
Splunk acquires cloud monitoring service SignalFx for $1.05B - sgloutnikov
https://techcrunch.com/2019/08/21/splunk-acquires-cloud-monitoring-service-signalfx-for-1-05b/
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deanmoriarty
Does anybody know if employees will end up actually making any money from this
massive acquisition, or if yet again board and investors found a way through
some shenanigans to distribute all the wealth just to themselves?

EDIT: I'm being downvoted, but I've been increasingly hearing a shady Silicon
Valley practice where, upon successful acquisition, the board will vote to
emit a large number of new shares (think 5-10X the total pool), which will be
redistributed just among execs and investors. So, if you are an employee who
held on to your 0.1% (which, on 1B, might be worth 1M), you might find out
that after the acquisition you are going to be diluted maybe to 0.01%. And
this is after all the other "healthy" dilutions that have happened to the
company over the years, as part of their financing rounds.

~~~
windexh8er
I was part of a smaller acquisition Splunk made. My existing options at the
original company were worthless at the time the deal closed. Instead Splunk
and our management agreed to pay us out in cash that was lower than the value
of what Splunk paid. In turn Splunk slapped on the golden handcuffs for those
they wanted to keep and bumped up our salaries and threw the standard four
year vesting RSUs at us with everyone starting at day 0. The rumor was our
founder took the lion's share of cash on acquisition. Once I was in Splunk it
was, unfortunately, what I feared. Beyond a lot of mediocre mid-level
management and everyone calling themselves rockstars I asked about how a
specific prior acquisition had gone. Most Splunkers were pretty candid about
how poorly that had gone (it was their UBA acquisition, I was part of the SOAR
acquisition). I saw the writing on the wall within a few months and left money
on the table. It just wasn't worth it to me to stick around as I had been in a
similar size Valley security company that was equally as bad.

It's unfortunate this is what the landscape has become. On one hand I'm happy
for the SignalFX founders to have made it and hit pay dirt. But everyone
else... Yeah, they're all going to get swindled on the deal. Sure you'll make
some money but not nearly as much as a select few and even then there's a good
chance anyone who tries out Splunk internally runs into the same wall myself
and a bunch of my peers did. Splunk, Palo Alto Networks, IBM... They're all
are done innovating. These companies buy relevancy and then are proud of their
accompliments in changing the world. Or that's what they tell their prospects,
customers and themselves. So much great technology and brain power are getting
locked up in these non-R&D companies who are at a stage of run rate revenue
but still think they're a startup that will continue to pull 50% growth YoY.
It's absurd.

Splunk isn't good at acquisitions. I've seen it first hand. I'd never go back
there willingly. I hope the SignalFX crew ends up better. But at the end of
the day you're working at Splunk.

~~~
Trias11
Well you got RSUs at Splunk + salary bump which is like ok deal?

Granted - your payout at acquisition didn’t work to your expectations - and
it’s typical in SV - but after dust settled you been offered something not
that bad in a company that is really not a lagger after all...

~~~
truncate
Umm, I've never worked in a startup, but if I do, a huge motivation would be
make money. Risk is startup failing, not it getting acquired for good money.
In the end, if all I'm getting is standard RSUs and salary bump, I might as
well will join the established company at first place. I understand some
people really do love to work for startups, but I think many don't and
regardless potential to make money much more than standard job in future is
always a motivation.

~~~
repomies691
On average, the problem with being an employee in a startup is that actually
it is easy to over-value your shares/options. However, there are still lots of
cash-out stories as well, where the employee has made nice bonus on top. But
to me it seems that for each cash-out story, there is like 9 or 10 stories
where the options/shares have turned out to be worthless.

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jedberg
Good for them! I've been a huge fan of SignalFX since they launched. It was
the closest commercial product I could find to Netflix's internal monitoring
system. I mention it often when people ask for a recommendation of a
monitoring system.

~~~
cwp
Yeah. SignalFX is great! I'm happy for them.

But also, dammit. Splunk will destroy it.

~~~
occamsrazorwit
Why do you think Splunk will kill it?

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cwp
Cause that's how acquisitions always work out. It might not be as obvious as
"We are shutting down SignalFX." But they'll want to turn it into a feature of
another product which is aimed at a different market, or move it to Splunk's
infrastructure, which was designed for something else. Or maybe it's about
adopting a common UX, which ends up being worse than what SignalFX has now.

Think of Microsoft buying Skype. It's still around, but it's not good anymore.

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blawson
Seems like a really impressive number, based on the 170% compounded annual
growth rate referenced in their last funding round[1].

Huge assumption but if they started at 1,000,000 ARR in 2015 (which seems
generous if sales just started then), 170% yearly growth over 4 years is ~$8.5
million ARR today. Over a 100x multiple!

