Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.
Years of buildup led to a historic IPO for business management platform Domo -- and not in a good way. The Hustle Mon, Jul 2 Brought to you by Leesa… life, liberty, and the pursuit of sleepiness. Domo’s deal with...
By: Wes Schlagenhauf
July 2, 2018
Years of buildup led to a historic IPO for business management platform Domo -- and not in a good way.
Brought to you by Leesa… life, liberty, and the pursuit of sleepiness.
Domo’s deal with the devil: A desperate IPO reduced the company’s value 77%
Overhyped data analytics startup Domo posted a historically anticlimactic IPO last week. The offering, filed in a desperate attempt to raise cash, valued the company at $511m -- a mere 23% of its former $2.2B target.
It wasn’t a complete failure (stock prices rose as much as 20% on its first day of trading), but the remarkable decline in value shows that IPOs can go haywire when funding flows like the salmon of Capistrano.
The devil is in the data...
And for Domo, the numbers don’t add up. The company’s value has declined rapidly due to chronic cash flow problems -- last year the company had a net loss of $176.6m (slightly better than $183m losses the previous year).
The company tacked $193m onto the $690m it raised pre-IPO, meaning Domo’s raised $883m -- but is only worth $511m. So, to drum up investor interest, the company got desperate.
[Cue IPO pump-up music…]
Sit tight, investors -- it could be a bumpy 24 months…
“These are just financing events,” Domo CEO Josh James told CNBC on Friday, assuring investors that Domo’s fortunes would turn around. “What really matters is: What does this look like in 24 months?”
But most investors don’t share James’ optimism. As one analyst bluntly put it, “Investors should stay away from this IPO.”
‘To IPO or not to IPO, that is the question’
Companies have been drinking deep from the IPO fountain in recent months, thanks to a bullish investment market.
DocuSign and Spotify have IPO’d to increase their private values, while other companies, like Airbnb and Uber, continue to hold out -- a gamble made possible by plentiful late-stage funding.
But, Domo fell into an unfortunate third category -- opting for a disadvantageous IPO just to keep the lights on. Domo’s IPO (like DocuSign’s recent IPO, which included a 25% haircut) reduced its value by about 77%
When you mess with the bull (market)...
You get the horns
Community colleges arise as the new tech incubators thanks to nuts tuition costs
Community colleges have historically been looked down on as institutions for people who can’t get into 4-year schools -- but these days, companies are calling “baloney” on the elitist claim.
For the last few years, community colleges have waded into the business sector, providing entrepreneurial incubators and management training.
Now, as The Wall Street Journal reports, some of the biggest names in tech are launching their own two-year schools to do the same.
Amazon, Google, IBM. Ever heard of ’em?
Borrowing a page from the long-subscribed construction and manufacturing industries, tech giants like Google, Facebook, and IBM have started setting up apprenticeships, new certifications, and even degree programs.
Google recently announced direct partnerships with 25 community colleges in 7 states, and Amazon launched an associate degree program in cloud computing that gives students paid-apprenticeships that lead directly to a job at the company.
White-hot take: School is too expensive
We don’t need to tell you that Americans are currently bogged down with a $1.4T student loan monkey on their backs. Or that 1 in 4 humans bogged down with student loans have low wage jobs.
But these tired facts only illustrate why the community college is due for its time in the sun.
According to WSJ, tuition at community college typically costs less than half of an in-state 4-year school, and 30% of people with associate degrees out-earn the average bachelor’s degree holder.
The utilities biz struggles to keep up with the energy demands of blockchain
Crypto shot out of an unregulated canon at warp speed in 2017, but it’s had a less-than-stellar 2018.
Yet, as Axios reports, the 60% drop in crypto value this year has had zero effect on the ungodly energy demands of the systems behind these currencies, AKA blockchain and other digi-ledge technologies.
The proverbial roof is on proverbial fire
In the beginning of the crypto craze, utility companies publicly touted their areas as cheap, abundant sources of hydroelectric power.
And while the influx of crypto miners seemed like a boon to the industry, it left many pro-crypto cities overwhelmed by the massive amounts of energy they consume.
Some areas are rethinking their infrastructures entirely
Canada’s largest utility, Hydro-Quebec, says it is facing “unprecedented” demand from crypto mining, and has ceased servicing much of the industry until it can find a more manageable blockchain processing outlet.
According to deputy director of the Atlantic Global Energy Center, it’s now up to governments and utilities to have a high-voltage jam sesh on how to beef up sources of sustainable electricity to keep up with demand.
Airbnb throws employees a bone to hold them over until a 2020 IPO
Brian Chesky, CEO of Airbnb, announced a new cash bonus plan for employees to appease ’bnb’ers who are impatient to taste the sweet IPO fruit of their labors.
Chesky also announced plans to take Airbnb public in 2020 -- but, thanks to plentiful investment (and recent profitability), he’s in no rush.
Employees are antsy
The 10-year-old company has been profitable for 2 years in a row, prompting employees at the $31B travel giant to demand a way to cash out on some equity before they cash in on their retirement benefits.
So, to please the people, Chesky will offer cash bonuses and give employees an opportunity to sell their stock for cash every quarter instead of every year.
On top of the cash perks, Chesky also gave employees a timeline -- promising an IPO by the end of 2020 at the latest.
But it sure doesn’t need to IPO
Financially speaking, at least. In the current economy, it’s easy for companies with a good brand and solid financials to raise money -- which is exactly what Airbnb has done in 13 different funding rounds totaling more than $4.4B.
Plentiful funding gives Airbnb flexibility, but scaling a business privately also carries risks.
Like proud parents, we love all of our readers equally. But, sometimes one of you sends us something that totally blows us away -- and last week, we got an email we couldn’t not share.
Forgive the horn tooting (and let the record show, our giveaways are 100% real).
Hi Sam and Kera,
I was lucky enough to win a free ticket to Hustle Con this year, and despite my bank account balance, I totally jumped at the once-in-a-lifetime opportunity. Check out the exchange I had with my friend immediately after I received the email. You can tell how excited I was…
Needless to say, I enjoyed every single second of last Friday! I met some wicked smart people who are really good at what they do and secured lifelong friendships. As a rising senior in college, I really couldn't have asked for anything else out of an entrepreneurship conference.
**Is it bad that I have an emotional attachment to an email newsletter? No, of course not.**
Thanks for the chance of a lifetime. I hope to visit Hustle Con again next year and the year after that and the year after that and the year after that and the year after that... and probably the year after that too.
For the love of everything that is holy in this world, please keep up all your hard work. There are so many people out there who are picking up what you're putting down.
This edition of The Hustle was brought to you by
Sleep through the rocket’s red glare
And the bombs bottle rockets bursting in air… aaalll the way from the twilight’s last gleaming, through the dawn’s early light.
Leesa is the only mattress with 11k verified 5-star reviews, thanks to a foam tech that’s cool and soft to the touch, but still firm and supportive -- in other words, you’ll sleep through every dog bark and window rattle Independence Day may throw at you.
Even better? Order your Leesa mattress direct -- they’ll ship it straight to your door, complete with a 100-day guarantee. If you’re not completely satisfied, return it for a full refund, no questions asked.
Readers of The Hustle get $160 off a Leesa mattress.