Equity transcribed: Away’s $1.4B valuation and CrowdStrike’s S-1

Welcome back to another transcribed edition of Equity, the wildly popular TechCrunch podcast that digs deep into the week’s news about … equity.

There were no IPOs this week so there was only one episode, but it was jam-packed with news about direct-to-consumer scooters, luggage funding and fake meat. This is where tech has taken us this week.

Oh, and Slack set the date for its direct listing.

Kate: So [Away] raised a 100 million, series D. This round was led by Wellington Management, so not by a traditional venture capital firm. Though Away is backed by big name faces like Forerunner Ventures, which is responsible for investments in pretty much direct to consumer companies. So this valued Away at 1.4 billion, and that’s obviously quite large, but what’s particularly surprising about that valuation is that Away was valued at just 400 million the last time they raised money, which was a series C of 50 million, maybe about 1 or 2 years ago.

Alex: Oh gosh.

Kate: I’m not sure exactly when that was. But we’re seeing a major, major, major uptick in its valuation. And the reason why is because at its series C, Away was profitable already. Like I was telling Alex, they didn’t say anything about profitability this time, so I don’t know where that stands, but I do know they have $150 million in revenue.

Alex: Yearly revenue.

Kate: Yes. They are growing top line at 100%. They have an NPS score in the 80’s, and they have a bunch of new investors in this round that I think kind of shows that they’re going well. And also, they want to use this capital to create a generic travel brand. So they want to be more than just these Instagram-friendly cute luggage, suitcases, carry-ons, whatever they want to be. Kind of provide anything and everything you might need when you’re going on a trip of any kind.

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Kate Clark: Hello, and welcome back to Equity. I am TechCrunch’s Kate Clark. This week, I am in the studio with Alex Wilhelm of Crunchbase News. Hello Alex, how are you doing today?

Alex Wilhelm: I am good, but as we were just saying before we hit record, this is in some ways a bittersweet moment for us in this room, because it is the last time that the three of us, you, myself, and our excellent producer Christopher Gates, will be together in the TC podcast studio at 410 Townsend.

Kate: It is indeed a bittersweet moment for all of us.

Alex: Yeah. You guys are moving to a new cool office. Actually, closer to mine, which is a lot of fun. But I will be remote next week, so this is kind of goodbye to probably over a hundred episodes recorded in this room alone, I think? Yeah.

Kate: And then we’ll be moving on to a new podcast studio, and who knows what that’s going to be like.

Alex: I wonder if it will be fancier.

Kate: I hope it’s fancier. If it’s not fancier, I’m going to feel a little ripped off.

Alex: Okay well, write that down everyone, and then we’ll report back in about two weeks with results on it. But, if I can kick off Kate, I wanted to go over a couple of notes, because today is May 15th, and it is the very middle of the quarter. And it is a good moment to take a kind of a check in. So here were some things that are out, and about that, if you want to get a kind of a pulse or a feel for what’s going on in the startup and venture capital world, you can take a look at.

Alex: One is the Bessemer Cloud Index, everyone’s favorite basket of publicly traded SaaS in cloud companies, is still trading near record highs despite the market’s taking a bit of a tumble in the last couple of days. Most IPOs from this year are doing pretty well. The Uber and Lyft problems have overshadowed the cohort of IPOs this year, but most of them are doing kind of okay. SoftBank is still putting money into companies. Grofer raised 200 million, it was announced today from SoftBank, for example. There are a lot of 250 million dollar rounds or larger still happening. IPOs are coming out, we have Luckin and Fastly this week.

Alex: On the other side though, there’s a lot of trade uncertainty, which is dinging companies, and there is a regulatory climate here in the United States that is deteriorating per large tech companies.

Alex: That’s kind of what’s on my radar, Kate. Anything you want to throw into that mix as the quarter hits mid point?

Kate: I think you summed it up pretty well. I think the narrative around Uber is going to really dominate the tech news cycle, probably for weeks and months to come. So we’re not paying quite as much attention to the companies that are doing well, and to the big rounds that SoftBank is still shoving into companies.

Alex: Yeah. I think they’ve almost become so regular it’s become banal. We just don’t care as much, we just go, oh, another hundred million dollars. Maybe I’ll have breakfast now.

