When Cisco bought AppDynamics in 2017 for $3.7 billion just before the IPO, the company sent a clear signal it wanted to move beyond its pure network hardware roots into the software monitoring side of the equation. Yesterday afternoon the company announced it intends to buy another monitoring company, this time snagging internet monitoring solution ThousandEyes.
Cisco would not comment on the price when asked by TechCrunch, but published reports from CNBC and others pegged the deal at around $1 billion. If that’s accurate, it means the company has paid around $4.7 billion for a pair of monitoring solutions companies.
Cisco’s Todd Nightingale, writing in a blog post announcing the deal said that the kind of data that ThousandEyes provides around internet user experience is more important than ever as internet connections have come under tremendous pressure with huge numbers of employees working from home.
ThousandEyes keeps watch on those connections and should fit in well with other Cisco monitoring technologies. “With thousands of agents deployed throughout the internet, ThousandEyes’ platform has an unprecedented understanding of the internet and grows more intelligent with every deployment, Nightingale wrote.
He added, “Cisco will incorporate ThousandEyes’ capabilities in our AppDynamics application intelligence portfolio to enhance visibility across the enterprise, internet and the cloud.”
As for ThousandEyes, co-founder and CEO Mohit Lad told a typical acquisition story. It was about growing faster inside the big corporation than it could on its own. “We decided to become part of Cisco because we saw the potential to do much more, much faster, and truly create a legacy for ThousandEyes,” Lad wrote.
It’s interesting to note that yesterday’s move, and the company’s larger acquisition strategy over the last decade is part of a broader move to software and services as a complement to its core networking hardware business.
Just yesterday, Synergy Research released its network switch and router revenue report and it wasn’t great. As companies have hunkered down during the pandemic, they have been buying much less network hardware, dropping the Q1 numbers to seven year low. That translated into a $1 billion less in overall revenue in this category, according to Synergy.
While Cisco owns the vast majority of the market, it obviously wants to keep moving into software services as a hedge against this shifting market. This deal simply builds on that approach.
ThousandEyes was founded in 2010 and raised over $110 million on a post valuation of $670 million as of February 2019, according to Pitchbook Data.
When Verizon (which owns this publication) announced it was buying video conferencing company BlueJeans for around $500 million last month, you probably thought it was going take awhile to bake, but the companies announced today that they has closed the deal.
While it’s crystal clear that video conferencing is a hot item during the pandemic, all sides maintained that this deal was about much more than the short-term requirements of COVID-19. In fact, Verizon saw an enterprise-grade video conferencing platform that would fit nicely into its 5G strategy around things like tele-medicine and online learning.
They believe these needs will far outlast the current situation, and BlueJeans puts them in good shape to carry out a longer-term video strategy, especially on the burgeoning 5G platform. As BlueJean’s CEO Quentin Gallivan and co-founders, Krish Ramakrishnan and Alagu Periyannan reiterated in a blog post today announcing the deal has been finalized, they saw a lot of potential for growth inside the Verizon Business family that would have been difficult to achieve as a stand-alone company.
“Today, organizations are relying on connectivity and digital communications now more than ever. As Verizon announced, adding BlueJeans’ trusted, enterprise-grade video conferencing and event platform to the company’s Advanced Communications portfolio is critical to keep businesses, from small organizations to some of the world’s largest multinational brands, operating at the highest level,” the trio wrote.
As Alan Pelz-Sharpe, founder and principal analyst at Deep Analysis told TechCrunch at the time of the acquisition announcement, Verizon got a good deal here.
Verizon is getting one of the only true enterprise-grade online conferencing systems in the market at a pretty low price,” he told TechCrunch. “On one level, all these systems do pretty much the same thing, but BlueJeans has always prided itself on superior sound and audio quality. It is also a system that scales well and can handle large numbers of participants as well, if not better, than its nearest competitors.
BlueJean brings with it 15,000 enterprise customers. It raised $175 million since its founding in 2009.
With many major sectors totally frozen and reeling from losses, tech’s biggest players are proving themselves to be the exception to the rule yet again. On Friday, Facebook confirmed its plans to buy Giphy, a popular gif search engine, in a deal believed to be worth $400 million.
Facebook has indicated it wants to forge new developer and content relationships for Giphy, but what the world’s largest social network really wants with the popular gif platform might be more than meets the eye. As Bloomberg and other outlets have suggested, it’s possible that Facebook really wants the company as a lens into how users engage with its competitors’ social platforms. Giphy’s gif search tools are currently integrated into a number of messaging platforms, including TikTok, Twitter and Apple’s iMessage.
