Back in 2012, John Preskill, a theoretical physicist at the California Institute of Technology, invented the phrase “quantum supremacy” to describe the moment when a quantum computer finally surpasses the world’s best classical supercomputer. Although the term generated excitement among the applied quantum computing research community, there wasn’t really a general consensus on what the minimum condition should be in terms of outperforming a classical supercomputer for “quantum supremacy” to be achieved.

So when Google announced it had achieved the milestone using their “Sycamore” machine — IBM immediately challenged Google by releasing a statement stating that the quantum supremacy threshold has not yet been crossed! In a paper posted online, IBM provided arguments that the world’s most powerful supercomputer can nearly keep pace with Google’s new quantum machine. As a result, IBM argued that Google’s claim should be received “with a large dose of skepticism.”

Google vs IBM - Who Is Right?

With the collaboration of our parent company Zaiku Group, we sent out a survey to quantum computing academic researchers and open source quantum developers under the condition of anonymity asking their views on Google’s experimental quantum milestone. The following results are from 600 researchers/developers based in Europe and the US, all of which took their time to reply, we’ll keep updating the results every once in a while as more people take the survey.

Question 1: From your understand of the quantum experiment carried out at Google, did they achieve quantum supremacy?

Yes (8%) | No (75%) | Partially Achieved (10%) | Undecided (7%).

Question 2: Is Google's experiment an important milestone in quantum computing?

Yes (53%) | No (6%) | Maybe (41%).

Question 3 (your prediction): If your answer to Google’s quantum supremacy claim is negative, how far are we from achieving quantum supremacy with scientific consensus?

Within 5 - 10 years (33%) | Within 10 - 15 years (48%) | Within 15 - 20 years (19%).

If you have any questions or feedback about our quantum survey, please feel free to share your thoughts with our team:

Share Thoughts!

Kähler VC.X Catch Up

If lately, you’ve missed our newsletters, the following are the most recently read by investors across our network.

1. ‘Our Prediction came true - Plaid has exited!’

2. ‘The Kolmogorov IPO Score for 1Life Healthcare, Inc (aka One Medical)’

3. ‘Confluent + Databricks: Should these enterprise unicorns merge before IPO?’

4. ‘Kolmogorov IPO Score: A proxy investor sentiment measurement score to predict unicorn IPO success?’

5. ‘Friday Digest: Is the endgame near for SoftBank & Wework?’

6. ‘Partial ROI Analysis: Specialist Partners vs Generalist Partners’

7. ‘VC 2020 Outlook: IPOs vs Big Tech vs PEs’

Disclaimer: Any opinions, newsletters, research, analyses, prices, projections or other information offered by Kähler VC.X is provided as general market commentary, and does not constitute investment advice. Kähler AI will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.  ZAIKU GROUP LTD (Parent company of Kähler AI).

As a mathematically minded team, we’re always asking the ‘what if’ type of questions! So, after we produced our analysis on the hypothetical Slack + Dropbox merger entitled ‘The future of Slack: Could a Merger with Dropbox Create a $60Bn Company?’ – we couldn’t resist the temptation of asking what if the two companies merged before going public? Our analysis suggests that if the two merged before going public, their IPO would have been far more successful. Hence, a natural question is what if other private unicorns with synergy merged before going public?

In a previous post, you may recall that we formalize/proxy the computation of an ‘IPO success’ in terms of a Kolmogorov IPO Score i.e. we theorize that the Kolmogorov IPO Score corresponds to the probability of a successful IPO .

Confluent & Databricks

For readers not familiar with either company - Confluent is the company behind the popular open-source data streaming technology called ‘Apache Kafka’ and Databricks is the company behind the popular open-source big data processing technology called ‘Apache Spark’. In a nutshell, Confluent’s core technology enables companies to collect large amounts of data in real-time - e.g. think live user clicks from eCommerce sites or social media posts. Whereas, Databricks enables companies to process large amounts of data faster, plus it integrates with Kafka and other open-source big data technologies such as Apache Cassandra. Hence, you can start to see the potential synergy between the two companies! The following architecture from the WalmartLabs blog highlights how a large enterprise such as Walmart used Kafka and Spark to build a robust analytics platform.

Architecture example sourced from WalmartLabs.

