Welcome back to The ProWellTech exchange, a weekly newsletter from startups and markets for you to enjoy on the weekend. It's largely based on the daily column that appears on Extra Crunch, but free and made for you to enjoy on the weekend.
Ready? Let's talk about money, emerging companies and hot IPO rumors.
Unfortunately, the best news of the week doesn't fit here
So far this little newsletter has exceeded performance expectations and has quickly become my favorite thing to write every week. Unfortunately, however, it does have a theme it's at kind it's at return. Which means I will not write his opening column on the Epic-Apple payment brouhaha. Alas.
But do not worry. In our world of markets and startups, there was a lot to overcome.
That is to say, a number of unicorns you know by name seem to be getting closer and closer to the public. There are some big names that are about to archive or are heading towards public debut and we are getting more and better information than before.
I tried to sum it up a bit this Thursday, but let's narrow it down and just talk about the mechanics of the IPO:
- Palantir could head the list in September. Is it advice? Is it a software company? Is it a mix of both? I do not know? Don't you want to give it a price? Just list it directly! Seriously that we are so close to a Palantir IPO is a combination of that and exciting. (Read more about her growth story here.)
- Not only is Airbnb's IPO back, it could be unveiled this month and go public before the end of the year. And second-quarter financial data leaked. The damage in perspective: After 842 million dollars in revenue in the first quarter of 2020, the company recorded 341 million dollars in the second quarter. And in the year ago Q2 made a flat billy north in the top line.
- A queue on Airbnb. Lyft and Uber haven't seen their value drop as much as their revenue in 2020. So, there's a return story to tell that investors are willing to buy. The fact that Uber and Lyft are still talking about adjusted profitability obviously helped their case. However, if Airbnb can chart a path back to its former financial position, investors may be willing to overlook its summer results.
- Stripe has hired a CFO. It's a game, even if we don't expect a release by 2020.
Adding a little more, Coinbase is still expected to debut perhaps in early 2021, and DoorDash is somewhere behind the scenes.
And then there are the companies that are IPO-scale and just ... aren't going public because they're enjoying long tours of the late-stage startup market funded by the generosity of wealthy relatives. Or late stage venture funds. Everything. Do you understand what I mean. Snowflake has a recurring annual revenue of $ 400 million, and it is private. Wild.
We, the audience reading S-1, are hungry for f ****** numbers. Give it to us!
Market Notes
This week's market notes are a bit different than usual as we have two longer topics, instead of a series of unimportant items.
The Exchange recently caught up with the CEOs of Wix and Cloudinary, to talk about their companies (the former is public, the latter is private) and how they are doing during COVID-19.
I know we're all a little tired of talking about the pandemic, but how it changed the business landscape is probably the single biggest story of the year in our world. So, let's see what we've learned from talking to executives.
Cloudinary- ProWellTech spoke to Cloudinary media management service in January of 2020 because it was a company that had reached ARR $ 60 million with no outside capital. It sold secondary stakes here and there to outsiders (Bessemer, Salesforce Ventures), but paid for its own growth. In January, CEO Itai Lahan said his company never lacked what it needed to continue to grow and "get to the next level."
- So what's happening at Cloudinary now that we're deep in the pandemic business cycle? Comparing his company to a bulldozer when discussing how Cloudinary operates compared to some startups, Lahan said his market was diverse - e-commerce as a segment isn't growing as fast as the company expected, but customers. social networks had grown rapidly in April, and so on.
- Cloudinary itself is still growing, and its CEO stressed that he didn't have to lay off staff during the pandemic. Cloudinary burned some money for a few months earlier in the year, but remains self-fueled with sufficient resources according to the CEO.
- Cloudinary VP of Marketing Sanjay Sarathy was also on call, so I asked him if he agreed with Lahan that he had all the resources he needed. He predictably agreed, but he pointed out something that stuck in my head. According to Sarathy, having both self serve is corporate sales have been useful; with two market paths, Cloudinary can balance one with the other, making me wonder why more companies don't do the same.
- Finally, the three of us reflected on the impact that high ratings have on some startup choices. If ARR is highly valued by investors, startups may be pursuing less efficient growth than they would otherwise because they have some incentive to do so. Cloudinary isn't chasing VC markups in the same way, so its world is a little different. The company remains extremely interesting and we will contact you in a few months.
- Wix recently reported earnings, and I spoke on the phone with its CEO Avishai Abrahami to talk about its achievements, and specifically its pandemic-era marketing spend. When some companies are cutting costs and lowering spending, Wix invested $ 119.3 million in sales and marketing in the second quarter, up from $ 95.2 million in the first quarter of 2020 and $ 71.3 million in the second quarter of 2019.
- What's up with that? In short, Wix has caught the headwinds of accelerating digital transformation and decided, instead of just enjoying a boost, to invest heavily to grow even faster. This costs money, but the company is pretty excited about how short its payback cycle is for those expenses. The company said more than half of the second-quarter marketing spend (60%) was returned to the company in cash (part of the revenue is not earned, of course, and will be prorated over time).
- "We are responding to this continued growing demand by increasing our marketing investment, which based on our historical data will drive continued revenue collection and growth in the foreseeable future," the company said during its earnings cycle.
- During our conversation, Abraham said that even in places where the pandemic has subsided somewhat, the world has not returned to what it was pre-pandemic. The acceleration of digital transformation, therefore, is perhaps not a short-term leap, but a complete reorganization of the way business is done.
- Wix also launched a number of products including some e-commerce tools towards the end of 2019, which Abrahami described as timely. He also pointed out that COVID-19 is horrifying and that good commercial results don't mean he's happy with world conditions.
Hence, Cloudinary is snorting with a slightly uneven growth profile depending on the niche in question. Wix is seeing perhaps a larger acceleration. But both companies will come out on the other side of COVID-19 in great shape. Let's just hope Cloudinary goes public again in due course. We want that S-1!
Various and various
- On Equity this week we delved into how Gen Z are changing fundraising by making it fun, good and engaging Caution in the matrix of things that prove suitable for the market.
- I've covered Cube's $ 5 million seed round, which stood out for the part of the market they're tackling, and Mux's $ 37 million Series C. Mux makes video API so any business can bring video into their service. natively. As you can imagine, it has been busy.
- Duck Creek has priced its IPO at $ 27 per share after increasing its range earlier this week from $ 23 to $ 25 per share. Shares in the company opened at $ 42 per share, up 56%.
- This week The Exchange was delighted to welcome another author for the first time: Natasha Mascarenhas who you might know from Equity's podcast crew. You can read her first entry here, as she was kind enough to replace me on my day off.
- The world of fintech software and cards took a sharp turn this week as Ramp added more code to its corporate card business. It's a startup we've been monitoring since its launch earlier this year and managed to grow during the spending reduction pandemic, which is good.
- Gong's round was an interesting one, with the company worth $ 2.2 billion after new capital of $ 200 million. Oh, and it's grown 2.5 times this year.
And we have to cut it there because we are out of the room. Thanks for hanging out with us today!
Hugs, fistbumps and good vibes,