SAP agrees to buy Qualtrics for $8B in cash, just before the survey software company’s IPO

Ryan Smith of Qualtrics speaks onstage during TechCrunch Disrupt SF 2015

Enterprise software giant SAP announced today that it has agreed to acquire Qualtrics for $8 billion in cash, just before the survey and research software company was set to go public. The deal is expected to be completed in the first half of 2019. Qualtrics last round of venture capital funding in 2016 raised $180 million at a $2.5 billion valuation.

This is the second-largest ever acquisition of a SaaS company, after Oracle’s purchase of Netsuite for $9.3 billion in 2016.

In a conference call, SAP CEO Bill McDermott said Qualtrics’ IPO was already oversubscribed and that the two companies began discussions a few months ago. SAP claims its software touches 77 percent of the world’s transaction revenue, while Qualtrics’ products include survey software that enables its 9,000 enterprise users to gauge things like customer sentiment and employee engagement.

McDermott compared the potential impact of combining SAP’s operational data with Qualtrics’ customer and user data to Facebook’s acquisition of Instagram. “The legacy players who carried their ‘90s technology into the 21st century just got clobbered. We have made existing participants in the market extinct,” he said. (SAP’s competitors include Oracle, Salesforce.com, Microsoft, and IBM.)

SAP, whose global headquarters is in Walldorf, Germany, said it has secured financing of €7 billion (about $7.93 billion) to cover acquisition-related costs and the purchase price, which will include unvested employee bonuses and cash on the balance sheet at close.

Ryan Smith, who co-founded Qualtrics in 2002, will continue to serve as its CEO. After the acquisition is finalized, the company will become part of SAP’s Cloud Business Group, but retain its dual headquarters in Provo, Utah and Seattle, as well as its own branding and personnel.

According to Crunchbase, the company raised a total of $400 million in VC funding from investors including Accel, Sequoia, and Insight Ventures. It had intended to sell 20.5 million shares in its debut for $18 to $21, which could have potentially grossed up to about $495 million. This would have put its valuation between $3.9 billion to $4.5 billion, according to CrunchBase’s Alex Wilhelm.

This year, Qualtrics’ revenue grew 8.5 percent from $97.1 million in the second-quarter to $105.4 million in the third-quarter, according to its IPO filing. It reported third-quarter GAAP net income of $4.9 million. That represented an increase from the $975,000 it reported in the previous quarter, as well as its net profit in the same period a year ago of $4.7 million. Qualtrics grew its operating cash flow to $52.5 million in the first nine months of 2018, compared to $36.1 million during the same period in 2017.

In today’s announcement, Qualtrics said it expects its full-year 2018 revenue to exceed $400 million and forecasts a forward growth rate of more than 40 percent, not counting the potential synergies of its acquisition by SAP.

Qualtrics’ main competitors include SurveyMonkey, which went public in September.

Alibaba made a smart screen to help blind people shop and it costs next to nothing

Just a few years ago, Li Mengqi could not have imagined shopping on her own. Someone needed to always keep her company to say aloud what was in front of her, who’s been blind since birth.

When smartphones with text-to-speech machines for the visually impaired arrived, she immediately bought an iPhone. “Though it was expensive,” Li, a 23-year-old who grew up in a rural village in eastern China’s Zhejiang province, told me. Cheaper smartphone options in China often don’t have good accessibility features.

Screen readers opened a plethora of new opportunity for those with visual impairments. “I felt liberated, no longer having to rely on others,” said Li, who can now shop online, WeChat her friends, and go out alone by following her iPhone compass.

Reading out everything on the screen is helpful, but it can also be overwhelming. Digital readers don’t decipher human thoughts, so when Li gets on apps with busy interfaces, such as an ecommerce platform, she’s bombarded with descriptions before she gets to the thing she wants.

Over the past two years, Alibaba’s $15 billion R&D initiative Damo Academy has been working to improve smartphone experience for the blind. Its latest answer, a joint effort with China’s prestigious Tsinghua University, is a cheap silicone sheet that goes on top of smartphone screens.

Li is among the first one hundred visually impaired or blind users to trial the technology. Nothing stands out about the plastic film – which cost RMB 0.25 or 3.6 American cents each to produce – until one has a closer look. There are three mini buttons on each side. They are sensory-enabled, which means pressing on them triggers certain commands, usually those that are frequently used like “go back” and “confirm”.

“It’s much easier to shop with the sheet on,” said Li. Having button shortcuts removes the risk of misclicking and the need for complex interactions with screens. Powering Smart Touch is human-machine interaction, the same technology that makes voice control devices possible.

