Luxology & the Foundry merge

[dwigfor]

When I hear merger, I think Activision:Blizzard, Time Warner, etc.

When I hear acquisition, I think Autodesk, Adobe, Google, Apple, Microsoft.

[luceric]

there is a huge difference IMHO between a merge and an acquisition and this *is* an acquisition.

A merger means that both side are about equal size and the owners of both side own part of the new combined entity.

An acquisition means one side sold to the other, bigger side that has more money and the previous owner becomes only an employee.

So by marketing this as a merger, they are just bald face lying. I think you couldn't do this in a publically owned company because there are rules and stock holders are not stupid.

It's an interesting bit of info here, because luxo has all this CAD licensing of their renderer and some wrote "milions of CAD users" (which is probably b.s. as official source say "only" 300,000 CAD seats have access to the renderer (still a lot, of course) ) The Foundry doesn't have any mainstream product and therefore not huge revenue. However, they seem to have all this money for acquisition, which for me casts doubt about how well luxo was doing. You sell yourself when you cannot, or don't want, to continue alone. But usually when you cannot. As a point of reference, SideFX's business is estimated to about 6 million dollar a year.

[ActionArt]

As a casual observer with no vested interest, I'd have to say it looks like Luxology had money problems or just wanted more in order to speed up development. I think it's a fairly neutral event as far as users go and probably won't really effect anything.

If it had been bought out by a company with a similar product (say Maxon or SideFX as a loose example), that would have been a concern because it would have eliminated some competition like AD is so fond of doing. But, the Foundry has no similar product so their only interest will be to help develop and market which may or may not be a good thing as Luceric pointed out.

Luxology may now have more financing available but also probably more overhead and less freedom. One thing is likely, prices will probably go up.

[bottleofram]

Actually, SideFX and Luxology pairing would have been an interesting one...

@Greg
In all fairness, you should have anticipated defensiveness when you painted modo's future bright while simultaneously casting XSI's in shadow. Both are equally speculative, no?

There's no question that the relationship Luxology build with its userbase is very special, but i made an argument not too long ago that they had to in order to have any chance of even the smallest success. This is a fairly young company that put an immense effort to brake into an industry and, arguably, they did so by concurring consumer and prosumer domain first. The most vocal bunch since the merging was announced were exactly those hobbyists, freelancers, the small independent houses because they have the strongest ties to Luxology of old. Questioning Autodesk for their lack of such relationship and commitment is missing the point. Autodesk doesn't have to do this. I learned Maya in school. They had me by the balls before they even realized. Not only that, their complete philosophy revolves around getting into studios (and staying there) so it matters even less whether their internet presence is on the pair with Luxology or Pixologic or anyone else...

[Greg]

Yep, good post. Yep - I think one of the biggest hurdles for The Foundry/Luxology will be to penetrate AD's grip on educational institutions...no small feat.

It was definitely rude of me to speculate on SI's future in my first post on this forum...especially when it's been done to death : ) So apologies

Speculating on SI is old, but speculating on Lux/Foundry is new and fun : ). With regards to merger vs. acquisition, it is a matter of semantics (it's not an opinion...) and nobody knows how the deal was structured. It's being called a merger (and they have every right to do so) because that's how they want to treat it. When AD bought Naiad the purchasing and support was moved over to AD...now maybe Naiad will be like Mudbox and thrive under AD (who knows)...but it's identity was purposefully made AD. The Foundry and Luxology have spent a bunch of time (and will be spending money) doing the exact opposite. People who like Luxology will want to continue dealing with them..and they can. They're all still there, I went over to Lux HQ yesterday and they looked like they usually do (never leaving their computers).

Now...was Naiad struggling? Was Mudbox struggling? Was Instagram struggling when Facebook bought them for a billion(!)? There's 2 opportune times for a deal like that. The one everybody strives for is when your company is at the top of it's game and has the highest valuation, that's the best time to do a deal. The worst time is when you're circling the drain. Unfortunately in this industry SI and Maya were not in good shape when they were picked up....so people tend to assume that's how it is. Luxology was not circling the drain..I've known these guys for years and they've been steadily expanding, when Brad says this was their most profitable year ever you can call him a liar if you want...but it makes sense that their biggest release ever was their best selling one and that they merged when their valuation was at it's highest (which is what you **want**). Nobody knows the financial details of Luxology's licensing agreement with Bently and Dassault systems..or the value of their patent porfolio, but it's safe to assume those factors played a role. They were an extremely attractive company for any suitor especially one that could make immediate use of their technology (they were already collaborating with The Foundry on a project for ILM) and wants a foot in the door of the Gaming and Design space (where the Foundry's presence is slim and none). Nobody knows the details of the stock/cash transaction and what the Luxology founders ownership in the The Foundry is now. We do know that the Luxology website didn't vanish...the product didn't vanish...the development team didn't vanish and the support didn't vanish. We also know they're trying tremendously hard to alleviate all the fear. So let's take these facts into consideration while speculating.

