Technology

The former Tesla employee who was fired and then sued by the electric vehicle automaker has filed a formal whistleblower tip tothe U.S. Securities and Exchange Commission alleging the company has misled investors and put its customers at risk.

Martin Tripp has retained Meissner Associates, awhistleblower, securities, investment fraud and employment law firm to represent him before the SEC. Tesla did not respond to questions about the whistleblower tip.

The filing is the latest blow in a bout between Tesla, its CEO Elon Musk and Tripp.

Tesla filed a lawsuit on June 20 against Tripp for $1 million, alleging the man, who worked as a process technician at the massive battery factory near Reno, hacked the companyconfidential and trade secret information and transferred that information to third parties, according to court documents. The lawsuit also claims the employee leaked false information to the media.

A mere 24 hours later a combative email exchange between Musk and Tripp emerged. Tesla also notified police based on a tip to its customer service line that Tripp had allegedly told a friend he was going to attack the companyGigafactory in Sparks, Nevada.Tripp has denied this and the Storey County Sheriffdepartment, which investigated, told TechCrunch they found no credible threat.

Tripp is turning to an attorney with a successful whistleblower track record. The firm obtained a more than $22 million judgment from the SEC on behalf of a Monsanto whistleblower in 2016.

Trippwhistleblower tip, which was filed July 6,alleges that Tesla knowingly manufactured batteries with punctured holes possibly impacting hundreds of cars on the road; misled the investing public as to the numbers of Model 3s actually being produced each week by as much as 44 percent; and lowered vehicle specifications and systemically used scrap and waste material in vehicles, all so as to meet production quotas, according to a statement from Meissner Associates.

Tesla has said in the past that Trippallegations are false and contend that he is not a whistleblower, but someone who hacked and stole confidential information.

Tripp says he has been threatened and harassed in the days since he revealed information about Tesla to the media.

&Getting the truth out has become a nightmare. While we have had to relocate due to threats and harassment, both online and offline, making it difficult to press on, my family and I have also received a ton of support, which keeps us going,& Tripp said in a statement. &I hope that, in the end, my fight will make it easier for future whistleblowers to come forward without fear of repercussions like those I have endured.&

Meissner will not handle the federal lawsuit that Tesla filed against Tripp. He is currently looking for an attorney to represent him in the case, the firmmanaging member Stuart Meissnertold TechCrunch.

Meissner, a former assistant district attorney in Manhattan and assistant New York state attorney general, said Tesla filed its lawsuit against Tripp and engaged in a PR campaign to defame him in a calculated effort to ruin his reputation and silence him and other potential Tesla whistleblowers from coming forward.

Have we reached &peak software&

Just like the idea of &peak oil&—the hypothetical point at which global oil production could max out—you could say we&re approaching a saturation point for venture-capital investments in software companies.

Recent data from Pitchbook shows that venture investing in software companies has plateaued: The amount of VC money invested in these companies&$32 billion last year—remained roughly constant over the last four years. The actual number of venture-backed software investments, mostly for business-focused companies, has actually declined, from 4,068 in 2014 to 2,980 last year.

But software is not, in fact, a declining industry. As I explore with my colleague Neeraj Agrawal in a recent report calledSoftware 2018, released last month, a closer look at the Pitchbook data shows that the falloff in software deal volumes is primarily in the Bay Area, where an overheated market has boosted valuations and caused some investors to temporarily pull back. Investment in other U.S. regions, and globally, is actually going up. Investment in software companies based in Europe, Canada and Australia/New Zealand, for example, was $5.4 billion in 2017, up nearly 69% from the previous year.

Perhaps more important, a number of broader, global mega trends continue to fuel software innovation today, promising more new companies and more new jobs. These trends include everything from the rise of artificial intelligence, which is pushing software into new fields like autonomous driving, to the recent corporate tax cuts in the U.S., which could free up hundreds of billions of dollars for big corporations to buy up software startups.

In Mary Meekerannual, consumer-focused Internet Trends reportin late May.But some of the key trends we see shaping the global, mostly business-focused (or enterprise) software market may signal a rebirth.