In 2018, Facebook famously got into hot water over its use of a mobile app called Onavo, which gave the company a peek into mobile usage beyond Facebook’s own suite of apps—and violated Apple’s policies around data collection in the process. After that loophole closed, Facebook was so desperate for this kind of insight on the competition that it paid people—including teens—to sideload an app granting the company root access and allowing Facebook to view all of their mobile activity, as TechCrunch revealed last year.
For lawmakers and other regulatory powers, the Giphy buy could ring two separate sets of alarm bells: one for the further evidence of anti-competitive behavior stacking the deck in the tech industry and another for the deal’s potential consumer privacy implications.
“The Department of Justice or the Federal Trade Commission must investigate this proposed deal,” Minnesota Senator Amy Klobuchar said in a statement provided to TechCrunch. “Many companies, including some of Facebook’s rivals, rely on Giphy’s library of sharable content and other services, so I am very concerned about this proposed acquisition.”
In proposed legislation late last month, Sen. Elizabeth Warren (D-MA) and Rep. Alexandria Ocasio-Cortez (D-NY) called for a freeze on big mergers, warning that huge companies might view the pandemic as a chance to consolidate power by buying smaller businesses at fire sale rates.
In a statement, a spokesperson for Sen. Warren called the Facebook news “yet another example of a giant company using the pandemic to further consolidate power,” noting the company’s “history of privacy violations.”
“We need Senator Warren’s plan for a moratorium on large mergers during this crisis, and we need enforcers who will break up Big Tech,” the spokesperson said.
News of Facebook’s latest moves come just days after a Wall Street Journal report revealed that Uber is looking at buying Grubhub, the food delivery service it competes with directly through Uber Eats.
That news also raised eyebrows among pro-regulation lawmakers who’ve been looking to break up big tech. Rep. David Cicilline (D-RI), who chairs the House’s antitrust subcommittee, called that deal “a new low in pandemic profiteering.”
“This deal underscores the urgency for a merger moratorium, which I and several of my colleagues have been urging our caucus to support,” Cicilline said in a statement on the Grubhub acquisition.
The early days of the pandemic may have taken some of the antitrust attention off of tech’s biggest companies, but as the government and the American people fall into a rhythm during the coronavirus crisis, that’s unlikely to last. On Friday, the Wall Street Journal reported that the Department of Justice and a collection of state attorneys general are in the process of filing antitrust lawsuits against Google, with the case expected to hit in the summer months.
On the heels of a spate of reports over the weekend, today Intel confirmed its latest move to grow its automotive division. The chip giant is acquiring Moovit, an Israeli startup previously backed by Intel that analyses urban traffic patterns and provides transportation recommendations with a specific focus on public transit. The deal values Moovit at $900 million, although Intel says that the growth of its existing stake in the startup effectively means that Intel is paying $840 million in this transaction.
Moovit provides traffic data to third parties — including Intel itself, Uber and 7,500 transit authorities — and it also has a popular app with 800 million users globally. Intel has confirmed to me that all existing services will continue, but additionally it plans to use Moovit’s technology to expand the services it offers via Mobileye, the autonomous car company that Intel acquired for $15.3 billion in 2017, which is the anchor of its efforts in the automotive sector.
Specifically, Moovit’s tech will be used to expand and enhance Mobileye’s “mobility as a service” (MaaS) offering, Intel said. Mobileye’s driver assistance technology is in some 60 million vehicles today, and while a lot of autonomous services like “robotaxis” are still in their most nascent phase, the opportunities are big: Intel believes that robotaxis alone will be a $160 billion market by 2030.
“Intel’s purpose is to create world-changing technology that enriches the lives of every person on Earth, and our Mobileye team delivers on that purpose every day,” said Bob Swan, Intel CEO, in a statement. “Mobileye’s ADAS technology is already improving the safety of millions of cars on the road, and Moovit accelerates their ability to truly revolutionize transportation — reducing congestion and saving lives — as a full-stack mobility provider.”
Mobileye and Moovit had already been working together prior to the acquisition: Intel had been a strategic investor in the startup as part of that deal; Professor Amnon Shashua, senior vice president of Intel and CEO / CTO of Mobileye, was on Moovit’s Board of Directors as an observer.
The deal is interesting not just because it underscores how Intel is doubling down on its autonomous car business, but that it’s doing so at a time when a number of other car companies and autonomous efforts are being paused or axed because of the global economic slowdown resulting from COVID-19. They have included Ford postponing its autonomous vehicle service until 2022; and Waymo and Voyage both suspending services.
