May 12, 2020
Image: Cytonn Photography, Unsplash
Good morning! This Tuesday, Sinch's CEO explains what it's like to spend $370 million on acquisitions during lockdown, the outlook for smaller tech hubs, and Jeffrey Katzenberg wants to blame COVID for Quibi's bad shows. Want Index in your inbox each morning? Subscribe here.
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I've talked a lot here about the coming tide of M&A — but for some companies, that's already a reality. Cloud communications service Sinch has spent around $370 million in recent weeks, snapping up natural language startup ChatLayer, messaging provider Wavy, and most recently SAP's Digital Interconnect business (known as SDI). Turns out doing an acquisition right now is … tricky.
Werner said these acquisitions weren't COVID-motivated, with all of them in progress before the economy began to melt down.
A world in which we all work from home should be good for nontraditional tech cities. Tech Twitter, for one, has been prophesying a new future where employees abandon their much-too-expensive San Francisco apartments, building a new life for themselves elsewhere. The reality, though, is more complicated.
I've also heard speculation that investors might stick to what they know. Risk-averse investors might prioritize repeat founders, and entrepreneurs in their networks that they know personally — both of which could hurt smaller hubs.
But there is some hope. While cities like New York and Boston are still dealing with a serious case of the pandemic, other regions are bouncing back faster.
The full story is fascinating; check it out on Protocol.
"I attribute everything that has gone wrong to coronavirus. Everything." That's how Quibi founder Jeffrey Katzenberg explained the app's dismal start to The New York Times. Downloads are "not close to what we wanted," he said, with the company claiming it has 1.3 million active users. The problem, Katzenberg thinks, is that we don't have many short breaks in COVID-times. That's one problem, sure, but I'm not convinced it's the main problem. As journalist Peter Suderman tweeted, "The real problem is all of the shows suck." COVID has just provided a convenient excuse to explain away that much more damning issue. As Warren Buffett famously said: "You only find out who is swimming naked when the tide goes out."