Discover more from Learning by Proxy with Vivek Srinivasan
Learning by Proxy | Price of Data
There are acquisitions that are taking place only for the data that companies hold and past acquisitions of data rich companies are starting to come back and bite today.
Facebook did not buy WhatsApp or Instagram for the data but for the products that they had built. They brought a lot of the users to the products and now they are too powerful.
On the other hand, companies are getting bought only for the data that they have. Is that data worth the money going into it?
Data for Sale
Clive Humbry said ‘Data is the new Oil’ in 2006. At the time Internet was still not as pervasive in our lives. Google was just 8 years old, Facebook was 2; nobody could have through that these two companies will ruin the world through the power of their data, but here we are. Two acquisitions were announced over the past week which proved the value of data.
Work from home has forced many of the companies to seek out tools to communicate and engage with their team. Companies such as Zoom and Slack have been beneficiaries of this trend despite Google and Microsoft’s tools which they have often bundles with existing products to promote easier adoption. Slack is approaching a billion dollars in revenue, thanks to the huge surge in adoption that COVID has brought. The company is still not profitable.
Salesforce, a cloud-services company that targets businesses, has announced that it will acquire workplace communication service Slack for $27.7 billion. The announcement follows a week of rumours and a steep bump in Slack's value on the stock market in anticipation of the deal being made official. […]
Slack's valuation on the market leapt dramatically since the rumours of the acquisition broke; in early November, the company's shares were valued as low as $24.10. Aftermarket close today, shares were up to $43.84.
Source: Ars Technica
The market has been smoking strange stuff this year and even they thought the company was worth half what Salesforce agreed to pay. The price being paid is not for the business. Salesforce certainly has more customers that Slack does but the nature of data that Slack has, Salesforce would not. They have made this purchase more for the data than for the business.
In a similar vein, S&P acquired IHS Markit, which is a financial data firm.
Business information provider S&P Global Inc agreed on Monday to pay $44 billion in stock to acquire IHS Markit Ltd in the year’s biggest acquisition that will create a new data powerhouse serving Wall Street and the corporate world.
The deal raises the stakes in the consolidation sweeping the fragmented financial information services industry, as companies race to create one-stop shops to lure the biggest clients and invest in artificial intelligence and machine learning.
In the world of finance, data is quite important for making decisions and having the right data at hand is powerful. Having said that, generally, companies that are engaged in the business of data tend to be valued quite highly. Case in point, Facebook and Google. Several business models have been built on aggregating data and selling the data. Ostensibly it is supposed to provide business intelligence.
But intelligence is in the eyes of the data holder.
Much like insurance is only valuable when something untoward happens, if you don’t break a leg, the insurance is merely donation. Data is only as valuable as the insight that it can provide, if you are not able to glean insights out of it, data is merely a distraction. The question that arises by extension is how much is the data really worth?
Digging in the heels
In the movie Chak De, Shahrukh Khan’s character Kabir Khan says ‘ek achcha team banane ke liye taakat ki nahin neeyat ki zaroorat hoti hai’ (to build a good team you don’t need the strength you need an intention). The opposition parties in India, that have been at best pedestrian in their opposition of BJP, seem to have found the intent.
The Bharat Bandh called by agitating farmers on Tuesday received overwhelming support from the Opposition parties, with the Congress, Left and regional outfits throwing their weight behind the protest against the new farm laws.
While the sixth round of talks between the Centre and farmers is scheduled for Wednesday, Union agriculture minister Narendra Singh Tomar held parleys with his deputies on the scope of concessions to be offered to the farmers.
Source: The New Indian Express
The opposition smells an opportunity and there seems to be enough anger that they can utilise. Much like the mask debate in the US, which unnecessarily got politicised and is delivering a stunning number of deaths. To avoid it from being seen as a political defeat, BJP seems to be digging its heels in.
There is “no question of repealing” the three laws against which farmers are protesting but “all other options” are open as the government discusses the range of issues flagged by farmer leaders, a top government official told The Indian Express.
The top government official said that “the resolution can only be found through discussions” and added that if the farmers are willing to continue their protests for long, the government is “also prepared”.
Source: Indian Express
The harder the stances become, the harder it becomes to resolve the stand-off. The government should have communicated with the farmers from the get-go. Now, the opposition has all the reasons to try and milk this situation as much as they can.
