The Exchange is taking a break from vacation to dig into the new Qualtrics S-1 filing. Then the column and newsletter are back on hold until January 4th.
This afternoon, Qualtrics, a software company that helps companies poll their employee base, customers, and others, filed to go public. It’s the second time that the Utah-based unicorn has done so, failing the first time to complete its offering after SAP swooped in and bought it for around $8 billion in cash.
SAP announced in late July of this year that Qualtrics would be spun out via an IPO, bringing the smaller company’s saga full-circle.
The new S-1 filing — you can view the 2018 original here — is a different animal from the first. First, Qualtrics is larger than it was, and older. And its financials are more complex as it extricates itself from its soon-to-be-erstwhile corporate parent.
Qualtrics intends to list on the Nasdaq under the ticker symbol “XM.”
Looking back at my chat with Ryan Smith, then Qualtrics CEO and today its chairman, and Bill McDermott, then SAP’s CEO and today the CEO of ServiceNow, it’s hard to believe that the acquisition deal was only two years ago.
Much has changed since late 2018. Let’s see what happened to Qualtrics in the meantime. We’ll dig into the financials, the company’s implied valuation range — spoiler: it has gone up — and whatever else we can shake loose.
The new Qualtrics S-1
A few things up top. First, SAP will be the company’s controlling shareholder after the Qualtrics’ IPO. That’s early in the S-1 filing. And, Smith and Silver Lake are investing in the company as part of its new debut.
The FAA today announced that it will be issuing two new rules for drone pilots in the U.S. The first is the implementation of a long-awaited Remote ID. The system effectively works as a kind of digital license plate for unmanned aircraft, broadcasting identifying details, including the location of the craft.
The full text of the finalized new rule can be found here. In short, drone operators will have one of three methods for complying:
1. Operate a standard Remote ID drone that broadcasts identification and location information of the drone and control station;
2. Operate a drone with a Remote ID broadcast module (may be a separate device attached to the drone), which broadcasts identification, location, and take-off information; or
3. Operate a drone without Remote ID but at specific FAA-recognized identification areas.
While some drone operators are likely to be put off by additional regulation, its arrival is understandable given the sheer volume and speed of drone adoption. The FAA says that more than 1.7 million drones have been registered in the U.S., along with around 203,000 certifications for drone pilots. Those numbers will likely only snowball as more drones are deployed for commercial purposes.
Notably, the FAA sees the new rules as a method for accelerating drone deliveries in the U.S. “The new rules make way for the further integration of drones into our airspace by addressing safety and security concerns,” FAA Administrator Steve Dickson said in a release tied to the news. “They get us closer to the day when we will more routinely see drone operations such as the delivery of packages.”
Also new is the “Operations Over People and at Night” rule, which, as the name implies, regulates both the ability to fly over people and fly at night. The rule features a number of different qualifications for compliance, including weighing less than 0.55 pounds to fly overhead.
According to the rule, “small unmanned aircraft must not cause injury to a human being that is equivalent to or greater than the severity of injury caused by a transfer of 25 foot-pounds of kinetic energy upon impact from a rigid object, does not contain any exposed rotating parts that could lacerate human skin upon impact with a human being, and does not contain any safety defects.”
In order to fly at night, drones need to sport operational anti-collision lights that can been see for three miles. The rules are set to be officially published next month, officially becoming effective 60 days later. Drone makers will have a year and a half to begin adding Remote ID to their devices. In August, the FAA granted Amazon permission for delivery trials.
Pokémon GO was created to encourage players to explore the world while coordinating impromptu large group gatherings — activities we’ve all been encouraged to avoid since the pandemic began.
On a press call outlining an update Niantic shipped in November, representatives said the company had tossed out its product roadmap, which included a handful of new features that have yet to see the light of day. They declined to say which features were removed, noting that it just didn’t make sense to release them right now.
Instead, as any potential end date for the pandemic slipped further into the horizon, the team refocused in Q1 2020 on figuring out ways to adapt what already worked and adjust existing gameplay to let players do more while going out less.