Alibaba blind smartphone feature

Alibaba’s $1 “Smart Touch” plastic sheet helps smoothen smartphone experience for the visually impaired. / Photo credit: Alibaba

“We thought, human-machine interaction can’t just be for sighted people,” Chen Zhao, research director at Damo Academy told TechCrunch. “Besides voice, touch is also very important to the blind, so we decided to develop a touch feature.”

Smart Touch isn’t just for fingers. It also works when users hold their phones up to the ears. This lets them listen to text quickly in public without having to blast it out through speakers or headphones. Early trials of ear touch show a 50 percent reduction in time needed to complete tasks like taking calls and online shopping, Alibaba claims.

Emotions also matter. People with visual disabilities tend to be more cautious as they fumble through screens, so Smart Touch takes that into account. For instance, users need to double-click on the silicone button before a command goes through.

At the moment, Smart Touch works only on special editions of Alibaba’s two flagship apps, e-commerce marketplace Taobao and payment affiliate Alipay . The buttons automatically take on different functions when users switch between apps.

But Zhao said she wanted to make the technology widely available. Some tinkering with existing apps will make Smart Touch compatible. The smart film requires more testing before it officially rolls out early 2019, so Damo and Tsinghua have been recruiting volunteers like Li for feedback.

“Unlike with regular apps, it’s hard to beta test Smart Touch because the blind population is relatively small,” observed the researcher, but embedding the technology in popular apps could speed up the iteration process.

There’s also the issue with distributing the physical sheets. According to state census, China had around 13 million visually impaired people in 2012. That’s about one in a hundred people. However, they are rarely seen in public, as a post on China’s equivalent of Quora points out.

One oft-cited obstacle is that most roads in China aren’t disability-friendly, even in major cities. (In my city Shenzhen, blind lanes are common but they often get cut off abruptly to make way for a crossing or a bus stop.)

Damo doesn’t plan to monetize the initiative, according to Zhao. She envisions a future where her team could give out the haptic films — which can be mass produced at low costs — for free through Alibaba’s expanding network of brick-and-mortar stores.

Time will tell whether the accessibility scheme is more than public relations fluff. Initiatives around corporate social responsibility have mushroomed in China in recent years. They have come under fire, however, for being transient because many merely pander to the government’s demand (link in Chinese) for corporate ethics overlook long-term impact.

“The technology is ready. It just takes time to test it on different smartphones and bring to users at scale,” said Zhao.

Travel startups are taking off

The second wave of Internet-era travel companies has captured the attention of venture capitalists.

In the last five years, travel companies have raised more than $1 billion in venture capital funding. That includes short-term rental startups, travel and tourism apps, marketplaces for “experiences” and other travel or hospitality tech platforms. Airbnb, a $38 billion company and an anomaly in the category, has raised $3 billion in that same time frame, according to PitchBook.

In the last few months alone, aspiring Concur-competitor TripActions and travel activities platform Klook entered the “unicorn” club with large venture rounds that valued both of the businesses at more than $1 billion. Meanwhile, luggage maker Away raised $50 million at a $400 million valuation and smaller startups in the space like Freebirds, IfOnly, KKDay, Duffel and RedDoorz all closed modest funding rounds.

“Something is really happening in the industry; something bigger than us,” TripActions co-founder Ariel Cohen said in a recent conversation with TechCrunch about his company’s $154 million Series C financing. “Different startups are identifying the opportunity here and the fact that companies want to make sure their employees are happy while they are on the go. That’s why you see investments in companies like Brex and like TripActions.”

Brex, though not classified as a travel startup, lets startup employees earn extra points on business travel with its corporate credit card for startups. It recently raised a $125 million Series C at a $1.1 billion valuation.

Global travel and tourism is one of the most valuable industries worth some $7 trillion. The online travel market, in particular, is expected to grow to $817 billion by 2020. VCs are hunting for tech-enabled startups poised to dominate that slice.

“You have a new wave of businesses where all of that digital infrastructure is set up, so the focus can be on things like efficiency, improved customer service, scale and growth — you have a ton of companies popping up catering to those needs,” Defy Partners co-founder Neil Sequeira told TechCrunch. Sequeira was a managing director at General Catalyst when the firm made its first investment in Airbnb.

On the other hand, you have a whole cohort of travel business founded amid the dot-com boom that are looking to technology startups for a much-needed infusion of innovation. Many of those larger companies have become active acquirers, fueling VC interest in the space. SAP Concur, for example, acquired the formerly VC-backed travel-booking startup Hipmunk in 2016. Before that, it bought travel planning company TripIt for $120 million, among others.