Kate: Totally. It’s crazy because I remember, what was it, maybe more than a year ago when just every SoftBank deal was just a huge, huge deal. Literally, it was these large deals, but people were paying so much attention to them. And now it’s kind of like, oh SoftBank invested hundreds and hundreds of millions, oh well, I don’t really care about that.

Alex: Can I tell you why I think that is? I think we used to try to figure out the deals. Wag raises 300 million from SoftBank’s vision fund, what is it going to do? We would sit around and go, wow, I don’t know. And now we go, there’s no way to find out; it’s totally random. And we just move on.

Kate: That’s so true. We were trying to dissect them, or trying to be like, oh, actually yeah, I see what SoftBank sees in Wag. But now we look back and we’re like, um, that’s probably not a very good idea.

Alex: Well, maybe it is. But there’s no way sitting here we’re going to be able to tell why, or also, we’re not going to be able to grade it.

Kate: Fair enough.

Alex: Let’s dial a little bit closer to home and go back to your home state actually, and talk about the biggest venture capital group up there in the Seattle area, Madrona.

Kate: Yeah, there are a few names that carry a lot of weight in Seattle, but then also outside of Seattle. I think Madrona Venture Group is one of those firms that is known down in here in Silicon Valley, it’s known, of course, in Seattle. So they have a startup studio model in addition to a traditional venture capital fund. I think we may have talked about studios before in the podcast, but I’m not sure. So I’ll just quickly summarize what those are.

Kate: So basically, that’s when a firm within its safe, cozy walls, actually thinks of ideas for startups and then begins kind of testing the idea, looking for product market fit, and actually building that startup within the venture firm. They’ll give it a little bit of money, they’ll actually go out and find an entrepreneur that they think fits that project. And sometimes they allow entrepreneurs to come to them with an idea, and then they kind of partner.

Kate: So Madrona has this of course. They just raised $11 million to sort of build out this operation. That 11 million’s actually not to invest in the companies, which I was surprised by. But it’s actually just operational capital, in order to scale out this. And they want to spin out another dozen in the next year or so. They’ve already spun out seven so far, and some of those are actually well known. I don’t know if you’ve heard of Mighty AI, but that’s a pretty big company up in Seattle. And I think they’ve raised dozens of millions, I think their valuation’s somewhere around 80 million, so it’s done well.

Alex: My thought about this is, is this kind of like doing angel investing with a weird twist? Because Madrona doesn’t do seed or angel investments. I think they’re more of a series A and B firm. Okay. But they want to have an early look at things and get a cheap price on those companies, so why not just put 11 million over here in your little idea factory, see what bubbles up, and then you can fund it.

Kate: Yeah. I think it’s kind of like that, but I think the real purpose of this, and I think the reason why we see it in places like Seattle, is the culture is different in a way where people don’t take that risk of starting a company as often. And because of that, you don’t see as much entrepreneurship, which is something we’ve definitely talked about, or I’ve written about a lot. Seattle really struggles to match these other ecosystems like New York, L.A., San Francisco, even Boston, because people work at Amazon, Microsoft, or they work at Facebook satellite office, or Air B&B satellite office or whatever. And they make a lot of money, and they don’t really feel the need to start their own thing.

Kate: But if you have these studios, which are like hey, we’ll kind of eliminate the risk, and we’ll just help you. Sure, we own 1/3 of the company, you own just 2/3, which is obviously a huge stake to lose right away. I think it’s enough to get those people who might be founders to actually become founders.

Alex: I think the point about Microsoft and Amazon is especially good, and I think also this is why this model, this Madrona model, might be a good fit for places like Chicago as well. Markets that are a little bit less risk oriented, at least in my impression, but have a lot of talent, a lot of great developers around there, it’s pretty cool. But 11 million will only go so far. So presumably, they’re going to have to re-up that pot of money eventually.

Kate: Yeah, I imagine they’re going to keep it pretty lean. I wonder… I didn’t have a long time to chat with them, just because it’s been kind of a crazy week, but I do wonder how much they envision this scaling. I do think it’s good. I don’t want to criticize it, I think it’s a great idea. I don’t think it’s something that would work very well here, because people want to own their companies. They’re willing to take the risk, just because it’s so common.