-G

Actually, SideFX and Luxology pairing would have been an interesting one...

@Greg
In all fairness, you should have anticipated defensiveness when you painted modo's future bright while simultaneously casting XSI's in shadow. Both are equally speculative, no?

There's no question that the relationship Luxology build with its userbase is very special, but i made an argument not too long ago that they had to in order to have any chance of even the smallest success. This is a fairly young company that put an immense effort to brake into an industry and, arguably, they did so by concurring a consumer and prosumer domain first. The most vocal bunch since the merging was announced were exactly those hobbyists, freelancers, the small independent houses because they have the strongest ties to Luxology of old. Questioning Autodesk for their lack of such relaisionsip and commitment is missing the point. Autodesk doesn't have to do this. I learned Maya in school. They had me by the balls before they even realized. Not only that, their complete philosophy revolves around getting into studios (and staying there) so it matters even less whether their internet presence is on the pair of Luxology or Pixologic or anyone else...

[Mathaeus]

Regarding the '5 years for a half baked (too clicks) CA' I have no idea what you're talking about. CA was just a recent development (I've been on the beta team for well over 5 years and the deformation system wasn't developed until the 601 cycle..period) and I don't see any more clicks than when I do something in Maya. Of course it's not as refined as SI or Maya..and it won't be in 701 either, but that's not really the point of this thread - is it? Don't be so defensive, my point is that the Foundry deal will almost certainly offer SI users a more mature product choice at some point...or at the very least a nice renderer.

-G

Well I don't know about Maya, but in XSI or Max, an ordinary task such as adding a new bone to existing envelope, requires exactly two clicks, in Blender, about four of five. In Modo, if I'm correct it's impossible, or it is..... by using the new node thing, which btw operates directly on matrices. Sooo user friendly, what else to say Or, all that beauty modes for hair interpolation, even more user friendly
With all due respect to your emotions, all what I recognized in Modo 601, it was totally erratic development through very long time. Hard to learn, easy to forget. Ten years old software, is it "young" ? I don't think so.
Anyway thanks for info about rigging in 701 . BTW you're Lightwaver in soul, aren't you ("CA" ... )

[luceric]

about mergers and acquisition again .. Yes mudbox and naiaid were struggling. Instagram made no money at all the fact facebook got into a crazy high bidding war is not relevant to our topic. Nobody buys anything at the top of their valuation unless their poor businessmen. And nobody sells when their making a lot of money and the future is bright unless that's their exit plan and the want to quit the business and cash out. But you dont have to be circling the drain either. The fact that there is a separate website and brand doesnt mean luxology is independant and not getting acquired. Softimage always had their own website under microsoft and avid and we were still not in control of our destiny, and definitely not "merged" with microsoft.
Brad himself said they're calling it a merger because it sounds better, even though it's an acquisition, hizari reprinted that quote here.

[Bellsey]

Mergers and acquisitions can be a complicated business but the reasons why they happen can be very simple. I remember when I was at EA (who made many acquisitions), talking with someone who explained alot about how things often work.

Very often its comes down to a few simple things: Tools; Tech; Talent; Market.
Tools -the company you want might have a complimentry software and tools that you want to add to yours.
Tech - other than the existing tools, there could be the tech (and potential future tech) that someone has that you want to add or implement into your offerings.
Talent - R&D and development costs money and you need to hire the right people. So rather than try and build a dept from nothing, it can be better to buy a going concern.
Market - You could be loosing ground to a competitor, or you might want to enter a new market but you have no product. So rather than build one you can, again, buy a going concern.

Of course all of these four overlap each other and if you make the right move, you can kill 3-4 birds with one stone, so to speak. Companies don't have to be doing well or badly to be acquired, but timing is important.

As for the various companies mentioned, I don't think Skymatter, Niaiad were really struggling (AFAIK), neither were Alias or Softimage for that matter. The timing just seemed to be right. They had the right tech/software (combined with other factors) at the right time, and it was something that someone wanted, and wanted before anyone else got hold of it.