Expedia has gobbled up a number of travel brands too, like travel photography community Trover; Airbnb-competitor HomeAway, which it paid a whopping $3.9 billion for in 2015; and most recently, both Pillow and ApartmentJet.

Many of these acquisitions are for peanuts, which is far from ideal for a venture-funded company. And building a travel business is cash intensive, hence the $4.4 billion Airbnb has raised to date or even TripActions’ $236 million in total VC funding. To keep momentum in the space, companies need to be striking larger M&A deals.

It doesn’t help that many in and around the venture capital industry are predicting an imminent turn in the market. Travel companies, which are reliant upon a consumer’s tendency to spend excess cash, will be among the first sectors to be impacted by hostile economic conditions.

“If the market turns, people aren’t going to spend $10,000 on a trip to Zimbabwe,” Sequeira said, referencing companies like IfOnly, which sells curated experiences.

Travel startups should raise now while the market is hot. The conditions may not remain favorable for long.

A tale of two scooter cities

The kids in Madrid’s El Retiro Park are loving their new on-demand joyriding toys. Lime launched its scooters in the Spanish capital this summer.

Spending a weekend in the city center last month the craze was impossible to miss. Scooters parked in clusters vying for pay-to-play time. Sometimes lined up tidily. All too often not.

The bright Lime rides really stood out, though it’s not the only brand in town. Scooter startups have been quick to hop on the international expansion bandwagon as they gun for growth.

Grandly proportioned El Retiro clearly makes a great spot for taking a scooter for a spin. Test rides beget joyrides, and so the kids were hopping on. Sometimes two to one.

The boulevard linking the Prado with the Reina Sofia was another popular route to scoot.

While a busy central bar district was a hot ride-ditching spot later on. Lines of scooters were vying for space with the vintage street bollards.

The appeal was obvious: Bowl up to the bar and drink! No worries about parking or how to get your ride home afterwards. But for Saturday night revellers there was suddenly a new piece of street furniture to lurch around, with slouching handlebars sticking up all over the place. Anyone trying to navigate the pavement in a wheelchair wouldn’t have had much fun.

In another of Spain’s big tourist cities the scooter story is a little different: Catalan capital Barcelona hasn’t had an invasion of on-demand scooter startups yet but scooters have crept in. In recent years locals have tapped in of their own accord — buying not renting.

Rides are a front-of-store sight in electronics shops, big and small — costing a few hundred euros. Even for a flashy Italian design…

Electronic scooters

Take a short walk in one of the more hipster barrios and chances are you’ll pass someone who’s bought into the craze for nipping around on two wheels. There’s lots of non-electric scooters too but e-scooters do seem to have carved out a growing niche for themselves with a certain type of Barcelona native.

Again, you can see the logic: Well-dressed professionals can zip around narrow streets that aren’t always great for finding a place to (safely) lock up a bike.

There’s actually a pretty wide variety of wheeled e-rides in play for locals with the guts to get on them. Some with seats and/or handles, others with almost nothing. (The hands-in-pockets hipsters on self-balancing unicycles are quite the sight.)

In both of these Spanish cities it’s clear people are falling for — and, well, sometimes off — the micro-mobility trend.

But the difference between the on-demand scooters being toyed with in Madrid vs Barcelona’s locally owned two wheelers is a level of purpose and intent.

The Lime rides in Madrid’s center seemed mostly a tourist novelty. At least for now, having only had a couple of months to bed in.

Whereas the organic growth of scooters in Barcelona barrios is about people who live there feeling a need.

Even the unicycling hipsters seem to be actually on their way somewhere.

Hop on

What does this mean for scooter startups? It’s another example of how technology’s utility and wider societal impacts can vary when you parachute a new thing into a market and hope people jump on board vs growth being organic and more gradual because it’s led by real-world demand.

And it’s essential to think about impacts where scooters and micro-mobility is concerned because all this stuff must piggyback on shared public spaces. No one has the luxury of being able to avoid what’s buzzing up and down their street.

That’s why lots of on-demand scooters have ended up trashed and vandalized — as residents make their feelings known (having not been asked about the alien invaders in the first place).

In Europe there’s a further twist because the spaces scooter startups are seeking to colonize are already well served with all sorts of public transport options. So there’s a clear and present danger that these new kids on the block won’t displace anything. And will just mean more traffic and extra congestion — as happened with ride-hailing.

