Tech Brew Ride Home - Wed. 12/2 – A Salesforce/Slack Deal Analysis

Episode Date: December 2, 2020

A full analysis of the huge Salesforce/Slack deal. What HPE leaving Silicon Valley means, even if only symbolically. Qualcomm’s new flagship Snapdragon chip. All the announcements from AWS re:Invent. A smartwatch with a 9 day battery life and putting holograms right on your mantle might finally be getting practical. Sponsors: ImPartner.com/ridehomedemo GetRoman.com/techmeme Links: Salesforce buys Slack in a $27.7B megadeal (TechCrunch) Why Salesforce bought Slack (Divinations) Hewlett Packard Enterprise is the latest tech company to leave Silicon Valley, and is moving to Houston (CNBC) Qualcomm's Snapdragon 888 is a glimpse into how much better your next Android phone will be (CNET) Amazon to roll out tools to monitor factory workers and machines (Financial Times) Techmeme Snapshot of re:Invent headlines Wyze announces $20 smartwatch with nine-day battery life (The Verge) Looking Glass’s next product is a holographic digital photo frame (TechCrunch) Learn more about your ad choices. Visit megaphone.fm/adchoices

On April 4th, 2023, around 2 in the morning, a man was found stabbed multiple times on a sidewalk in downtown San Francisco. Hey, who did this to you? What happened next turned the story into a political firestorm. Reports have identified the victim as Bob Lee, the founder of Cash App. From Bloomberg Podcasts, this is Foundering, the Killing of Bob Lee, beginning April 16. Welcome to the Tech meme right home for Wednesday, December 2nd, 2020. I'm Brian McCullough. Today, a full analysis of the huge Salesforce slack tie-up.

What HPE leaving Silicon Valley means, even if only symbolically, Qualcomm's new flagship Snapdragon ship, all the announcements from AWS reinvent, a smartwatch with a nine-day battery life, and putting holograms right on your mantle might finally be getting practical. Here's what you miss today in the world of tech. Salesforce has announced it is buying Slack in a $27.7 billion deal that I believe is a mixture of cash and stock. That dollar figure represents a 64% premium over Slack's $16.8 billion market cap a week ago,

right before the rumors of the acquisition first leaked. Quoting TechCrunch, Salesforce co-founder and CEO Mark Benioff didn't mince words on his latest purchase. Quote, this is a match made in heaven. Together, Salesforce and Slack will shape the future of enterprise software and transform the way everyone works in the all-digital work-from-anywhere world, Benio said in a statement. And Slack CEO Stuart Butterfield was no less effusive than his future boss, quote, as software plays a more and more critical role in the performance of every organization, we share a vision of reduced complexity, increase power and flexibility, and ultimately a greater degree of alignment and organizational agility.

Personally, I believe this is the most strategic combination in the history of software, and I can't wait to get started, Butterfield said in a statement. Ultimately, Slack was ripe for the taking. Entering 2020, it had lost around 40% of its value since it went public. Consider that after its most recent earnings report, the company lost 16% of its value, and before the Salesforce deal leaked, the company was worth only a few dollars per share more than its direct listing reference price. Toss in net losses of $147.6 million during the two quarters ending July 31st, 2020,

Slack's uninspiring public valuation and its winding path to profitability, and it was a sitting target for a takeover like this one. The only surprise here is the price, end quote. Yeah, so let's examine all the angles here from all the things that I've been reading and hearing from smart folks overnight. Here's take number one. Slack couldn't hack it. They should have been a good in COVID-time stock, along with the likes of Zoom, but they weren't.