Turning the dials
As its name indicates, GO was never meant to be played while sitting at home. John Hanke’s initial vision for Niantic was focused around finding ways to get people outside and playing together; from its very first prototype, Niantic had players running around a city to take over its virtual equivalent block by block. They’d spent nearly a decade building up a database of real-world locations that would act as in-game points meant to encourage exploration and wandering. Years of development effort went into turning Pokémon GO into more and more of a social game, requiring teamwork and sometimes even flash mob-like meetups for its biggest challenges.
Now it all needed to work from the player’s couch.
The earliest changes were those that were easiest for Niantic to make on-the-fly, but they had dramatic impacts on the way the game actually works.
Some of the changes:
Doubling the players “radius” for interacting with in-game gyms, landmarks that players can temporarily take over for their in-game team, earning occupants a bit of in-game currency based on how long they maintain control. This change let more gym battles happen from the couch.
Increasing spawn points, generally upping the number of Pokémon you could find at home dramatically.
Increasing “incense” effectiveness, which allowed players to use a premium item to encourage even more Pokémon to pop up at home. Niantic phased this change out in October, then quietly reintroduced it in late November. Incense would also last twice as long, making it cheaper for players to use.
Allowing steps taken indoors (read: on treadmills) to count toward in-game distance challenges.
Players would no longer need to walk long distances to earn entry into the online player-versus-player battle system.
Your “buddy” Pokémon (a specially designated Pokémon that you can level up Tamagotchi-style for bonus perks) would now bring you more gifts of items you’d need to play. Pre-pandemic, getting these items meant wandering to the nearby “Pokéstop” landmarks.
By twisting some knobs and tweaking variables, Pokémon GO became much easier to play without leaving the house — but, importantly, these changes avoided anything that might break the game while being just as easy to reverse once it became safe to do so.
For obvious reasons, many of us are spending the final week of 2020 looking forward. Samsung is hoping some folks are looking far enough ahead to reserve a spot in line for its still-unannounced Galaxy S21 handset (not an official name, mind, but probably a safe guess).
If you’re on the Samsung Mobile mailing list, you may well have received an email, compelling you to “Get ready to jump to the next Galaxy.” The link brings you to a reservation page that offers up some perks for getting in early on the company’s new flagship, including credits on other Samsung products like Galaxy earbuds.
The company recently noted that it would have more information in January – be it at CES or, more likely, a standalone event. That bucks trends a bit, which have found the company introducing its latest Galaxy S devices closer to Mobile World Congress (the S20 — pictured above — was announced February 11). Of course, MWC has been delayed until late June next year, and nothing is really normal besides.
As I noted in a recent piece, 2020 was the roughest in a series of rough years for the smartphone industry, so why not get those pre-orders started a little early? And hey, not everyone got what the wanted for the holiday. Why not treat yourself to a new phone?
Source: Winfuture
The good news is we (think we) know a lot about the unannounced phone. Samsung’s never been great at keeping things under wraps and we’re already starting to see some key details leaking out a few weeks ahead of the expected official unveil. Surprisingly, camera specs look to more or less be in line with the last model, after the company promised some big imaging strides in 2021. Perhaps those updates will arrive more in the form of software, instead of straight hardware bumps.
Specs from Winfuture point to – naturally – the Snapdragon 888 in the U.S., with the Exynos 2100 chip in other locales. The S21 sports a 6.2-inch display and 4000mAh battery, where as the Plus upgrades things to 6.7 inches and 4,800mAh, per the leak.
Samsung is expected to make everything official on January 14.
Volkswagen Group has developed a mobile electric vehicle charger that can autonomously navigate parking areas, power up an EV and then make its way back to its outpost without the intervention of humans.
The prototype, which VW Group Components created, aims to showcase how the automaker will expand charging infrastructure over the next few years to meet the expected demand that will arise as it produces and sells more electric vehicles. VW Group has committed to launching dozens of electric models over the next decade. The group’s Volkswagen brand plans to build and sell 1.5 million electric cars by 2025.
“Setting up an efficient charging infrastructure for the future is a central task that challenges the entire sector,” Volkswagen Group Components CEO Thomas Schmall said in a statement. “We are developing solutions to help avoid costly stand-alone measures. The mobile charging robot and our flexible quick-charging station are just two of these solutions.”
