Today in Philly Tech History 2/10/1998: CDNow completes IPO

Tom Paine

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On February 10, 1998, CDNow, started in 1994 by twin brothers Jason and Matthew Olim out of their parent's basement in Ambler, completed its initial public offering. The online music retailer, which sparked a revolution in music distribution, closed the day up 37.5% at $22, from its opening price of $16. CDNow raised $65.6 million, and had a market capitalization of $342 million at day's end. Based in Jenkintown at the time it went public, it later moved to Fort Washington.

When it went public, its prior year revenue was $17.4 million, with a net loss of $10.7 million. Shortly afterwards, CDNow acquired its largest competitor, another Philadelphia area company named N2K. Revenue grew rapidly to a $150 million run rate, and CDNow was an early innovator in ecommerce and web marketing techniques.

However, as the crisis in the Internet economy materialized in 2000, investors lacked confidence in CDNow's financial performance and future outlook. The company slashed its workforce and soon sold itself (after a prospective merger with Columbia House fell through) to German media giant Bertelsmann in the summer of 2000 for $117 million. The brand later ended up with Amazon, and gradually faded away.

Mike Krupit, currently COO at startup Real Food Works, was serving in a CIO/CTO role for CDNow at the time of the IPO. He soon afterwards became COO and later CEO after Bertelsmann took over. He had already seen a couple of companies he had been with go public, including Infonautics. I asked him by email what things were like for CDNow at the time of its IPO. His response:

"CDNow was one of the first dotcom and ecommerce companies to go public. Obviously, we were thrilled to be able to put the money in the bank and have [it] to invest in our growth. But we also knew it didn't guarantee our success. It was tremendously exciting for the team, [though] as you'd imagine, the honeymoon doesn't last too long."

"Culturally, it's a double-edged sword. The expectations of the IPO isn't always met by the reality. The dream of the value of our equity is now something easily calculated. When the stock is up - great; when not, demotivating. We also had to stop sharing lots of information with the team. A lot of healthy chatter had to stop by being a publicly-traded company, which was a big change to CDNOW's startup culture."

Krupit told Technically Philly last summer that what ultimately killed the company was the planned merger with Columbia House; CDNow focused much of its resources on that and when it fell through there wasn't much of a backup plan.




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Avalara has great IPO; is King of Prussia's Vertex keeping pace?

Tom Paine


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Seattle-based Avalara began trading yesterday following its IPO, and the offering was quite successful for the tax software company. Shares closed up 87 percent at $44.94 after opening at $35. Shares were priced at $24 in the company's $180 million IPO on Thursday. It ended up with a market capitalization in excess of $2 billion.

Revenue in 2017 climbed 27 percent to $213.2 million, though Avalara continued to lose money - $64 million.

Much like subscription billing services such as Zuora, Avatar depends heavily upon transactions, particularly in the rising digital economy. Avalara see its current US TAM (total addressable market) as being in excess of $8 billion.

Avalara CEO Scott McFarlane, who co-founded the company in 2004, told CNBC's "Squawk Alley" on Friday that in the next seven to 12 years, sales tax will have to be entirely automated.



Avalara CEO: We want to be a part of every internet transaction from CNBC.


The last revenue figure I've seen for Vertex was "in excess of $200 million", according to then-CEO Jeff Westphal two years ago. Vertex has 1,000 employees on LinkedIn; Avalatra has more than 1400 employees. These two aren't alone in the market; a Thomson Reuters unit, OneSource, and CCH are also players.


My sense of the matter is that Avalatra has been aggressive in attacking the boundaries in the enterprise tax software market, while Vertex had been more cautious. Vertex may have some catching up to do in the enterprise and international markets where Aavalara is strong.


Vertex had made some significant changes in recent years. Headquarters has moved from Berwyn to King of Prussia; Jeff Westphal turned over the CEO job to David DeStefano; it shuttered an income tax prep business in Florida; and expanded its Cloud Platform and capabilities.

Whether Vertex can or needs to go public in the near future is something I don't know; but the controlling Westphal family may need to expand or alter its capital structure to compete in an amped up market, perhaps yielding some control. Another outside possibility is hooking up with a company like Zuora.

