IBM Sells Watson Health to Francisco Partners - Daily Crunch

Daily Crunch: January 21, 2022

A daily summary of TechCrunch’s most significant and impactful stories is delivered to inboxes each day at 3 p.m. PST. You can subscribe to this roundup here.

Market Volatility and Weekend Relief

Greetings, and welcome to the Daily Crunch for January 21, 2022. Typically, an attempt is made to inject some enthusiasm into the introductory remarks of this newsletter.

However, today a more direct approach is being taken. The current state of the stock market is prompting questions.

Following a sustained period of growth, a shift may be occurring. Is a reversal of fortunes underway?

While the situation isn't necessarily welcomed, the arrival of the weekend offers a degree of solace. – Alex

TechCrunch's Top 3 Stories

Here's a rundown of the most noteworthy stories covered by TechCrunch today, offering insights into the evolving tech landscape.

Microsoft and Labor Organization

A significant development is unfolding at Activision Blizzard, where the quality assurance team at Raven Software is establishing a union. This marks the first instance of a union forming within a major U.S. gaming company, as reported by TechCrunch.

The timing is particularly noteworthy, considering Microsoft’s pending acquisition of Activision Blizzard, Raven Software’s parent company. This situation adds a unique dimension to the ongoing discussions surrounding unionization within the tech industry.

Facebook's Internal Communication Tool

Despite interest from venture capitalists, Facebook’s internal work communication platform will remain within Meta. TechCrunch sources revealed that VCs proposed a spin-off with a valuation exceeding $1 billion.

However, Meta’s leadership, led by Mark Zuckerberg, ultimately decided against the separation, choosing to keep the tool integrated within the company’s ecosystem.

Netflix and the Shifting Market

Netflix experienced a substantial decline in stock value following the release of its latest financial results, which were met with disappointment from Wall Street investors.

This outcome reinforces the growing consensus that the surge in tech valuations observed during the pandemic is now a thing of the past. TechCrunch previously questioned the sustainability of exceptionally high tech valuations in late December, and current market trends appear to confirm those concerns.

The performance of Netflix serves as a clear indicator that the conditions driving the “pandemic trade” are no longer in effect.

Startups and Venture Capital Updates

For companies focused on streamlining corporate expenditure, funding continues to be available. Ramp, Brex, and Airbase are currently competing within the U.S. market.

Meanwhile, Moss is focused on establishing a significant presence in the European corporate spend landscape and is gaining substantial financial backing. The company recently secured $86 million in funding.

This latest investment has propelled Moss’ valuation to approximately $600 million, reflecting investor confidence in its growth trajectory.

Innovative Beverage Technology

A humorous element in Douglas Adams’ The Hitchhiker’s Guide to the Galaxy involves a spaceship incapable of brewing genuine tea. It can produce a beverage similar to tea, but not the real thing.

This serves as an analogy to the emerging field of beverage printing, which, while not entirely novel, is becoming increasingly tangible. Cana Technology has recently introduced what they describe as “the world’s first molecular beverage printer.”

The key question remains: can this technology replicate a perfect cup of tea? Regardless, the innovation is noteworthy.

Expanding into the African Market

Growth within the African technology startup ecosystem is demonstrably accelerating. However, companies based in Europe may encounter challenges when attempting to expand operations into Africa.

Venture capital firm Partech is addressing this issue with its new Chapter54 accelerator program, as reported by TechCrunch. The accelerator is designed to facilitate market entry for European startups.

Israeli Venture Capital Activity

The Israeli technology sector is experiencing a robust period of investment in 2022. Entrée Capital has announced the launch of a new $300 million fund.

This marks the second new fund originating from Israel to be announced this year, suggesting continued strong investment activity despite broader economic concerns.

These developments indicate that predictions of a slowdown in venture capital funding may be premature.

An Examination of Secfi’s 2021 Stock Option Equity Report

Having equity in the company one contributes to is beneficial, however, employees frequently receive unfavorable outcomes when they lack understanding of the most advantageous timing for exercising their stock options.

Data from Secfi indicates that, in the previous year, startup employees collectively incurred approximately $11 billion in unnecessary taxes.

This was due to exercising options following an exit event, instead of prior to it.

CEO Frederik Mijnhardt presented his insights regarding key trends in stock options during 2021 in a TechCrunch+ article.

His analysis focused on the reasons why many employees were unable to exercise their options until after an IPO, despite successful public offerings.

This delay significantly increased their tax obligations.

Key Findings from the Report

Mijnhardt observes that the prevailing industry direction of substantial funding rounds and extended exit horizons suggests a continuing rise in the overall expense for startup employees to exercise their stock options.

This trend is anticipated to persist into 2022.

(TechCrunch+ is a membership program designed to empower founders and startup teams with a competitive edge. Registration is available here.)

Big Tech Inc.

Recent developments highlight shifts and adjustments within major technology companies.

Peloton's Production Adjustments

Peloton is actively recalibrating its production output. The company’s CEO acknowledged a need to “reset production levels to facilitate sustainable growth.”

This announcement follows recent reports concerning consumer demand for Peloton’s products. Further details are anticipated during the company’s upcoming earnings report.

Intel's Ohio Investment

Intel is planning a significant investment in domestic chip manufacturing. The company intends to construct two chip fabrication plants near Columbus, Ohio.

The projected cost for this undertaking is approximately $20 billion. This move represents a boost for U.S.-based chip production.

IBM Divests Watson Health

IBM has successfully divested its Watson Health unit. The acquisition is being made by Francisco Partners, with the financial terms remaining undisclosed.

The sale signifies a potential conclusion to IBM’s efforts in the healthcare AI sector. It is expected that the sale price will be considerably lower than IBM’s initial investment in the assets that comprise Watson Health.

The outcome suggests a recalibration of IBM’s strategic focus within the artificial intelligence landscape.

TechCrunch Experts

TechCrunch is seeking recommendations for software consultants. They are interested in firms experienced in areas ranging from UI/UX design to cloud architecture.

Readers are invited to share their experiences with consultants through a provided form.

Those interested in the methodology behind these surveys can review an interview conducted by Miranda Halpern.

The interview features Georgina Lupu-Florian, CEO of Wolfpack Digital, and focuses on effective collaboration between non-technical founders and software developers.

The topic discussed is “How should non-technical founders collaborate with software developers?”