The stock was down after its most recent earnings report because Slack telegraphed that far from seeing a longer-lasting COVID bump, their new customer numbers were basically already reverting to trends that they had been seeing before COVID struck. They stopped disclosing daily active users, while, meanwhile, Microsoft Teams gleefully announced 115 million daily active users. Last we knew, Slack only had 12 million Dows. Now, I'm sure they have gotten much more than that since then, but something tells me they would only be able to report significantly less than what teams was seeing. So the bottom line of this take is, out in the actual marketplace, you know, going out and convincing companies to buy licenses, Slack simply couldn't compete with the muscle

of mighty Microsoft's Salesforce. Microsoft was simply bulldozing them in the enterprise marketplace. But that leads us to take number two. This is a win. Probably a win for both parties. The tie-up makes a lot of sense almost for the reason that I just stated. If anyone has the Salesforce and the direct line to CIOs and CTOs across the world that could compete with Microsoft, it is Salesforce and their Salesforce.

It would be an easy thing to bundle Slack with Salesforce's existing offerings. In fact, if you read Salesforce's most recent earnings forecast from just last last night, they're already factoring in Slack as a meaningful revenue growth driver. Here is a flavor of this particular take from Ed Sim, founder of Bold Start Ventures, quoted in the Divination's newsletter just from this morning, quote, it's a brilliant buy for a couple of reasons. First, Slack is the digital nervous system for a lot of businesses. That's a powerful position to be in, and Salesforce is currently dependent on integrations with these sorts of hubs. Now, they own one. Second, Slack benefits from bottoms up product-led adoption. This is a valuable contrast to

Salesforce's usual focus on big enterprise clients that require a lengthy sales process, end quote. Part and parcel with that particular take is the reminder that Slack is essentially a failed gaming company that pivoted successfully to enterprise SaaS. Can't think of many other failed gaming companies that pivoted successfully to the tune of $27 billion. But take number three throws some cold water on that. According to this, take Salesforce, 20 years into its life, can only grow by making continued big, bold acquisitions like this one. It's probably overpaying for a product that was failing in the marketplace anyway. Mark Benioff tends to overpay for things, and if SaaS multiples plummet in the coming years, this deal is going to look pretty bad. But then again, look at Salesforce's

historical stock price, along with their history of acquisitions, and this seems to have worked out pretty well for them so far this strategy of making big, bold acquisitions. They just passed $20 billion in annual revenue for the first time. And finally, take number four plays back into take number one, sort of. This take says it's sad that Slack couldn't hack it as a solo company. They were one of the original unicorns. The whole idea was they were going to disrupt the Microsoft Office Juggernaut by creating their own platform for enterprise productivity. Does the fact that they couldn't withstand the competitive onslaught, not just from Microsoft with Teams, but also from Google, with whatever Google calls their enterprise products these days, and even from Facebook

with their workplace product? In other words, according to this take, does this show what antitrust adjutants have been arguing for a while now, that in the current tech landscape, the oligarchs are so big, the platforms are so all pervasive in their scale that indie competitors really don't stand a chance. In other words, does this sort of acquisition prove the point that tech is too big if they are so big that they can effectively crowd out any chance of disruption from below by companies like Slack? This is less directly consequential than that, but maybe no less monumental. HPE has announced that it will relocate its headquarters from San Jose, California to Houston, Texas, and that it is already constructing a full new headquarters campus there. This is

notable for two reasons, quoting CNBC. The coronavirus pandemic has given a number of tech companies and prominent Silicon Valley figures an excuse to exit California. Without many needing to go into an office every day, many are questioning the high cost of living and the state's hefty taxes amid a broader shift to remote work. But HPE's move is particularly notable because Hewlett-Packard was one of the original Silicon Valley success stories founded by partners Bill Hewlett and Dave Packard in a garage in Palo Alto in 1939. In 2015, that company, into HPE and hardware maker HP, which is not moving. Data Analytics Software Company Palantir Technologies moved its headquarters to Denver from Palo Alto earlier this year.