One other point I found interesting: Vertex has a close relationship with Oracle , and Vertex' cloud is powered by Oracle.

Cross Atlantic Capital Partners-backed Amber Road primed for IPO (Update)

Esther Surden
Publisher & Editor, NJTechWeekly.com


Radnor-based Cross Atlantic Capital Partners-backed Amber Road (East Rutherford, NJ), which licenses software as a service (SaaS) software to automate international import and export processes, has filed for an initial public offering (IPO). The company is expected to begin trading March 21, 2014. Cross Atlantic owns about 35%.

Amber Road, which hopes to raise $75 million, will list on the New York Stock Exchange under the symbol AMBR.

The company announced its terms earlier in March. It will sell 6.5 million shares at a price range of $10.50 to $12.50 per share. According to an article on NASDAQ.com, at the midrange of this stock price Amber Road would command a fully diluted market value of $313 million.

James Preuninger of Amber Road / Courtesy Amber Road 

Amber Road was founded in 2002. According to an article on the website Seeking Alpha, Amber Road made two important acquisitions in 2005 to complete its global trade management portfolio: BridgePoint and NextLinx Corporation.

“NextLinx added 11 years of global trade compliance technology and content, which is Amber’s key selling point to customers. The company [which began as Management Dynamics] was rechristened Amber Road in 2011,” the article says.

The Seeking Alpha article notes that as of the end of 2013, Amber Road had 463 customers: 172 enterprise companies contributing at least $100,000 each in annual revenue and 291 midmarket firms contributing less than $100,000 each in annual revenue. The company employs some 500 people.

An article by Lawrence J. Aragon on Reuters PE Hub reports that Amber Road’s primary venture backers include Cross Atlantic Capital Partners, which holds 6,685,160 shares (34.8 percent of the total); Updata Partners (Washington, D.C.), 3,561,856 shares (18.6 percent); Goldman Sachs (New York), 2,987,756 shares (15.6 percent); NJTC  Venture Fund (Mount Laurel), 1,355,051 shares (7.1 percent); and Orix Ventures (Dallas), 245,946 shares (1.3 percent).

“As a group, the five investors own 14.83 million shares (or 77 percent of the total) prior to the offering. Assuming they don’t exercise options to buy additional shares, the investors collectively plan to sell about 1.2 million shares in the IPO,” the Reuters article states.

In January 2014, the NJTC’s TechNews interviewed Jim Preuninger, founder and CEO of Amber Road. Preuninger discussed some of the early challenges his company had faced, including selling a cloud product when no one else was doing so and convincing large companies like GE and Wal-Mart to buy it.

Another challenge he noted was that “one platform, a cookie-cutter approach, doesn’t work.” However, customization for each customer was unsupportable. The answer: “We had to develop a technology that was highly adaptable and had a high degree of configuration so it could be a tight-glove fit for Wal-Mart as well as a small company in a different industry,” said Preuninger.


Esther Surden is Publisher and Editor of NJTechWeekly, and a contributor to Philly Tech News. This article originally appeared in NJTechWeekly, and is republished here with her permission.

Update: Amber Road priced at $13, above the range, and now commands a $356 million market cap, Renaissance Capital reports.

Begin the IPO watch for Monetate

Tom Paine

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David Brussin / Monetate 

No one who has followed Conshohocken-based Monetate, the SaaS vendor whose products help retailers and other brands customize their websites to the needs of individual users, and its progress would be surprised to hear that they are thinking about going public. But timing is a key issue. A company has to demonstrate the revenue base, size of market opportunity and credibility (not necessarily immediate profits) to gain investor confidence.

Now CEO David Brussin has said something more definitive about the subject than I've heard him say before. In an interview with the Daily News appearing yesterday, Brussin said, "in a couple of years, we'll be a public company and a lot larger. We want to be here. I can't even imagine this company not being in Philadelphia."

If Monetate is going public within two years (assuming there are no drastic setbacks, or market turbulence, or someone makes an offer they can't refuse) that probably means the thought process and preliminary planning must be moving along.