[McNistor]

"merging", "acquisition", doesn't really matters which, when Autodesk does it it's bad, when other companies do it it's not.
Deal with it! (to bellsey and luceric)

[bottleofram]

For what it's worth, the term also slipped to John Knoll here at about 10:12:

http://www.fxguide.com/fxguidetv/fxguid ... d-hotel-t/

Could be just a bad choice of words, but him being so involved in this whole deal, and from the way they talk about the "not-so-immediate-but-rather-eventual" future of modo, i get the feeling its going to be them working to fill the needs of ILM, more than anything else.

Which, in it self, doesnt have be bad for modo at all. I mean, just look at maya...





 

[Greg]

Bellsey, thanks for the sane post. Luceric...I think we are actually on the same page about this. I've said (repeatedly) the merger/acquisition is semantics (we are on the same page here)..it's just a term at the end of the day. Did I say anywhere that decision making wouldn't change at Luxology? Of course things will change, the point is they are making an effort to keep as much in place as possible...right? agree? MS may have tried this with Softimage for similar reasons....it probably helped Soft to a degree at the time. There's no disagreement here.

Yes mudbox and naiaid were struggling.

I'm not sure where you are getting that Naiad and Mudbox were struggling - what proof do you have of that? They were at the height of their popularity when they were acquired (which is why the founders did the deal and why AD was interested...they were a success as is, not acquired for some obscure patent....well Naiad maybe was).

Nobody buys anything at the top of their valuation unless their poor businessmen.

I'm sorry but you are very wrong...that not how business is done. Companies routinely pay more than a company's valuation if it fits their business strategy. No offense but your idea of how this works is a little....off. When I came so SV at the height of the dot-com boom it was 10-20x Gross now it's around 1.5x. This is why Instagram (and a load of other companies) are relevant to this discussion. They have numerous rounds of financing and don't need to 'make money' to have value, they were at the height of their popularity and they were bought for way more than their valuation. TONS of companies sell when they are making a lot of money - good lord man! TONS of companies get bought WAY OVER THEIR VALUATION. AD just bought some stupid web video company for more than they paid for Maya and Soft combined. It happens ALL THE TIME. Obviously Luxology thinks they can do better as part of The Foundery - it doesn't mean they weren't already doing well. Companies sell all the time even when they are doing well - it all depends on the terms of deal.

Mathaeus, as far as adding a new bone....um...setup mode, add a bone and bind it? I think it's 3 clicks. So do you always come off as a sarcastic dick? Or is this actually how you communicate with people?

I will go ahead and go back to lurking now, this was an epic fail.

-Greg

[McNistor]

Edit: I deleted what I previously said in the hope this will not ignite unnecessarily into a fight of - I almost said arguments, but there were none.

[Greg]

meh - my post was the epic fail. I stand by the other statement. : )

G

[Bellsey]

Acquistion/Merger, well they're not just word and in the business world there are definite differences. It's just that right things aren't that clear, but I'm sure like anything eventual details in the small print will emerge. It could well be a merger as they say as both are known 'brands; in the market and new parent holding company could be set up, so that both parties can operate autonomously but also together. Though I'm completely guessing here.

Incidently, Socialcam was mentioned. This is hardly a 'stupid' web video company, according to various sources they were the largest Facebook-connected app, second only to Youtube as the most popular moible video app, and they were being courted by potential buyers. As for why Autodesk acquired them, I don't know but again you could apply any one of my 4 previous points.
For $60million it looks like a smart buy, and it wasn't more than Maya and Softimage combined. Autodesk acquired Alias for just shy of $200million. Alias wasn't just about Maya, they also had StudioTools, which was (and still is) used alot in the manufactoring/automotive industry.

[Greg]

Yep, you're right (off the cuff there) - Maya was a lot more. SI was what? 17mil? or was it 30? I don't remember... At any rate it was at least double what they paid for SI. Remember winAMP? Way back in the day...that was popular, I think it went for around 60mil...that didn't work out so well. I'm just saying...as far as 'stupid' maybe they will prove me wrong but it isn't exactly in their wheelhouse and all the people recently laid off probably feel a little differently. I mean...that money could have been spent developing SI..Maya...you know, the stuff we pay our subscription for. (btw - I'm not going after you....in my lurking you seem to take an inordinate amount of beating here and I applaud you for sticking around)

-G

[Letterbox]

Your forgetting that SI was never going to sell for huge amounts, not when it was know that the ceo of Avid was (and has) going to slash and burn to get Avid back to it's core competencies.

Bellsey, there is another item that should be on your list, 'Barrier to Entry'.