Snap, Inc., the parent company of Snapchat, went public this week. Opening at $24 (initially priced at $17) it has continued to rise to $27.01. There are quite a few takes being thrown out there relating to Snap’s debut on the public market.
Like the one that examines the interest from millenials looking to get a piece of the company that they perceive as their version of Facebook.
But one thing is clear, a lot of the optimism surrounding the Snap IPO is that, FINALLY, a high-potential private tech company has decided to test the public market. As I said before, this could be a major signal for companies who have been waiting on the sideline to jump into the IPO game.
I reached out to Maia Heymann, General Partner at Converge Venture Partners, to get her take on the potential opening of the IPO window following Snap’s pop.
Her response is great:
“I can’t predict the public markets or the buy-side’s receptivity to IPOs after Snap, but I sure hope the window stays open so that more tech companies can access the public markets. We need more tech companies to get public, grow into bigger companies, and keep the industry strong and diversified. If you end-up only having a few large trees in the forest, and too many saplings are bought-up, it ends up not being a forest anymore, and those few big trees cast a shadow that prevents new growth. The tech industry is getting that way. We’ve largely lost that mid-tier of mid-cap tech companies, who were buyers of smaller companies. We’ve gone from about 8,000 publicly traded companies in the U.S. in 1996 down to around 4,000 in 2016. When investment banks couldn’t publish research on the companies they took public (circa 2003), that was the huge blow. It’s not SOX compliance, or the cost of being a public company that keeps companies from going public. It’s the lack of research coverage on new tech companies; no coverage, no float; no float, no buyers (of the stock). Who wants to go public only to be an orphaned stock. If smaller tech companies could access the public markets, they would. The loss of mid-tier investment banks who could cover smaller tech companies, published research, and provided coverage and analysis on a mid-cap tech stock post IPO, has hurt. I’ve always maintained that the loss of the boutique investment banks devoted to tech—the Four Horsemen: Robertson Stephens, Hambrecht & Quist, Montgomery, and Alex Brown—has dampened the IPO window for tech stocks more than any SOX ever did.”
That’s some great insight, especially the lesser discussed issues that have slowed both the IPO and M&A markets. It does really feel like more and more, companies, Snap included, are hitting the market with a lot of uncertainty.
Hopefully, whichever way Snap goes, some other tech companies on better standing (like say, being profitable) will hit the market soon to build more confidence to go public.
Who is under-the-radar?
According to Eric Paley, the most under the radar company in Founder Collective’s portfolio is BookBub.
Paley says that BookBub — which has raised $10.8 million in funding — gets about 10 million daily users. That makes it one of the largest independent eBook sales platforms on the web, but it still doesn’t seem to get as much attention as others in the online publishing space.
He didn’t dive into the reasons why BookBub wasn’t more in the spotlight, but you don’t have to read Inside Book Publishing to know that there is one MAJOR reason why you don’t hear much about the company, and that is Amazon.
One major threat to BookBub’s success has been the launch of Amazon, the clear eBook leader, and its Prime Reading product. Prime Reading aims to serve as a launchpad for lesser known authors, which has been a major draw for BookBub.
But BookBub does have some advantages, its model is cheaper, for one. Also, it has a bit more of an independent book store culture and brand. If you can believe that such a thing could exist on the Internet, BookBub is the indie neighborhood book shop to the corporate Amazon. This attracts a niche of authors working in outlier genres that seem to get lost in the colossus that is Amazon.
Brit+Co. has called the company the “Kayak for eBooks,” and the “interweb’s best open secret on where to score books for a fraction of the cost.” With growing readership and the type of indie cred that can’t be drummed up by a marketing team, expect BookBub to gain more and more accolades and users. Oh, yeah, and more profit and funding as well.
What went down this week…
HubSpot’s Katie Burke, the company’s Chief People Officer, published a blog post on Medium this week that is a must read. I shared “Because I’m a Girl,” on a couple social media platforms and got more feedback from folks outside of my “tech/startup” circle, to use the old Google+ nomenclature, than anything I’ve ever posted. I also got calls from my sisters who were fired up by Burke’s message.
Burke’s post struck a nerve. While having her qualifications questioned because she is a woman is the impetus for this piece, there isn’t likely anyone in Boston, or beyond, who has the legit experience that Burke does. Not only did she play an integral role in keeping HubSpot culturally grounded during its IPO, but she was key in weathering the PR nightmare the company faced last summer with the Dan Lyons thing. While it totally sucks that someone is so blind to the work done by Burke to question her in this manner, it did push her to create this rallying cry of a blog post. And, I believe, it definitely empowered more than a few women in the workplace.
NU – Nick Ducoff and the work he is doing at Northeastern with the Level Analytics Bootcamp. Level got some praise from none other than the original Innovator’s Dilemma scribe Clayton Christensen, who said of Ducoff and the program in a recent paper on higher education innovation, “Leaders looking to build disruptive models under the traditional university umbrella can take a page from Ducoff’s book.”
Why this is good? While Harvard and MIT tend to pump out the most innovative thinkers and business leaders, it is vital that the other institutions in town push the two so that they don’t become complacent. Ducoff’s work at Northeastern, the job William Brah has done at UMass-Boston, Debi Kleiman’s work at Babson, and John Gallaugher’s impressive innovation leadership at BC have made an impact in the number of young startups popping up all over Boston. With Harvard’s i-lab (totally biased), the Rock Center at HBS, the MIT Media Lab, and the recently announced The Engine, expect a boom in the next few year’s in student-started companies coming out of Boston. Boston VCs, if they are paying attention, have a more innovation potential within a short drive than almost anywhere in the country.
M&A – Word is that there is at least one MAJOR move happening in the next couple of weeks with a well-known Boston company. The question is will they be the acquired or the acquirer?