Indeed a lot of well-known enterprises and startups use Kafka and Spark as a part of their big data architectures, notably the following companies:

Kafka users sourced from StackShare.

Spark users sourced from Stackshare.

The Kolmogorov IPO Scores

Before we share the Kolmogorov IPO Scores for the two companies individually and for the hypothetical merged entity, that for lack of imagination of a better name we’ve abbreviated as ‘ConfBricks’, we would like to highlight the following assumptions:

1. We assumed that both companies are planning to list on Nasdaq and so we assigned the hypothetical merged company ConfBricks to Nasdaq – hence we factored certain Nasdaq specific signals.

2. 50/50 investor profile - we set the composition of the K >1 investors to be a 50/50 split between growth investors & value investors i.e. 50% are of a growth investor profile type and 50% are of a value investor profile.

According to our prediction, as of January 14, the merged company ConfBricks has a Kolmogorov IPO Score of 52% i.e. ConfBricks has 52% chances of IPO success. Whereas, Confluent on its own has a 38% chance (up 5% from the previous update) and Databricks 35% chance (up 3% from the previous update).

Of course, it is possible this prediction will change to a more positive outlook for Confluent and Databricks individually as we capture more data over the coming days and weeks. It is also possible that under one particular type of investor profile, the two companies may individually score higher or lower - subscribers to our Pre-IPO Analyzer (Basic Plus) can submit questions to our team about this analysis.

Finally, please recall that we don’t consider a first-day stock surge as 'success’ - instead, the ability of the companies to maintain strong stock performances until their lockup periods expire is what we consider as being a successful IPO from the perspective of existing shareholders like VCs. This is very important as we’ve seen companies make stellar debuts, with their stocks skyrocketing on the first day of trading, only to see a couple of weeks later the stocks sinking to a record low just before the lockup period expires!

Any other unicorns?

Yes we are looking at more unicorns (mostly enterprise software-oriented ventures) including; a GitLab + HashiCorp potential merger that we’ll be covering in near future! In meantime, we recommend checking our October 2019 post about Confluent entitled ‘Will Google Buy Confluent?’.

Do you also know that you could commission bespoke Pre-IPO analysis from our team on pretty much any VC backed tech company in Europe and the US?

Commission Bespoke Pre-IPO Analysis

Kähler VC.X Catch Up

If lately, you’ve missed our newsletters, the following are the most recently read by investors across our network.

1. ‘Our Prediction came true - Plaid has exited!’

2. ‘The Kolmogorov IPO Score for 1Life Healthcare, Inc (aka One Medical)’

3. ‘Friday Digest: Is the endgame near for SoftBank & Wework?’

4. ‘Kolmogorov IPO Score: A proxy investor sentiment measurement score to predict unicorn IPO success?’

5. ‘Partial ROI Analysis: Specialist Partners vs Generalist Partners’

6. ‘VC 2020 Outlook: IPOs vs Big Tech vs PEs’

Disclosure: ZAIKU GROUP LTD (Parent company of Kähler AI) is a co-developer of Nanosai.com which is working on products in the same category as Confluent and Databricks.

Disclaimer: Any opinions, newsletters, research, analyses, prices, projections or other information offered by Kähler VC.X is provided as general market commentary, and does not constitute investment advice. Kähler AI will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.  ZAIKU GROUP LTD (Parent company of Kähler AI).

Visa just announced that it has acquired Plaid! For those who have been with us for a while, you may remember last November we posted a free article entitled ‘Big Tech M&A War & CB Insights Global Fintech Report Q3’ - in this article featuring Plaid we made the following comment:

We’re receiving strong signals of fierce M&A activities featuring: Big Tech, incumbent financial services players and Paypal - where each faction will try to acquire notable market leaders/disruptors across various fintech domains. We are closely monitoring the following 8 companies that our signals indicate are likely to back an attractive acquisition offer. Our signals suggest that their management & majority investors would most likely prefer this route rather than pursuing further growth (with some uncertainty & risk) for an IPO!

We also shared the following battlefronts which featured Plaid.

Indeed, Plaid was one of the infrastructure oriented fintech companies that we received strong M&A signals from, including from Big Tech companies such as Amazon Web Services. In fact, we published a report back in September 2019 entitled ‘Is Plaid on Amazon’s wish list?’

