acquistion Archives - Product Management Confabulation

March 29, 2023

Meditation app Simple Habit sells to wellness marketplace Ingenio, pivots the company to Sleep Reset

Y-Combinator and Foundation Capital-backed meditation app Simple Habit has been acquired by Alpine Investors-backed wellness marketplace company Ingenio. Because of this deal, Simple Habit will rebrand itself to Sleep Reset —eponymous to a sleep-focused app it launched last year.

Simple Habit was founded by Yunha Kim in 2016 with the aim to be the “Netflix of Meditation”. The company got $12.5 million in total funding from various investors including Y-Combinator and Foundation Capital. The app boasts more than 5 million users.

Last year, Kim launched Sleep Reset as she saw that, while only 10% of content on Simple Habit was related to sleep, it brought in 70% of engagement. The new paid app was developed in partnership with experts from the University of Arizona, the University of Minnesota, and the Stanford University Sleep Medicine Center to develop its program. It took a no-pill approach and brought Cognitive Behavioral Therapy for Insomnia (CBT-I) in an app form. Users who subscribed to the app got a dedicated coach to improve their sleep.

Kim told TechCrunch that since the launch last year, more than 8,000 users have paid for the app. She said that with $155,000 in revenue last month, the app is set to clock $1.86 million in its first year. She also said that the company has improved sleep and habit logging on the app and doubled the number of sleep coaches since the launch.

“In the nine months since we came out of beta, we’ve more than doubled our subscriber base and our revenue. We’ve made updates to our program which have driven increased engagement and our efficacy data remains very strong, with the average program graduate reporting over an hour more of sleep per night, and 53% less time needed to fall asleep,” she said.

Ingenio has a rather intriguing curve as a company. It was founded as Keen.com in the 90s — a platform to connect users to psychics for readings. In the 2000s, the company rebranded itself and launched the personal guidance platform Ingenio and sold it to AT&T. In 2013, it was sold to San Francisco-based Alpine investors.

Since then, it has acquired multiple media properties like Horoscope.com and Astrology.com. In 2021, Alpine spun off Ingenio with a continuation fund. The company has a blog post that says Apollo is an investor, but there are no details in the post (Apollo owns Yahoo, which owns TechCrunch). When asked about Apollo’s investment, Ingenio pointed to an Alpine press release about the single-asset continuation vehicle for the company, which doesn’t mention Apollo.

Bryan Leppi, Ingenio’s Chief Corp Dev Officer, told TechCrunch over an email that the company is acquiring Simple Habit to bolster its holistic wellness portfolio. He mentioned that Simple Habit — which has more than 90,000 active users — will continue as a product and Kim will join Ingenio’s advisory board.

“Simple Habit will continue as a stand-alone product as well as a further wellness content layer for Ingenio’s global brand footprint. The meditation and audio wellness content from Simple Habit may be added to apps like Keen to expand access to healthy habit formation and balanced lifestyles,” Bryan said.

Ingenio or Sleep Reset didn’t comment on the size of the deal.

Kim said that Sleep Reset as a company will focus on better personalization for different kinds of sleep problems with advice from sleep experts on the team.

Meditation app Simple Habit sells to wellness marketplace Ingenio, pivots the company to Sleep Reset by Ivan Mehta originally published on TechCrunch

March 10, 2022

Course Hero scoops up Scribbr for subject-specific study help

For an undisclosed price, Course Hero has acquired Scribbr, a proofreading and editing service for academic writing. This is Course Hero’s latest deal in a string of buys – including CliffNotes, LitCharts, QuillBot and Symbolab – all powered by a duo of financings that saw the edtech platform valued at $1.1 billion.

Founded in 2012, Scribbr says it has an international network of 700 editors that offer a variety of services, from edits, to notes and clarity checks. The deal will help Course Hero expand its footprint in Europe, since Scribbr is a Netherlands-based business. Overall, Scribbr’s focus specifically compliments Course Hero’s 2021 buy of Quillbot, an AI tool that helps clarify writing that feels somewhat reminiscent of Grammarly.

Course Hero acquires LitCharts, founded by the creators of SparkNotes

Course Hero CEO Andrew Grauer has explained that the mission of his company is to create a question-and-answer platform with extreme levels of specificity for students. It sells subscriptions to students that unlock access to all of its learning and teaching content, which include course-specific material created by teachers and publishers.

The startup wants to be subject-agnostic, meaning that it can connect students to any specialty that they need advice in, whether it’s a niche grammar rule or a one-off algebra question. In some ways, that feels like the future of education: students shouldn’t have to piecemeal together advice, and even better if it’s on-demand help. Edtech companies that help the same students across different subjects can even poke out consistent gaps in their understanding. What if a company could tell a middle-schooler that they constantly get stumped when it comes to inferential questions?

