
Intel to buy smart urban transit startup Moovit for $1B for its car division - 1cvmask
https://techcrunch.com/2020/05/03/intel-to-buy-smart-urban-transit-startup-moovit-for-1b-to-boost-its-autonomous-car-division/
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jackyinger
This sort of stuff is why I quit Intel and sold all my stock. In my opinion
(and I haven’t been following post-Kersanich Intel closely) Intel should be
focusing on their process and processors, I don’t think the execs really have
the will it would take to diversify.

These acquisitions almost always end up being run into the ground because
Intel is so used to turning the crank on their mature (read: awesomely
ubiquitous software support) CPU architecture that they don’t want to spend
much on R&D on things that aren’t proven money makers. But they keep trying to
div diversify in a very half-assed way because they have such a high market
share in CPUs (not that it is without legitimate threat from AMD) that to
continue to grow they want to hit new markets.

~~~
Traster
I actually disagree with your analysis, my experience with Intel was from an
acquisition. They decided they were going to do 'big bets' which involved
massively massively investing in a few areas. What happened, was they acquired
the company and told us to grow in certain areas enormously and quickly. So
it's not that they acquired and then cut R&D. The opposite happened, they
hugely increased R&D (sure they cut lots of other things that caused trouble),
but it was like winning the lottery, suddenly everyone could hire for
everything. So the message was "Get on and hire, because it won't be like this
forever, and if you fail your hiring target, you'll be stuck delivering big
projects with no staff". Immediately hiring became a mess, the weight of
bringing on all this new staff massively slowed everything down. In most ways
we ended up delivering less with twice the staff. Needless to say: this didn't
produce the results they wanted.

Fortunately for my team, Intel completely shitting the bed on 10nm meant that
all these problems were barely noticed - who can blame you if the silicon
isn't there.

The thing is, that when you pay a premium, overinvest and under-deliver you
end up with no choice in the exec team - and you end up 'cutting you losses'
and doing a McAfee.

~~~
hn_throwaway_99
It's amazing to me how often this story repeats itself in tech, yet the
results are almost always the same:

1\. Old, hugely successful company needs to find new growth areas.

2\. Company acquires company in high growth area (sometimes innovative,
sometimes not)

3\. Taking from the MBA playbook that higher investment equals more growth,
acquired company is given aggressive targets but also a huge budget to meet
them.

4\. Company goes on a massive, usually relatively untargeted hiring spree,
things become a major shitshow, acquired leadership team is eventually canned.

Instead of finding some realistic _product_ targets and then setting a budget
around what resources will be needed to attain those goals, the budget is
allocated based solely on desired revenue and somehow hiring all these people
without a clear plan will make that happen.

I'm genuinely curious, has this ever worked?

~~~
renewiltord
I think Google did it with YouTube if you want a B2C example but this has
happened many times in the B2B world successfully.

~~~
dmitriid
Survivor bias and all that. I wonder what the ratio is between

\- bought and turned into success

\- bought and integrated into the larger business

\- bought and closed after running into the ground

\- bought and then later spun off due to inability to create a successful
business or integrate.

Not just for Google, but across IT as a whole.

~~~
PaulHoule
The number I have heard (from maybe 15 years ago) is that "2/3 of corporate
mergers meet their goals." That was across a range of industries. Tech in 2020
might be different, there is a certain kind of mindlessness around
acquisitions that happens around technology sectors. For instance, AOL bought
Time Warner, regretted it, AT&T bought Time Warner, now the vulture funds like
Elliot Capital Management are circling and they will have the CEOs head.

AT&T's mistakes were made by people who were more technical than MBA, but it's
a consistent trope that "Google bought Company A" and then Company B brings
their salespeople to muster the next morning to inform them what's going to
happen at Company A, and the next sales retreat is fistbumps all around.

I wonder if we could put a break on mergers and acquisitions, not for the sake
of communities, workers, and competition, but just for the poor stockholders!