Subscribers to our Pre-IPO Analyzer will get free monthly reports on potential M&A moves.

Disclaimer: Any opinions, newsletters, research, analyses, prices, projections or other information offered by Kähler VC.X is provided as general market commentary, and does not constitute investment advice. Kähler AI will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.  ZAIKU GROUP LTD (Parent company of Kähler AI).

In our December post entitled ‘SoftBank's 2020 Portfolio Dilemma’ - we covered Wework and the choices that we predict SoftBank will be faced with this year as the giant fund tries to move on from being further exposed to Wework’s risks.

Over the past few days, reports from media sources such as Axios is that SoftBank backed out of high profile deals even after sending the terms sheets - Honor, Seismic, and Creator were highlighted:

SoftBank Vision Fund has walked away from investing in several startups, months after submitting term sheets worth hundreds of millions of dollars and promising that closing delays were only temporary, Axios has learned. Axios report

Of course, we don’t have all the facts that led SoftBank to make the critical decisions that could potentially harm its ability to make future deals with promising startups in Silicon Valley and beyond. To make the situation more intriguing, high profile SoftBank backed companies such as Zume & Getaround have announced massive layoffs. On top of all this, another SoftBank backed company (Grubhub) listed on the NYSE is considering selling itself according to Business Insider.

What will SoftBank do next?

It’s hard to know at this stage what Mr. Son is thinking, but the signals strongly indicate that SoftBank will make a decision soon and one could guess the following two options are very likely:

1. Adam Neumann returns (we compute a 50% probability) – with this option, Adam Neumann backed by deep-pocketed investors, buys a majority stake from SoftBank and takes back control. Will Adam Neumman reinvent himself into Adam Neumman 2.0 and as a result Wework 2.0? If so, what will Wework 2.0 become?

2. Private Equity (we compute a 50% probability) - in this option, a deep-pocketed PE (e.g. Blackstone Group) buys a majority stake from SoftBank.

In a nutshell, the current signals indicate that SoftBank has had enough of the Wework debacle and it wants to move on by doing whatever it needs to do to sell its majority stake. Also, the most likely options are either Adam Neumann or a deep-pocketed PE firm as these will be the least damaging options.

Another option that we considered is the scenario in which SoftBank takes long-term bet on Wework à la PE, all in the hope of streamlining its operations and growing it back into a position where it can be a solid IPO candidate few years from now. The risks with this are that a few years can easily be 5 or even 10 years from 2020! Plus, will SoftBank’s own backers in Saudi Arabia and Abu Dhabi agree to this?

Could SoftBank let Wework collapse?

Of course, SoftBank could pull the plug as any investor who doesn’t want to expose itself to further risks would do. However, this could backfire heavily on multiple fronts. Firstly, all eyes will be on SoftBank because of the scale of the potential negative effects that come with the collapse of Wework, including; job losses in the company’s major hubs, disruption of small companies that need to scramble to find alternative co-working spaces, and regulators potentially scrutinizing the whole SoftBank investment approach. Secondly, it would send a very bad signal to founders who may be considering taking large sums of money from the firm. Thirdly, the reputation of the SoftBank vision fund and its ability to raise money from large investors such as sovereign wealth funds could be largely impacted.

In essence, SoftBank has found itself in a very uncomfortable position where Wework is inconveniently, too big to fail? Mr. Son and the team will definitely need a lot mathematical thinking to get the firm out of the current situation!

Image credits: WSJ.com.

Kähler VC.X Catch Up

If lately, you’ve missed our newsletters, the following are the most recently read by investors across our network.

1. ‘Kolmogorov IPO Score: A proxy investor sentiment measurement score to predict unicorn IPO success?’

2. ‘The Kolmogorov IPO Score for 1Life Healthcare, Inc (aka One Medical)’

3. ‘Partial ROI Analysis: Specialist Partners vs Generalist Partners’

4. ‘VC 2020 Outlook: IPOs vs Big Tech vs PEs’

5.  ‘The future of Slack: Could a Merger with Dropbox Create a $60Bn Company?’

Disclaimer: Any opinions, newsletters, research, analyses, prices, projections or other information offered by Kähler VC.X is provided as general market commentary, and does not constitute investment advice. Kähler AI will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.  ZAIKU GROUP LTD (Parent company of Kähler AI).