The flipside, though, is hard to ignore. Just because a student wants to come to Course Hero for math help, doesn’t automatically mean that they want to come to the company for a summary of the Shakespeare reading. That reality can take away from Course Hero’s assumed goal of creating a stickier, more useful product for customers.

Graeur’s response to that concern is that he says he doesn’t plan to rush the integrations between the new, and different companies within the Course Hero umbrella.

“We start with the thesis of ‘let’s be decentralized, let’s empower and continue the entrepreneurialism of building out those individual companies,” Graeur said. “And then if and when there’s these moments, and you’re gonna start to see more and more of integration of different content, tools and services between the offerings at the right moment in time.” The answer suggests that Course Hero wants to play a backseat, and more of a platform role in these companies’ lives, versus combining and paywalling them to drive more subscriptions.

And to take a minute to believe the founder, who started the company in 2006 and only recently began using venture capital as a leverage to grow the core business, it does appear that every acquisition continues to stand alone in its own, specific world. There’s more to come, he tells me, which means that we’ll see what the edtech’s appetite looks like as it scales.

Course Hero, a profitable edtech unicorn, raises rare cash

“We’re a company of relatively more independent, autonomous brands,” he said. “There is so much amazing opportunity for integrating each other’s technology and services with each other. And the question is how to stack rank those and prioritize them.”

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October 28, 2018

The largest software acquisition ever: IBM to buy Red Hat for $34B

At a price typically reserved for semiconductor companies, telecoms, and pharmaceutical giants, IBM announced today it would pay a record $34 billion in cash and debt to acquire enterprise open source provider Red Hat. Eclipsing Microsoft’s $26.2 billion acquisition of LinkedIn, this is the biggest software acquisition in history. It’s not the biggest tech acquisition ever, though, as that title belongs to Dell’s $67 billion buyout of data storage business EMC.

You can learn about what IBM is buying Red Hat to become a hybrid cloud company in TechCrunch editor Ingrid Lunden’s deep dive here:

IBM to buy Red Hat for $34B in cash and debt, taking a bigger leap into hybrid cloud

So how does the IBM-Red Hat deal (if it closes), stack up against the other largest acquisitions of all time?

Top Tech Acquisitions

$67 billion – Personal computer company Dell buys EMC data storage
$37 billion – Semiconductor company Avago Technologies buys and renames as semiconductor giant Broadcom
$34 billion (pending) – IBM computers buys open source software provider Red Hat
$31.4 billion – Japanese conglomerate SoftBank buys semiconductor company ARM Holdings
$26.2 billion – Software company Microsoft buys professional social network Linkedin in 2016

Top Software Acquisitions

$34 billion (pending) – IBM computers buys open source software provider Red Hat in 2018
$26.2 billion – Software company Microsoft buys professional social network LinkedIn in 2016
$22 billion – Social network Facebook buys messaging app WhatsApp in 2014
$13.5 billion – Security software maker Symantec buys storage management software maker Veritas in 2004 ($18 billion adjusted for inflation)
$11 billion – Database company Oracle buys human resources software company PeopleSoft in 2004 ($14.7 billion adjusted for inflation)

Top Acquisitions Ever

$202 billion – British telecom Vodafone buys German telecom Mannesmann in 2000 ($296 billion adjusted for inflation)
$165 billion – ISP AOL buys media conglomerate Time Warner in 200 ($241 billion adjusted for inflation)
$111.8 billion – Pharmaceutical giant Pfizer buys pharmaceutical company Warner Lambert in 1999 ($164 billion adjusted for inflation)
$130 billion – Telecom Verizon Communications buys Vodafone and Bell Atlantic’s Verizon Wireless in 2013
$130 billion – Dow Chemical buys chemical company DuPont in 2015

The Red Hat deal is proof that the scalability of software can massively concentrate wealth. Unlike industrial giants of old that split their fortunes with the physical resource providers that supplied and distributed their oil, chemical, or packaged good empires, software requires almost no material cost to create or distribute. The aggregation of value to software giants and their leaders offers both a great incentive to build a world-changing busines, but also a dangerous extraction of capital from the working class. While it’s fine to celebrate Red Hat’s accomplishment, society must inevitably grapple with the poverty and populism fueled by how software funnels money to the few.

June 4, 2018

Microsoft promises to keep GitHub independent and open

Microsoft today announced its plans to acquire GitHub for $7.5 billion in stock. Unsurprisingly, that sent a few shock waves through the developer community, which still often eyes Microsoft with considerable unease. During a conference call this morning, Microsoft CEO Satya Nadella, incoming GitHub CEO (and Xamarin founder) Nat Friedman and GitHub co-founder and outgoing CEO Chris Wanstrath laid out the plans for GitHub’s future under Microsoft.

The core message everybody on today’s call stressed was that GitHub will continue to operate as an independent company. That’s very much the approach Microsoft took with its acquisition of LinkedIn, but to some degree, it’s also an admission that Microsoft is aware of its reputation among many of the developers who call GitHub their home. GitHub will remain an open platform that any developer can plug into and extend, Microsoft promises. It’ll support any cloud and any device.