Kate: One of the things Mike from Madrona said in our call, he was like, “You know, in Seattle you’re not walking down the street and, you don’t just run into an angel investor like you do in San Francisco. It’s just completely different, and people forget that. So, like you said, Chicago, these other markets, Atlanta, there are tons of places where I could see this model thriving.

Alex: Nashville, New Orleans, whatever. It’s cool, and it’s 11 million, so it’s a lot of money, but it’s also not a lot of money. So if this doesn’t go well for Madrona, not big deal. If it does go well, it could set a good precedent. Last comment though, does feel a little bubbly to me? A little bit?

Kate: Yeah, it certainly does.

Alex: We are in rich times. I’m just trying to keep an eye on how far from risk averse we’re getting.

Alex: I want to talk about scooters really quick.

Kate: Ugh.

Alex: Yeah, I know, I know. But not talk about scooter companies in the way we have traditionally. Two companies have put out scooters recently that have price tags that I don’t understand. TechCrunch wrote today about how Boosted Board, who makes the famous skateboard that people you don’t like ride, have put out a scooter that’s rugged, and will cost about $1600. And this follows up news from last week that Bird is going to sell its own Bird One scooter for $1300. Why? Doesn’t that strike you as a relatively high price for a scooter, when you could buy a bike for like 200 bucks? I don’t get the-

Kate: Well absolutely, but how much is an electric bike? Because that’s the point here, right? Is that these are electric so you get around faster.

Alex: I don’t know. I don’t feel like I’m faster on an electric scooter than I am on a pedaled bike. Because I’ve got big wheels on the bike, and I can cruise along.

Kate: I mean, I’m definitely faster on an el… we want to have this debate. I’m definitely faster on an electric scooter than I am on a regular bike. Come on, like, hills?

Alex: Okay, but imagine you don’t live in San Francisco. Imagine you live literally anywhere else in the world.

Kate: I mean, sure.

Alex: It’s flat!

Kate: I completely agree that this seems like something that is not going to make these companies much money. Like you just said, Bird is now selling their scooters direct to consumer. But I think also that was partly because they want to get their scooters on the streets of these places that aren’t allowing them, like San Francisco. Now, there could be tons of Bird scooters because people could just own them, and I guess take th… But there are just so many questions I have about how that would go. Like, where do you put it when you’re not using it?

Alex: Yeah. I don’t know. Maybe you bring it into your office and everyone goes, cool story, bro.

Kate: And then people think it’s a terrible scooter though, unless people steal it.

Alex: That’s like the problem with owning a black Prius in any major city, because everyone’s going to think you’re driving for Uber or Lyft. Anyways, the pricing struck me as high, and we’ll see how they do. But I have been proven wrong a number of times on micro mobility points, so I could be being Dr. Doom yet again. But it’s interesting. And you know what, Bird will generate positive gross margin on those scooters.

Kate: I was going to say, what do you think the margin’s like? How much do you think they’re paying for these scooters that they’re presumably getting it from China?

Alex: I don’t know, but I would think at 1300 bucks per Bird, selling the Bird One, pretty good. Because if it’s not a great margin, then they’re spending too much on scooters that won’t make money back in the market. Because these Bird Ones are also the ones they’re now using that claim to have better economics, and they’re driving their business away from the massive losses they sustained in 2018.

Kate: So you could almost get one Peloton for the price of two Birds.

Alex: That’s the most San Francisco thing I’ve ever heard in my entire life.

Kate: Actually, I don’t know the price of a Peloton, I think it’s like three grand.

Alex: About three, yeah.

Kate: Yeah, so… Just saying.

Alex: I’m not allowed to talk about Peloton on the show, because last time I did I got made fun of. So we are going to move on to something that I’m kind of excited to talk about, because it’s a round that I didn’t understand to begin with, and Kate has since taught me as to why it makes a lot of sense. So Kate, why has Away raised $100 million?

Kate: Away is the very Instagramable luggage brand that you’ve probably seen, either on Instagram, or at the airport, or maybe you know someone that has one. Full disclosure, I have one, and I like it.

