This post is by Semil Shah from Haystack.vc
Click here to view on the original site: Original Post
Normally, I like to pounce on these big acquisitions quickly with some quick analysis, but big M&A in tech is happening too fast, and it’s graduation season for the toddlers, and family is in town, so for this installment of the blog, we will talk about both Looker and Tableau together, as they’re in the same space.
So without further ado, here are my quick takeaways from both acquisitions:
1/ “Not Another BI Startup?” This phrase is a common refrain among many startup investors. And, there is some truth to it — there are plenty of “BI tools” and “analytics/dashboard” companies that were started and funded. It was a red ocean. Fast-forward to June 2019, and two BI companies were purchased for close to $18B combined. Of course, Tableau and Looker do much more than just “BI” but I’m sure there are a number of early founding teams and who are gritting their teeth with this news.
2/ Kurian Moves. In a post-Diane Green world at Google Cloud, new chief Thomas Kurian seems determined to push GCP up from #3 in the cloud infrastructure market. While catching MSFT may be possible from a share of market POV, catching up to Amazon may require a lot more time and money. (See below for #5.)
3/ Salesforce Strategery. Benioff is certainly a very smart — and strategic — fellow. He is also very acquisitive. In paying a 50% premium for Tableau for $15B+, this was Salesforce’s 60th acquisition in its 20-year history, and it’s richest by nearly a factor of three (Mulesoft was about $6B). With Tableau, Salesforce gobbles a bunch of strategic goodies — a new regional HQ in Seattle; over 75K customers; a growing product line that will go into data management and more intelligent services; and possibly signaling an interest to go deeper into data business lines.
4/ Pivot North, Indeed. Your standard growth, public, and venture investors made good coin by backing companies like Looker and Tableau. For those following the early-stage seed market, by now you’re used to seeing firms like First Round (which backed Looker) as an early investor in big outcomes — but you may not know of Pivot North, a modest $35M-ish fund run by a single person who was a former GP at Sequoia and USVP. Get used to hearing about Pivot North. This fund takes very early and concentrated positions in companies, such as Looker (and Chime and Sun Basket). There are only a handful of early-stage funds that will truly partner with founding teams and earn the right to own 20-25% of the company from Day 1 — IA Ventures, K9 Ventures, Baseline, Harrison Metal come to mind. In a world with so much growth capital and competitive rounds, these firms get in early with small dollars and can protect their equity in the event of a breakout. Assuming Pivot North owned 8% of Looker at exit (it could’ve owned more), that would return $200M-ish to the fund — nearly 6x-ing the fund in one swoop.
5/ “Oncoming Cloud Consolidation” As I alluded to in #2 above, the “Cloud Wars” between Google, Microsoft, and Amazon seem to have entered a new phase. One battle area involves the concept of “multi-cloud,” where companies and developers increasingly do not want to be locked-in to one cloud platform and thus want to be free to move their data and services between and across different cloud environments. Products like Looker already have this mindset baked in, and on the heels of Google’s Anthos announcement, we are moving toward a world where even the incumbent cloud giants will allow their users to (somewhat) seamlessly move between different cloud environments. I expect to see more blockbuster M&A in this broad category.