I regret to inform you that I am considering diversifying (kinda) into bitcoin

Welcome back to Cautious Optimism. Today is June 5th, 2024. Your humble scribe stayed up too late playing poker last night but is in good spirits. To work!

Trending Up: Modi’s third term … Shein’s UK IPO, which could value the Chinese fast-fashion concern at $66 billion … venture investment into hardware startups (biotech is the largest category) … the price of every subscription you have (except, of course, for Cautious Optimism!) … Meta’s VR ambitions …

Trending Down: Modi’s party’s results in the recent election … AI uptime … women’s health in Texas … Apple’s existence as the only Tech Giant that didn’t forget all words during keynotes except ‘AI’ … Apple’s argument that it makes digital safe-havens …

Some brilliant reporting for your lunch interval: The Information’s Natasha Mascarenhas has a piece up on a new venture fund forming from a super-group of existing GPs coming from well-known funds. And, Forbes’ Alex Konrad has a banger out on open-source AI versus closed-source AI. Both are well worth your time.

Ok, so when do we put 1% into bitcoin?

Fidelity, whom I adore, employs a bloke named Matt Horne. CNBC writes that he’s Fidelity’s “head of digital asset strategies at the firm’s digital asset management arm.” So, he’s talking his book when he said that a “non-zero position in something like bitcoin could make sense for a lot of clients given a long-term horizon.”

I have covered bitcoin et al since $BTC was in the double and triple digits; thankfully, I have precisely zero FOMO regarding its price ascent because even if I had broken journalistic norms by buying some at the time, I would have sold it at $500 to buy fancy Scotch and cartons of Camels.

Regardless, the world has changed, and I do not think that having a micro-allotment of crypto as part of a larger, balanced portfolio is contrary to journalistic ethics anymore. Why? Because whenever I look under the hood of one of my beloved low-cost index funds what do I find? Large positions in companies that I cover; this is mostly due to the fact that tech companies are the largest companies by value, but it feels the same.

All this is to say that I am tempted to put a very minor portion of my family’s regular investing into a bitcoin ETF just in case the folks who love to call me no-coiner are even partially right.

WalkMe to the moon, and let me play among the stars

SAP is buying WalkMe. I have to go to brunch here in Napa in a few minutes (hard life, I know), so we’ll have to be slightly terse:

• $14 per share, 45% premium to WalkMe’s share price

• $1.5 billion deal, cash

• Back after its 2021-era IPO, WalkMe was worth about $30 per share. In the last 52 weeks, it bottomed out at $7.60. Inclusive of the company’s massive share-price jump in the wake of the deal’s announcement, WalkMe is worth $1.26 billion (Google Finance).

Is it expensive? Nope. Here’s the thing with WalkMe, the company’s Q1 was incredibly mid. Revenues of $64.4 million were up 6% year-over-year. At the same time, WalkMe’s gross margins are insanely good, it generates cash, and is increasingly profitable on a non-GAAP basis.

But what matters the most is this little note from the company’s CEO: “Q1 has been a great kickoff as we turn the corner on growth with a focus on doubling our net new ARR in 2024.”

Fair enough. That will boost the growth rate of the company and make its what, effective ~6x ARR multiple seem even cheaper.

That means that SAP is not overpaying for something that generates cash. Good. Even more, since SAP software is UI/UX dogshit — looking at you, Concur — buying WalkMe to help explain to hapless enterprise end-users how to file their expenses is probably a good strategic buy.

Men major tech companies will literally do anything spend $1.5 billion on WalkMe instead of going to therapy making usable software.

I know that there is some IPO news and other M&A to chat about. Trust me, I’m chomping at the bit. Travel, however, is not conducive to productivity. More soon! — Alex