You and I have been talking a lot about an emerging trend in the tech and venture world: what we'll call midsize private and public tech companies being acquisitive on the lower end of the spectrum, with $100 million to $1 billion acquisitions. Walk us through what's going on here and what you're seeing.

I've been reporting about a flurry of these deals. Last week I scooped that Datadog was buying a company called Eppo after trying to buy another experimentation company. Imagine these as the next-gen Optimizely companies. They tried to buy another one called Statsig, which I speculated would then raise another round. That actually got announced earlier today, I believe. So I was right on that one.

And then in my newsletter just earlier today, I revealed that they also tried to buy LaunchDarkly before they ended up buying Eppo, but couldn't agree on price. LaunchDarkly had been previously valued at $3 billion in 2021, obviously a frothy market back then. But my understanding from sources was that LaunchDarkly wanted closer to that previous valuation, and Datadog was looking much lower than that.

In between, I actually scooped a different deal, which was Databricks acquiring Neon, in a whole different area of databases and data, for about a billion dollars. That deal is still underway, according to sources. It could still fall through, but I feel confident that it's going to end up around that billion mark when it's finally done.

Just over the course of the past couple of months, you're seeing a lot of midsize tech M&A. Why?

I think there are a couple of things going on. There's dry powder at these big unicorns, the near-IPO or IPO'd companies, where they don't feel the pressure of quarterly earnings and being a public company in a turbulent market. But they have the cash reserves and the war chest that we would expect of the Microsofts of the past.

Look at a company like Databricks. They raised $15 billion earlier this year, $10 billion in equity and $5 billion in a credit facility or so. And that money was earmarked at the time partly for M&A. They are doing what they said they would do, and I think we're going to see them buy a bunch more companies. Look at OpenAI: again, valuable stock, near-IPO style company, a lot of cash maybe. They're going to make acquisitions. And even Datadog, which is a public company, I see as trying to pivot in this AI world.

So even though they do have the market pressures, companies like Snowflake and Datadog, which went public a few years ago, I think are going to be very active in this space too. So the next tier of companies are really going to be busy here. And it's a good time to be an AI or data startup.

You had the big three or four companies doing almost 100% of the acquisitions of meaningful scale in the tech world. And that was almost the exit path. If you were a startup talking to your VC, you would say, "My hope is, sure, maybe we IPO, but more likely we just get bought by Google." And that went on ice, because in the early part of the Biden administration, you had all of this renewed fervor against what we'll call big tech. Walk us through that evolution: why things were more on ice, and why do you think we're now thawing out?

This is also really funny timing, because I am interviewing Lina Khan tomorrow here in New York City at a conference. So it'll be very interesting to hear what she thinks about what has changed since she was in charge, and also what her legacy there is.

Let's not forget that some people in little tech or the startup world actually were not against Lina Khan trying to keep the biggest tech companies from over-consolidating. I think she spoke at a Founders Fund Hereticon or something, and people posted, "Is Lina Khan secretly based?" That was a meme.

We want to make sure we don't conflate things. There's the big tech versus little tech power grab. And then there's also: who is a good exit here? I think that's always a funny tension, especially for VCs, where you want the startups to be able to grow and stand up to big tech. And at the same time, as you noted, it's a great source of liquidity and an outcome. So I think there's a balancing act there.

It certainly feels like that next tier down of companies feel they have the green light to just go crazy. It's not going to be considered overly restrictive or monopolistic, and they have this cash. What will be really interesting to see is if that biggest tier of Facebook, Google, Microsoft, and Amazon also see open season here really soon. I'm not sure we know the answer there yet.

We did just see the tentative Wiz acquisition for $32 billion. So perhaps it's open season for everyone except Meta, as of now at least.

The Wiz deal is fascinating because, as your audience will probably know, we're all plugged-in tech junkies. That deal almost happened a year ago. The biggest thing I had heard sourcing around the time was that, especially on the Wiz side, but people on both sides, weren't sure the deal would go through. Could it get approved? And would a breakup fee then be enough? Would Wiz lose a step being caught in no man's land, as we saw happen with Figma and Adobe, and also Plaid and Visa before that?

So obviously something changed, and the money got better for Wiz, where that deal does happen. I'm very curious, Eric, how fast the Wiz-Google deal actually would go through, and if there's going to be real opposition to it. We don't know yet if that's a crazy outlier or if it is a door opener, at least for most of those companies.

Meta, as you noted, might be in a different situation. Kevin Systrom was testifying in DC not too long ago. I think people are looking to him more and more these days: why did you sell to Meta? Imagine what Instagram could be like. He spoke at Startup Grind, as did I last week. He got the whole balcony filled with people asking what he was thinking and what his regrets were. I was lucky to talk to a much smaller group about Upstarts, but it was really interesting to see Kevin speaking in that moment as well.

The Datadogs, the Databricks of the world: is this the beginning of a new trend over the next couple of years? Are others likely to follow the playbook, Snowflake, Cloudflare, these mid-to-large but not mega-cap tech companies?

My money's on yes. I'm betting, based on what I'm seeing from what I've reported, that those unicorns or recently public companies valued in the tens of billions will make a bunch of purchases.

I'm even hearing this at a much smaller scale. I wrote last week about Gamma, a startup that has reached $50 million in ARR despite only raising $23 million in venture capital. When I was talking to the CEO, Grant, about whether they would ever raise that unicorn round, he was saying, frankly, "We don't need to raise, so I don't really want to." One of the only reasons they would raise a funding round at a company like Gamma would be to make acquisitions. He said secondary for employees could be nice, and gobbling up companies could potentially be nice too.

So I think if you're a really healthy, fast-growing ARR startup, or you have that war chest, there are a lot of zombie companies out there, or at least companies that are not really valued at what they last raised at a couple of years ago. And they're up for grabs.

Is the through line here, at the end of the day, just AI mania, or is it something deeper about how the tech industry is reorganizing in 2025?

I think the lesson is, if you put AI in your name, you can be acquired. And if you put data in your name, you can buy them. No, I don't know. I do think there is a mania here. What you're seeing, though, is those data and cloud leaders who are maybe pre-generative AI trying to really ramp up their generative AI strategy. And if you can't do it in-house, you're going to buy your way.

Databricks previously bought Mosaic in AI. Tabular last year was another multi-billion dollar reported deal. So Databricks is going to aggressively catch up wherever it thinks it needs to. The CEO, Ali Ghodsi, is a killer. And I think you're going to see other companies execute that on a smaller scale.

And Databricks, of course, is not alone in its cadre of also trying to catch up. OpenAI and Windsurf is a whole different situation. We could probably talk for hours separately about what's going on there. But I think a similar FOMO and need to catch up is driving that too, broadly speaking.

I think you hit the nail on the head. At the end of the day, it's probably best distilled as some combination of, one, playing catch-up in a category or an area where you might be behind, and two, having .ai appended to your company's name, particularly if you're a public company, can't hurt. Alex, thanks for joining. It's great to see you, as always. We'll have you back soon.

Yeah, I'll keep reporting on it. Talk soon.