Good exit news!
Plus: OpenAI makes a save, and a quick poll
Welcome to Cautious Optimism, a newsletter on tech, business, and power.
📈 Trending Up: Deliberate chaos … friends … Fred’s ‘Value Added by Industry: Private Industries,’ apparently … EU/ACC? … sticking it to the man (TWiST) … very mild analyst criticism of Musk …
Tesla shares today, after a rout in recent trading sessions.
📉 Trending Down: Chinese auto exports? … stocks … raising capital? … babies over in the EU after “the largest annual decline recorded since 1961” …
ServiceNow buys Moveworks
The ServiceNow-Moveworks deal is big news. Quickly, Servicenow (public, worth north of $160 billion), is buying the venture-backed Moveworks for $2.85 billion worth of cash and stock.
Servicenow argues that the deal will “combine ServiceNow’s agentic AI and automation strengths with Moveworks’ front‑end AI assistant and enterprise search technology to unlock new experiences for every employee for every corner of the business.” Corporate-speak aside, the deal has some merit to it from the perspective of the acquirer.
Moveworks was founded back in 2016, hoping to automate IT tickets using chatbots. The market moved towards it as AI improved, and the startup was able to raise a massive $200 million Series C back in 2021 at a $2.1 billion valuation. That historical price means that it’s selling at an up valuation to its peak-ZIRP price tag. Nice!
Even better, the company told the market that it crossed $100 million ARR back in September of 2024. At that revenue rate and current price, it’s selling for 28.5x ARR. That’s spicy.
But also probably wrong. Moveworks kept growing since September, now nearly two full quarters hence. Therefore, we must adjust its ARR up and its implied ARR multiple down. We can infer quick growth from Moveworks because it sold for $2.85 billion during a period of market disruption. So, I would hazard an ARR multiple closer to the low 20s. Still not cheap, and that’s great news for startups sitting on the vine.
A quick poll
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Chart of the Day: Cloud stocks are getting hammered
This is a three-month chart of the WisdomTree Cloud Computing Fund ($WCLD), which tracks the Bessemer cloud index, a useful basket of public equities compiled by one of my favorite venture firms, Bessemer Venture Partners.
The index provides a good look at how public-market investors value the product of startup work, and venture investment. The index is lousy with former venture darlings — Palantir, Crowdstrike, Snowflake, Toast, you get the idea — and generally trades like a more energetic Nasdaq Composite.
As we can see above, it’s taken a massive spill. Far larger in percentage terms than the Nasdaq, in fact: