New Podcast

Misha joined for a podcast (also available on Spotify and iTunes).

We discussed Misha’s new fund, the flash crash in early August, how it affected our main fund, and also how self-driving cars have suddenly become a reality in cities around the world.

Misha has closed $35 million for a new fund with EVP, a local software-focused VC firm.

The fund will take a rigorous, private equity approach to investing in small and medium-sized software businesses that sit in that awkward gap - too small for private equity and international growth funds, but growing too slowly (<50%) for VC. The fund will be evergreen and have access to EVP’s deal flow. If you’re interested in having a chat you can contact Misha here: [email protected] 

This striking chart from the Financial Times has done the rounds, showing start-up shutdowns are rising.

And Australian Super reportedly lost over a billion dollars on Pluralsight. For context, this is only ~0.3% of their AUM, but it does sound like a lot for a single deal.

I remember when that acquisition crossed the screens in late 2020. It was one of a series of acquisitions that gave a boost to software sentiment, showing that private equity was willing to pay a premium to red hot listed multiples. So it’s interesting to see how the story ultimately played out.

After the acquisition Pluralsight bought a Melbourne startup ‘A Cloud Guru’ for A$2 billion - quite a windfall, though it wasn’t reported how much was cash vs equity. Hopefully more of the former.

Now, it’s reported that Pluralsight in its entirety is worth half of what was paid for A Cloud Guru.

We also covered self-driving cars, which have suddenly become a reality with Google’s Waymo Jaguars now ubiquitous across San Francisco and taking mostly delighted passengers.

The impact on Uber is not clear - famously Travis Kalanick left the firm after a self-driving scandal and lawsuit, after which Uber abandoned its own development efforts.

Uber does have the most customers though, by a long way.

It wasn’t entirely clear at the time, but right now it does look like the right strategy to let others spend and compete on the tech, while investing in growing the most liquid market of demand.

From Uber’s latest result:

And from their latest earnings call:

The alternative, that the Waymos and Teslas of the world develop their own app, may also be the industry’s end state. But can they build a userbase large enough, and cheap enough, to outweigh simply paying Uber 20%?

The economics for the owners of the self-driving cars are also yet to be determined.

Drivers are obviously a major cost, but under the current model they also cover major costs, notably depreciation, cleaning, and maintenance. This will need to be covered directly by the owners of autonomous fleets.

And if private vehicle owners are allowed to put their own autonomous vehicles onto the market, that might push down pricing below what fleet owners can afford (in this case, owners would be covering the depreciation, maintenance and cleaning, as Uber drivers do currently).

We’ll just have to see - and simply be grateful for the extraordinary multidecade investment that has made this possible. Waymo’s data suggest their cars reduce average injury rates by 85 percent, which is something we can all welcome.

At the moment it looks like Australians will have to wait until 2030, though I’m sure Tesla will continue to push the boundaries of what’s allowed and regulations may move faster than expected if these early experiments work out.

Given the stakes and complexities involved, this may be one of those situations where the kinks are best ironed out overseas.

Michael