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When a large company is after a popular startup, the decision to sell is not clear-cut

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When a big company comes after a hot startup, it’s not a slam dunk decision to sell

Last month, rumors first emerged that Google was pursuing cloud security startup Wiz, and a suggestion of $23 billion was on the table, the most lucrative offer ever made to a startup. There were a lot of moving parts before the deal finally fell through, and it’s fair to ask: What are the mechanics behind putting a big deal like this in motion, and the way does a startup determine whether to sell or not?

We spoke with Jyoti Bansal, founder and CEO of Harness, a developer tools startup that has raised about $575 million and made a variety of small acquisitions along the way. While Bansal has no direct knowledge of the Google-Wiz negotiation process, he experienced the adulation of a large company when Cisco got here in after his previous startup, AppDynamics. Cisco ultimately bought the company just days before it went public in 2017 for $3.7 billion.

He says there are three aspects at play in deals like this. The first is how serious the offer is, and whether it’s concrete or simply exploratory. In the case of a private company like Wiz, it’s likely to be exploratory at first, since there’s not as much public details about its funds as there can be with a public company.

Bansal says that when he was going through the AppDynamics negotiations with Cisco, he had recently filed his S-1 with the SEC, and all of his financial cards were already on the table. “So for an acquirer, acquiring a private company that’s on the IPO track and a few days away from an IPO is fundamentally no different than acquiring a public company,” he says. “All the information they need is there, and they don’t have to worry about whether they’re missing something, or whether the information isn’t clean, verified, or audited.”

Once you’ve got determined how serious the company is, you wish to investigate whether it’s a good fit. “The second factor in any type of courtship that happens is why are you merging companies? Is it interesting? Is it exciting?” You also need to consider what is going to occur to your employees and your products: Will some employees lose their jobs? Will products be discontinued or canceled?

Finally, and maybe most significantly, the economics of the deal need to be examined to see if it is sensible and represents good value for shareholders. From Wiz’s perspective, this was a huge offer (assuming the rumored amount was accurate) that was 46 times current ARR and 23 times projected 2025 ARR. However, Wiz believed it could be higher to remain a private company.

In Bansal’s case, when Cisco courted him, he was in the middle of his company’s IPO tour. It took a few days for the company to go public, but even with the information Cisco could analyze, there have been ongoing discussions, and it wasn’t easy for Bansal to surrender his baby, even when the price was right in the end.

Both firms knew they’d a strict deadline. Once the IPO happened, it was over. The negotiations ended with three offers, and after they ended, Cisco got the company. “Ultimately, it comes down to what’s best for all the shareholders in terms of risk and reward. It’s about what’s the risk of being independent versus the reward of selling,” Bansal said.

The first offer was according to the IPO value and was easy to reject. The second was higher, but after discussing it with the board, Bansal again said no. “Then they came back with a third offer, and in the third offer it made sense, from a risk-reward perspective, for our shareholders to sell the company.” And they sold at a range of two.5 to 3 times the IPO valuation.

It’s easy to think that with billions of dollars at stake, the decision to sell can be easy, however it really wasn’t. “It wasn’t an easy decision on our part. It sounds like ($3.7 billion) is a very easy decision.” But he says you’ve to survey your investors, your fellow executives, your board members — they usually all have different interests, and also you’re trying to make the right decision for everybody involved.

Wiz thought it was higher to stay independent. In AppDynamics’ case, with the pressure of an IPO looming and a good deal on the table, the company eventually decided to accomplish that. “So for us to independently get to a valuation of two and a half, three times our IPO valuation, we would need at least three years of good execution,” he said. “And there were a lot of unknowns, a lot of risks for the company, like what’s going to happen in the next three years.”

But that doesn’t mean he doesn’t regret it, regardless that he remodeled 300 of his employees millionaires with the deal and his personal wealth. When he looks back on the moment of the announcement, he realizes that it’s entirely possible he could have made that much money, or much more.

“I always wonder what AppDynamics could have become if we had gone to IPO. There are a lot of unknowns, and hindsight is 20/20, but if you look back, we sold the company in 2017, and the years after that sale, post-2017, were some of the best boom years in tech, especially for B2B SaaS,” he said. He ultimately could have made more cash, but he began Harness as a substitute and is joyful constructing a second company.

It’s necessary to note that Wiz’s offer stays mired in rumors, so it might or may not be that big. But if it were, the founders may also regret not getting Wiz the value it could have had if it had taken the big money and run.

This article was originally published on : techcrunch.com
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OpenAI may change its nonprofit structure next year

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OpenAI could shake up its nonprofit structure next year

It looks increasingly likely that OpenAI will soon change its complex corporate structure.

