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Ready? Let’s talk about money, startups, and piquant IPO rumors.
Hi friends, yesterday I had what I call Modern Syndrome. Basically I got hit my second dose of vaccine, and instead of enjoying the weekend of eating candy and pampering my dogs, I spent the whole day unable to move on the couch… This all means that I missed out on Coinbase and DoorDash earnings when they came out.
By catching us, Coinbase lived up to its previously published predictions (more details here), and today its reserves are at the same level. DoorDash, on the other hand, has surpassed market expectations and is up 25% at the time of writing.
But despite huge quarters each, both companies are well below their recently set record highs. Today, Coinbase is trading at around $ 265 a share, below the all-time high of $ 429.54 it recently set. And today, DoorDash is priced at $ 145, well below the 52-week high of $ 256.09.
They are not the only recent public offerings that have lost relevance. Many combinations under the direction of SPAC fail. But while Coinbase and DoorDash are still highly valued at current levels and are worth a lot more than they were as private companies, some startups that have listed SPAC money are not doing well, let alone either.
As Bloomberg NotesThe five electric vehicle companies that SPAC entered the public markets were worth $ 60 billion at one point. Now, the largely non-revenue public electric vehicle population has lost “more than $ 40 billion in market capitalization combined from their peaks.” Youch.
And the SPAC hypeman and common investor Bon vivant Chamat Palihapitiya is take a stick for proceeds from his deal. Everything is a little confusing. To be honest, this is exactly what we expected from the very beginning.
Not that there aren’t any sensible SPAC combinations. There is. But mostly it was more speculative hype than business substance. Perhaps that’s why Coinbase and DoorDash didn’t need crutches to go public. Of course, the market is still figuring out how much they actually cost, but that doesn’t mean they have any serious problems. But let’s take a moment to look at companies that have agreed to go public through SPAC prior to the fix and are still waiting for their deal to close.
Your TFW forecast is conservative
The exchange has recently been on a strain with several public company executives following their income statement. After these conversations, we need to talk a little about leadership. Why? Because this game annoys me a little.
Some public companies simply do not provide forecasts. Chill. For example, Root does not provide quarterly guidance. Excellent. Other companies make recommendations, but only in an ultra-conservative format. In my opinion, this is, in fact, not an indication at all. Not that we are rude to companies as such, but they often end up in a strange dance between telling the market something and tell something useful.
Choosing Appian’s CEO because he is someone I like, Matt Calkins said when discussing his own company’s forecasts that his management was “consistently conservative” – so much so that he said it was almost disappointing. But he went on to argue that Appian is not focused on the short term (good), and that if a company makes big valuations, it is more judged by valuation. expectation these results in comparison with their implementation. This way of thinking immediately makes superintelligent guidance intelligent.
This is more of a philosophical argument than anything else, as Wall Street sets its own expectations. The financial rubber hits the road as companies direct under Wall Street’s own expectations or results that do not match those of outside players. So leadership matters, but not as much as people think.
BigCommerce CEO Brent Bellm helped provide additional guidance as to why public companies might act a little more conservatively than we might have expected during our recent call. This helps them not to waste extra money. He noted that if BigCommerce – which has super hard quarterBy the way, he is conservative in his planning (a source from which the leadership to some extent flows), he cannot use too much short-term capital.
In the case of BigCommerce, Bellm continued, he wants the company to exceed revenue, but not adjusted earnings. Thus, if revenues exceed expectations, the company may spend more, but will not be able to maximize their short-term profitability. And he said that he told the analysts exactly that. So keeping forecasts low means that the company will not overspend and increase adjusted profitability, while any upside potential allows for more aggressive spending?
Harumf, this is my general view of all of the above. It’s okay for CEOs of public companies to play the public game well, but I would very much prefer them to do something more akin to what startups do. High-growth tech companies often have a board-approved plan and a more aggressive internal plan. For public companies, this would be similar to the base case and the stretch. Let’s both, please? I’m tired of sorting out the numbers from the sandbags for the truth.
Of course by reporting the guide rangepublic companies do some what. But this is not enough. I hate modesty for the sake of modesty!
Enough of the rant for today, more on BigCommerce earnings next week if we can fit that. You can read more from The Exchange on Appian and the larger low-code move hereif this is your jam.
Never come back
We’ve been delaying a bit today, so let me make some predictions.
Almost every startup I spoke to in the past year that had 20 or fewer employees at the time of the chat is a remote team. This is due to the fact that they are often born during a pandemic, and also because many startups in the very early stages simply find it easier to hire employees around the world, because often the talents they need, can afford or can attract, are not in the immediate vicinity of them.
It is important for startups to have a relaxed work location rules to capture and, we believe, retain the talent they need. And they are not alone. Big Tech is in a similar position. As Information reported recently:
An internal bulletin board for Google employees emerged last Wednesday morning as news spread of what many employees see as a softer teleworking policy. One meme posted on the board featured a crying man with the caption “Facebook Recruiters.” Another depicts a sad man with the words “San Francisco Homeowners” written on it.
If you’re not laughing, you may have a life. But I do it for a living and I dying according to this quote.
Look, it’s obvious that many people can do a lot of work outside the office, and even though labor buyers (employers) want to do 1984-style operations with their employees (labor sellers) to make sure they are doing enough sure, the real inhabitants writing the code are alike, no. And this is too difficult for Big Tech, as they literally represent the cash flows held by the people who make their living in print.
This means that technology will not go back to 100% office work or anything close. At least not in companies that really want to be sure they have talented people.
It’s a bit like a company of only white men; you know that he is far from the best team that could have been. Firms that have full office policies will over-index a specific demographic. And it won’t do them good.