VW Group is developing a portfolio of different DC charging products, including a DC wallbox that charges up to 22 kilowatts. The automaker began piloting its DC wallbox earlier this month at some of its production sites in Germany. VW Group is also planning to launch a flexible — yet still more stationary — quick-charging station will be launched onto the market in early 2021.
The mobile charging robot doesn’t have a release date. The company said now that it has reached prototype status it will be “comprehensively further developed.” There is one caveat for the mobile charger. VW said that car-to-X communication, which allows a vehicle to “talk” to infrastructure, will be one prerequisite for the mobile charger to reach market maturity.
The charging robot prototype can be started via an app launched by the vehicle owner or car-to-x communication. Once the communication begins, the mobile charger turns on — two digital eyes open on the display — and it steers towards a vehicle. The mobile charger opens the charging socket flap as well as connects or disconnect the plug. The mobile charger is also able to move and then connect the vehicle to an energy storage unit. Once the charging is complete, the robot collects the mobile energy storage unit and takes it back to a central charging station.
Schmall said the DC charging products will not just focus on customers’ needs and the technical prerequisites of electric vehicles, but will also consider the economical possibilities of possible partners such as operators of parking bays and underground car parks.
You can watch the video of the mobile charging robot in action below.
Global investors are running from Chinese tech stocks in the wake of the government’s crackdown on Ant Group and Alibaba, two high-flying businesses founded by Ma Yun (Jack Ma) that were once hailed as paragons of China’s new tech elite.
Shares of major technology companies in the country have fallen sharply in recent days, with Bloomberg calculating that Alibaba, Tencent, JD.com and Meituan have lost around $200 billion in value during a handful of trading sessions.
Already reeling from the last-minute halt of the public debut of Ant Group, a major Chinese fintech player with deep ties to Alibaba, the e-commerce giant came under new fire, as China’s markets watchdog opened a probe into its business practices concerning potentially anticompetitive behavior.
Shares of Alibaba are off around 30% from their recent, record highs set in late October. Tech shares are also off in the country more broadly, with one Chinese-technology-focused ETC falling around 8% from recent highs, including a 1.5% drop today.
The American Depositary Receipts used by traders to invest in Alibaba fell from around $256 per share at the close of Wednesday trading on the New York Stock Exchange to around $222 last Thursday. The company is down another half point today. It was worth more than $319 per share earlier in the quarter.
It’s clear that the rising tensions between China’s tech giants and the country’s ruling Communist Party have investors spooked. But Jack Ma’s relationship with the Chinese government has always been a bit more fraught than that of his peers. Ma Huateng (Pony Ma), the founder of Tencent, and Xu Yong (Eric Yong) and Li Yanhong (Robin Li), the co-founders of Baidu, have kept lower profiles than the Alibaba founder.
Bloomberg has a good synopsis of the state of the market right now. The companies that are most directly in the crosshairs appear to be Ma Yun’s, but at different times, Tencent has been the focus of Chinese regulators bent on curbing the company’s influence through gaming.
Specifically for Alibaba things have gone from bad to worse, and a boosted share buyback program was not enough to halt the bleeding.
Whether this new round of regulations is a solitary blip on the radar or the signal of an increasing interest in Beijing tying tech companies closer to national interests remains to be seen. As the tit-for-tat tech conflict between the U.S. and China continues, many companies that had seen their growth as apolitical may become caught in the diplomatic crossfire.
Other tech companies are seeing their fortunes rise, boosted by newfound interest from the central government in Beijing.
Private investors may be less enthused at the prospect of backing Chinese tech upstarts who could face government censure should the regulatory winds shift. Whether other startup markets in the region — India, Japan, among others — will benefit from the Chinese regulatory barrage will be interesting to track in 2021.
The U.S. government is appealing the ruling that blocked the Trump administration’s TikTok ban, according to a new court filing. On December 7, 2020, U.S. District Court Judge Carl Nichols in Washington became the second U.S. judge to block the Commerce Department’s attempt to stop the TikTok app from being downloaded from U.S. app stores, citing threats to national security.