Brussin also provided another useful piece of information in the Daily News story (credit
Daily News staff writer Michael Hinkelman with getting the story). He said, "a small [Monetate] client might be $75,000 a year. A large client - millions of customers - might be more than $1 million in fees annually". I'm not going to get into a guessing game about Monetate's revenues based on that information, although I am somewhat surprised to learn that it may have million dollar plus clients. Monetate said in a press release early
this year that it more than doubled its client base in 2012 and added over 100 brands
This would imply that it had somewhere in the neighborhood of 200 distinct accounts.
I asked a Monetate representative for an update on this but have yet to receive a response.

At mid-year 2013, Monetate said revenue for the first half of the year increased 127%
over the prior year. It expects to finish 2013 with at least 225 employees, and is offering generous bounties for successful referrals.



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On heels of Veeva Systems' mega IPO, a look at its Philly ties and vision for life sciences IT

Tom Paine


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Veeva opening on NYSE / courtesy Veeva Systems

Pleasanton, CA-based Veeva Systems, a cloud computing company serving the life sciences industry, went public Wednesday at $20 per share, raising its offering price twice since its initial S-1 filing. As a result, the company raised $194 million, and after trading opened shares nearly doubled on the first day. On Thursday, Veeva (NYSE: VEEV) closed at $41.60, giving the company a $5 billion market capitalization.

Though based in Silicon Valley, Veeva has many roots and a major portion of its life sciences client base here. Veeva now has about 100 employees in the Philadelphia area, between its Eastern US office in Radnor and also from acquiring AdvantageMS in Fort Washington in June. And Matt Wallach, Veeva co-founder who is a native of Wallingford, is based out of Radnor. Wallach was recently named Veeva's President, reporting to CEO Peter Gassner. He issued the following statement on Wednesday:

“Today marks a very exciting day for Veeva employees, customers and partners. We founded the company to help life sciences companies solve their most strategic business challenges with our industry cloud solutions. Multitenant cloud technology has enabled Veeva to efficiently craft industry-specific solutions to help pharma companies educate physicians on new therapies, bring drugs to market more quickly and maintain compliance with government regulations. These are billion-dollar business challenges, and the IPO validates their importance.”


I had an opportunity to speak with Wallach the morning after the IPO by phone. He said a large part of what Veeva was trying to achieve through its IPO was to firmly establish itself as a life sciences cloud solutions company, as opposed to simply being a life sciences CRM vendor (its original offering). Secondly, although Veeva is already expanding into other sectors of the life sciences space and intends to do so further, Wallach wanted to emphasize that it doesn't intend to go head to head against everyone. Rather, when Veeva can partner with companies who are doing an excellent job of meeting customers needs to provide an integrated, enhanced offering that adds value, it will do so. However, there is a list of areas where Veeva feels customer needs are not being well served and it will consider developing solutions for these from scratch. Beyond products already launched or announced, however (Veeva Vault, Veeva Network), Wallach declined to name any of these.

We discussed areas such as regulatory documentation & submission (where it partners with companies including Accenture and its Wayne-based Octagon Research Solutions unit); clinical trial management systems (CTMS), where its partnering with Medidata Solutions which has a unit in Conshohocken; prescription data and related research, where Veeva is working with Horsham-based Symphony Health Solutions; and quality management, where Veeva recently announced a partnership with Hamilton, NJ-based Sparta Systems. As for ERP and HCM, Wallach said those were fairly generic applications that Veeva would not try to replicate, but that some type of partnership with a major cloud ERP player could be a possibility.

A key tenet of Veeva's strategy is to "crowdsource" (with appropriate permissions) data flowing through its CRM platform from contacts with physicians and other providers to provide feeds that update and improve the quality of other databases, Wallach says. This could have a scale effect if (as Veeva hopes) it continues to increase its share of the life sciences CRM market.

For Veeva Network, Veeva's newest offering built partly around its AdvantantageMS acquisition and running on top of its Network platform, Veeva also opened an office in Toronto for technical development to support ongoing work on the product in Fort Washington. Veeva Network, which seeks to provide an improved provider database and already has some active users, is expected to be formally released before the end of the year.