“While others working on AV R&D may slow down or downsize their ambitions given the headwinds in our economy, we saw an opportunity to acquire a valuable asset that will help us realize our vision for driverless MaaS even faster,” Shashua noted in a blog post.
The acquisition comes at critical moments both in the world of transportation, as well as in the world of startups.
On the transportation side, many people around the world are being asked to curtail their movement to slow down the spread of COVID-19 cases in what has become a global pandemic; and partly as a result of that same public health crisis, the global economy has been in a major downswing. Both have had a direct impact on the automotive world, which is seeing some not only changing courses in ambitious next-generation strategies, but bigger shut-downs in all automotive production, both to contain coronavirus spread and to respond to the big drop in purchasing demand.
On the tech side, all companies big and small have been working on leveraging their assets in as optimised a way as possible to help keep things moving (so to speak). That has been playing out specifically in the world of transportation startups, too.
For Moovit, consumer usage of its app will have drastically dropped off with people moving around less, but at the same time, the company launched a series of COVID-19 services to help those customers that still need to keep things operational, and still need to give their users data and transportation options to get from A to B.
These have included a special service for transit data managers (which it’s offering for free, unlike its normal B2B products) to both receive updated transit and traffic data and subsequently put in place “thousands of short-term changes quickly, enabling riders to plan their trips with only updated, valid routes.”
Moovit also started a real-time service for its app users to make sure that they are getting those alerts. Thirdly, it has launched an “emergency mobilisation on-demand” service that lets transportation managers redeploy buses on routes more quickly to better serve essential workers that are still using public transport.
There is also the issue of funding, and where Moovit happened to be sitting on that front. The company last raised back in 2018 — its investors, alongside Intel, were a pretty illustrious list that included NGP Capital, BMW, Sound Ventures, Gemini Israel, Sequoia Israel and LVMH.
It’s not at all clear if Moovit had been working on raising more money, or if it had been feeling the same pinch that so many other startups have felt when it comes to closing deals at the moment, or if Intel’s offer was too good to refuse right now, or even if it was on the table before COVID-19. Regardless, this is a complementary fit that will not face the classic issues of integrating teams that have never worked together before, given the existing relationship.
“We are excited to join forces with Mobileye and lead the future revolution of new mobility services,” said Nir Erez, Moovit co-founder and CEO, in a statement. “Mobility is a basic human right, and as cities become more crowded, urban mobility becomes more difficult. Combining the daily mobility habits and needs of millions of Moovit users with the state-of-the-art, safe, affordable and eco-friendly transportation enabled by self-driving vehicles, we will be able to make cities better places to live in. We share this vision and look forward to making it a reality as part of Mobileye.”
More to come.
Chargify, the subscription billing platform, announced today that it has acquired event streaming company, Keen for an undisclosed amount. One interesting aspect of this deal is that both companies are part of the Scaleworks private equity firm’s stable of companies.
Keen gives Chargify an event streaming business, and it has taken advantage of that by adding an event-based billing component to the platform.
Chargify CEO Paul Lynch believes that event-based billing is the next step in subscription pricing. Just as serverless architecture provides a way to pay for only the infrastructure resources you use and no more, event billing provides a way to pay for the software services you use and no more.
“It’s a unit-based kind of billing model where you’re paying down to the very last unit of what you’re consuming,” he said. That means that you are no longer paying a fixed monthly or yearly price for services you may or may not use. Instead, you only pay when you open the service and actually use it.
It sounds logical, but he says it’s actually a hard problem to solve without the kind of technology Keen provides. “No one is delivering event-based billing. So I asked myself why, and it’s because the Keen component, the event data management component is so difficult to build and to manage,” Lynch explained.
He says that having Keen in the same building, and part of the same family of companies certainly helped make the deal happen. “The fact that it was owned by Scaleworks is obviously an enormous benefit. Going out and buying a business, finding that business to acquire is super hard. The fact that Keen was sitting down the hall was an unbelievably surreptitious kind of benefit,” he explained.
That said, the acquisition still involved all the kinds of steps, hurdles and due diligence that would be required in any similar exercise. “You’re still going to the board. You’re still putting together board pricing projections. You’re still looking for Board approval,” he said.
While Keen’s technology becomes an integral part of the Chargify platform with the acquisition, Lynch said that the company will continue to operate as before servicing its 800 customers and building on its product set.
The event-based billing feature is available starting today.