1\. [https://www.globenewswire.com/news-
release/2019/06/12/186761...](https://www.globenewswire.com/news-
release/2019/06/12/1867619/0/en/SignalFx-Raises-75-Million-to-Fuel-Demand-for-
its-Cloud-Monitoring-Platform.html)

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brunoTbear
I didn't see the terms on that Tiger capital round anywhere online (very
cursory search tho, so I'm open to being wrong!), but they raised $75 just 2
months ago. I wonder what the terms on that round were and what this
acquisition means for the older shareholders.

Seems unlikely to be a bad deal, given that they _just_ raised, so I'm curious
why a sale happened so soon after closing a round.

~~~
allana
Perhaps the addressable market on their own was too small (or so the team at
SignalFx felt), thus now is a good time to sell.

Splunk already has Enterprise and B2B sales down cold, adding a supporting
product is an easy in-sell.

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jujube888
Splunk's existing cloud service is a disaster they are desperate to make it
work but due to lack of experience in the cloud field they think they can buy
credibility by acquiring a SaaS company to make it work and it will only get
worse.

Splunk is forcing customers to sign on to it's cloud service by ending all
perpetual licensing by November 2019 and forcing subscription cloud and term
licensing to make it affordable to customers. It will take them an extra 5 or
more years to break even as their cloud service has been in existence for 6
years. There is no guarantee of success as they haven't been known for their
execution with poor leadership everywhere in the company.

The SignalFX exec management team will make money but no one else will. They
will only be there for one year as they realize they've been put into
subservient roles reporting to incompetent SVP and VP Splunk managers.

The regular employees will soon find out that Splunk is a chaotic and terrible
environment and that no one is held accountable for their mistakes or lack of
competence. Their stocks will be reset to what splunk will dole out for new
employees and they have to vest for 4 years all over again.

There is no joy to this it's a brutal reality and Splunk will eventually be
purchased by a legacy tech company like Cisco or a private equity like Thoma
Bravo.

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bpicolo
Congrats to the team.

I used Signalfx at Yelp years back. It was a fantastic product - I miss it to
this day. (Same with Splunk).

Both products set a ridiculously high UX bar, but they definitely charge
accordingly for it.

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chirau
I wonder what this means for Datadog's soon to be IPO

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AznHisoka
I also wonder if New Relic is an acquisition target as well.

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ryanSrich
New Relic’s stock is down 42% on the year so I don’t see them doing very well.
An acquisition would make sense.

~~~
apple4ever
Really... is there a reason for that?

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liveoneggs
they missed targets and told everyone that a new dashboard with existing
features (newrelic one) was a new sale-able product?

~~~
apple4ever
I was wondering how NR1 worked out. Seems not great to me...

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paulyacoubian
Tiger Global led the Series E round in June at a $500m post-money valuation.
That means they get a 2x in a few months. This looks like it will be a
fantastic exit for employees too!

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majestik
So the days of “Splunk for logs and X for monitoring” will change to “Splunk
for logs and monitoring”

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rattray
Curious to see what comes of this from a product perspective... any
speculation as to what they might be able to pull off in practice as a joint
entity?

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codesushi42
Proof that the cyber security industry is an overlooked dark horse, full of
opportunities.

Too bad it gets overshadowed by AI, cryptocurrency, VR/AR. I guess it's unsexy
and not necessarily new. But there's a lot of money in it.

~~~
munchbunny
From the inside of the cyber security industry, it certainly doesn't feel that
dark horse-like. It feels quite crowded actually.

There are two big things going for it though:

1\. There's an adversarial relationship that drives up demand for products.

2\. It's stupidly complex, so there's a lot of potential value add in anything
that can simplify the problem.

The main thing going against the cyber security industry is that while it's
sexy to subject matter experts, it's not really sexy to boardrooms, Silicon
Valley tech startups included, many who see it as a cost center and something
that slows down product development and thus do the minimum necessary to
_look_ secure. Speaking from anecdotal evidence.

In the context of big companies, Krebs on Security had a great article in the
wake of the Equifax breach which pointed out that there are very few CISO's
(or equivalent) who report to the CTO or CEO. For the most part they report to
the CFO, to the head of IT, or to the head of legal.

~~~
cik
Concur, also from inside the industry. The reality is that almost every
C-Suite executive I talk to sees security as a cost center, and rolls it (and
IT even) into the CFO, or the COO.

We focus on helping an organization make security an enabler. Yet even those
customers who get it - really only care when there's a breach, or if someone's
bacon has seriously been saved.

Suffice it to say, I find the industry troubling, to say the least.

~~~
staticassertion
Lots of things are cost centers. SRE is a cost center. OPS is a cost center.
Companies still pay a fortune for services that optimize these areas.

Hell, why do you think Splunk has 1 billion dollars to burn?

~~~
SamuelAdams
>Lots of things are cost centers.

Agreed. If you boil it all down, the only things that are "profit centers" are
either Marketing or Sales. Everything else is a cost.

When a company I work for begins putting its employees into boxes like that, I
look for a quick exit. It's only a matter of time before the C-level staff
start reducing those "cost-centers" to a few overworked, underpaid staff.

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Trias11
Oops,

Just found 2yr old email from SignalFx asking if I interested in a Director
position :)

