Atlassian’s IPO is just part of its lofty goal for the workplace

One of Silicon Valley’s “unicorns” (that is, a tech company valued at over $1 billion), Atlassian is the company behind JIRA, HipChat, Confluence and BitBucket, all of which are aimed at making collaborative efforts within companies easier and more efficient. The company is one of Silicon Valley’s oft-fabled “unicorns” — that is, a company for which the valuation has surpassed the $1 billion dollar mark — and last week the company saw its shares jumping over the initial price of $21 to just over $27, where it has held for the most part. 

Atlassian was founded in 2002 and specializes in workplace software. Most of their products are aimed at streamlining workplace communication and simplifying collaboration in teams. 

HipChat, one of its most popular products, is an email-buster comparable to Slack that brings ongoing correspondence out of lengthy email threads and into a simple chat interface shared by teams and departments within a company. JIRA Software is a project-tracking software development tool. JIRA Service Desk is a task management platform that allows teams to coordinate the living, breathing, changing tasks that often become the foibles of service teams everywhere.

From BBC to Adobe and NVIDIA to Land Rover, Atlassian products are used by over fifty thousand teams worldwide. Which is great, but ultimately just the tip of the iceberg where the company’s concerned. With the successful IPO under their belts, Atlassian’s chasing down some seriously lofty goals.

“Our mission, ultimately, is to have every employee inside of every company using Atlassian products every day,” says Atlassian President Jay Simons. “And when you consider that there’s more than 800 million knowledge workers around the world, that’s a pretty big ambition and it’ll take a while to get there. The IPO doesn’t really change that. That’s basically been a goal of the company since inception.” 

A pretty big ambition, indeed. But it’s a pretty big market, too, and it’s no secret that email’s not particularly well-suited to the way that we work today. Inboxes that tend to get cluttered paired with our own abysmal skills when it comes to staying on top of the constant digital deluge, email’s become something of a dirty word in some circles. 

Though email’s something of a necessary evil that likely won’t be going anywhere (no matter how much I wish the opposite were true), Atlassian products exist largely to bring conversations and collaborative efforts that don’t belong in our inboxes into more appropriate arenas. Even with fifty thousand companies already onboard, there are still thousands of teams stuck in the cluttered trenches of email-only communication.

“I think there’s a tremendous amount of white space across teams with a lot of inefficient use of email,” says Simons. “I don’t think email’s going away anytime soon because it is an effective way to direct certain kinds of communication to people, but I do think that when you use our products, your inbox becomes a lot smarter, more directed and more appropriate for what email’s good at.” 

In Simons’ eyes, the successful IPO signals a recognition that what Atlassian’s doing is not only working, but that there’s room to grow—more tasks to manage, more email chains to prevent, more projects completed on-time with fewer hiccups and dropped balls. The way we work is changing, and the response yesterday would seem to suggest that Atlasssian’s going to be around to usher in some of these changes in the way we get things done.

“I think that the market and the investor enthusiasm recognizes that we’ve built a pretty special company,” says Simons, “and also recognizes that there’s a big opportunity in front of 800 million knowledge workers worldwide and teams all over the place that are trying to figure out how to work better together.” 

Square files to go public

Square filed an initial public offering today.
The payments company, which was co-founded by Jack Dorsey and Jim McKelvey in 2009, has been rumored to be planing a public offering for some time. Now it has filed its S-1 with the US Securities and Exchange Commission.
Square will be listed on the New York Stock Exchange with the “SQ” symbol. The NYSE became popular among tech companies looking to go public in 2013, after Nasdaq was widely perceived to have bungled Facebook’s public offering.
Dorsey serves as the company’s chief executive, and was also recently named the full-time CEO at Twitter, the other company he co-founded. Interestingly, Square mentions in the S-1 filling that Dorsey’s split attention between the two companies could be a risk factor.
Dorsey for his part does, however, explain his commitment to Square in a letter included in the filing:

I believe so much in the potential of this company to drive positive impact in my lifetime that over the past two years I have given over 15 million shares, or 20% of my own equity, back to both Square and the Start Small Foundation, a new organization I created to meaningfully invest in the folks who inspire us: artists, musicians, and local businesses, with a special focus on underserved communities around the world. The shares being made available for the directed share program in this offering are being sold by the Start Small Foundation, giving Square customers the ability to buy equity to support the Foundation. I have also committed to give 40 million more of my shares, an additional 10% of the company, to invest in this cause. I’d rather have a smaller part of something big than a bigger part of something small.

