Pivotal Buys Xtreme Labs for $65M in Cash

http://allthingsd.com/20131002/in-a-big-mobile-move-pivotal-buys-xtreme-labs-for-65-million-in-cash

by cpymchn • 13 years ago

61 32 13 years ago

So, does Xtreme Labs build custom mobile apps for enterprises? It is sort of hard to cut through all the buzzword bingo in the article.

blisse3• 13 years ago

Xtreme Labs builds mobile apps. Our portfolio includes the Facebook, Twitter, and MTV apps, to name a few. We are essentially a contractor, and work on all mobile platforms - Android, iOS, WP8, BB, and Web are the main ones I think.

Source: I work for XL (now part of Pivotal and Pivotal Labs).

jordanthoms2• 13 years ago

Not sure having worked on the Facebook and Twitter apps is a selling point - at least not the Android versions!

Timothee• 13 years ago

(now part of Pivotal Labs)

Ok, I'm now very confused. When I saw the title I thought "Pivotal Labs" for a second and then "oh no, the 'other' Pivotal that is not Pivotal Labs and which I have no idea what they're doing". I got confused and the past and realized (or thought at least) they were two different entities.

But now, you, as well as an investor quoted in the OP[0], say "Pivotal Labs". Are these two the same thing? Are these two different but related entities? A cursory look at each sites don't seem to mark them linked, though it does show that the OP is about Pivotal as in http://www.gopivotal.com/

Thanks for the clarification!

[0] Actually he's quoted like so: "Palihapitiya even noted that Xtreme had built a “Pivotal Labs for mobile.”", which in itself doesn't mean the buyer is Pivotal Labs, but, in the context, is confusing. It almost sounds like the post's author get the two confused as well. (unless, they're the same thing obviously)

adammichaelc2• 13 years ago

Writing is on the wall with mobile.

Here is a great presentation on the topic, Mobile is Eating the World. http://www.slideshare.net/bge20/2013-05-bea

Disclaimer: I'm biased. I work for http://mokriya.com

ceekay• 13 years ago

Nice portfolio!

adammichaelc2• 13 years ago

Thanks! We are having a blast working with such awesome folks.

mabbo• 13 years ago

Whenever I see "... for $X in Cash" I really want to believe they rolled up with a cardboard box full of money.

sanderjd2• 13 years ago

Interesting. Why a cardboard box? I picture a briefcase handcuffed to some sort of emissary.

jval• 13 years ago

I picture an old bus full of pennies.

veemjeem• 13 years ago

Unless it is a bank cheque, I don't think you can fit $65M in a briefcase. If we use breaking bad as reference, we'd need 6 of those 55 gallon barrels to transport $65M in cash, or a really really large cardboard box.

uladzislau• 13 years ago

The majority of stake in Xtreme Labs was bought by Chamath Palihapitiya one year ago for $20 million. http://allthingsd.com/20120925/chamath-palihapitiya-personal...

Now it's being sold for $65 million. I'm wondering what made Xtreme Labs three times as valuable in a year? And why Chamath sold it so quickly?

ChuckMcM• 13 years ago

You made a common error there, Chamath put in $20 for a 'majority' stake, which can be either 50.1% of the shares, or x% where X < 50.1 but represents the largest single block of shares (I've seen both types of stakes being called 'majority stakes')

Lets say it was 50.1% then the post money valuation of the company was $40M (not $20M) so in that scenario the growth in value was 50% (rather than 300%)

That said, since these things don't go into details, he may have lost money on the deal if the deal is structured more for retaining the talent than paying back the investors.

acchow• 13 years ago

It's hard to know for certain; some people use majority as >50.1%, some as "plurality".

001sky• 13 years ago

This is a good point, and also its worth another note (from the linked article):

Palihapitiya put $6 million into the company upfront, he said, and has committed $20 million over the next three years.

The article goes on to note that this was a personal investment, not an investment of his fund. So, all things considered, perhaps not so surprising that he chose to exit opportunistically.

tanzeeb• 13 years ago

For starters, Xtreme Labs has had 100% annual growth every year since 2007 -- http://www.xtremelabs.com/2013/01/how-to-double-your-growth-...

yapcguy• 13 years ago

Historical performance is not... you know the rest.

Anyway, there is no evidence in that blog post to verify there has been 100% annual growth rate.

Also, growth of WHAT? Is it growth of revenues? Number of employees? Number of customers?

chamakits• 13 years ago

As a bit offtopic, I've never "heard" of Pivotal directly regarding the kind of work that they do. But I recently started using Jasmine, and decided to look into who is behind it, and I see Pivotal.

I think, "Oh cool. Let's see what else they do.", and man, they fund so many open source projects that are considered "standard".

Just take a look:

http://pivotallabs.com/tools/

http://www.gopivotal.com/about-pivotal/community

Happy to see a company push open source forward as much.

rubyrescue• 13 years ago

This is surprising. Consultancies are generally worth 1.25x their annual revenue, or 5x their EBIDTA meaning they are doing 52mm in annual revenue or 13mm in EBIDTA. Perhaps the multiple is significantly higher for the client book.

VladRussian2• 13 years ago

hiring and onboarding 300 "hot" mobile developers (well more probably something like 100 devs plus 100 PM/mgr/etc plus 100 GSA) - this way they paid 200K/head and have them from day 1. Add client book too.

Pivotal Buys Xtreme Labs for $65M in Cash

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