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Hi friends, yesterday I was out with what I call Moderna Syndrome. Basically I have whacked With my second dose of vaccine and instead of enjoying a day off, eating candy and pampering my dogs, I spent the whole day unable to move on the couch. That said, I missed Coinbase and DoorDash earnings when they came out.
Coinbase caught up with us and met its predictions that it had previously published (more here), and today its inventory is flat. In contrast, DoorDash has exceeded market expectations and is currently up just over 25% as I write to you.
Despite the big quarters of both, both companies are well below their recently set all-time highs. Coinbase is valued at around $ 265 per share today, compared to an all-time high of $ 429.54 that was recently set. And DoorDash is worth $ 145 this afternoon, well below its 52-week high of $ 256.09.
You are not alone among the recent public offerings that have lost steam. Many SPAC-led combinations refuel. But while Coinbase and DoorDash still have a high value at the current level and are worth far more than as private companies, some startups that have floated SPAC money are not doing well, let alone are.
As Bloomberg notes, five electric vehicle manufacturers that brought SPAC to the public market were valued at $ 60 billion at one point in time. Now the rally of mostly no-turnover public EV companies has lost “more than $ 40 billion in market cap combined from their respective peaks”. Youch.
And the SPAC hype man and general investing connoisseur Chamath Palihapitiya also accepts the return on his deal. It’s all a bit chaotic. Which, to be fair, is pretty much what we’ve been expecting all along.
Not that there aren’t any sensible SPAC combinations. There are. But mostly it was more speculative hype than business substance. Maybe that’s why Coinbase and DoorDash didn’t have to rely on crutches to get to the public. Sure, the market is still figuring out what they’re actually worth, but that doesn’t mean they’re in real trouble. However, consider for a moment those companies who have agreed to go public through a SPAC before the correction and are still waiting for their deal to close.
TFW Your prognosis is conservative
The exchange was recently on the horn with some CEOs of public companies after their earnings report. After these conversations, we need to talk a little about guidance. Why? Because it’s a game that I find a little annoying.
Some publicly traded companies just don’t make any forecasts. Cool. For example, Root does not provide quarterly guidance. Fine. Other companies offer guidelines, but only in a super-conservative format. In fact, this is not a guide at all, in my view. Not that we’re rude to companies in and of themselves, but they often get into an odd dance between telling the market something and tell him something useful.
When Matt Calkins selected Appian’s CEO as someone I like, when discussing his own company’s projections, he said that his guidelines were “always conservative” – so much so that he said it was almost frustrating. But he went on to argue that Appian is not short term focused (good) and that when a company makes large estimates, it is judged more by that Expectation these results versus the realization of these results. This way of thinking makes extremely careful guidance immediately sensible.
This is mostly a philosophical argument as Wall Street has its own expectations. Financial rubber hits the streets when businesses are leading under Wall Street’s own expectations or results inconsistent with external weather. So leadership is important, just not as much as people think.
Brent Bellm, CEO of BigCommerce, helped provide more guidance on why public companies can run a bit more conservatively than we expected in our recent appeal. It helps them not to spend too much. He noted that BigCommerce – which, incidentally, had a very solid quarter – is conservative in its planning (the typeface that guides the guideline to some extent) and cannot invest too much short-term capital.
In the case of BigCommerce, Bellm continued, the company wanted to outperform sales, but not adjusted profits. When sales exceed expectations, they can spend more but not help maximize short-term profitability. And he said he told the analysts just that. So if you keep the forecast low, does that mean the adjusted profitability isn’t too high and being blown up while an uptrend allows for more aggressive spending?
Harumph, is my general take on all of the above. It is very good for public company CEOs to play the public game well, but I would very much prefer them to do something more similar to startups. High-growth tech companies often have a board-approved plan and an internal plan that is more aggressive. For listed companies, this would be a base case and a stretch case. Let us have both, please. I’m tired of searching sandbagged numbers for the truth.
Safe by reporting a guide Rangedo public companies something from that. But not nearly enough. I hate restraint for restraint’s sake!
That’s enough for today, more on BigCommerce revenue for the next week if we can. You can read more of The Exchange on Appian and the bigger low-code movement here if that’s your jam.
I will never go back
We have a bit of time today, so let me descend with some predictions.
Almost every startup I’ve spoken to in the last year that had 20 or fewer employees at the time of the chat is a remote-first team. This is because they are often born during the pandemic, but also because many startups at a very early stage simply find it easier to recruit globally because often cannot afford or attract the talent they need is in the immediate vicinity.
Startups simply find it important to work in a relaxed manner location Rules to snap up and, as we suppose, keep the talent they need. And you are not alone. Big tech is in a similar situation. As the information recently reported:
An internal message board for Google employees was lit last Wednesday morning when news was circulating about what many employees found to be more relaxed guidelines for remote working. A meme shared on the board featured a crying person named “Facebook Recruiter”. Another featured a sad person named “San Francisco Landlord”.
If you don’t laugh, you might have a life. But I do this for a living and I am too To die at this quote.
Look, it’s clear that a lot of people can get a lot of work done outside of an office, and although job buyers (employers) want to run their employees (job salespeople) 1984 style to make sure they are doing accurately enough actual citizens writing code , are like, naw. And that’s just too much for big tech as it’s literally just about cash flows held by people who make a living.
This means the technology won’t work 100% in the office or near work. At least not with companies that actually want to make sure they have top-notch talent.
It’s a bit like seeing a company made up of all white men. They know that there is nowhere near the best team that it could be. Companies that enforce full office policies will overindex a specific demographic group. And it won’t be to their advantage.