~~~
clairity
> "The number I have heard (from maybe 15 years ago) is that '2/3 of corporate
> mergers meet their goals.'"

my recollection is that it's closer to half. m&a deals tend to be executive
vanity projects as often as sound strategy.

~~~
calvinmorrison
Again it depends. Look at Church & Dwight, more known as the Arm & Hammer
company. Their strategy of expanding all over the grocery store cleaning isle
seems to have worked as they have a whole team of brands and brands at
different price premiums. They have bought smaller cpg companies successfully

~~~
clairity
yes, certainly there are successes, but it's good to realize that that's only
about half of attempts. if you're an involved shareholder, it's eminently
reasonable to be skeptical of executive strategies that feature m&a centrally.

~~~
ksec
And even with the half rate "successes" ( Success in terms that is actually
defined by the executive themselves ), most of them were done with a
miraculously talented team that normally has little to do with the executives.

Because in an ideal world you expect M&A to provide synergy, but it is often
where 1+1 = 1.5 or less, and at best successes are 1+1 = 2. What people should
be aiming for is 1+1 = 2.5 or more.

And recent Intel ( Post Andy Grove or Post Patrick Gelsinger ) has a track
record of both poor strategic decision, acquisition _and_ execution.

Note: That is M&A with respect to diversification.

~~~
clairity
yes, i refrained from using the word "synergy" because most people don't
differentiate the common pejorative understanding and it's M&A usage.

it's a fascinating component of how companies are often overvalued in m&a
activity.

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crazygringo
Wait... let's rewind. Why does Intel have an "Israeli automotive hub" from
acquiring "Mobileye, the autonomous driving company" in 2017?

It makes sense when a large company acquires a smaller one, or founds a
division from scratch, because it can provide that smaller company/company
with uniquely valuable resources. E.g. Google/Alphabet founding Waymo because
of Google's existing expertise in ML.

But how does expertise in processors translate to _any_ kind of advantage for
autonomous driving? Presumably the microprocessors in a self-driving car are
one of the most commoditized parts... who cares if it's Intel, AMD or ARM?

Does anyone "in the know" have a clue around Intel's strategy here?

I can only guess they want to repeat the "Intel Inside" marketing campaign of
the 1990's -- i.e. if they lost mobile, they don't want to lose cars too. But
then wouldn't they want to form strong subsidized partnerships, the way they
did with Intel Inside? Developing their own technology seems like it would
make the autonomous car industry view them as competitors, not partners, and
thus _less_ likely to use their chips.

What am I missing?

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detaro
NVidia has product lines specifically for this field. Tesla proudly announced
to the world that they made their own chip for autonomous driving. "Autonomous
driving" research/development right now means lots of Machine Learning, image
processing, ... High-performance stuff that benefits from GPU-like designs,
all the while the systems for that need to be reasonably energy-efficient and
build in a way that they'll survive in an automotive setting. They're not a
competitor to car companies because car companies typically don't want to
design chips themselves, they'll happily buy them if they can (Tesla is a
really odd one out in that regard, and even they'll use superior hardware made
by someone else if it makes sense). If it takes off across manufacturers,
Intel very much would like a slice of that pie instead of leaving it all to
NVidia&Co.

~~~
ineedasername
Sure, NVidia has chips that fit the needs of that field. Intel though has
bought the actual company.

My only explanation is that Intel may believe they would have trouble breaking
into that market with their own chips, and buying the company means they can
make it dogfood Intel's products. If successful, it strengthens their sales
argument to others.

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gallego2007
Interesting acquisition by Intel, but also equally surprising valuation at
$1B. I thought Moovit was entirely crowdsourced and made up primarily of
volunteers[1]... maybe that changed recently?

[1] [https://www.linkedin.com/pulse/crowdsourcing-just-ticket-
exp...](https://www.linkedin.com/pulse/crowdsourcing-just-ticket-
exponentially-grow-your-business-nir-erez)

~~~
303space
Also the article claims “800 million riders” which is astounding for an app
that is currently #36 in the navigation category (iOS App Store). Unless this
app is more popular than TikTok everywhere outside of the US they’ve gotta be
playing fast and loose with those usage statistics.

~~~
aeyes
Moovit is for public transportation and that is pretty much why it isn't big
in the US. Here it is #3 in navigation after Google Maps and Waze.

I couldn't live without it anymore, the city has probably around 500 bus
lines. Making 3 combinations isn't unusual and it works to the point where I
don't worry about researching a new route. Whenever you aren't commuting it is
your best option to finding a route.

Sometimes I spend a weekend in smaller cities I don't know well. They have bus
lines which you can't find online anywhere. But everything is on Moovit. This
has saved me so many hours, I feel like I should be paying for it.

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en4bz
Can someone create an equivalent of the Google Graveyard but for dumb Intel
acquisitions?

