By Aaron Pressman and Adam Lashinsky
August 30, 2018

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Only in Silicon Valley would a highly-indebted, 19-year-old company that loses oodles of money attempt to go public on the strength of a less-than stellar track record.

But for the debt part, it’s a normal story. Decent revenue growth, generous employee stock compensation, and high administrative costs all describe SurveyMonkey, the pioneering “freemium” software company that supplies surveys and analytical tools to individuals and businesses. But SurveyMonkey also sports a balance sheet that is long on debt—$317 million, about $100 million more than it had in revenue last year—and short on cash, $43 million at last count. (It raised debt years ago to delay its IPO and for growth.) Because of the service on that debt, SurveyMonkey loses money, $24 million last year, and it wouldn’t have made much if it didn’t have the interest expense. (It plans to use the IPO money to pay down debt.)

For all that, SurveyMonkey’s IPO will get a lot of attention. For years it was at the vanguard of giving away tastes of its product to the masses and upselling and cross-selling fuller meals to the well heeled. Of the 60 million users who have signed up for SurveyMonkey, 16 million are active and 600,000 pay, according to the company’s S-1 filing. And SurveyMonkey isn’t exactly on fire: Revenue growth in 2017 was a tad under 6%. (The company’s revenue growth rate excluding a discontinued product line was faster.)

The not-so-young company has some sizzle to it. Its largest shareholder is Facebook honcho Sheryl Sandberg, whose late husband, Dave Goldberg, was SurveyMonkey’s CEO before his untimely death three years ago. (I counted him as a friend and remembered him here.) Sandberg is on the company’s board, as is tennis great Serena Williams. The company is a good marketer too: It forms partnerships with many media companies, including Fortune, which used SurveyMonkey to query attendees of its Brainstorm Tech conference in Aspen.

You’d think after nearly two decades a company with tons of talent and an impressive product could make money. The truth is, that’s harder than it looks.

Adam Lashinsky
@adamlashinsky
adam_lashinsky@fortune.com

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