or your podcast app of choice. We always love to get your feedback, too so please reach out via Twitter or email, and check back next week for our next episode.

In the second episode of our new podcast Found, our guest is Brie Code. Code is the founder and CEO of TRU LUV, a startup based out of Toronto that has its roots in the game industry, but that is taking a radically different approach to designing interactive experiences based on a historically-overlooked motivating paradigm called ‘tend-and-befriend,’ an alternative to the ‘fight-or-flight’ response aimed at by most AAA game studios.

Code’s startup developed #SelfCare, a mobile app that encourages users to explore a variety of interactive experiences that are meant to do more than simply encourage them to engage in competitive behavior either with other players, or with computer-controlled antagonists. The motivation for creating this kind of thing for Code came from recognizing its absence in the existing market, and identifying a huge demand gap that just wasn’t being addressed. Building on her expertise in the game industry engineering interactions for non-player characters (NPCs) and her exploration of academic research on the subject of ‘tend-and-befriend,’ Code set up to build a venture-scalable business to define a new category of entertainment.

TRU LUV’s first touchpoint with users may be its app, but the startup has big ambitions that extend all the way to a larger mission of “healing our relationship with technology.” Chatting with the founder behind that pursuit reveals how deeply that mission runs both with her, and her startup.

We hope you get as much out of this deep and engrossing discussion as we did, and don’t forget to subscribe in Apple Podcasts, Spotify, or your podcast app of choice. We always love to get your feedback, too so please reach out via Twitter or email, and check back next week for our next episode.

In the second episode of our new podcast Found, our guest is Brie Code. Code is the founder and CEO of TRU LUV, a startup based out of Toronto that has its roots in the game industry, but that is taking a radically different approach to designing interactive experiences based on a historically-overlooked motivating paradigm called ‘tend-and-befriend,’ an alternative to the ‘fight-or-flight’ response aimed at by most AAA game studios.

Code’s startup developed #SelfCare, a mobile app that encourages users to explore a variety of interactive experiences that are meant to do more than simply encourage them to engage in competitive behavior either with other players, or with computer-controlled antagonists. The motivation for creating this kind of thing for Code came from recognizing its absence in the existing market, and identifying a huge demand gap that just wasn’t being addressed. Building on her expertise in the game industry engineering interactions for non-player characters (NPCs) and her exploration of academic research on the subject of ‘tend-and-befriend,’ Code set up to build a venture-scalable business to define a new category of entertainment.

TRU LUV’s first touchpoint with users may be its app, but the startup has big ambitions that extend all the way to a larger mission of “healing our relationship with technology.” Chatting with the founder behind that pursuit reveals how deeply that mission runs both with her, and her startup.

We hope you get as much out of this deep and engrossing discussion as we did, and don’t forget to subscribe in Apple Podcasts, Spotify, or your podcast app of choice. We always love to get your feedback, too so please reach out via Twitter or email, and check back next week for our next episode.

In the second episode of our new podcast Found, our guest is Brie Code. Code is the founder and CEO of TRU LUV, a startup based out of Toronto that has its roots in the game industry, but that is taking a radically different approach to designing interactive experiences based on a historically-overlooked motivating paradigm called ‘tend-and-befriend,’ an alternative to the ‘fight-or-flight’ response aimed at by most AAA game studios.

Code’s startup developed #SelfCare, a mobile app that encourages users to explore a variety of interactive experiences that are meant to do more than simply encourage them to engage in competitive behavior either with other players, or with computer-controlled antagonists. The motivation for creating this kind of thing for Code came from recognizing its absence in the existing market, and identifying a huge demand gap that just wasn’t being addressed. Building on her expertise in the game industry engineering interactions for non-player characters (NPCs) and her exploration of academic research on the subject of ‘tend-and-befriend,’ Code set up to build a venture-scalable business to define a new category of entertainment.

TRU LUV’s first touchpoint with users may be its app, but the startup has big ambitions that extend all the way to a larger mission of “healing our relationship with technology.” Chatting with the founder behind that pursuit reveals how deeply that mission runs both with her, and her startup.

We hope you get as much out of this deep and engrossing discussion as we did, and don’t forget to subscribe in Apple Podcasts, Spotify, or your podcast app of choice. We always love to get your feedback, too so please reach out via Twitter or email, and check back next week for our next episode.