Not all SPACs are garbage, and the power of teamwork

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Happy Saturday! We are taking on two topics today. The first is in our coverage area. The second wasn't much. Let's go!

Not all SPACs are garbage

I missed the public debut of Alight Solutions. The company is based outside of Chicago and supports tens of millions of employees in the United States. It combined with a blank check company in July of last year.

I chatted with its CEO after it reported earnings. I want to noodle on with you about three things from the Alight report. In order.

• Not all SPACs are a mess: Today Alight Solutions is worth about $4.7 billion, and is trading a fraction above its pre-combination $10 per share price. That means that the company’s SPAC deal was valued pretty well, and that it is possible to take a company public using the method and not have it eat its own shorts in the following weeks, months and quarters. SoFi was, previously, our leading example of a SPAC combo that failed to flounder; we can add another name to the list.
• Some SPAC projections bear out: In its investor deck from its combination announcement from last January, Alight said that it expected to generate $363 million in BPaaS revenues in 2021. BPaaS stands for Business Process as a Service, and is the company’s SaaS-y service that is its fastest-growing revenue segment. In 2021, however, the company actually saw $390 million in BPaaS revenues. It beat on a key metric! That’s why the company is above water, I reckon.
• The idea of profitable growth: Why is it considered bad news in some circles if a tech company starts to pay a dividend? One line of thinking is that the choice to return cash to shareholders via regular disbursements is an indication that the company in question is out of places to deploy funds, which implies slower future growth. So we tend to see tech companies that aren’t goliaths simply grow like hell even at the expense of profits. Alight appears to sit between the two extremes, focusing on what Scholl described as profitable growth to TechCrunch. This, he explained, ensures that his company doesn’t “over-rotate” on any particular effort, and isn’t burning its ships on its BPaaS strategy; if it doesn’t work out long-term, the company will survive. Alight is rather profitable, so he’s speaking from a position of black ink, for reference. Still, it was interesting to talk to a company that has much in line with tech companies going through a software transition, but with a very different approach to balancing growth and profits. Interesting.

Something different now.

Teamwork

I write to you on Friday afternoons. I type up a little missive and contribute to Daily Crunch.

The Friday has been a hard day. Chris Gates is leaving TechCrunch for a new role because of economic uncertainty and the invasion of Ukraine. You probably don't know Chris, which is a sign that I haven't done enough to shout him out.

His last day was today, and he was a founding member of Equity. He will be gone by the time you read this. We worked together for over five years, recording hundreds of shows, suffering from failures, celebrating wins and generally making the show work as a team. He was there through host changes, the sale of our parent company, and so much more. It goes without saying that Equity is also Grace and Mary Ann andNatasha, and has had the pleasure of having Danny and Kate and Matthew and the others in the mix during its life. It is a group project.

I will miss working with Chris. His exit is a good reminder of teamwork.

The myth of the man is his smile. It's only fair to troll him with this because he posted it to Slack. The energy he brought was this.

This newsletter is written by me. Annie or Richard will read it. As he helped dream it up with me a few years ago, Henry often looks at it. The sales team prepares to include the correct advertising elements in our email software. Our tech crew makes it possible for it to be sent out to your inbox and posted on the site. I got my name at the top because I wrote the words. The product is the result of material and teamwork.

I have had better luck with teams than I have deserved. Most of the people I have worked with in my career have been people I have loved having in my life. Equity was worked on by Chris and I through weddings, the birth of kids, moves and more. You know, we did life together.

The Exchange lives generally in the area of the TechCrunch+ team. Walter, Annie, Ram, Anna and the rest of the team are wonderful people. We work together and I get to do more. I hope I'm returning the favor.

There is teamwork. It's the best. It makes it harder to break up at work.

Godspeed, Chris, in your next adventure. I look forward to being your #1 fan.

Alex.