Software IPOs with Tomasz Tunguz

Software companies such as Slack, Zoom, and Uber have recently gone public.

When a company goes public, they issue a document called an S-1. Within the S-1, there is a wealth of information about the company, providing a detailed story about the company’s business model, economics, and future prospects. The S-1 describes the operating model and the philosophy of a newly public company.

Going public serves several purposes. Being public allows a company to gain access to the public capital markets. It allows previous investors to have a liquidity event, by selling the shares that they purchased from the company in private markets. Being public also puts some constraints and visibility on a company, which can be useful for a company that is trying to develop internal discipline.

In the software industry, it is useful for most people to understand the dynamics of going public. A technology worker who is earning equity at a private company needs to understand the roadmap to their company going public, or potentially getting acquired. Anyone who invests in public technology stocks is evaluating the different available options for investment, and considering the best software companies to place a bet on.

Tom Tunguz is a venture investor at Redpoint, and the author of a popular blog at tomasztonguz.com. In a recent series of posts, Tom has evaluated the S-1s and compared the growth dynamics between a variety of newer public software companies. Tom joins today’s show to discuss his writing, and offer reflections on what can be learned about company building from the recent series of IPOs and direct listings.

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Transcript

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