I also had a chance to speak with J. Bruce Daley, VP and Principal Analyst at Constellation Research, a CRM veteran who has followed Veeva for a while. He compared Veeva's rise (in particular, versus Oracle) to that of Workday, though in a niche rather than a vertical. Of course, principal founders of both firms came from companies Oracle acquired. Daley commented: “The founders of Veeva and Workday are becoming like the Old Masters. Each new success in technology only inspires them to think of the next one.”

There are other details I could cover (and will do so later), but for now I'm just trying to give the broad picture, while also mentioning Veeva's rapid rise since being founded in 2007 and its tremendous capital efficiency and profitable status (unlike many cloud companies).

Veeva's vision for life sciences seems to be to achieve data integration across the enterprise at perhaps a higher level than has has been achieved in the past. Their ability to achieve this vision will depend partly on customers' ability to change and adopt. The cloud is only an enabler, but the functionality that Veeva is aiming for goes beyond a mere change in how you access your data.

Links 10/16/2013: Veeva Systems worth $4.5 billion following first day close after IPO

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Pleasanton software firm Veeva Systems rakes in $261 million in IPO (San Jose Mercury News)
Veeva, with significant presence and customer base in Philly area, initially valued at $2.4 billion pre-trading.

Shares of Veeva Systems soar in IPO (MarketWatch)


Veeva’s IPO Isn’t Twitter-Hot, but It Should Make One Investor Very Rich (Bloomberg)

Gordon Ritter: Veeva Systems is the next Salesforce (VentureBeat)


Veeva CEO: We were never going to delay IPO (Fortune Term Sheet)


Verizon Testing Same-Day Delivery for Phones Ordered Online (AllThingsD)
Testing it in Philadelphia.

Comcast and NBCU Tap Exec to Lead Cross-Company Promo Efforts (Variety)



Consumer interest in cable shifts
Subscribers seek customized bundles (Philadelphia Inquirer)

Dominion Business Solutions Merges with Integrated Business Consulting (Business Wire)
Combined company's portfolio includes Philly-based EigenX.

SaaS Life Sciences vendor Veeva Systems, with significant Radnor (& now Ft Washington) presence, annnounces IPO plans

Tom Paine

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Veeva Systems announced this morning it was planning to conduct an initial public offering of its common stock after the SEC completes the review process initiated by Veeva Systems' confidential submission on June 26, 2013 of its draft registration statement, subject to market and other conditions.

Headquartered in Pleasonton, CA, Veeva serves the life sciences vertical with an increasingly broad array of SaaS-based solutions. Veeva has much of its US sales, marketing and client services based in Radnor, with at least 50 to 60 employees located in the area, the company told me in March.

Veeva's CRM offering for Life Sciences sales reps was built on Salesforce's Force.com platform. It built its own content management platform, Veeva Vault, which was introduced last year. Just this week, at the DIA annual meeting, it introduced its cloud-based Veeva Vault Investigator Portal, appearing to move more deeply into the clinical trial document management space, and acquired AdvantageMS, a Fort Washington-based provider of data on healthcare providers.

I first wrote about Veeva's potential IPO plans after Bloomberg reported on them in March, speaking at the time with Veeva co-founder and Chief Strategy Officer Matt Wallach, a Wallingford native who is based here. Veeva is unusually profitable for an early-stage SaaS company, with Bloomberg citing sources as saying that Veeva posted a profit of $30 million on revenue of $120 million in 2012. Oracle is probably Veeva's biggest overall competitor, and Oracles' partnerships with Salesforce, NetSuite and Microsoft announced this week were seen by many analysts as a recognition of its weaknesses in SaaS and cloud computing.

Veeva Systems was founded in 2007 and reached this point with only $7 million in outside capital. Peter Gassner is its President & CEO.