Kate: Away raised $100 million this week, and like Alex’s reaction, I noticed a lot of people in the TechCrunch office similarly being like, oh wow, shows you how far you can get just having cute Instagram pictures. But I think there’s a reason why they’ve been so successful. Yes, they have excellent branding, and I will talk about that, but I think it’s good product. And they’ve kind of just figured out how to tap into a market that was not populated with startups. It’s mostly populated with these incubants who have really crappy, crappy products. Do you like your suitcase that you use currently?

Alex: I don’t use a suitcase. I use a duffel and a backpack because I fly a lot, and I act-

Kate: And how’s that?

Alex: It’s crappy, but fine. I mean, I fly to [crosstalk 00:11:43] economy Kate, nothing’s good.

Kate: Well, you get the idea. Right. You understand there’s an opportunity to probably improve your life if you were to invest in something maybe a little bit nicer.

Alex: No.

Kate: His face. Yeah, he’s like, absolutely not.

Alex: Look, if I bought a nice suitcase I have to take care of it. If I carry around the stuff that I currently carry around, if I spill a soda on it, I don’t care. I just buy a new little duffel. So this does not hit me in the knee category, even though I fly a lot. But I do respect the fact that people do want better luggage. It is a huge pain point for a lot of people who travel. And I presume the margins could be quite strong. So, to your point about me being wrong initially, once I thought about it a little bit more, I can see it.

Kate: Okay, well I have a lot of things that I want to say, so let me just… Let’s just go back and let me review some more key details.

Alex: Yeah, please.

Kate: So they raised 100 million, series D. This round was led by Wellington Management, so not by a traditional venture capital firm. Though Away is backed by big name faces like Forerunner Ventures, which is responsible for investments in pretty much direct to consumer companies. So this valued Away at 1.4 billion, and that’s obviously quite large, but what’s particularly surprising about that valuation is that Away was valued at just 400 million the last time they raised money, which was a series C of 50 million, maybe about 1 or 2 years ago.

Alex: Oh gosh.

Kate: I’m not sure exactly when that was. But we’re seeing a major, major, major uptick in its valuation. And the reason why is because at its series C, Away was profitable already. Like I was telling Alex, they didn’t say anything about profitability this time, so I don’t know where that stands, but I do know they have $150 million in revenue.

Alex: Yearly revenue.

Kate: Yes. They are growing top line at 100%. They have an NPS score in the 80’s, and they have a bunch of new investors in this round that I think kind of shows that they’re going well. And also, they want to use this capital to create a generic travel brand. So they want to be more than just these Instagram-friendly cute luggage, suitcases, carry-ons, whatever they want to be. Kind of provide anything and everything you might need when you’re going on a trip of any kind.

Alex: Okay, couple of points about this. The revenue amount makes the new valuation reasonable. Because I think if you’re at roughly 10x revenue multiple, going at 100%, in one year it’s 5, and all of the sudden the investors look brilliant, really good. That NPS score is nuts, well done. I’m curious though how the brand will spread out, because I think you’re right. They’ve driven a lot of great mindshare. I walked in and I actually saw your suitcase, and I knew what it was, even though I’ve never bought one. I’m surprised that I knew what it was, frankly. That’s a surprise to me. And with this amount of money, they can do a lot. But will the brand stretch to cover small tote bags, or whatever the hell else you need to travel?

Kate: I’m pretty confident that this will work well. And the reason I think that is one, they’ve just mastered branding, and they just know their market, and they know who they’re selling to. So let me clarify, these are luxury items. Of course, these suitcases are a couple hundred dollars, just for the cheapest. So you’re paying $250 for a suitcase, right, but I mean, that’s more than a lot of people are going to pay. So these are upscale items

The founders of Away came from Warby Parker. One of them was head of supply chain, and one of them was head of social media. So they have an interesting shared skill set between them that’s really allowed them to figure out how to grow quite fast and to expand their market a bit. So I do think it will work. I think it’s going to be fast. I also think they were smart early on in that they knew if they could get these bags popular among celebrities and trend setters, that they would really figure out how to… Meghan Markle has been seen using it, all these people.

Alex: Meghan Markle is the new royal person?

Kate: I mean, she’s not that new now.

Alex: But she’s the new… She married into the royal family?