Fusion notes that even as Square’s revenues grew by $298 million between 2013 and 2014, its losses also grew by $50 million in the same period. (It drew $561 million in revenues in the first half of 2015 and lost $78 million in that time.)
Previous reports indicate that Square plans to complete its initial public offering by the end of the year. The company has not yet revealed its initial price range, nor how many of its shares it plans to sell in the offering.

Before IPO, Tinder says there’s no ‘dating apocalypse’

Tinder, a company that became popular by making it easy for people to reject potential mates, doesn’t deal well with rejection. Surprising? Maybe. Unfortunate for a company that claims it wants to remove barriers to making social connections? Definitely.

By now, you’ve probably heard about the late-night tweetstorm Tinder wrote in response to a Vanity Fair article claiming the swipe-centric service has led to what one of the piece’s millennial subjects called the “dating apocalypse.”

Others have already fact-checked both the Vanity Fair article, which stands accused of ignoring a nationally representative study in favor of a narrative informed by a series of anecdotes, and Tinder’s fevered response to the piece.

But another angle worth considering is whether or not Tinder, which is scheduled for an initial public offering alongside sister companies Match and OKCupid, did itself any favors by publicly responding to Vanity Fair’s story.

Tinder owner IAC said in June that it plans to spin off the Match Group — the division that houses IAC’s dating, fitness, and education-focused brands — as its own publicly-traded company during the fourth quarter of this year.

Of the brands managed by the Match Group, Tinder is expected to be one of the primary drivers of the newly-public company’s stock price, according to a MarketWatch report that examined investor interest in the prospective IPO.

Business Insider reported in July that Bank of America-Merrill Lynch said a “bullish scenario” could result in Tinder receiving a $3 billion valuation, given the increasing number of people willing to pay for its premium service.

Given all that, it’s understandable that Tinder would want to combat any negative publicity. Yet doing so with an apoplectic tweetstorm filled with dubious claims is strange (North Korea? Really?), and turned what could have been a single article about its place in society into a veritable flood of critical news coverage.

Why call more attention to a critical article? And, perhaps more important, why attempt to refute its contents with easily-debunked claims about your service being popular in a country where many people can’t use the Internet?

The short answer is that it won’t matter in the long run. Tinder’s users couldn’t care less about the Vanity Fair article, and might never have heard about the company’s response to it were it not for all the coverage it received.

Vanity Fair’s piece makes this clear even as it’s arguing that Tinder signals the end of dating. What are the majority of the story’s subjects doing while answering questions about their Tinder usage? Swiping through potential matches, reading messages out loud to their friends, and otherwise using Tinder.

While I can’t know what many of those same people were doing when the story was published, I suspect they were merely continuing to swipe, barely pausing with their thumbs poised above their phones before Tindering on.

Investors are unlikely to care, either. Tinder’s growth is solid, its users are obviously hooked, and the company’s swipe-to-act user interface has been copied ad nauseum. Tinder is ubiquitous; a negative story in a magazine read mostly by 45-year-old men probably isn’t going to change any of those things.

It’s fun to mock Tinder’s reaction to Vanity Fair — as well as the piece that inspired it — now. But most people have already forgotten, or perhaps never even knew, about all this hubbub, making it little more than a spectacle.

Tinder has not yet responded to a request for comment on this story.

Lawyer who sold fake shares in Facebook IPO gets 46 months in prison

In the months before Facebook became a public company in May 2012, shares in the social media network were the most sought-after investment opportunity in the company. Some people were so desperate to get them, they wired millions of dollars to a New Jersey lawyer who claimed to have the inside track on large blocks of shares.

The investment failed to pan out, however, since the lawyer, 61-year-old Fred Todd, was a Ponzi schemer who did not have access to any of the shares. Now, Todd will get to explore a new social network of his own — in federal prison, where he was sentenced to spend 46 months.

On Wednesday, the U.S. Attorney for New Jersey Paul Fischman announced the prison term, and a requirement for Todd to pay $6.53 million in restitution to his victims. A press release set out some of the details of the scheme:

In February 2012, Todd and his conspirators offered a pair of investors (referred to in the information as the “Facebook victims”) the opportunity to purchase large blocks of Facebook shares prior to the company’s initial public offering, or IPO, in May 2012. The offer was particularly attractive because large blocks of the shares were extremely difficult to get and were expected to increase in value at the time of the IPO. Weinstein and his conspirators did not actually have access to the shares.

