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The DL - A-Cloud's PRFAQ, GeekWire Awards, SPACs, GPT-3 Demos

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Welcome to The DL, a weekly newsletter about tech, startups, and investing in the Pacific Northwest.
 
July 27 · Issue #58 · View online
The DL
Welcome to The DL, a weekly newsletter about tech, startups, and investing in the Pacific Northwest.

This week’s issue has a link to a PRFAQ doc for “A-Cloud,” winners from the Geekwire awards, a look at SPACs, and a collection of GPT-3 demos.

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A-Cloud PRFAQ
Today, all of the big tech CEOs (except for Satya) were supposed to testify in front of Congress for an antitrust inquiry. I think that led to all of the tech companies and publications releasing stuff like this last week:
  • Amazon Met With Startups About Investing, Then Launched Competing Products (WSJ)
  • Apple’s App Store and Other Digital Marketplaces: A Comparison of Commission Rates (Apple)
  • Slack Accuses Microsoft of Illegally Crushing Competition (NYT)
  • Internal Google Program Taps Data on Rival Android Apps (The Information)

One interesting article in all of this was this profile on Tim Bray, a VP who left Amazon in early May with a viral blog post criticizing Amazon for firing whistleblowers. Since leaving, he has continued speaking out against Amazon and the broader wealth and power balances in our society.

To help address the problem of how concentrated Amazon’s power is, he wrote a PRFAQ describing how Amazon might spin off their AWS business. If you’ve ever wondered what an Amazon PRFAQ doc looks like, check it out.
… and let me know what you think. Would spinning AWS out of Amazon solve any of society’s problems?

Shoutout to the GeekWire Award Winners!
Hope you all tuned in to a fantastic virtual GeekWire Awards last week! Congrats to…

Investors love SPACs
This is a big year for SPACs (special purpose acquisition companies). The way a SPAC works is…
  • Someone raises money for a “shell company” through an IPO
  • The money in the company is used to “acquire” a private company, taking the acquired company public and giving it the cash
  • This allows the company that wants to go public to agree to a deal with just one investor, instead of dozens on an IPO roadshow
  • At the time of the transaction, SPAC shareholders can get shares of the acquired company or get their cash back if they don’t like the deal
  • Virgin Galactic, Draft Kings, and Nikola all went public through SPAC acquisitions

Last week, Bill Ackman (the hedge fund dude who made $2.6B on a $27M investment in March) raised $4B for the largest SPAC ever. And Craig McCaw is also creating a new SPAC (in Seattle) called Holicity, which is planning to raise $250M and acquire a technology business.

The cool thing about SPACs is you get the opportunity to invest in one of these investor’s deals and have the option to get your money back if you don’t like the deal. So if you think Chamath, Bill, Craig, or whoever is smart and makes good investments, you don’t have to invest in their VC/PE/hedge fund, you can just buy shares of their SPAC to get a piece of their next deal.

It’ll be interesting to see which companies decide to choose SPACs over an IPO. So far there haven’t been any enterprise software companies that went down this route (probably because there is so much investor demand for those companies), but maybe that will change this year.

Other stuff Dan's talking about
💭 Show your thinking - I could use these kids to write investment memos for me! Love this quote: “I answered the question and moved on with my life”
🐦 Best thread ever - This Twitter thread is so good. People post a topic, and the author responds with a profile of a person that relates to the topic. SO many great stories and links to read
👨‍👩‍👦‍👦 Sibling rivalry - After SPACs, the hottest investment this year is Jio, which has raised $20B from literally everyone. This is an awesome profile (from that Twitter thread) on the Ambani brothers and the history of Jio
🤖 GPT-3 demos - If you haven’t read about GPT-3 yet, you should check out these AI demos. Designing an app, building a functional app, replacing VCs, creating quizzes and evaluating answers, and a bunch more

Please hit reply! (Or subscribe or forward!)
About me: I work as an investor at Madrona Venture Group, a Seattle-based venture capital firm that has been early partners with companies like Amazon, Smartsheet, Apptio, and Redfin.
If you have thoughts, questions, or comments, hit reply! If you’re new, check out some of the DL’s top articles from the last few months:

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