Kate: Yes. I think our listeners probably know who Meghan Markle is.

Alex: They may not, because maybe they’re like me and they try to avoid the British Kardashians, a.k.a. the royal family.

Kate: Well let’s not get into a debate about this, because I have thoughts. But anyways…

Alex: Please.

Kate: One thing I do want to say is that this is another female founded unicorn…. The RealReal already this year, so that’s really exciting, and I think completely unprecedented, as well.

Alex: That’s amazing. Actually, I didn’t realize those were all new unicorns in 2019 all led by women.

Kate: Those are all female founded companies.

Alex: All right, I’m going to race you after the show to see who can blog that faster.

Kate: And actually, you know, better yet, those are solely female founded companies. Those companies have only women that have founded them, which is crazy. So anyway, that’s awesome and super exciting, and I’m excited for this company, and I’m curious to see how they figure out how to expand.

Kate: Another note is they’ve sold one million bags, which is a lot of bags.

Alex: That is a lot. I have one final question about this before we move on to another huge round, but how long does a suitcase last? Not using it until it literally falls apart in your hands, but until it no longer has the luxury quality that you wanted when you bought it, so is it three years, five years?

Kate: I’m not sure, but I think these bags have a lifetime guarantee, so I think that they are meant to last. I’ve only had mine maybe nine months. I’ve traveled a lot in that time and it’s held up just fine, but we’ll see.

Alex: Because I was trying to figure out how fast they’ll have repeat buyers, and the answer, given what you just said, doesn’t seem like it’ll be particularly soon. So maybe this extension to new products lets them hit the same consumer multiple times and drive up their average revenue per suitcase owner.

Kate: Yeah. I think that that’s why they have to expand. There was a really good How I Built This episode, which I’m sure you did not listen to because you don’t listen to podcasts.

Alex: Correct.

Kate: But there was recently one on Away, and they interviewed Jen Rubio, which is the co-founder, chief brand officer. When they got the idea to do this, before they had a single suitcase actually delivered to them, they were selling coffee table books for $250. And if you bought one, you were guaranteed one of those suitcases when it came out. Isn’t that cra… And they sold out of these, they completely sold out.

Alex: What was in the book?

Kate: They were going after people who read Vogue magazine. I think it was lifestyle/travel. I obviously don’t have one. But isn’t that wild? Just to see the kind of commitment to the brand so early?

Alex: That’s amazing! Wow.

Kate: Right, yeah. What we wanted to note as well is that when this story came out, the CEO of Slack, Stewart Butterfield tweeted that he wanted… He asked Jen Rubio to marry him over twitter following that announcement.

Alex: Yeah, I saw this and I went, mm-mm (negative), not looking up that. And I tried to walk away, but here I am, sucked back in. So Kate, was that a real proposal or not?

Kate: Apparently it was not. Apparently it was a joke. I thought it was serious, so I’m a little surprised.

Alex: Don’t joke about that!

Kate: For one, don’t joke about that. Two, don’t steal someone’s thunder by making this viral joke.

Alex: Yeah, good poi.. He just totally stomped on her press cycle!

Kate: He did!

Alex: Oh my gosh! Stewart, Stewart man.

Kate: I’m sure she thought it was funny, he thought it was funny, but I was just like, damn Stewart, you need to know when to take a seat.

Alex: Right then, just sit. You’re already really rich. Don’t tell jokes. Stay in your lane.

Kate: Okay, well anyways, I think we’ve talked enough about that. Shall we move on?

Alex: Yes we shall. There’s been a recent IPO that we’ve tracked called Beyond Meats, but in the same space roughly, there’s been another huge round, and Kate, what are the nuts and bolts of this Impossible Foods infusion of capital?

Kate: Impossible Foods has raised a 300 million dollar round, which brings its total equity raised to 750 million, and it gives it a new valuation of $2 billion. So not only does this follow the Beyond Meat IPO, but it also follows a really high profile deal with Burger King that will have Burger King incorporating Impossible’s meat to create the first meat-alternative Whopper… non-meat Whopper?

Alex: Are you a Burger King fan, Kate?

Kate: No.

Alex: Okay. All right, all right, all right, I’m just asking the que-

Kate: I’m sorry, are you?