Based on misrepresentations by the conspirators, the Facebook victims wired millions of dollars between February and March of 2012 to an account Weinstein and a conspirator controlled. Weinstein and another conspirator provided investors with false documents showing companies owned by various conspirators held assets, which would secure the Facebook victims’ investment.

In the years since the IPO, which turned out to be a short-term debacle for [company]Facebook[/company], the company’s shares have been on an upswing, trading today around $76.

Box IPO: What a long, strange trip it’s been

Box CEO Aaron Levie’s self-deprecating tweet on the day that the cloud-storage startup he co-founded in 2005 announced it was back on track to go public after months of delays pretty much summed up the collective enthusiasm of the tech community that’s been observing Box throughout the past year.

What seemed like a reason for the company to celebrate back in the spring of 2014 when the [company]Box[/company] made public its plans for an IPO turned out to be an elongated stretch of time that saw, among other things: Box wavering on its IPO plans on numerous occasions; raising a significant investment round; and unleashing a new product line that the company is hoping will make it a significant threat to competitors like [company]Google[/company], [company]Microsoft[/company] and [company]Citrix[/company].

It seemed like Box was just waiting for that perfect time to take the company public, and Levie even told Bloomberg Television in December that Box “should not have filed when we did,” citing a “market correction” that affected technology stocks.

But Box took advantage of the delay to work on its business. It’s tried to position itself as a serious player in the hot work-collaboration space, and the performance of its IPO could validate that strategy.

However, Box is not alone in the burgeoning field of work-collaboration, which appears to be one of the areas the cloud giants of Amazon, Google and Amazon will be battling for supremacy in now that the storage price wars seemed to have abated (for now). And, of course, it faces stiff competition with longtime rival Dropbox, who has made a similar push to invade the workspace through collaboration features.

Box is expected to go public this Friday, although a company spokesperson declined to confirm the exact timing. Will Box’s new enterprise product line and, as company filings show, an increase in revenue be enough to satisfy the stock market?

To answer this question, let’s take a look at how Box got to where it is now, starting from last spring.

The long road to an IPO

Box’s long road to an IPO began in earnest in March 2014 when the company filed the necessary paperwork with the SEC to get the gears in motion. A poor-performing marketplace put Box’s IPO plans on hold, but by early summer Box celebrated the fact that it landed General Electric as a customer, which would have 300,000 GE employees using the Box platform.

In July, Box received a $150 million funding round from private-equity firm TPG Capital and hedge fund Coatue Management, which valued the company at $2.4 billion. At the time, industry observers figured that the cash could buy the company some time for an eventual IPO in fall because the company was still plowing through money as it invested in sales and marketing — a common complaint for the company, but one that Levie seemed ready to defend as he told Re/Code before the company filed for an IPO and went quiet, “I would be the first to say we’ve been aggressive, but there is simply not another logical way to attack the market.”

If you were wondering why Box was spending so much on sales and marketing, in September Box had an answer: Box was working on a new product line that’s essentially a custom version of the Box platform that accommodates the needs of different industries, like retail, healthcare and media and entertainment.

As Gigaom Research’s Stowe Boyd told me, in order to sell these products Box needs a big sales staff that’s well-versed in different industries, especially as it aims to capture legacy clients that are part of regulated industries like healthcare.

Because companies like [company]IBM[/company], [company]Citrix[/company] and [company]Microsoft[/company] likely have been doing business deals with large companies in different industries for quite some time, it’s likely that they have sales teams that can speak the lingo. Box has had to build that (and is likely still building it), requiring it to invest a significant amount of money in sales and marketing staff that have the appropriate skill level and knowledge to capture new clients.

“Verticals—that makes things more complicated for them,” Boyd said. “They have to back up that rhetoric; it makes their sales cycle more complicated.”

Box CEO Aaron Levie hugs actor Jared Leto onstage at BoxWorks 2014. Photo by Jonathan Vanian/Gigaom

Box CEO Aaron Levie hugs actor Jared Leto onstage at BoxWorks 2014. Photo by Jonathan Vanian/Gigaom

In September Box also detailed an upcoming Box Workflow tool that it’s banking will be a hit in the workplace collaboration space; the product will include features like allowing companies to create timed notifications for time-sensitive documents, which Box will then ping the appropriate user though email or mobile device to address.

