Nick’s Newsletter No. 36

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No guest this week. Instead I’ve gone through A16Z’s analysis of the Dell+EMC deal and summarized some of the main points. Thanks for reading!

Making Sense of Dell + EMC + VMware

  • A16Z writes a fantastic, in-depth analysis of the deal and what it means for tech in general. They also detail the structure of the transaction and the four different methods of financing Dell is using to complete the transaction including VMWare tracking stock (huh?).
  • Records: The $67 billion deal is the largest take-private in history by over $20 billion, it is also the largest tech M&A transaction by about $26 billion.
  • Synergies: The companies expect an additional $1 billion in revenue from synergies and expected cost synergies of $300 million. The synergies will come from complimentary products (Dell+EMC’s hardware + VMWare’s virtualization products), by giving Dell a foot in the door with EMC’s large enterprise clients, and through combining powerful enterprise salesforces.
  • Activists: The assets managed by activist investors have grown 270% in the past five years and Dell+EMC have been no stranger to this activity. Dell originally went private after Michael Dell fought Carl Icahn for control of his company. He wanted to avoid the scrutiny of the public markets and make long term decisions for Dell. By the same token, EMC had long been arguing with the hedge fund Elliot Management who thought that they should spin out VMWare. EMC didn’t want to because they thought that VMWare aligned with their longer term cloud interests. Thus the Dell deal allows EMC to focus on its strategic interests which include maintaining control of VMWare.
  • Will it Close? The deal looks pretty good from EMC’s perspective. They’ll receive a 35% premium above EMC’s average share price over the past 30 days. There is a 60 day “shop around” period in which EMC gets to look around for a better deal, but there are only a few other tech companies that are large enough to buy them, and those companies are busy with their own acquisitions (think HP breaking up). A16Z also expects the deal to pass regulatory approval, although it could take over a year to do so.

The News:

Cisco Beefs Up Security, Buys Lancope For $453M

  • Lancope’s products give administrators visibility into network traffic and help detect unusual behavior. Lancope had raised just $24.6 million since it started in 2000.

Top 20 Android Security Apps

  • Great overview of the biggest players in the Android security ecosystem.

Yahoo Hires Bob Lord as its CISO

  • Lord previously worked at Twitter and Rapid7–where he was “CISO in residence.” The move comes after Yahoo’s well known CISO Alex Stamos left for Facebook several weeks ago.

Cloud-based vulnerability management: Top vendors in the field

  • Top vendors include Immuniweb, Qualys, Truswave and BeyondTrust.

Cato Networks gets their heads into the clouds with $20 million round

  • Cato was founded by Shlomo Kramer, who also founded the public security company Check Point. The round comes from Steve Krausz of USVP and Theresia Gouw of Aspect Ventures.

Unrelated to Security:

6 Steps to Writing Great Cold Emails

  • Noah Kagan, founder of AppSumo and employee #30 at Facebook, analyzes a great cold email that he received, that led to an in person meeting.

The Dangers Ahead if Tech Unicorns Get Gored

  • Noting the apparent increase in restrictive terms that VCs are putting on the term sheets of unicorns, Chris Mims writes “Despite their fondness for playing them on Twitter, venture capitalists aren’t macroeconomists. And to those who seem to believe that the current state of affairs is sustainable, I would ask this: When in history has ever-increasing financial complexity, lack of transparency, perverse incentives and new ways to extend credit and increase leverage not eventually led to disaster?”

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