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Tableau's market value soars past that of competitor QlikTech on first day of trading

Tom Paine

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Photo / Business Wire

Business Intelligence vendor Tableau (I think the preferred term now is data discovery and visualization) closed its opening day of trading (on the NYSE under the symbol "DATA") yesterday at $50.75, up almost 64% from its opening price to the public of $31.00, giving it a market capitalization of about $2.9 billion.

Its Radnor-based competitor, QlikTech, closed yesterday at $30.68, with a market cap of $2.65 billion. QlikTech held its IPO on July 16, 2010.

Seattle-based Tableau had been growing at more than 100% per year and had total revenue of $127.7 million in 2012. It posted a net loss of $3.7 million on revenue of $40 million during this year's first quarter, up 62% from the pior year. QlikTech reported total Q1 2013 revenue of $96.5 million, up 22% from the prior year's first quarter, and a GAAP loss of $16.8 million.

Tableau and QlikTech are by no means apples to apples competitors, though they frequently come up for direct comparison (but QlikTech CEO Lars Björk downplays in presentations how often they compete for the same accounts). Tableau's strength's are seen as data visualization and "rapid fire" ad hoc query capabilities, and being easier for end users who are not data analysts or developers to use. QlikTech is probably better suited to heavier (more structured) data analysis and for the sheer speed of its in-memory processing (although Tableau also uses in-memory technology).

Another distinction between the two is that while QlikTech originated in Sweeden and gradually expanded into other regions of the world and its revenue distribution still reflects its European roots, only 17% of Tableau's 2012 revenue came from outside the US and Canada, according to its S-1.

QlikTech announced earlier this month it had acquired Sweeden-based NComVA, a company it was already partnering with, to enhance its visualization technology.

QlikTech shares have also had a nice spike this month, up 20% and hitting a 52 week high, partially spurred on by the prospects of the Tableau IPO and perhaps a sense among some investors that QLIK was undervalued relative to the value given to Tableau.




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Veeva Systems holds Global Customer Summit in Philadelphia

Tom Paine


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Veeva Systems, the Pleasanton, CA-based Cloud CRM and CMS vendor to the Life Sciences and Pharma industries, held its Global Customer Summit earlier this week with over 700 attendees from 100 companies at the Pennsylvania Convention Center in Philadelphia.

Veeva, a company founded only in 2007 and about which I would guess few outside of its niche markets and perhaps the Salesforce.com universe (its CRM runs on the Force.com platform) knew much until recent months, has been put on the map due to widespread reports that it is planning an IPO that could take place as soon as the third quarter, and has already lined up its lead bankers for the deal. (See my posts California-based Cloud Pharma CRM & CMS vendor Veeva Systems, with sales & marketing based in Radnor, may seek IPO and Reuters: Veeva Systems, with significant Radnor presence, taking more steps towards IPO ). While Veeva has not confirmed the most recent reports, neither has it denied them.

Veeva held its Customer Summit in Philadelphia this year, as it has in the past, partly due to the large concentration of Life Sciences customers in Pennsylvania and New Jersey, and also because of the location of Veeva's US customer service, sales and marketing in Radnor. The event gave Veeva the opportunity to make some significant new product announcements:

Introduced Veeva Network, a cloud-based customer data and master data management (MDM) solution.


A new mobile CRM and CLM (Closed Loop Marketing) solution for Windows 8. The same apps had been available on the iPad since 2011.

Veeva also announced that two major healthcare advertising agencies had committed to developing content for Veeva's new, approved (for regulatory purposes) email app that allows Pharma salesforces to communicate directly with physicians via their tablets.

In addressing the summit, Veeva’s CEO, Peter Gassner, presented some key company milestones. He said in the last 5 ½ years (essentially since the company's founding), Veeva’s user base has grown to 100,000 users in 75 countries and the company currently has 500 employees, and is still growing at 100% per year.

Veeva Systems had around $120 million in revenue last year and is profitable, according to reports. It accomplished this with only $7 million in venture capital - $4 million of it institutional (from Emergence Capital) and $3 million in angel funding. Veeva told me in March it had 50 to 60 employees in the Philadelphia area.



