Hypothesis: For a large TechCo, investing in a startup where money invested comes back as fees for TechCo's own products is a good deal for the TechCo Management.
It’s a great way to pad revenues - which leads to better executive compensation.
If the investment does well, we look like visionaries.
If it doesn’t, ah well, only the shareholders lost money.
3 questions:
Is it a Term Loan or is it a “Strategic Investment”?
How much was invested?
How much is going back to Microsoft as fees for Azure or other products (less tax leakages)?
Update (20 Aug 2021):
$5mn invested at $9.6bn valuation. I cant stop laughing for some reason.
Context Here:
BRENT BRACELIN, Piper Sandler: Good afternoon and thanks for taking the call. A question for you really around $10 million-plus contracts. You called out momentum this quarter and last quarter. My question is around the drivers of these larger enterprise commitments. Is this driven by just the larger scope of deals or are you seeing kind of broader attach rate across the whole breadth of Microsoft products? Thanks.
AMY HOOD: Thanks, Brent. Maybe, Satya, I’ll take this one first, and if you want to add anything.
Brent, unfortunately I’m going to answer, it’s everything. And let me talk about why I say that. When you see the size of the contracts increase, it’s about the entire scope of what’s offered under the Microsoft cloud. We’re seeing both really strong renewals of our core contracts, really strong additions across Dynamics, Power Apps, Power Automate, M365, Premium SKUs, security, compliance, voice, which of course increases those commitment sizes.
And you’re seeing the addition of Azure commitments, which we often talk about as these multiyear longer term contracts. And so then you do, of course, see them just have longer duration, especially in the case of Azure.
In many ways, what we focus on are the components that make up the larger contracts, is each component being additive to selling the value that’s present across all of our pieces of the Microsoft cloud?
This was a good execution quarter for us. You see it in the bookings number even more. When you have a declining expiry base and then bookings growth that’s that high, you have to do all those things well. And that’s, I think, really what’s reflected ultimately and transactionally meaning those larger $10 million-plus contracts being done.