(Photo by Tomohiro Ohsumi/Getty Images)

Softbank: Not just for consumer companies anymore

Softbanknew, $100 billion Vision Fund has had a huge impact on the technology industry already, given the Japanese firmability to essentially play kingmaker in a given technology market by making a huge investment of hundreds of millions of dollars in one company. This, obviously, makes it extremely difficult for competitors to keep up in terms of building market share. And if a company declines Softbankmoney, therethe potentially lethal possibility that Softbank could fund a competitor, essentially snuffing out the first company.

Whatless noticed, however, is that Softbank is investing in many business-focused software companies, not just big consumer names like Uber, FlipKart and SoFi. In the last two weeks, Softbank put $2.25 billion into GMCruise business unit for autonomous driving and $250 million into secondary storage vendor Cohesity*, for example and has backed other B2B players such as construction/building-software outfit Katerra; real-estate software company Compass; and workplace chat app Slack.

With these investments and others, Softbank is accelerating the pace of growth in many key software markets and likely also dampening these companies& IPO prospects, since companies receiving several hundred million dollars from the Japanese company face less of a financial need to go public. Softbank is essentially taking the place of an IPO.

Image: Bryce Durbin/TechCrunch

More software means less hardware, more robots

The continuing march of software innovation isn&t great for everyone—losers in this picture could include hardware vendors and people with jobs that can be automated by smart, software-powered robots. (Yes, even lawyers and doctors could be affected—itnot just truck drivers.)

The implications of artificial intelligence on the job market, and the auto industry, have been widely discussed. Less noticed, though, are the shifting growth rates in cloud-based IT gear versus traditional IT hardware, the technology that powers large corporations and other organizations. IDC predicts that by 2020, corporate spending on cloud-infrastructure software will finally exceed spending on non-cloud IT infrastructure—meaning all those boxes inside corporate data centers from vendors like Dell, IBM, Cisco, H-P etc. Many of those companies are trying to figure out their cloud services approach to stay relevant.

Lower taxes = more software M-A

Not everyone loves the Trump administrationpolicies, but if you&re a software CEO, you might be a fan of the administrationnew tax bill. Thatbecause the 2017 bill could be a boon for software-industry M-A. Two key components of the new law—the reduced rate charged to companies to repatriate cash from overseas, and the lowering of the corporate tax rate to 21% from 35%&could leave many big tech acquirers with new war chests, analysts believe.

According to investment bank Qatalyst Partners, both changes could leave a group of the largest traditional tech-company acquirers with an additional $400 billion to spend, if they repatriate money from overseas. This would be enough to buy 50 leading software companies today, according to Qatalyst. We have already seen some this with the recent acquisitions of GitHub by Microsoft ($7.5B) and Adaptive Insight by Workday ($1.55B) and Q1 deals like MuleSoft by Salesforce ($6.5B) and CallidusCloud by SAP ($2.4B).

The traditional tech acquirers could be more receptive to acquisitions than ever these days, given that the easy, low-cost cloud business model has allowed a range of young tech upstarts to attack many parts of their businesses from all angles. Often, the easiest solution is for the big tech companies to buy the upstarts.

Niche is nice for software

As software transforms big, well-known corporate markets—like datacenter software, and technology for functions like human resources, sales and marketing—it is also making inroads into much more narrow industries and corporate functions. The low cost of the cloud makes it easy for every industry, from physical therapy to prison management to mortgage lending, to grow its own, customized software, usually deployed for tasks like operations and customer management. Often there are multiple firms vying for customers (and investor dollars) today in these specialized fields.

Similarly, software is fueling extremely specialized companies to serve business needs inside companies today. These include companies as varied as DocuSign, which has built a multi-billion dollar public company focusing exclusively on document signing, and Carta, which sells technology to help companies manage their financial cap tables.

Mary Meeker is right that consumer Internet trends like the rise of online wallets, subscription services for certain goods and increasing oversight of social media by regulators will have big economic implications in the years to come. But we humbly offer that business software is a pretty big economic driver too—you just have to work a little harder to figure out the implications for businesses and the markets.