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Today in Philly Tech History 2/8/2012: EPAM Systems completes IPO

On February 8, 2012, Newtown-based systems integrator EPAM Systems completed its IPO. Although it had to cut back on its offering (to 6 million shares at $12 per share from a planned 7.4 million shares at $16-$18), the so-called "Cognizant of Eastern Europe" since most of its workforce is based there has done well, as its share price has risen to $21.49 giving EPAM a market value in excess of $900 million.

Workday closes first day up 74%, after raising offering price again

Tom Paine


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Enterprise Cloud software vendor Workday closed its first day of trading at $48.69, up 74% from its offering price of $28, which was raised from its previous range of $24 to $26, after already being increased from $21 to $24 per share earlier this week. That gives the company a market value of $7.3 billion.

Not to obsess about the numbers, but Pleasanton, CA-based Workday's valuation is big. Workday's 2011 revenue was $134 million, with a net loss of about $80 million. Workday is now valued at an amazing 39 times the last 12 month's revenue, although revenue in its most recently ended quarter doubled to $62.7 million.

Workday's importance is that its a completely cloud-based alternative to traditional on-premise enterprise software vendors, in particular SAP and Oracle. Workday is different from Saleforce.com, both in aspects of its technology and in terms of applications. While Salesforce.com is trying to branch out from its traditional Customer Relationship Management (CRM) emphasis (and is in fact partnering with Workday in Human Capital Management), Workday's strength is in the HCM space although it has already moved into financials and potentially could expand into a broader range of ERP applications. Major customer wins include Kimberly-Clark, HP and Google.

Workday's founders, Dave Duffield and Aneel Bhusri, worked together to build PeopleSoft into a company that was acquired by Oracle in a bitter takeover fight for $10 billion. Workday is also trying to move into one of PeopleSoft's old markets,
Higher Ed, taking on Oracle and Ellucian (the result of the Datatel/SunGard Higher Ed merger). SAP acquired SuccessFactors, and Oracle acquired Taleo and others in response to the Workday threat.



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Daily Links 4/2/2010: Comcast-NBCU deal under scrutiny by Florida, other states

Eastern Tech-MAC merging (Philadelphia Business Journal)
MAC Alliance and The Eastern Technology Council Announce Agreement to Merge (Press Release)

BI Software Provider QlikTech Files for $100M IPO (Managing Automation)
2009 revenue of $157.4 million.

Comcast-NBC Universal Deal Probed by Florida Amid U.S. Review
(Bloomberg via Business Week)

Verizon Derides Cable 3DTV Efforts
(Light Reading Cable)

Comcast Owes One-Fifth of Its Value to VoIP (Seeking Alpha)

Delaware iPad lines form at 6, maybe earlier (Wilmington News Journal)




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QlikTech files for IPO

In a long anticipated move, in-memory business intelligence provider QlikTech of Radnor announced today it had filed a registration statement on Form S-1 for a proposed initial public offering of common stock. No info at this time concerning number of shares or pricing. Morgan Stanley, Citigroup Global Markets, and J.P. Morgan are acting as joint book-runners, and Jefferies & Company and Thomas Weisel Partners LLC will be co-managers.

QlikTech has grown rapidly and achieved revenue of $120 million in 2008; I have yet to see 2009 figures. This should be the biggest tech IPO in the Philly area in some time. I don't have enough information to makes guesses as to how much the company is worth except that it should be in the hundreds of million dollars. An IPO not only would help some people to "cash out" or get some liquidity for their interest in QlikTech, but it would also give the company a currency to make acquisitions to broaden its product portfolio.

See press release here.




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Report: Radnor's QlikTech preparing for IPO

The 451 Group blog "Inorganic Growth" says that Radnor's QlikTech, the in-memory Business Intelligence provider, is taking steps in preparation for an initial public offering. QlikTech has reportedly chosen bankers (Morgan Stanley, CitiGroup and JPMorgan) and is preparing its IPO paperwork. Revenue was $120 million in 2008, up from $80 million in 2007, and certainly appears to have grown in 2009. The company was hinting at an IPO two years ago before the market meltdown.


QlikTech looks likely to click on the market (The 451 Group: Inorganic Growth)




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