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In January, when I interviewed Sundar Pichai, he revealed that “most” of Alphabet’s far-out R&D efforts would seek outside investors. These are the vaunted “other bets” that were the brainchildren of Google founders Larry Page and Sergey Brin. The presumption was that Pichai, the professional manager the dreamer-billionaires installed to run their empire, would cast a less sentimental eye on the duo’s money-pit projects.
Monday’s news that Waymo has attracted serious money from serious outside investors shows how far along Pichai’s efforts are. Waymo is the self-driving car unit Page and Brin established years before it was obvious that self-driving cars would be a thing or why Google would want to develop them. Today Waymo is widely acknowledged to lead on robotic-car technology in the industry, a source of envy in the automotive world as well as jealousy within Google, which makes oodles of money (Waymo doesn’t).
The company announced it had raised $2.25 billion at an unspecified valuation from investment firms Silver Lake and Andreessen Horowitz; sovereign wealth fund and pension funds, respectively, Mubadala Investment and Canadian Pension Plan Investment Board; auto-related entities Magna International and AutoNation; and Alphabet itself.
Three thoughts on this:
- Waymo has validated its staying power by raising this money from these investors. It refers to the fundraising round as “an initial close,” meaning more money may be in the offing. It isn’t clear when the business may be able to stand on its own, and it has shared next to no public financial data. But now we know it has provided detailed information to these risk-taking investors, all of whom are playing with other people’s money for a living. This is promising.
- Waymo did not announce investments from any of its car-maker partners, each of whom needs to be thinking about how its own self-driving strategies co-exist with Waymo’s. Or don’t.
- This is the third “other bet” to win an outside investor. SoftBank invested in balloon Internet company Loon, and Silver Lake and Temasek, another sovereign wealth fund, invested in life-sciences startup Verily. Alphabet also recently said it will ditch its wind-turbine effort, Makani, suggesting that oil company Shell might continue working with it. An incomplete list of other “other bets’ that could be ripe for investment includes Wing, Calico, GV (the artist formerly known as Google Ventures), Google Fiber, Sidewalk Labs, and DeepMind.
This edition of Data Sheet was curated by Aaron Pressman.
Baby, they build you up. Adding one more thought to Adam's essay, don't forget that one of the new investors in Waymo, Canadian auto assembler Magna International, is the same company that built Sony's super-cool Vision-S electric car prototype shown off at CES. Waymo may need some of that kind of outside aid when it comes to manufacturing.
Dead cat bounce. With a chance that the Federal Reserve could lower interest rates to stimulate the economy in the face of the coronavirus outbreak, stock soared on Monday. Tech stocks which had led the way down last week did better: Intel gained 5%, AMD 4%, and Nvidia rose 2%. Among the FAANG stocks, Facebook gained 2%, Apple shot up 9%, Amazon rose 4%, Netflix 3%, and Google increased 4%. Apple's share price was not harmed by news it will pay small settlements to owners of old iPhones that were slowed when battery troubles occurred.
I'm sorry, Dave, I'm afraid I can't do that. People who depended on free trading app Robinhood as their broker couldn't get in on the rally, however. The startup's trading platform was offline for all of Monday's session due to a technical glitch.
Canceling plans is OK. More tech events were postponed and cancelled on Monday, but the organizers of SXSW are planning to put on their show starting March 13 in Austin. Still, Facebook and Twitter pulled out of the conference. Meanwhile, Adobe cancelled its annual summit in Las Vegas, Microsoft cancelled its MVP Summit in the Seattle area, and Google dropped its Cloud Next meeting in San Francisco. Speaking of postponed, it now looks like Airbnb's efforts to go public will also fall victim to the virus outbreak.
Mash up classic. In a classic private equity roll-up strategy, BMC Software is buying Compuware, consolidating two leaders in providing software and services for mainframe computers. BMC is owned by private equity firm KKR and Compuware is owned by Thomas Bravo.
FOOD FOR THOUGHT
One of the reasons why Apple's stock price has had among the largest up-and-down moves during the coronavirus outbreak is that the company is so dependent on China, both for manufacturing and for consumer demand. On Tuesday, contract manufacturer Foxconn said iPhone factories would be back to normal operations within weeks. Wall Street Journal reporters Yoko Kubota and Tripp Mickle have a deep dive into the company's operations in China and its failure to diversify to factories in other regions.
Finding a comparable amount of unskilled and skilled labor is impossible, said Dan Panzica, a former Foxconn executive. The population in China has allowed suppliers to build factories with a capacity for more than 250,000 people. The number of migrant workers in China, who do much of Apple’s production, exceed Vietnam’s total population of 100 million. India is the closest comparison, but its roads, ports and infrastructure lag far behind those in China.
“You’re not going to be able to have mega-factories anywhere else,” Mr. Panzica said. “You’re going to have to break them up.”
ON THE MOVE
Some various and sundry departures from Apple to report. Nick Forlenza, vp of manufacturing design, retired, and Duco Pasmooij, another vp in operations, is nearing his exit, Bloomberg reports...former Sony television exec Michelle Mendelovitz came to Apple in 2018 to help create shows for Apple TV+. Now she's off to 20th Century Fox Television as senior vice president of drama development...In other streaming news, Netflix hired Josh Simon from Nike as the new head of its consumer products group, running the effort to sell t-shirts and games based on Netflix shows...Nokia CEO Rajeev Suri is stepping down, as the company struggles with transitioning to sell 5G telecom equipment. The new CEO is Pekka Lundmark, former CEO of energy company Fortum.
IN CASE YOU MISSED IT
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Honeywell sees path to world’s most powerful quantum computer in 3 months By Robert Hackett
NASA hiring new astronauts for the first time in four years By Chris Morris
Too good to be true? Beware of fake online jobs By Anne Fisher
The stock market’s gyrations feel historic. But are they? By Ben Carlson
For a time, Jack Welch was the most valuable CEO on earth By Geoff Colvin
Best earbuds in 2020: Apple AirPods Pro Vs. Sony WF-1000XM3 (video) By Devin Hance
BEFORE YOU GO
Today is Super Tuesday, so don't forget to vote if you're in one of the 14 states holding primaries today. An interesting piece of trivia arose yesterday: Given the ages of all of the remaining candidates, until what year could former candidate Pete Buttigieg run in every presidential election and still be younger than Sanders, Biden, Bloomberg, Warren, and Trump are in 2020? The answer may surprise you. Hopefully, President Pete will have a flying, self-driving car from Waymo by then.