The Trump administration had raised concerns over the video-sharing app due to its Chinese ownership by way of parent company ByteDance, and the potential risk of TikTok’s U.S. user data being accessed by the Chinese government. This ultimately resulted in President Trump’s decision to use his executive order power to ban TikTok from the U.S. market.
TikTok, in response, had vowed to fight the order in court while it also entered negotiations with American companies over the potential sell-off of its U.S. operations, in case the order was upheld.
However, prior to the Dec. 7 ruling on the matter, a group of TikTok creators successfully challenged the ban, when U.S. Judge Wendy Beetlestone in Pennsylvania issued an injunction that blocked the restrictions that would have otherwise stopped TikTok from operating in the U.S. The creators said the ban would have caused them to lose their income by way of their brand sponsorships and other opportunities afforded by the platform.
Following that order, Judge Nichols in the separate case led by TikTok ruled that Trump overstepped his authority in trying to ban the app from the U.S., referring to the agency’s action as “arbitrary and capricious.”
The U.S. Commerce Dept. spokesperson said at the time of the ruling it would continue to comply with the injunctions but intended to “vigorously defend the [executive order] and the Secretary’s implementation efforts from legal challenges.”
Today, it has followed through on that statement with its appeal.
Of course, the decision as to whether the U.S. will continue its attempt to ban TikTok will ultimately reside with the incoming Biden administration.
The news of today’s filing was first reported by Reuters.
TikTok declined to comment on the appeal. The U.S. Commerce Dept. has not responded to a request for comment.
When kids today want to learn about a new topic they’re interested in, they’ll often turn to YouTube. But the quality of the educational content on the platform can be hit or miss, depending on what specific videos kids happen to come across. Tappity, a digital educational startup now backed by $1.3 million in seed funding, aims to offer an alternative. Its video library offers entertaining and interactive live-action videos kids enjoy, while also ensuring the content itself is aligned with current educational standards.
The two-year old startup was co-founded by CEO Chad Swenson, his brother and CTO Tanner Swenson, and CPO Lawrence Tran.
Image Credits: Tappity founders
As Chad explains, the idea for Tappity emerged from his interest in designing interactive learning experiences, which resulted in a senior project eight years ago where he created an interactive experience to help students learn about evolution. Over the years that followed, he began to experiment with different concepts in this area, but never planned for anything of venture scale.
However, Chad says he later realized there could be an opportunity to develop content based around the Next Generation Science Standards (NGSS) — the set of K-12 science content standards that were developed by a consortium of multiple U.S. states — whose adoption across the U.S. is now growing.
“A lot of parents were looking for healthier alternatives to YouTube,” Chad says. “And I really started to believe this is something that could be much bigger.”
He found also that the science-based topics kids are generally interested in are often those that are aligned with what the NGSS aims to teach — like space, dinosaurs, geology and others.
“A big inspiration was just looking at the most popular books on Amazon for kids,” Chad adds, noting that a large number of these books are focused on STEM-related subjects.
Chad met his co-founder Lawrence Tran when consulting for fintech startup Bill.com, and convinced him and his brother Tanner to work on the startup.
Over the course of a couple of years, Tappity has developed tools that make it easier and efficient to produce interactive, educational video content. Today, the library includes over 200 science lessons for kids ages 4 to 10, across thousands of videos.
While the video clips themselves are pre-recorded, they give the kids the feeling of having a one-on-one interaction with the character on the screen. For example, if the teacher is building something and needs a screwdriver, the kids can pass it to her in the app when she asks. But they’ll also have a lot of other fun options they can do instead, like passing her tape or even throwing pizza at her — and she’ll react. The teacher may also engage with kids in other ways, too, like responding to what they drew in the app, among other things.
Image Credits: Tappity
Currently, Tappity’s teacher Haley the Science Gal (Haley McHugh), a childhood entertainment expert with over 10 years of experience, is leading the lessons which span topics like space, life science, earth science and physical science.
In addition to the video lessons, kids are engaged with an in-app points system for completing activities. The app also offers follow-up emails for parents so they can track what kids are learning and further engage them.
Due to the COVID pandemic, and the resulting screen fatigue that comes from virtual schooling, Tappity adapted some lessons to include offline activities — like drawing with paper and pens, for instance. And on Sundays, Tappity offers more involved activities parents and kids can do together — like baking cookies that you turn into Pangea or making a volcano.