The company's co-founder John Lonsdale followed suit and announced last month that he was moving the headquarters of 8VC, his venture firm, from San Francisco to Austin, Texas. Dropbox CEO Drew Houston, has also reportedly decided to move to Austin. Dropbox said in October it will stop asking employees to come into its offices and instead make remote work the standard practice. For employees who need to meet or work together in person, the company is setting up Dropbox studios in San Francisco, Seattle, Austin, and Dublin when it is safe to do so, end quote. Yeah, so more fuel to the fire for those who think Silicon Valley is, quote, over. But honestly, and yes, you could quibble about how this isn't HP moving, it's HPE, but then you could also argue that HPE is maybe more or less of a direct descendant of Hulet Packard. But look, Hulet Packard

is basically the Omega Silicon Valley startup, the startup that led to the consumer-facing tech industry as we know it, the first startup in a garage, the startup that seeded the personal computer revolution. The fact that a scion of the Hewlett-Packard legacy is abandoning Silicon Valley is notable for symbolism, if nothing else. Though as many people snarked, maybe they should change their name to Compaq. The tech industry has a long and storied history in tech. actually. Search Wikipedia for Silicon Prairie if you're so inclined to learn the story behind that. Qualcomm yesterday unveiled its new flagship chip set, the Snapdragon 888, boasting a 5G modem with both MMWave and sub-6 gigahertz 5G support, and an AI engine capable of 26 tops. This will be

the chip that will be powering a universe of devices from the likes of LG, Motorola, OnePlus, Appo and basically anyone else, beginning next year, quoting CNET. The chip that will power most high-end 5G phones next year is here, the Qualcomm Snapdragon 888. And for the first time in its ultra-high-end lineup, Qualcomm has integrated its 5G modem on the same chip as the brains, AI, and other processor features, likely giving 5G phones a boost in battery life. Last year's Snapdragon 865 had a standalone modem, while Qualcomm integrated 5G connectivity with the processor system on its mid-range, Snapdragon 765 and 765G systems on a chip or SOCs.

Many people expected Qualcomm's highest-end chip to be the first Snapdragon system on a chip to have an integrated modem, but the company at the time said if it didn't pare back the modem or the app processor features, the resulting chip would be too big and too power-hungry for high-end smartphones. Qualcomm chose not to compromise on either feature for its high-end phones, but was willing to make some compromises for its mid-range chip lineup. With the Snapdragon 888, Qualcomm gets back to its SOC strengths, and phone users will benefit. The biggest advantage of systems on a chip are better battery life and lower cost.

Instead of two chips taking up room and a phone, there's just one resulting in thinner, sleeker phones, or more room for bigger batteries. Having an integrated chip also enables device makers to quickly develop phones for essentially any 5G network in the world, and it makes 5G handsets cheaper. for consumers. Quote, it gives you everything you need in a single package and theoretically makes phone design easier, cheaper, and just better integrated. Technanalysis research analyst Bob O'Donnell said, end quote. AWS's Reinvent conference continues, and there have been a whole slew of new announcements. There's no real way I could delve into each announcement in depth. So let me summarize a bunch of

the news in roughly descending order of interesting. Starting with Amazon unveiling Monotron, a service for monitoring factory workers and machines with low-cost sensors as it looks to push into the industrial sector, quoting the Financial Times. Launched by Amazon's Cloud Arm, AWS, the new machine learning-based services include hardware to monitor the health of heavy machinery and computer vision capable of detecting whether workers are complying with social distancing. Amazon said it had created a two-inch low-cost sensor, Monotron, that can be attached to equipment to monitor abnormal vibrations or temperatures and predict future faults, end quote. AWS also unveiled new compute instances like the compute heavy C6GN powered by Arm-based Gravaton 2

that AWS says performs 40% better on price versus comparable X86 options. If I got that pronunciation of C6GN wrong, sorry. I couldn't find a video that would explain how to pronounce that. Also say hello to Babelfish for Aurora PostgreSQL. which I did find a pronunciation for that one, which aims to make it easier and cheaper for Microsoft SQL server users to migrate to the AWS cloud. And there's AWS Panorama,

which can transform existing on-premises cameras into computer vision-enabled surveillance devices. There's a new custom machine learning training chip, Traneum, with support for TensorFlow, PiTorch, and MX Next coming in 2021. AWS claims it outperforms rival cloud chips. AWS also debuted Lambda functions with access to up to 10 gigabytes of memory and six virtual CPUs, the ability to deploy Lambda functions as container images, millisecond billing, and

