The DL — An inside view into Pacific Northwest Tech
Hey! Welcome to issue #2 of The DL! This is a weekly newsletter about tech, startups, entrepreneurship, and investing in the Pacific Northwest.
If you have thoughts, questions, comments, hit reply — I’d love to hear from you! 👋
How to Sell a Company to Uber
Last week there were two acquisitions of autonomous vehicle startups. Apple bought Drive.ai, and Uber bought MightyAI (a Madrona portfolio company — woohoo!). Both startups had raised tens of millions of dollars and were acquired by companies that are investing hundreds of millions of dollars into developing autonomous vehicle tech.
Rumors of both deals had been reported a few weeks ago, but it was interesting that the final deal announcements happened within hours of one another. From an investor perspective, this is a great demonstration of how deals get done.
Deals are all about creating “demand” for your “supply.” Something is only worth what someone else is willing to pay for it, and with several autonomous vehicle deals “in play” at the same time, along with several potential acquirers competing for deals, I’m sure the perceived scarcity and social proof helped get both of these deals done.
From a behavioral economics perspective, it’s interesting that this stuff happens all the time. For example, rewind a few weeks and take a look at the data visualization market where Tableau and Looker were both acquired within a few weeks of one another for billions of dollars each. It’s not a coincidence that markets “heat up” and “cool down,” and deal activity gets concentrated in specific sectors.
What’s the next sector to watch? This Salesforce board deck from 2016 might have some good clues as five of the companies highlighted in the deck have been acquired already… perhaps marketing automation, vertical SaaS, or service management will be next?
Advice from Jeff Bezos
A couple years ago, we had a 20th anniversary celebration for Madrona, and one of the events was a fireside chat between Jeff Bezos and Tom Alberg, one of Madrona’s founders and the first outside investor in Amazon.
One of the questions that someone asked Jeff right at the end of the session was, “If you weren’t working on Amazon and starting a new company today, what would you do?” Unfortunately he didn’t have a lot of time to elaborate, but his answer was “biotech.”
Watching the Adaptive Biotechnologies IPO this week, it’s hard not to think about Jeff Bezos’s advice. Adaptive Biotech is worth ~$6B today and has traded up almost 200% since their IPO.
And… I’d bet you that most people buying this stock have absolutely no idea what this company does. Check out some of these descriptions from their website:
Our team has created a powerful platform to make the elegant complexity of the immune system accessible to researchers and clinicians around the world to allow each and every person’s immune system tell its own story
The massive amount of data generated by our immune medicine platform is stored in our dynamic clinical immunomics database of over 30 billion immune receptors.
If this sounds remotely interesting to you, you should spend more time digging in because the intersection of life sciences and computer science is going to be one of the most exciting trends of the next decade — both because there is a tremendous amount of potential at the intersection of these two markets and also because very few people understand both.
Other Stuff I’ve Been Talking About
📚The Sun Does Shine — This is a crazy story about an amazingly inspiring person named Anthony Ray Hinton — and how he was unjustly sent to death row, how he managed to stay optimistic and survive with the help of loving friends and family, and ultimately how he was able to prove his innocence after 30 years on death row.
⚔️ In case you were wondering… HBO was able to retain 84% of new subscribers who signed up during the latest season of Game of Thrones. Pretty impressive considering how bad this season of GoT was.
💰Bitcoin! It’s back! Or it’s not back — kinda depends on the day. In any case, it’s pretty funny how over the last year, bitcoin prices are highly correlated with the price of avocados 🥑 (#millennials). Here’s the chart from Bloomberg.
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About me: I work as an investor at Madrona Venture Group, a Seattle-based venture capital firm that has been early partners with companies like Amazon, Smartsheet, Apptio, and Redfin.
I’m writing this to share what I’m seeing as a Seattle-based VC and to connect with other people who are interested in what’s going on in PNW tech.
If you have any thoughts, questions, or comments, hit reply — I’d love to hear from you, and that’s why I’m writing this newsletter! 👋 Also, if you have friends who might like this newsletter, please share it with them as well!