Tappity expects to have over 1,000 hours of video content by the end of next year, and over 4,000 hours by the year after, Chad notes.
When the team of three applied to startup accelerator Y Combinator, Tappity was small but profitable, thanks to its in-app subscription tiers that average around $9 per month. Today, the company has over 5,000 paying customers and over 20,000 weekly active users who have collectively completed 30 million lessons to date.
In the near-term, Tappity is working to expand its team and bring its lessons — that today are only available on iOS — to the web. Over time, the company’s goal is to create a large library of interactive educational content.
While the COVID pandemic has inspired VCs to invest in more edtech startups, the longevity of some of these businesses in the post-COVID world remains to be seen. Where Tappity is different from many of these remote learning startups or those designed for the classroom, is that its focus is not on selling into the school system.
“Teachers have picked it up organically — we give it away free to schools right now,” Chad explains. “But we’re not dedicating any resources to it because we’re focused on the parents’ and kids’ needs, which are quite a bit different,” he says.
Tappity’s app is available iOS, and includes some free content outside of the subscription.
If ever there was a typically quiet tech industry that seemed to drive massive headlines this year, it was semiconductors. From record-setting M&A purchases to prodigious venture capital financing, the decline of major players and huge international trade fights, semiconductor companies found themselves in the crosshairs of inventors, VCs, regulators, politicians and, well, Apple.
2020 was a banner year, mostly since it was the culmination of patterns we’ve been watching in the industry for years now. It’s dangerous to predict that there will be “less news” in any tech industry, but these patterns have in many ways worked themselves out, and it seems highly probably that 2021 will be a quieter year for semiconductors than the past year has been.
Here’s a snapshot of four of the largest story lines of 2020, and what may happen next as we enter 2021.
Chip consolidation is in process. The question is whether it will all be approved
The biggest story this year in chips was the rapid consolidation of the industry in just the span of a few months. That consolidation was headlined by Nvidia’s $40 billion purchase offer of Arm, the chip design firm that supplies the blueprint for almost all smartphones and is also starting to encroach on the desktop world with Apple’s launch of its M1 processor.
Nvidia wasn’t unique in throwing around big money to consolidate. AMD spent $35 billion to buy Xilinx, which makes reprogrammable chips known as FPGAs that are increasingly vital in tech stacks like 5G, where technologies change faster than silicon can be replaced. Intel sloughed off its memory unit to SK Hynix for $9 billion as it fights for survival, and Analog Devices bought Maxim for $21 billion in a bid to consolidate the embedded chips market in areas like sensors and power management. Beyond the major headlines of course, there were many smaller acquisitions made across the industry.
The chips industry isn’t unique in its heavy consolidation — plenty of other industries have also taken the M&A route given the relatively lenient antitrust policy in place and the abundant capital from the public markets at their disposal. Yet, there are also unique forces pushing semis to head this direction.
First, the cost of staying competitive in the chip industry have been rising rapidly. For the most high-performance chips, fabs cost tens of billions of dollars to construct and require years of lead time. R&D costs remain high, which is one reason why VC financing of the industry has been limited in the past (although that has changed – read below). It’s just tough to make it in chips if you are small and don’t have the capital to burn to stay competitive.
Perhaps even more importantly though, there has been consolidation on the customer side, and that monopsony is also forcing general consolidation for suppliers. Among the largest buyers of high-performance compute and storage today are the big cloud platforms like AWS, Google Cloud and Microsoft Azure. Apple and a few other manufacturers control most of the market in smartphones, and even in embedded systems, the number of buyers is apparently consolidating. Customer consolidation forces supplier consolidation, fighting markets demand power with market supply power.
Those two trends have been around for years, but they culminated this year with the M&A frenzy we saw. That’s not to say that there is nothing left to buy in the market, but big players like Nvidia and AMD have made their biggest bets and are unlikely to make any more major acquisitions in the meantime.
What to watch for in 2021: The big story next year is which of these massive acquisitions actually receives approval. Antitrust regulators have been remarkably sanguine about consolidation in the sector, but now that consolidation is reaching its logical end, with only a few players — or even just one — existing in their respective markets.