Reports earlier this week suggested the AI ​​company was in talks to boost $6.5 billion at a pre-funding valuation of $150 billion. Now Reuters reports that The deal is contingent on OpenAI successfully restructuring and lifting the profit cap for investors.

In fact, based on FortuneCo-founder and CEO Sam Altman told employees at a company-wide meeting that OpenAI’s structure will likely change next year, bringing it closer to a standard for-profit business. OpenAI is currently structured in order that its for-profit arm is controlled by a nonprofit, which seems to have frustrated investors.

“We remain focused on building AI that benefits everyone, and as we’ve said before, we’re working with our board to ensure we’re best positioned to deliver on our mission,” OpenAI said in an announcement. “The nonprofit is core to our mission and will continue to exist.”

This article was originally published on : techcrunch.com
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LinkedIn games are really cool

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I actually have a weakness that I’m ashamed of, and it isn’t that I’ve watched all of Glee (yes, even the terrible later seasons) or that I’ve read an incredible amount of Harry Potter fan fiction in my life.

My little weakness is playing LinkedIn games.

To answer the plain query: Wait, LinkedIn has games? Yes. In May, LinkedIn launched three puzzle games via LinkedIn News, like New York Times game knockoffs. There’s the logic puzzle Queens (my favorite), the word game Crossclimb (pretty good), and the association game Pinpoint (not great, but oh well).

LinkedIn is taking the classic tech strategy of seeing what works for one more company after which trying to copy that success, even when it could appear odd to play games on knowledgeable networking platform. But it’s no wonder NYT Games inspired that inspiration. In a way The New York Times is a gaming company now – from December 2023 users I spent more time within the NYT Games app than within the news app.

LinkedIn isn’t alone. Everyone has games now. Apple News. Netflix. YouTube. There are so many games we are able to take pleasure in. And yet, once I finish my various New York Times puzzles, I still want more. It’s not that I feel like playing Crossclimb LinkedIn before Connections, however the games are adequate to provide me that sweet dopamine rush.

I often play LinkedIn games in the course of the workday (sorry to my boss). Sometimes it’s because I’m on LinkedIn to envision facts or look up a source, but then I remember I can spare a number of minutes for slightly game. Other times, my mind is foggy from gazing the identical draft of an article for too long, and taking a break to resolve a colourful Queens puzzle makes it easier to return and revisit that Google doc.

But it turns on the market’s a scientific explanation for why we love these quick, once-a-day puzzles a lot.

I recently spoke with DeepWell DTx cofounder Ryan Douglas, whose company relies on the concept playing video games (moderately) can have a positive impact on mental health. In some cases, the transient distraction of a game can pull us out of a negative thought spiral or help us approach an issue from a brand new perspective.

“If you’re playing Tetris, for example, you can’t have a long conversation in your head about how terrible you are, how much you suck, what’s going to happen next week, and so on,” Douglas told TechCrunch.

On a neurobiological level, Douglas explained that after we play, we activate the limbic system within the brain, which is answerable for coping with stress. But even when these stressors are simulated, they accustom the brain to coping with that stress in some ways.

“You start learning on a subconscious level, creating new neural pathways at an accelerated rate and preferentially selecting them on a subconscious level to deal with those problems in the future,” he said. “If you deal with (the stressor) in that particular environment, you gain agency. You have control.”

That’s to not say we must always play Pokémon all day—the video game development tools DeepWell creates are approved for therapeutic use in 15-minute doses. Maybe that’s why we’re so infatuated with games like Wordle, and other games The New York Times (and LinkedIn) has written which have a finite ending. You solve one puzzle a day, and then you definately move on to the following.

Wordle creator Josh Wardle spoke to TechCrunch about his viral success even before The New York Times picked up his game.

“I’m a little suspicious of apps and games that want your endless attention — I worked in Silicon Valley, for example. I know why they do that,” Wardle said. “I think people have an appetite for things that clearly don’t want anything from you.”

But Wardle is correct—after all my beloved LinkedIn games want something from me: my attention. And to be honest, I’ve spent rather a lot more time on LinkedIn in recent months than I ever have.

According to LinkedIn’s data, my behavior isn’t an anomaly. The company found that latest player engagement has increased by about 20% week over week because the starting of July. LinkedIn has also seen strong traction in users starting conversations after playing games. After you finish a game, you may see which of your connections also played, which I imagine some people see as a chance to #network. I don’t do this, but on the other hand, most of my LinkedIn conversations are just me messaging my friends “hi” because for some reason I find that funny.