After making its product announcements, it seemed like fall was indeed the time for Box to go public as Alibaba’s huge IPO seemed like the right time to pounce on the market. Alas, the tech market took a bit of a downturn after the IPO and Box found itself again pushing back its big date with the public marketplace.

By mid-December, however, with both Hortonworks and New Relic both going public and becoming billion-dollar companies, the marketplace seemed stable enough for Box to finally reach the public market promised land.

About those financials…

This time around, Box is serious about going public, and in January the company detailed in its updated SEC filings that it’s planning to raise $186.9 million on Wall Street at a company valuation of $1.5 billion.

As Boyd pointed out, this new valuation is significantly lower than the $2.4 billion figure that was floated around last summer, but he believes that Box is “underplaying what the asking price for the IPO is so they have some headroom.”

The company doesn’t want to appear overconfident and end this drawn-out process on a “sour note,” he said.

Box has been growing in revenue per year since its founding and in 2014, it brought in $153.8 million in revenue for the nine-month period ending October 31; the prior year, Box took in $85.4 million in revenue.

[dataset id=”907258″]

As for losses, Box’s net loss went down from $125.2 million in 2013 to $121.5 million in 2014 for the same nine-month period that ended on October 31.

[dataset id=”907266″]

The good news is that Box’s net loss seems to have slowed down compared to its revenue, but the company is still spending a healthy amount of money on sales and marketing, which in 2014 for the nine-month period ending October 31 was $152.4 million as compared to $124.2 million in 2013.

[dataset id=”907267″]

With a new product line geared for specific industries, it’s clear Box will continue investing in sales and marketing to attract more clientele. In January 2013, the company had 689 employees and by the end of October 2014 it had 1,131 employees; it’s safe to assume that a good chunk of those new employees are sales and marketing people and as the company goes after more industries, like legal and financial, it’s only going to need to hire more.

“Certainly we’re all aware of Box’s sales and marketing spend, but they needed to garner marketshare in order to have the long term opportunity to monetize the platform,” wrote Forrester Research vice president and principal analyst Rob Koplowitz in an email. “If they have the seats, they can up-sell value over time.”

It will be worth watching what the company plans on doing with the $186.9 million it expects to raise and whether any of that cash will be used to pay off some of its accumulated deficit, which according to Box’s latest SEC filings, is at $482.7 million.

The SEC filings also show that Box plans to continue making “significant investments” into datacenter infrastructure, which is by no means a cheap investment; Google’s big data center in the Netherlands might cost the company $772 million, for example. Although to be fair, Box probably won’t be building anything to match Google’s scale just yet.

Structure 2012: Aaron Levie - Co-Founder and CEO, Box, Gary Orenstein - VP Products, Fusion-io

Structure 2012: Aaron Levie – Co-Founder and CEO, Box, Gary Orenstein – VP Products, Fusion-io

Building a competitive product

And therein lies Box’s big dilemma–it’s going to be hard to match the scale of companies like Google, Amazon or Microsoft. These companies can invest millions and millions into data centers and new products and Box doesn’t have nearly the amount of cash to compete dollar per dollar like those companies have been doing with each other.

The work-collaboration space is not where the three cloud giants are all deriving their primary income; that’s more of an ancillary feature that they can add to their cloud storage platforms as a way to further entice enterprise clients.

Forrester’s Koplowitz thinks Box has made a lot of progress on building features that distinguish it from rivals and that the company has clearly become more than just a cloud storage vendor. However, it remains to be seen if the company can make money on this path.

“They have a partner ecosystem that is helping them move in that direction,” wrote Koplowitz in an email. “So, the question is less ‘are they differentiating?’ and more ‘are they able to fully monetize their differentiation?’”

[dataset id=”907366″]

Dropbox faces a similar dilemma as Box, but it has an enormous user base and is prevalent among consumers who might be using Dropbox at work even though their office might encourage the use of a corporate storage account.

And then there’s Slack, a rising enterprise startup that’s gotten a lot of traction and seems poised to be a big player in the work-collaboration space. Its workplace chat service has been the talk of the town for users and developers, and it seems as if it’s also a trojan horse of sorts; in that once Slack infiltrates a client through chat, there are so many avenues it could infiltrate to make work a better experience for its users.