In Madrid, the first tranche of on-demand scooters seems to be generating pretty superficial and additive use. Offering a novel alternative to walking between sights or bars on a trip to-do list. Just possibly they’re replacing a short taxi or metro hop.

In the park, they were being used 100% for fun. Perhaps takings are down at the boating lake.

Barcelona has plenty of electro-powered joyriding down at the beach front in summer — where shops rent all sorts of wheels to tourists by the hour. But away from the beach locals don’t seem to be wasting scooter charge riding in circles.

They’re stepping out for regular trips like commuting to and from work. In other words, scooters are useful.

Given all this activity and engagement micro-mobility does seem to offer genuine transformative potential in dense urban environments. At least where the climate doesn’t punish for most of the year.

This is why investors are so hot on scooters. But the additive nature of micro-mobility underlines a pressing need for the technology to be properly steered if cities, residents and societies are to get the best benefits.

Scooters could certainly replace some moped trips. Even some local car journeys. So they could play an important role in reducing pollution and noise by taking trips away from petrol- and diesel-powered vehicles.

Because they offer a convenient, low-barrier-to-entry alternative with populist pull.

Not being too high speed also means, in and of themselves, they’re fairly safe.

If you’re just barrio hopping or can map most of your social life across a few city blocks there’s no doubting their convenience. Novelty is not the only lure.

Hop off

Though, equally, the local-level journeys that scooters are best suited for could just as easily be completed on foot, by bike or via public transit options like a metro.

And Barcelona’s congested streets don’t look any less packed with petrol engines — yet.

Which means scooters are both an opportunity and a risk.

If policymakers get the regulations right, a smart city could leverage their fun factor to nudge commuters away from more powerful but less environmentally friendly vehicles — with, potentially, some very major gains up for grabs.

Subsidized scooters coupled with a framework of congestion zones that levy fees on petrol/diesel engines is one simple example.

A clever policy could open the possibility of excluding cars almost entirely from city centers — so that streets could be reclaimed for new leisure and retail opportunities that don’t demand masses of parking space on tap.

Pollution is a chronic problem in almost all large cities in the world. So reshaping city centers to be more people-centric and less toxic to human health by displacing cars would be an incredible win for micro-mobility.

Even as the hop on, hop off ease of scooters offers a suggestive glimpse of what’s possible if we dare to rethink urban architecture to put people rather than four-wheeled vehicles first.

Yet get the policy wrong and scooters could end up — at very best — a frivolous irrelevance. A joyride that disrupts going nowhere. Yet another nuisance on already choked streets. An optional extra that feels disposable and gets rudely discarded because no one feels invested.

In this scenario the technology is not socially transformative. It’s more likely an antisocial nuisance. And a pointless drain on resources because it’s doing no more than disrupting walking.

Scooter startups have already run into some of these issues. And that’s not surprising given how fast they’ve been trying to grow. Their early expansionist playbook does also risk looking like Uber all over again.

Yet Uber could have pioneered micro-mobility itself. But being ‘laser focused on growth’ seemingly gave the company tunnel vision. Only now, under a new CEO, it’s all change. Now Uber wants to be a one-stop platform for all sorts of transport options.

But how many years did it waste missing the disruptive potential of micro-mobility coming down the road because it was too busy trying to fit more cars into cities — and ignoring how residents felt about that?

An obsession with growth at all costs may well be a side effect of major VC dollars flooding in. But for startups it really does pay to stay self-aware, perhaps especially when you’re rolling in money. Else you might find your investors funding your biggest blind spot — if you end up missing the next even more transformative disruption.

The really clever trick to pull off is not ‘scale fast or die trying’; it’s smart growth that’s predicated upon applying innovative technologies in ways that bring whole communities along with them. That’s true transformation.

For scooters that means not just dumping them on cities without any thought beyond creaming a profit off of anything that moves. But getting residents and communities engaged with the direction of travel. Partnering with people and policymakers on the right incentives to steer innovation onto its best track.

Move people around cities, yes, and shift them out of their cars.

There’s little doubt that Uber’s old ‘growth at any cost’ playbook was hugely wasteful and damaging (not least to the company’s own reputation). And now it’s having to retrofit a more inclusive approach at the same time as unpicking an ‘environmentally insensitive’ legacy that original playbook really doesn’t look so smart.

Scooter startups are still young and have made some of their own mistakes trying to chase early scale. But there are reasons to be cheerful about this new crop of mobility startups too.

