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Tech IPOs "dried up"

Barron's, in its weekly bearish take on Snap (this time comparing it to "Ill-Fated GoPro"), points out that "tech IPOs have all but dried up in recent years":

  • "There were just 20 such offerings in 2016, the worst year since 2009.
  • "Now we get to see if the well-received Snap offering is enough to usher in the next wave of IPOs, particularly with big 'unicorns' such as Uber Technologies, Airbnb, Spotify, and Dropbox lurking in the pipeline.
  • "[T]he good times won't last forever. Eventually the market will correct, suspending IPOs yet again. For all the unicorns planning to go public, it could be now or never."
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SoundCloud needs saving

Graham Smith/flickr

Recode reports that Soundcloud has been unsuccessfully trying to raise $100 million in funding since the summer, and is now talking to potential buyers, including Spotify, who opted not to buy the streaming service last year.

Why it matters: Investors initially valued SoundCloud at $750 million, but now Recode reports that SoundCloud may be willing to consider bids so long as they are higher than the roughly $250 million they've raised to date. Despite going back to investors for two additional round of funding, including a $70 million investment from Twitter in 2016, investors say SoundCloud's valuation remains the same.

What's in it for Spotify? SoundCloud's competitive advantage is its music library, not its user base. Last year, SoundCloud introduced a $10 monthly subscription service, similar to Spotify's, but the offering hasn't gained much traction against its competitors, mainly Spotify and Apple Music, which have 50 million and 20 million paid subscribers each.

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Uber hires veteran headhunting firm to find COO

AP File

Uber, which earlier this week said it will seek to hire a COO to help chief executive Travis Kalanick steer the ship, has settled on headhunting firm Heidrick & Struggles for the job, as Business Insider reported and Uber confirmed to Axios.

Track record: Heidrick & Struggles is responsible for the hiring of several high-profile executives, including Eric Schmidt as CEO of Google in 2001, and Satya Nadella as CEO of Microsoft in 2014.

The story has been corrected to show that Business Insider, not CNBC, first reported the news.

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Snap stock slides in first full week of trading

Greg Ruben / Axios

Snap had a rough first week in the public markets, with its shares closing down in four out of five days. The lowest close came today, at $22.07 per share.

Data: Money.net; Chart: Andrew Witherspoon / Axios

Here are the closing company valuations, fully-diluted:

  • IPO: $23.63 billion
  • First market open: $33.36 billion
  • Peak: $40.64 billion
  • Market close today: $30.67 billion
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SEC shoots down Winklevii bitcoin ETF

AP Photo/Evan Agostini

The U.S. Securities and Exchange Commission today decided not to mainstream bitcoin, by ruling that it will not permit the public listing of an ETF (exchange traded fund) that would have effectively allowed people to buy and sell the digital currency like stock.

What? The SEC disapproved a request to allow the BATS stock exchange to list the Winklevoss Bitcoin Trust ETF, which was founded back in 2013 by the Winklevoss Brothers of Facebook (and The Social Network) fame. It also may dump a giant roadblock in the way of other future publicly-traded bitcoin investment vehicles. For example, the future is now a bit fuzzier for Barry Silbert's Bitcoin Investment Trust, which recently filed for a $500 million IPO (although it's structured differently from Winklevoss, and is already publicly traded on the OTC).

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So? Had the SEC approved the Winklevoss effort, it could have significantly increased liquidity for the bitcoin market ― not only by encouraging retail investors to participate, but also investment advisors with larger bankrolls. More diverse bitcoin exposure also could have helped reduce price volatility, although anticipation of a more favorable ruling had caused the price of bitcoin to spike:


Bitcoin prices are now tanking in reaction to the ruling, down more than $200 at last check.

SEC explanation for its ruling: "First, the exchange must have surveillance-sharing agreements with significant markets for trading the underlying commodity or derivatives on that commodity. And second, those markets must be regulated. Based on the record before it, the Commission believes that the significant markets for bitcoin are unregulated."

Industry reaction: "The Winklevoss ETF proposal was rejected because the SEC found that the significant markets for Bitcoin tend to be unregulated overseas markets that are potentially subject to price manipulation. But this creates a chicken and egg problem. How do we develop well-capitalized and regulated markets in the U.S. and Europe if financial innovators aren't allowed to bring products to market that grow domestic demand for digital currencies like Bitcoin?" ― Coin Center executive director Jerry Brito

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Dana-Farber Cancer Institute at risk of losing Medicare funding

Mararie / Flickr Creative Commons

The federal government is threatening to cut off Medicare funding at the renowned Dana-Farber Cancer Institute in Boston after finding the cancer hospital "was not in substantial compliance" with Medicare rules.

Most of the violations stem from Dana-Farber inappropriately relying on Brigham and Women's Hospital to handle many day-to-day functions, according to documents obtained by Axios. Dana-Farber has until June 30 to fix the problems cited by the Centers for Medicare and Medicaid Services, but that date already marks the third extension from the agency. The original deadline was November 21, 2016.