~~~
Zigurd
I nominate Spectron. It died twice I think: the corpse was sold to Dialogic,
then Dialogic was bought by Intel later on, and then there was more
spinoff/merger pinball.

The original idea was for Intel to wrest control of multimedia from Microsoft
and create an Intel controlled multimedia subsystem. They didn't actually
acquire Dragon for the speech recognition part, but Dragon's fate was even
worse.

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jSully24
This appears to be a very desperate move by a company just realizing the
desperate situation they find themselves in. I agree with others sentiment
that they need to find a way to get back to doing well what it is they know,
or used to know.

~~~
jeffbee
Yeah Intel really has their back against that wall, after all they are one of
the most highly capitalized businesses in human history, just recorded their
largest annual revenue in the history of the firm, and earn a profit of only
about $80000 per minute. Pure desperation down there in Santa Clara.

~~~
eldavido
Financial results are always a lagging indicator in tech. That doesn't mean
they aren't important, just that you can coast on an existing product line for
a really long time (decade+) and then everyone's "surprised" when unit sales
decline, and there's nothing else in the pipeline.

An example of this: Sears. Dominant retailer, completely missed the boat on
ecommerce, now bankrupt. Literally.

~~~
jeffbee
Microsoft missed the boat on mobile and now they are the biggest firm in the
universe.

~~~
uHuge
I do not see them, Nokia is minor, Win discontinued..?

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chx
Let me grab this occassion to draw attention to a lesser known feature of
Citymapper (not everywhere alas): it can make a public transit plan augmented
by a cab. This is something I have been doing without an app myself at my home
city in a very clear demonstration of the "time is money" principle. This is
one of the true differentiating capabilities between Citymapper, Moovit and
Google Maps, otherwise they would be quite similar.

~~~
cwhiz
I actually hate that feature and can’t figure out how to turn it off. It
thinks getting me within 1-2 miles of my destination and hailing a car is
better than being on a train for 20% longer but being much closer to where I
actually want to go. I outright stopped using the app because it’s too
annoying to make sure the suggested route doesn’t involving getting off a
train and catching a car.

~~~
skrtskrt
Use the Transit app, it is almost completely focused on city transit only +
walking.

It suggests ubers and bike shares, but they’re pushed down to the bottom of
the options list.

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toasterlovin
The other day I was defending buybacks and dividends on HN as policies that
protect owners from managers. These kinds of acquisitions are exactly what I
had in mind.

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saipraneeth
can someone explain the differences between Moovit, Transit and Google Maps..
seems to me that they solve the same problem..

~~~
aeyes
They do solve the same problem but Google Maps public transportation data is
not crowdsourced, if there is no GTFS feed then it has nothing. Living in a
3rd world country where we have many buses but little data I can tell you that
Moovit works much much better here.

~~~
pier25
Doesn’t google use waze for data?

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lawrenceyan
This in my opinion is just a bailout acquisition from Intel to Moovit, made to
make Intel look more innovative in the face of a stagnating processor division
while bailing out Moovit from bankruptcy.

~~~
fred_is_fred
If that's true why not wait a few months and buy it for say $100M? Maybe it's
not as splashy for Intel if they do that.

~~~
ksec
Intel Capital ( VC arm of Intel Crop ) is one of the early investor of Moovit.

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blackrock
Intel screwed up and missed the mobile phone revolution.

They’re probably trying to make sure they don’t miss out on the autonomous car
revolution. Which will likely require more chips, in both vehicles and
infrastructure.

But this is a huge gamble, as an infrastructure upgrade like this will cost
billions or trillions. And it may likely never happen. But if and when it
does, then Intel may be standing on the next wave of huge spending for its
technology.

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bfrog
What a terrible purchase. Moovit is worth exactly $0.

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Gys
Clearly that depends who you are asking

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bfrog
If your asking the former vp from Intel that transferred to moovit I think
he'd disagree strongly, your right. I'm sure he got nothing from the deal.