Meat is unkind to climate. There are 4 times as many chickens on the planet as humans. Left to their own devices, Chicken would have never grown as populous. Similar stats can be found for Cows, Pigs and several other land animals that we consume. First, the environmental problem - the carbon dioxide and methane released by these animals as they live - Burps and farts and rotting of feed and so on. At the scale at which we are rearing them, it starts to have an adverse effect. Further, there is an ethical issue which is of separating the mother from the child and slaughtering them. Treating animals not as if they are living things but as if they are machines.
For the past few years, there has been a movement that has been focused on delivering the same meat without killing. Lab-grown meat. Startups such as Good Meat have been working on this and the Cattle growers association have been lobbying against them even before the product was launched.
The Singapore Food Agency (SFA) approved this week the sale of a lab-grown meat product. This is the first time cultured meat has been cleared for sale anywhere in the world. The product approved by the SFA is cultured chicken, produced by US-based East Just. The company has announced the product will be manufactured with local partners under its new brand GOOD Meat.
Source: Indian Express
This is a step toward making cultured meat a real thing that is stocked in stores and made available to consumers. Remains to be seen how quickly it is adopted by the public at large.
This year saw the emergence of a unicorn nobody had ever heard about - Dream11. Then there was the IPL and there could not have been a better canvas on which the company could announce itself. Then there were the lawsuits and people were left scratching their heads about what side of the law this business falls? It is the job of the government to make laws about things that do not fall under any law. 4 years ago I had written a blog about how it was not business model but the law that was being disrupted.
The government is creating a regulator for fantasy sports in India.
“NITI Aayog has initiated this discussion to examine the fantasy sports industry structure and consider evolving guiding principles that can help the industry grow by adhering to guidelines which are consistent and based on well-recognized principles," according to the report titled: Guiding Principles for the Uniform National-Level Regulation of Online Fantasy Sports Platforms in India
Having a regulatory body for Online Fantasy Gaming is a huge boost to the industry and brings it out of the grey area of the law. The pandemic has also forced states to look at alternate sources of revenue and many of them are considering legalising sports betting and even gambling.
When the going gets tough…
He loves me, he loves me not
Less than a decade ago, Facebook bought Instagram which was a fledgeling company at the time but growing fast as a photo network. A couple a years later for what seemed like an insane price, Facebook acquired WhatsApp. All these acquisitions had been cleared by the FTC in the USA. Instagram at the time had just about 28 Million users as compared to the 1 Billion users it has today; also, WhatsApp has gone from an impressive 450 Million users to a colossal 2 Billion users! It is bigger than Facebook itself.
Now, the FTC along with 40 other states are investigating Facebook.
The Federal Trade Commission also filed suit against Facebook today. The two cases, which were filed in the District of Columbia federal district court and will likely be combined into one, come after more than a year of coordinated investigation into the company. In a statement, Facebook general counsel Jennifer Newstead referred to the allegations in the legal complaints as “revisionist history,” noting that the FTC approved the Instagram and WhatsApp mergers at the time.
The worst-case outcome for Facebook would be all three products get spun off into three separate companies. Facebook is waning compared to the other two, not to mention, they are just at the doorstep of trying to monetise WhatsApp in meaningful ways. This would not be a blow, it would be an existential threat to Facebook. Given how Facebook has consolidated power and allowed meddling in the elections, there is no quarter of support.
Facebook’s argument - you cleared the acquisition, now why are you going back on it?
This will be an interesting case to watch, not just for Facebook but also for the entire digital advertising market.
Work From Home Law
The pandemic has caused many of the knowledge-based companies to move their employees away from their offices. Many companies such as TCS made tall claims of how they will ensure 75% of their staff will be work from home. Peak hour traffic in Bangalore has a different story to tell. That may not remain the case.
In a first, the Labour Ministry proposes to bring a model standing order — rules of conduct for workers employed in establishments — for the services sector.
Along with the existing weekly working-hours cap of 48 hours, the proposed order for the services sector is likely to provide for work flexibility and an explicit work-from-home provision for service sector companies.
Source: Indian Express
Work from home is possibly going to be codified in law. This has the potential to change the service sector and especially the knowledge-based industry. This will also introduce a lot of questions around the place/city of work and how to index the salaries accordingly. In some ways, it will open up a pandora’s box in terms of HR Policies.
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What we think, we become ~ Buddha