If CMS terminates its Medicare contact with Dana-Farber, the hospital would lose more than $243 million in annual Medicare funds — or about a quarter of its entire revenue.

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What happened: Massachusetts officials originally surveyed Dana-Farber in August, and this process has mostly been under wraps since then. Dana-Farber has a unique structure, in that its 30-bed inpatient facility is housed within Brigham and Women's Hospital, which is located a block away. But the two not-for-profit organizations are separate, independent entities.

That's the root of the problems, according to the CMS report. Dana-Farber has relied on Brigham and Women's to handle patient complaints, inform patients about their rights, track care quality and medical errors, verify the credentials of medical staff, and provide full nursing services. Dana-Farber's "failure to provide the independent oversight...placed all potential patients at risk to receive poor quality of care," the report said.

Dana-Farber says it has submitted two "plans of correction." In a statement, it said that CMS has "been very complimentary about the actual care we provide, but nevertheless want to ensure that Dana-Farber is more clearly responsible for all of the services provided to patients in our inpatient hospital."

Why this matters: Medicare has a lot of rules and regulations, known as conditions of participation, but the federal government only threatens to pull funding if it finds egregious offenses. Academic hospitals and other renowned health care organizations like Dana-Farber hold high rankings and reputations, but they are just as capable of flouting Medicare rules, sometimes putting patient care at risk. Modern Healthcare, for example, detailed Medicare safety violations at the Cleveland Clinic in 2014.

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The trade war in the Oval Office

Pablo Martinez Monsivais / AP

Trump's key economic advisors are pitted against each other on trade policy, with senior advisor Steve Bannon and trade advisor Peter Navarro on one side and National Economic Council Director Gary Cohn and his staff on the other, according to FT. One official said there was "a fiery meeting" recently in the Oval Office.

The FT says that Navarro is losing clout and being sidelined in the White House. As a European official put it: "His influence seems to be diminishing quickly."

Why it matters: FT nails the meaning in a quote from Thea Lee, a trade official at the AFL-CIO, who said, "At the moment it appears that the Wall Street wing of the Trump administration is winning this battle and the Wall Street wing is in favour of the status quo in terms of US trade policy."

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Waymo asks judge to block Uber's self-driving car project

AP Photo/Paul Sancya

Waymo, Alphabet's self-driving car unit, has asked a federal judge in California for a preliminary injunction to block Uber's self-driving car project, according to new court documents obtained by news outlets.

Expert testimony: Waymo also filed the sworn testimony of Gary Brown, a forensic security engineer at Google since 2013, according to The Verge. Brown says that according to logs from Google's secure network, Anthony Levandowski, a Google engineer who left the company to start the self-driving car startup Uber acquired last year, downloaded 14,000 files from Google containing proprietary information before leaving the company in early 2016. Brown also names two other engineers, Radu Raduta and Sameer Kshirsagar, who he claims also downloaded proprietary files before leaving Google to join Levandowski.

In late February, Waymo filed a lawsuit against Levandowski's startup and Uber, claiming they stole intellectual property from Google.

What to watch: Uber has called the lawsuit "baseless," so it's likely to try to prove that its own technology is different from Waymo's. Last year, in an interview with Forbes, Levandowski emphasized his team didn't steal any intellectual property from Google and it has "all the logs" to show that.

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Trump: "Phony" jobs report is now "real"

Pablo Martinez Monsivais / AP

The U.S. Bureau of Labor Statistics today reported that the economy added 235,000 jobs in February, and that the unemployment rate fell to 4.7%. President Trump touted these better-than-expected figures, even though he has dismissed such reports as a "joke" and a "hoax."

Sean Spicer was asked during today's press briefing if Trump still believes the BLS data is bogus. Spicer said that Trump asked to be quoted directly:

They may have been phony in the past but it's very real now.

The Labor Department has not changed its process for collecting or analyzing jobs data since Trump took office.

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Vista Equity surpasses $10 billion mark for tech fund

Vista co-founder Robert Smith

Vista Equity Partners has secured nearly $10.5 billion in capital commitments for its sixth flagship fund, according to SEC filings. The tech-focused private equity firm, which has primary offices in Texas and California, originally targeted $8 billion for the fund but later increased expectations to $10 billion.

Why it matters: Vista has been moving quickly up the capital stack, transitioning from a mid-market buyout firm to one of the world's largest private equity investors in technology companies. Historical returns have been extremely strong, with Vista on record as talking about how it has never lost money on a control deal. Going forward, the questions are if Vista can manage the speed and size of its scale-up, and if it has been letting leverage multiples get too rich on some of its deals (as some of its rivals argue).

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Caveat: The firm has not yet returned requests for comment, but word is that the $10.46 billion does not quite represent a final close for the fund. Expect the final figure to be $10.5 billion on the nose, with Vista still trying to work through final allocations.

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