These antitrust concerns are most notable with Nvidia/Arm, which has to receive simultaneous approval from four authorities (United States, Britain, Europe and China). Experts in the industry that I have talked to have been divided on their predictions, with some feeling that the parties can “work out a deal” and others feeling that China in particular is unlikely to approve a deal. We can expect some signs of how this is going in 2021, although approval of the deal might well head into 2022.
AMD/Xilinx has also raised some eyebrows among experts, but hasn’t gotten nearly the press that Nvidia/Arm has. As for Analog Devices and Maxim — which is pretty much classic horizontal consolidation — shareholders approved the merger in October, and the company said in its press release then that the period for the U.S. to intervene on antitrust grounds had expired. It still faces regulatory approvals in other regions and could close by summer 2021.
Given the huge spike in antirust concerns in the United States among both Democrats and Republicans around platform companies like Google and Facebook, the big question is whether those concerns spill over into other technology industries like chips. So far, that hasn’t been the case, but the new Biden administration might have other ideas when it sets up shop in January.
Venture capital activity in chips flourished in 2020. How much more investment can the industry take though?
2020 was another major year for VC dollars in next-generation silicon, after huge investment in 2019 and 2018. I’ve covered a lot of the exciting startups in the space, including Nuvia (which announced $240 million in September for its Series B), SiFive, EdgeQ, and Cerebras, and there are even more companies in the sector, including Graphcore and Mythic that are working on exciting products. Aggregate dollars in the sector are hard to calculate, since most chip companies stay very quiet about their funding for years due to concerns about competition. Nonetheless, even just the rounds that have been announced are staggering in scale.
Tesla will begin its operations in India “early” 2021, a top Indian minister said on Monday, a day after the tech carmaker said it was confident it would enter the world’s second most populated market next year.
The American car company will begin operations with sales in early 2021 and then “maybe” look at assembling and manufacturing of cars in the country, India’s transport minister Nitin Gadkari told newspaper Indian Express. How early? Definitely not next month, Musk tweeted over the weekend.
Tesla, which broke ground in early 2019 on a $5 billion factory in China — its first outside of the U.S.. — has for years expressed interest in expanding to India. But in a 2018 tweet, Tesla chief executive Elon Musk shared that “some government regulations” in India had emerged as a roadblock.
Like elsewhere in the world, Musk has amassed tens of millions of fans in India. A handful of people paid the token amount of $1,000 to pre-order the Model 3 in 2016. Musk later blamed the local regulations for the delay in bringing the cars to customers in India.
“Maybe I’m misinformed, but I was told that 30% of parts must be locally sourced and the supply doesn’t yet exist in India to support that,” he tweeted in 2017.
Instead of putting down $1000 in reserving the Tesla Model 3 in 2016, I should have invested in $TSLA stock. My money would be worth 10x more today.
And by the looks of it 30x (price of the car) by the time it launches in India. Sigh.
New Delhi, which has claimed to abolish more than a 1,000 “archaic laws” in recent years, has previously acknowledged the pain points expressed by Musk. In the past three years, India has proposed billions of dollars in incentive to car companies to switch to electric alternatives and accelerate innovation and manufacturing of batteries in a bid to reduce its spendings on oil and curb air pollution.
Indian ride-hailing firm Ola, acquired Amsterdam-based Etergo earlier this year, said this month that it plans to invest about $327 million to set up “the world’s largest scooter factory” in the Southern Indian state of Tamil Nadu, which it said will be able to create 10,000 new jobs and have an initial capacity to produce 2 million electric vehicles in a year.
Earlier this year, a proposal drafted by Indian Prime Minister Narendra Modi-backed think tank Niti Aayog said the country could slash its spendings on oil import by as much as $40 billion in the next 10 years if electric vehicles were to be widely adopted.
Gadkari told the Indian newspaper that he is hopeful that India will emerge as the No. 1 manufacturing hub for auto in five years.
The new S-1 filing — you can view the 2018 original here — is a different animal from the first. First, Qualtrics is larger than it was, and older. And its financials are more complex as it extricates itself from its soon-to-be-erstwhile corporate parent.