Alex: No. I was hoping one of us was so that we could say like, would we eat that?

Kate: Well, I would try it. Yeah, I would definitely try it. I mean, I really like the Impossible burgers, the Beyond Meat. I don’t know which one I’ve had, because I don’t know really if there’s much of a difference.

Alex: Yeah, I’m in the same boat there, but presumably, if this distribution deal with Burger King has major lift and gets a wide roll-out, it could be a material amount of revenue for Impossible Foods. And more power to them.

Kate: Right. Now they’re sold in more than seven thousand restaurants in the U.S. and Europe.

Alex: Oh my gosh, seven thousand?

Kate: Yeah, and you know what’s funny, I was reading something about this, and it was like, yeah, now 32% of Americans consider themselves “flexitarians.”

Alex: What?

Kate: Yeah. So that’s apparently now a thing. And my assumption is that that’s somebody who swaps in between not eating meat and eating meat, but what? Isn’t that already what people are?

Alex: Do. Yeah. The context of this round that we were talking about is that this follows an explosive IPO by Beyond Meats. It’s just been enormous. I did a little bit of math back right after the IPO happened, and they were worth about four billion. I figured out, they had a 227x multiple on their 2018 gross profit. That’s not their income, it’s just their gross profit. They’re now worth 5.5 billion. So the market is looking at companies in this space and going, this is the future. This feels like a faster acceleration to the future than we saw with electric cars, which has a much longer ramp time towards becoming, I think we all can nod our heads, eventually the thing we’re all going to drive. This, I want to find a polite way of saying fake meat, because that’s not the right… meat substitute?

Kate: Meat alternative.

Alex: Meat alternative? That sounds like, I don’t know, like Diet Coke. It’s like a replacement for, but also as good as. Alt protein, we’ll take that. And the beard has spoken so therefore it shall be. But to see the valuations get to where they are, fantastic. And to see $300 million go into this other company, Impossible Foods, also very exciting. I’m just kind of amped for it.

Kate: I’m sorry if you don’t know this off the top of your head, but do you recall what Beyond Meats’ most recent private valuation was?

Alex: No, but I will look it up while you talk.

Kate: I’m just curious because we’re seeing Impossible Foods end up at a two billion valuation, and I kind of wonder which will ultimately sort of conquer the market. With that said, there’s plenty of room for competition in a space like this, because this is kind of disrupting the way that we eat. Which is a very big deal.

Alex: Well now that I’m– I’m a flexitarian and no one told me… By the way, that is just the most useless term.

Kate: I wonder, to our listeners, let us know if you’ve ever heard of that. Because I had never saw that in my life until yesterday.

Alex: What is our email address? Equitypod@techcrunch.com?

Kate: Yes.

Alex: Okay, yeah. So if you are a flexitarian, write in to “I have weird taste buds,” and we’ll get back to you. I can’t find the last valuation number actually, so we’re going to have to move on from that. But critically, this is fun. Try out these burgers. If you live near Burger King and you can eat one of these, and you send in a picture of it, we will send you an internet high five.

Kate: I think most Americans do live near a Burger King.

Alex: Well, I live in San Francisco, so I don’t know if I do. Do we?

Kate: There’s definitely… yeah. Chris is nodding. There is definitely a Burger King in San Francisco.

Alex: So I will go out and take a picture of it and put it on the show. Moving on to our last key topic of the day. The CrowdStrike S-1 dropped yesterday. CrowdStrike is an online cyber-security firm. This was, to me, an unexpected offering. I did not know it was coming out. I was not prepared. But Kate and I both jumped on it right away, and we’re seeing a lot of AR growth, some sticky losses. Kate, what was your first impression looking at the numbers?

Kate: Well, I just want to pat myself on the back and say that I wrote a story at the end of last year predicting IPOs, and I mentioned CrowdStrike in it. So I wasn’t surprised.

Alex: Woo!

Kate: Yep. Which is great for me, because I’m never right.

Alex: That’s actually the first correct prediction you’ve ever had on the show.

Kate: Yeah, and one of the other companies that I had mentioned on there was Zoom, so that’s great, because they are obviously done.

Alex: Ah, 2 for 2!