So go on LinkedIn and have a good time as much as you may… after which, about 4 minutes later, return to the relentless grind of worldwide capitalism.

This article was originally published on : techcrunch.com
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These two friends created a simple tool to transfer playlists between Apple Music and Spotify, and it works great

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These two friends built a simple tool to transfer playlists between Apple Music and Spotify, and it works great

Last yr, I had the misfortune of losing all my playlists after I moved from Apple Music to Spotify. For me, playlists are necessary. They’re snapshots of a certain period in your life; possibly your summer of 2016 had a soundtrack. But traditionally, streaming music services don’t make it easy to take your playlists with you to other platforms.

You can imagine how joyful I used to be to see that Apple Music has created latest playlist uploader through the Data Transfer Initiative (DTI), a group founded by Apple, Google, and Meta to create data transfer tools. The Digital Markets in Europe Act requires these designated “gatekeepers” to fund data transfer tools as a part of a broader solution to Big Tech’s strategy of blocking users from their platforms.

Finally! There was only one big problem. The tools don’t work with the world’s hottest music service, Spotify, which apparently didn’t catch the wave of knowledge transfer (or possibly the regulator doesn’t tell them to). The DTI tool only transfers data between Apple Music and YouTube Music, making it much less useful for most individuals.

DTI Executive Director Chris Riley can be fed up with Big Tech’s blocking policies. He’s trying to get more firms to join the negotiations and make their services more portable.

“Over the last decade, we’ve kind of blended into this world, just feeling trapped,” Riley told TechCrunch. “I don’t think enough people know that this is something they need to know.”

With DTI limitations in mind, Riley suggested I move my playlists from Apple Music to Spotify using Soundfree third-party tool. Instead of working directly with streaming services, Soundiiz builds portability tools through existing APIs and acts as a translator between services. Within minutes, I used to be able to connect my accounts, transfer my playlists, and start listening to my old Apple Music playlists on Spotify. It was amazing and easy.

Soundiiz allows you to transfer playlists between Apple Music, Spotify, YouTube Music, Amazon Music, Tidal, Deezer, SoundCloud, and 20 other streaming services I’ve never heard of. There’s a simple user interface for connecting streaming services and choosing the playlists you would like to transfer, including ones another person has created.

The story behind Soundiiz may explain why it works so well and cheaply. It was created in 2013 by two friends from France, Thomas Magnano and Benoit Herbreteau, who loved listening to music while coding together. In the evenings, they decided to create a music search interface with input from everywhere in the web. In the method, they created a useful tool.

They never created a music search interface, however the playlist uploader became Soundiiz.

“I had to manipulate the API and test the fit between services. And while I was doing that, I was creating playlists and moving them between services, just for me internally,” Magnano told TechCrunch. “I presented this feature to a colleague of mine and we thought, ‘Oh, this is useful to me; maybe it’s useful to someone else.’”

In 2015, Soundiiz got its big break when it partnered with Tidal, the music service founded by Jay-Z. The music platform was trying to make it easier for people to leave Spotify and join Tidal with all the identical playlists, and Soundiiz helped with that. But Magnano says they made sure Tidal also let people export playlists, not only import them — something they require from every music service API they work with.

Then a lot more people began using the service, and the founders made Soundiiz their full-time job, but they kept their values. The two founders make a living from Soundiiz, but they tell TechCrunch they’re “not looking to get rich.” Magnano says Soundiiz has never sought outside investment to keep prices low, and the founders retain control over their project.

There are limitations to the free Soundiiz though – a number of the longer playlists might be shortened (limited to 200 songs). You even have to transfer playlists one after the other, and every one takes about a minute, so transferring a dozen or so playlists can take a while. Soundiiz offers a premium plan ($4.50 monthly, which you’ll cancel after transferring) to get around these limitations.

The two founders are still the one employees of Soundiiz, regardless that the corporate has grown: Soundiiz has helped hundreds of thousands of individuals move over 220 million playlists over the past 10 years. According to Magnano, they’ve never spent a dime on marketing, but he says they’ve never had to.

“If you were to Google ‘how to transfer Deezer to Spotify’ in 2012, there was no answer,” Magnano said. “So Soundiiz became the first result in Google search when we launched, and we’ve been doing great in SEO ever since.”

Magnano says Spotify likely has more to lose than to gain by creating a playlist uploader like Apple and Google, and he doesn’t expect that to change anytime soon. However, he says that every one of those streaming services are aware of what Soundiiz is doing and are okay with it — some even promote it of their FAQs. That said, it’s unlikely that any of them would promote playlist uploaders like Soundiiz greater than this.

This article was originally published on : techcrunch.com
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