Notes, details and other data from an incredibly busy week
Welcome back to The theinformationsuperhighway Exchange, a weekly newsletter for startups and markets. It is largely based on The daily column that is displayed for Extra Crunchbut free and made for your weekend reading.
Ready? Let's talk about money, startups and hot IPO rumors.
Was Snowflake's IPO mispriced or just misunderstood?
With an ocean of neat stuff to go through below, we're going to quickly start our thought bubble today focusing on Snowflake's initial public offering. Up front it was a huge success as a fundraiser for the data-driven unicorn.
It's about the discrepancy between the company's final IPO price of $ 120 and when it opened, which was around $ 245 per share. The usual forces were out on Twitter, arguing that billions were left on the table, with comments on the issue of a mis-priced IPO that even reached our friends at CNBC.
A good question, given the controversy, is how the company itself felt about its IPO price, given that it was the party that theoretically left billions of dollars on a metaphorical table. As it turns out, the CEO doesn't matter.
Forbes' Alex Konrad – a good guy, follow him on Twitter – caught up on the matter with Snowflake CEO Frank Slootman. He called the "chatter" about his company leaving money on the table "nonsense," adding that he could have fetched higher prices but that he "wanted to bring the group of investors that (Snowflake) wanted and ( er) I don't want to push them past the point where they really started to squeak. "
So Slootman found a new, higher price at which to rate his company on its debut. He got the investors he wanted. He brought Berkshire and Salesforce into the deal. And the company roared from the gate. What a terrible, terrible, not good mess on an IPO.
Also, I had a chat with a few SaaS VCs earlier this week and they largely failed to delve into the argument of the money on the table, given the assumption that a whole block of shares could be sold at the opening price stupid. Are IPOs perfect? Under no circumstance. Are bankers going for their own good? Yes. That doesn't mean Snowflake screwed it up, though.
No time to waste, let's get started:
- Lots of IPOs this week and they all did well. Snowflake was explosive while JFrog was just amazing. Sumo Logic and Unity had more modest debuts, but still got good results. Notes from JFrog and Sumo are executed the same.
- Disrupt has been a hell of a deal this week as the famous and aspiring tech guys show up to chat with theinformationsuperhighway about what's going on today and what's going on tomorrow. Here you can catch up on the sessions that I recommend. But I wanted to take a moment and thank the theinformationsuperhighway sales, partnership, and events teams. They killed it and got 0.1% of the love they deserve. Thank you.
- Why is Snowflake so special? This tweet from Jeff Richards of GGV has the story on a chart.
- What are the hottest categories for SaaS startups in 2020? We have you
- There's a new VC metric in town that startups can follow. People will remember the infamous T2D3 model, where startups should triple twice and then double three times. That five-year plan brought most companies to an ARR of $ 100 million. Now Shasta Ventures' Issac Roth has a new dispute model he calls the "C170R" and, according to an article by his company, he believes it could be the "new post-COVID SaaS standard". (We spoke to Roth the other day about API-focused startups.)
- So what is it In his own notes, it states, "If a startup entering the COVID season with sales of $ 2-20 million can generate 170% of its sales in 2019 and be in line with the new normal of remote." Obtaining new capital at good conditions are geared towards future corporate success. “He notes that there is less need to double or triple this year.
- Our thought bubble: If this catches on, many more SaaS startups will prove to be suitable for new rounds than we had thought. And with Shasta all-in at SaaS, that metric may be a welcome mat. I wonder which part of the VCs match Shasta's new model.
- Finally, there is no-code and low-code startups.
Miscellaneous and miscellaneous
Again, there is so much to do here that there is no room to waste words. Further:
- Chime has created an ocean of capital, which is remarkable for a number of reasons. First, a new valuation of $ 14.5 billion, up tens of percent from the early 2019 round and three times the late 2019 round. And it claims real EBITDA profitability. And with the company claiming that it will be ready to go public in 12 months, I'm hype about the company. After all, not every company that manages a major fintech review is in great shape.
- After going public this week, I phoned the CEO and CFO of JFrog to discuss the offer. The couple examined every IPO that took place during COVID in an attempt to get their company at a "fair price," adding that it is from here that the market will decide which number is the right one. CEO Shlomi Ben Haim also made a funny nod to a tweet comparing JFrog's opening rating to the price Microsoft paid for GitHub. I think this is the tweet.
- JFrog's pricing was based on the company's making money; H. The GAAP real net income for the last quarter. According to Jacob Shulman, CFO of JFrog, "Investors were impressed by the numbers" and also by his "efficient market model" which allowed him to gain "viral acceptance within the company".
- That last sentence sounds like efficient sales and marketing spending to us.
- Moved to Sumo Logic, which was also released this week (S-1 notes here). I caught up with the company's CTO, Christian Beedgen.
- I would just like to say that Beedgen is a pleasure to chat with. But more on the subject, the company's IPO went well and I wanted to learn more about the specifics of the market that sumo sees. After Beedgen showed me how he views his company's TAM ($ 50 billion) and market dynamics (not all winners), I asked about corporate customer sales disruptions that Slack mentioned in its latest earnings report. Beedgen said:
- "Personally, I don't see this as a systemic problem. (…) I think people in economies are very flexible and you know the new normal is what it is now. And you know these other people on the other side (of the phone), these companies they have to keep running, and they're going to keep figuring out how we can help. And they're going to find us, we're going to find them. I really don't see this as a systemic problem. "
- Good news for entrepreneurs everywhere!
- Wix has launched a non-VC fund that looks a bit like a VC fund. The group, known as Wix Capital, will "invest in technology innovators who are focused on the future of the web and who are designed to accelerate the way businesses do business in today's evolving digital landscape," the company said.
- Wix is a big public store these days with elements of low and no code at its core. (The stock market spoke to the company not long ago.)
- And finally, my friends, I call this the peloton effect and I will write about it when I find the time.
I'm talking to a Unity manager tonight, but it's too late to be included in this newsletter. Maybe next week. Hugs until then and stay safe.