Kate: And Peloton is on that list, and I am waiting patiently for that S-1, but we’ll see. Anyways, I’ll let you talk more about the financials if you’d like, but I will just say that I was interested to see that Excel owns 20% of CrowdStrike, and Excel also owns about a quarter of slack. So it’s a big year for Excel. Additionally, Warburg Pinkus owns 30% of CrowdStrike, and Capital G, that’s just the private equity arm of Alphabet, owns 11.2%. So another pretty spectacular year for Alphabet, because they had huge stakes in Uber and Lyft as well.

Alex: Yeah, too bad their Other Bets division can’t keep up with their Capital G division. Let’s talk about revenue, and we have to use their very annoying fiscal calendar. So I’m going to have to say a lot of extra words here, so I apologize to the listeners.

Alex: In the year ending January 31, 2017, so the year ending January of ’17, they had revenue of just under 53 million. That went up to 118.8 the next year, and in the year ending January 31, 2019, that shot all the way up to just under $250 million. So we’re seeing insane revenue go through this company, which came at a very high cost. The company’s operating expenses alone were 300 million in this last fiscal year, and it torched 140.1 million on a net gap basis. So you can see a lot of things you’d expect here. High growth, high spend, high burn.

Alex: However, there’s some stuff that was buried in the S-1 that I found that I’m pretty excited by. They closed their last fiscal year, so in January of this year, calendar, with ARR of just over 312 million. And that was up 121% from the preceding year result of 141 million ARR. When you’re in the nine figure ARR category, to go more than 100% in one year is nuts. And they have done it with essentially flat net losses. So their margins have improved as this has gone on.

Alex: And one last data point for the SaaS fiends out there, their dollar-based net retention rate in their last fiscal year: 147%, which is insanely good. So points to them, it’s super impressive. They spend too much money, but that’s kind of standard.

Kate: Right. I noticed that their operating expenses are like double their gross profit, but we almost never talk about cyber security. I don’t think we ever have. Just saying, we just don’t, so are you not interested in that space?

Alex: No. It’s, I don’t understand it.

Kate: Right, yeah.

Alex: Everyone in technology journalism does not understand cyber security. Zack Whittaker does.

Kate: Well, except for Zack Whittaker, who’s TechCrunch’s cyber security reporter, and the best in the business. But I agree. I don’t spend a lot of time looking at cyber security space, and we certainly don’t talk about it. But I’m curious, are you still… Because this is a SaaS business, which I know you like, are you excited for this IPO?

Alex: Very, very excited for this IPO. There’s a lot of stuff that could look scary at first blush, but if you know more about SaaS businesses, could look quite exciting. So to me, the exciting question here is not will it go public, it will, is how do you value it? And how do you value this very high growth, very high spend model in a post Uber and Lyft IPO climate? There’s a much simpler path to profitability for this company. But I do think it will give investors pause after watching Uber and Lyft struggle.

Kate: Right. Well, moral of the story is just because Uber performed disastrously and Lyft is not doing so well, companies are still going to go public, and unicorns are still going to go public. And it looks like the unicorn parade of IPOs is not slowing down any time soon.

Alex: That was the best segue ever on this show! Next topic Kate, go!

Kate: All right, last topic. Slack, it has set its date for its direct listing. It’s June 20th. So we’ll be here… well actually, I’ll be here. Alex will not be here in June 20th, but we’ll be watching closely, if you want to say why…

Alex: I get married on June 22nd. Not going to work. So on June 20th, if I’m on Slack or on the podcast, I believe I will get shot.

Kate: I told him, don’t pay attention. He said he’s going to watch Slack’s stock movement regardless.

Alex: Yeah, I’ll tweet about it, but I can’t do any real “work” or I’ll be in trouble.

Kate: Well, somebody will be here with me talking about it on Equity, and you guys can also look at Alex’s tweets for more.

Alex: Anyways, goodbye for me from 410 Townsend. We may be here for one last episode next week, but this is the end of an era. And so to this building, which has given me so much, goodbye.

Kate: Bye!

Alex: All right everybody, thank you for listening, and a big thank you to our producer Christopher Gates, our executive producer Henry Pickavet, and we’ll see you all right here next week.