In September, the company bought the small startup Spaces, whose central technology is a customized document that users can collaborate together with on editing, graphics, annotations, etc.

Sound familiar? That’s because Box, Dropbox, Google, Amazon and Microsoft have all been working on similar projects.

The big takeaway from Box’s IPO is that the company is not going public as merely a file-sync-and-share company, but rather as an “enterprise content collaboration platform,” as it describes itself in its SEC filings.

The file-sync-and-share players have spent the past few years trying to get out of being merely cloud storage middlemen; Box rival Egnyte just this week said it wants to make a push into being a data management and analytics company.

Now that Box seems confident as a solid workplace collaboration platform after a 2014 that saw the company see-sawing with its IPO plans, it has the products in place that could potentially attract more big, legacy companies like GE.

The problem is making sure that it can attract enough of these lucrative contracts and retain clients so that it can finally be profitable. Box admits that this is a tough goal for the company and said in its SEC filings, “We cannot assure you that we will achieve profitability in the future or that, if we do become profitable, we will sustain profitability.”

Once a company goes public, the tolerance for big losses can fade away and you can look at Amazon as an example of a cloud company in bad graces with Wall Street. Box can continue putting in its “non-profitability disclaimer” in its SEC filings, but that’s more than likely not reassuring to the marketplace.

Investors who take the plunge Friday are hoping Box can reel in the big clients and stave off any attacks from the big-cloud providers or legacy IT companies who are eyeing the same customers. We’ll have to wait until the end of 2015 to see how that plays out.

Two charts that show why Uber’s valuation isn’t ridiculous

Uber’s latest funding brings the company into the stratosphere of private company valuations.

At $40 billion, Uber is believed to be four times more valuable than Airbnb, Snapchat, Palantir or Dropbox. Its valuation is eight times larger than Pinterest’s, fifty-seven times larger than Lyft’s, 100 times larger than Instacart’s.

The news sent the tech world into a tizzy. People called Uber’s new valuation eye-popping, ridiculous, absurd. Just like Uber’s last round of funding, it was heralded as proof of a bubble, an upcoming crash, the tech apocalypse, etc.

[dataset id=”898119″]

But when you plot Uber’s valuation compared to big public tech companies, it looks less dramatic. [company]Amazon[/company], [company]Facebook[/company], [company]Microsoft[/company], [company]Amazon[/company], [company]Oracle[/company] and others are — as you’d expect from mature companies — much larger by market cap than Uber’s current valuation. Twitter is much smaller. Investors are essentially saying that they think Uber will be nearly as valuable as [company]Yahoo[/company] or [company]eBay[/company] and more valuable than Twitter when it goes public. It’s not a totally outlandish conclusion for them to bet on, given current tech hype and market trends.

Uber’s staggering valuation says more about the changing nature of tech fundraising than it does about Uber investors’ ridiculousness. Companies are staying private longer, choosing to develop their product outside of the prying public market’s eyes. Uber is leading that trend, a pioneer for a new kind of growth model.

Without much precedent, it’s hard to know what Uber’s eventual IPO will look like. It has more money and time to hone its business, so it’s not entirely fair to compare is to the IPOs of yesteryear and call its valuation outsized. We’re playing by a new set of rules.

[dataset id=”898108″]

There’s another way to look at Uber’s valuation. CEO Travis Kalanick isn’t content for his company to remain a car-hailing app. He plans to move into urban logistics and shipping, doing everything from delivering food to transporting supplies. When Uber drops off kittens on National Cat Day, it’s not just a publicity stunt — it’s logistics testing.

On that note, perhaps Uber should be compared to public transportation, logistics and automotive corporations. Companies like [company]Ford[/company] and [company]Tesla[/company] are distant cousins to Uber, but given that Kalanick wants Uber to replace car ownership, they may be competitors down the line. The same goes for [company]FedEx[/company] and [company]UPS[/company].

Uber’s valuation puts it at less than half the market cap of UPS, but close to the market cap of FedEx ($51 billion). From an automotive standpoint, the numbers are even more optimistic, with Ford and [company]General Motors[/company]’ market caps not that much bigger than Uber’s valuation. Tesla and Hertz’s market caps, $29 billion and $11 billion respectively, are smaller than Uber’s $40 billion valuation.

Uber’s investors are essentially saying that they think when the company goes public, it will be worth at least half as much as GM and Ford and more than Tesla and Hertz.

[dataset id=”898118″]