👋 Good Morning and Happy Sunday! Welcome to the e8 newsletter, a hand-picked collection of business and start-up news, resources for entrepreneurs, job/internship postings, and noteworthy trends that are happening this week! I hope you find this weekly newsletter informative and engaging!
Microsoft Just Wants To Talk...
Is Microsoft feeling some FOMO? Well it certainly feels like it. With big social media platforms such as SnapChat, Twitter, Facebook (Owners of Instagram) and TikTok as well as up and coming platforms such as Clubhouse and Spikeview, you know that Microsoft is still itching for a piece of that pie. This past week Microsoft reached out to Discord and offered $10 billion or more to acquire the company. Discord (a relatively young company being founded in 2016) could be heavily enticed by the bait that Microsoft is offering them, but with a $7 billion valuation just a few months ago from their last funding round, Discord could be contemplating going public. Let’s take a closer look and see what each decision will mean for the company.
Joining The Dark Side…
Let’s imagine that Discord takes the deal with Microsoft, and we know this deal would have to be well over $10 billion as there have been comparisons made to the Salesforce/Slack acquisition which went for just shy of $28 billion - a pretty big difference - but I feel like ultimately it would be a win-win for both companies. Microsoft would get their end of the deal byacquiring a successful social media platform and focusing on sweeping their Mixer streaming platform fiasco under the rug while the owners of Discord and their team would get a nice payout from the tech giant and hopefully be embraced into Microsoft's extensive library of brands. It would be interesting to see how they would be able to integrate Discord’s premium audio quality standards into Skype as well as their Xbox party chats.
It’s easy for Discord to snub their nose at Microsoft if they won’t be willing to offer them a pretty penny, so what would going public mean? Well, it’s tough to tell what exactly they would get priced at. The company has experienced extremely rapid growth during the pandemic as many people turned to gaming, and Discord is currently the most associated social platform with gamers. Their user rate has doubled since last year and their revenue has skyrocketed from 2019 almost tripling in 2020. While the chat and server provider continues to utilize their dominance in the gaming market, it will be key for the company to start branching out and innovating to stay on top.
Since the talks of acquiring TikTok fizzled out last year, it feels as though Microsoft has gotten a little desperate to figure out their footing in the social media space. It also wouldn’t be the first time they’re offering money to a company that isn’t profitable yet. Discord prides itself on a couple things: not selling user data and not playing ads, as well the fact they have grown almost exclusively from word of mouth. Simple, but honestly really refreshing when you’re so used to getting bombarded all day with privacy policies and spam. So how do they get their coin? First, Discord sells a subscription service geared towards die hard Discord fans that want extra features as well as the highest audio/video streaming and quality. Second, by selling server boosts which improve the quality of life for small communities in the same server. Not bad ways of generating revenue but still lacking the loyalty they need to push them into the green.
While both options of either going public or selling to Microsoft have their respective benefits, I would personally think selling to Microsoft would be the smarter move. Interesting enough, Discord was built with the focus around gamers, but ⅓ of their current user base are not gamers. This ultimately helps them compete against companies like Slack, Microsoft Teams, etc. Now imagine bringing over discords enhanced features such as audio quality to microsoft teams - then they would be king of the castle. To conclude, it’s Microsoft's time to shine and they don’t want to miss out. While they watched Google acquire Youtube, Facebook with instagram and Whatsapp, Amazon with Twitch, it’s evident that Microsoft wants to build their own community too. I believe the content is the key here. Content allows companies to develop trust, bring engagement, help marketing, and act as the main fuel to consistent growth. Discord will allow Microsoft to flourish with over 140 million monthly active users that includes thousands of high profile YouTubers, creators, and gamers. I really hope they take this one home!
👀 Interesting Follows
Amazon Gets FDA Authorization For An At-Home COVID-19 Test Kit
Industry Clouds Could Be The Next Big Thing
Y Combinator Takes On The World
Linktree Raises $45 Million for Its 'Link in Bio' Social Commerce Service
Soon you’ll be able to order Taco Bell through text messages and emails
Finance, Summer Analyst (Citi)
Intern, Credit Research (Fiera Capital)
Quantitative Researcher - Intern (Point72)
Finance/Legal/Operations Intern (OpenFin)
Deloitte Risk & Financial Advisory Intern (Deloitte)
🎷 Fresh Finds
💯Thank You For Reading, See You Next Week!
What's up, my name is Evan Hiltunen! I am a recent finance grad from Indiana University and financial analyst @ Goldman Sachs. I have a strong passion for start-ups, finance, and technology, and I hope you find this newsletter informative!
I’d love your feedback - feel free to email me at firstname.lastname@example.org