Signs they see value and opportunities in being pro-actively engaged with the environments they’re operating in. Having also learnt some hard early lessons about the need to be very sensitive to shared spaces.

Bird announced a program this summer offering discounted rides to people on low incomes, for example. Lime has a similar program.

These are small but interesting steps. Here’s hoping we’re going to see a lot more.

Facebook Portal needs more. At least it just added YouTube

To offset the creepiness of having Facebook’s camera and microphone in your house, its new Portal video chat gadget needs best-in-class software.  Its hardware is remarkably well done, plus Messenger and the photo frame feature work great. But its third-party app platform was pretty skimpy when the device launched this week.

Facebook is increasingly relying on its smart display competitors to boost Portal’s capabilities. It already comes with Amazon Alexa inside. And now, Google’s YouTube is part of the Portal app platform. “Yes, YouTube.com is available through an optional install in the ‘Portal Apps’ catalog” a Facebook spokesperson tells me. You can open it with a “Hey Portal” command, but there currently seems to be no way to queue up specific videos or control playback via voice.

The addition gives Portal much greater flexibility when it comes to video. Previously it could only play videos from Facebook Watch, Food Network, or Newsy. It also brings the device to closer parity with Google’s Home Hub screen, the Google Assistant-powered smart displays from JBL and Lenovo, and the Amazon Echo Show 2 which Google blocked from using YouTube before Amazon added a web browser to the device to reopen YouTube access.

Read our comparison of the top smart display gadgets

YouTube makes the most of the $349 Portal+’s 15.6-inch 1080p screen, the biggest and sharpest of the smart display crop. Whether for watching shows or recipe videos while making dinner, instructional clips while putting together furniture, or Baby Shark to keep the kids busy, Portal becomes a lot more useful with YouTube.

But we’re still waiting for the most exciting thing Facebook has planned for Portal: Google Assistant. A month ago Facebook’s VP of Portal Rafa Camargo told me We definitely have been talking to Google as well. We view the future of these home devices . . . as where you will have multiple assistants and you will use them for whatever they do best . . . We’d like to expand and integrate with them.” Now a Facebook spokesperson tells me that they “Don’t have an update on Google Assistant today but we’re working on adding new experiences to Portal.”

The potential to put both Google and Amazon’s voice assistants on one device could make Portal’s software stronger than either competitor’s devices. Many critics have asked if Facebook was naive or calloused to launch Portal in the wak of privacy issues like the Cambridge Analytica scandal and its recent data breach. But as I found when testing the Portal with my 72-year-old mother, not everyone is concerned with Facebook’s privacy problems and instead see Portal as a way for the social network to truly bring them closer to their loved ones. With Amazon and Google racing to win the smart display market, Facebook may see it worth the tech insider backlash to have a shot at mainstream success before its boxed out.

Bubble lets you create web applications with no coding experience

Meet Bubble a bootstrapped startup that has been building a powerful service that lets you create a web application even if you don’t know how to code. Many small and big companies rely on Bubble for their website.

I have to say I was quite skeptical when I first heard about Bubble. Many startups have already tried to make coding as easy as playing with Lego bricks. But it’s always frustratingly limited.

Bubble is more powerful than your average website building service. It recreates all the major pillars of web programming in a visual interface.

It starts with a design tab. You start with a blank canvas and you can create web pages by dragging and dropping visual elements on the screen. You can put elements wherever you want, resize maps, text boxes, images and more. You can click on the preview button to see the development version of your time whenever your want.

In the second tab, you can create the logic behind your site. It works a bit like Automator on the Mac. You add blocks to create a chronological action. You can set some conditions within each block.

In the third tab, you can interact with your database. For instance, you can create a sign up page and store profile information in the database. At any time, you can import and export data.

There are hundreds of plugins that let you accept payments with Stripe, embed a TypeForm, use Intercom for customer support via chat, use Mixpanel, etc. You can also use your Bubble data outside of Bubble. For instance, you can build an iPhone app that relies on your Bubble database.

Many small companies started using Bubble, and it’s been working fine for some of them. For instance, Plato uses Bubble for all its back office. Qoins and Meetaway run on Bubble. Dividend Finance raised $365 million and uses Bubble.

The startup takes care of hosting your application for you. Every time you resize your instance as your application gets bigger, you pay more.

Even though the company never raised any money, it already generates $115,000 in monthly recurring revenue. Bubble is still a small startup, which can be scary for bigger customers. But the company wants to improve the product so that customers don’t see the limitations of Bubble. Now, the challenge is to grow faster than customers’ needs.