Unsurprisingly, while the core of GitHub won’t change, Microsoft does plan to extend GitHub’s enterprise services and integrate them with its own sales and partner channels. And Nadella noted that the company will use GitHub to bring Microsoft’s developer tools and services “to new audiences.”

With Nat Friedman taking over as CEO, GitHub will have a respected technologist at the helm. Microsoft’s acquisition and integration of Xamarin has, at least from the outside, been a success (and Friedman himself always seems very happy about the outcome when I talk to him), so I think this bodes quite well for GitHub. After joining Microsoft, Friedman ran the developer services team at the company. Wanstrath, who only took over the CEO role again after its last CEO was ousted after harassment scandal at the company, had long said that he wanted to step down and take a more active product role. And that’s what’s happening now that Friedman is taking over. Wanstrath will become a technical fellow and work on “strategic software initiatives” at Microsoft.

During today’s call, Friedman also stressed Microsoft’s commitment to keeping GitHub as open as it is today — but he also plans to expand the service and its community. “We want to bring more developers and more capabilities to GitHub, he said. “Because as a network and as a group of people in a community, GitHub is stronger, the bigger it is.”

As for the product itself, Friedman noted that everything GitHub does should be about making a developer’s life easier. And to get started, that’ll mean making developing in the cloud easier. “We think broadly about the new and compelling types of ways that we can integrate cloud services into GitHub,” he noted. “And this doesn’t just apply to our cloud. GitHub is an open platform. So we have the ability for anyone to plug their cloud services into GitHub, and make it easier for you to go from code to cloud. And it extends beyond the cloud as well. Code to cloud. code to mobile, code to edge device, code to IoT. Every workflow that a developer wants to pursue, we will support.”

Another area the company will work on is the GitHub Marketplace. Microsoft says that it will offer all of its developer tools and services in the GitHub Marketplace.

And unsurprisingly, VS Code, Microsoft’s free and open source code editor, will get deeply integrated GitHub support.

“Our vision is really all about empowering developers and creating a home where you can use any language, any operating system, any cloud, any device for every developer, whether your student, a hobbyist, a large company, a startup or anything in between. GitHub is the home for all developers,” said Friedman.

It’s unclear whether all of these commitments today will easy developers’ fears of losing GitHub as a relatively neutral third-party in the ecosystem.

Nadella, who is surely aware of this, addressed this directly today. “We recognize the responsibility we take on with this agreement,” he said. “We are committed to being stewards of the GitHub community, which will retain its developer-first ethos operate independently and remain an open platform. We will always listen to develop a feedback and invest in both fundamentals as well as new capability once the acquisition closes.

In his prepared remarks, Nadella also stressed Microsoft’s heritage as a developer-centric company and that is it already the most active organization on GitHub. But more importantly, he addressed Microsoft’s role in the open source community, too. “We have always loved developers, and we love open source developers,” he said. “We’ve been on a journey ourselves with open source and the open source community. Today, we are all in with open source. We are active in the open source ecosystem. We contribute to open source project and some of our most vibrant developer tools and frameworks are open-sourced when it comes to our commitment to all source judges, by the actions we have taken in the recent past our actions today and in the future.”

May 17, 2018

Rackspace acquires Salesforce specialist RelationEdge

Rackspace today announced that it has acquired RelationEdge, a Salesforce implementation partner and digital agency. The companies did not disclose the financial details of the acquisition.

At first, this may sound like an odd acquisition. Rackspace is still best known for its hosting and managed cloud and infrastructure services, after all, and RelationEdge is all about helping businesses manage their Salesforce SaaS implementations. The company clearly wants to expand its portfolio, though, and add managed services for SaaS applications to its lineup. It made the first step in this direction with the acquisition of TriCore last year, another company in the enterprise application management space. Today’s acquisition builds upon this theme.

Gerard Brossard, the executive VP and general manager of Rackspace Application Services, told me that the company is still in the early days of its application management practice, but that it’s seeing good momentum as it’s gaining both new customers thanks to these offerings and as existing customers look to Rackspace for managing more than their infrastructure. “This allows us to jump into that SaaS management practice, starting with the leaders in the market,” he told me.

Why sell RelationEdge, a company that has gained some good traction and now has about 125 employees? “At the end of the day, we’ve accomplished a tremendous amount organically with very little funding,” RelationEdge founder and CEO Matt Stoyka told me. “But there is a huge opportunity in the space that we can take advantage of. But to do that, we needed more than was available to us, but we needed to find the right home for our people and our company.” He also noted that the two companies seem to have a similar culture and mission, which focuses more on the business outcomes than the technology itself.

For the time being, the RelationEdge brand will remain and Rackspace plans to run the business “with considerable independence under its current leadership.” Brossard noted that the reason for this is RelationEdge’s existing brand recognition.