DevOps Guru, which spots and recommends fixes for issues that might cause outages, such as missing or misconfigured alarms and code changes. Finally, AWS launched previews of its proton container management service for infrastructure provisioning and code deployment for serverless and container-based apps. So yeah, a bunch of stuff there for you devs. If you want to dig into any of those headlines in detail, I've included a link in the show notes to a snapshot of the tech meme homepage from yesterday linking to each of the things I just mentioned. Let's end today with a couple of cool new products, depending on what your base level of cool is in terms of gadgetry. Wise, the smart home company best known for its budget-priced security cameras,

has unveiled a $20 smartwatch, the Wise Watch, which boasts nine-day battery life and heart rate and blood oxygen tracking, but no GPS support. Quoting the Verge. The Wise Watch will be available in two sizes, 44 millimeters and 47 millimeters when it ships in the U.S. in February of 2021. And like the rest of the company's lineup, it's priced affordably at 20 bucks. Wise's announcement follows the release of the company's first fitness tracker, the $25 Wise Band earlier this year. The watch will ship with a fairly standard selection of smartwatch features, including blood oxygen monitoring, heart rate tracking, and IP68 water and dust resistance rating, nine-day battery life, activity and sleep tracking, and integration with Google Fit and Apple Health.

However, the watch will also integrate with Wise's other devices. The company promises that it'll support shortcuts to let you control products like its smart bulbs. It can also display your notifications, allowing you to read email previews and text, though Wise's press release doesn't explicitly say which mobile operating systems the watch works with. In terms of specs, the 44mm Y's watch has a 1.4-inch LCD display with a resolution of 320 by 320 and a 26-mph hour battery. The 47-millimeter version has a 1.75 inch LCD display with a resolution of 320 by 385 and a 300 MAHB battery. Both have 16 megabytes of storage, neither offer GPS tracking or support for voice assistance, end quote.

And looking glass is a company you might have never heard of, but they've released a bunch of interesting stuff. They specialize in holograms. They have a holographic 3D gaming PC and various 8K holographic displays, including a $6,000 15-inch model and a 32-inch model that is apparently so expensive they've never actually revealed the price. Well, now, Looking Glass is offering Looking Glass Portrait, A holographic digital photo frame.

At $349, it's still not cheap exactly, though it's only $199 if you get in on the Kickstarter. But this is a gadget that might be more accessible, because, you know, those portrait photos that your smartphone can take? Yeah, it turns out that those are perfect for creating holograms, quoting TechCrunch. The system can be run without being tethered to a computer. Its standalone mode relies on a built-in computer to deliver a 60 frames per second holographic image. Those photos, meanwhile, can be captured with an iPhone and edited into a 3D image using the included HoloPlay Studio software. Holographic videos can be captured with Azure Connect and Intel RealSense cameras.

The system offers up to 100 different perspectives on a 3D image, which, unlike products like Sony's new 3D display, can be viewed by multiple people at once. It's the first step towards holographic video calls, the company notes, perhaps tipping its hand a bit about future plans. Quote, ever since I was a little kid, I dreamed of the moment that I'd be able to have a holographic display of my own. CEO Sean Frey says in the release, I imagined what it would be like to send someone a holographic birthday message or to say hello as a hologram to my great-great-granddaughter. Looking glass portrait, the combination of six years of work by our Brooklyn and Hong Kong-based teams, make those dreams real for more people than ever before, end quote. So now if you're in a bit of a pickle and say,

Obi-1 Canobi is your only hope, you can now ask him for help properly, R2 unit not included. Nothing to report today, so talk to you tomorrow.