Data Sheet—Friday, January 23, 2015
Good morning, Data Sheet readers. Today’s the day! Box set the price for its public market debut at $14 per share. Who’s next? Read on to hear about 10 likely candidates for 2015. Plus, we’ve got excerpts from an exclusive interview with Salesforce founder and CEO Marc Benioff.
I’ll be off next week, testing my new dive computer. Thanks to Fortune senior editor Andrew Nusca for covering. Send some tip love his way, won’t you?
If you find this newsletter useful, forward it to colleagues and business partners, and tell them to sign up! I’d love to see more subscribers when I return Feb. 2. Did you miss an issue? Here’s an archive of past editions.
Long-time Apple director (and retail strategy advisor) retires. J. Crew CEO Mickey Drexler will step down from the eight-person board at the end of March. A replacement wasn’t named yet. Speaking of retail, former Burberry CEO Angela Ahrendts—who took over the company’s retail operations last year—got $73.4 million in stock last year. Apple CEO Tim Cook got “just” $9.2 million. That’s a pretty sweet signing bonus. Fortune
Huawei CEO: Spies for the Chinese government? Not us. People have been paranoid about the network equipment company for years. During an interview at the World Economic Forum in Davos, Ren Zhengfei said: “Why would I want to take someone’s data? Who would give me money for it?” ZDNet
Starbucks thinks high-tech with No. 2 hire. Former Juniper Networks CEO and long-time Microsoft executive Kevin Johnson takes over as president and COO on March 1. He’s been a board member since 2009, instrumental in its digital and mobile strategy decisions. Wall Street Journal
Amazon pays reported $350 million for mysterious Israeli chip designer. Not much is known about the company, Annapurna Labs. But its primary focus is speedier, more energy efficient data center networking. That would be good for both its core business, and Amazon Web Services. New York Times
POLICY & STRATEGY
Oracle has big hiring plans. It’s creating a new engineering center for its cloud services in San Francisco. That’s just the start. It also plans to recruit in the United Kingdom and South Africa, along with closer to home in Seattle, and Boulder Creek, Colorado. ZDNet
Why is SAP doing so well in Europe? You could say the German software company has home turf advantage. Another reason: faster cloud adoption. WSJ
Closer data center friends: EMC and Lenovo. Oracle isn’t the only one new challenger for Cisco with computing hardware that “converges” server, networking, and storage functions. Lenovo’s first big move since buying IBM’s low-end server division last year will see it team with the storage giant on similar all-in-one designs. Don’t forget, EMC used to be Cisco’s close partner for this sort of technology until their relationship cooled off late last year. eWeek
RESEARCH & PREDICTIONS
Big data disconnect. Apparently, the right hand doesn’t know what the left hand is doing. Almost half of the CEOs surveyed for an Economist Intelligence report about business intelligence believe their teams have the data they need to gather meaningful insights. Trouble is, only 27% of those outside the executive suite feel the same. Keep in mind, the survey was sponsored by data warehouse company Teradata. So assess accordingly.
Salesforce CEO Marc Benioff on where big tech is headed
Marc Benioff, the founder and CEO of Salesforce.com, has a knack for trend-spotting. He’s also a born marketer, with an uncanny ability to draw attention to subjects near and dear to him, of which there are many.
Benioff was among the first to foresee large software programs moving to the “cloud”— a concept he played a large role in popularizing—referring to inexpensively rented software sitting remotely on a network rather than on its owner’s computer. He was a heavy user of social media applications such as Facebook and Twitter well before other executives recognized their business potential. And from the founding days of Salesforce.com 16 years ago, Benioff, 50, committed himself, his company, and his employees to charitable work, making him a role model for other businesspeople.
In two interviews conducted in January—first at a dinner hosted by Fortune during the Consumer Electronics Show in Las Vegas and then a few days later at his San Francisco home—Benioff opened up about a variety of topics, including how data science will affect everyone’s business, where his ideas come from, why security should be companies’ top priority (above even customer-service software), and how he is working with Microsoft’s new CEO, Satya Nadella. Edited excerpts:
What’s the most important trend you see right now in the technology industry?
We’re in an AI spring.
You mean artificial intelligence?
Yes. For our company, and I think for every company, the revolution in data science will fundamentally change how we run our business because we’re going to have computers aiding us in how we’re interacting with our customers.
What’s an example of a company that’s using data well?
You probably don’t have to go very much further than looking at Uber and asking, “Why would Uber have all these data scientists?” Well, they want to have trip optimization, and they want to be able to maximize the efficiency of their fleet and ultimately provide you with the best customer service. And they think they’re going to do all that through data.
Beyond Box: 10 big business-tech IPOs in the making
Timing is everything. By happy coincidence, two business technology companies—data management innovator Hortonworks and data analytics upstart New Relic—picked the same inauspicious Friday in mid-December for their public market debuts. Both greeted the weekend boasting billion-dollar capitalizations, on par with their pre-IPO private equity valuations.
Normally that’s not something to brag about. But on a day when the rest of the Nasdaq index gave up 1% of its value, both newcomers overshot their pricing targets by more than 40%.
Yes, you could argue it’s because both companies were smart enough to low-ball their offer ranges. But there’s another reason: The market fundamentals for business technology look strong for the next 12 months. Big companies will expand budgets for information technology by an average 4% to 6% in 2015, according to a January forecast by Forrester Research. The tab could reach $2.34 trillion, with the biggest chunk—$620 billion—allocated for software.
“There is a huge appetite for consuming technology in the enterprise right now,” says Byron Deeter, partner with Bessemer Venture Partners (an early investor in business software powerhouses Cornerstone OnDemand and Skype, among others).
Against that backdrop, there are dozens of late-stage business startups that could face dates with destiny this year. Research firm CB Insights lists 588 companies in its pipeline that collectively have raised $64.3 billion.
Cloud file-sharing upstart Box will be first after the highly publicized delay in its public market debut last year. Last night, it set an initial public offering price of $14 per share. That was above expectations, and it translates into a likely market capitalization of $1.7 billion. That’s below its pre-IPO valuation of $2.4 billion.
Based on the flood of e-mails offering “perspective” on this long-awaited event, other business collaboration companies are thrilled. “This is great news, as it’s a real validation of the market that we’re playing in—the future of enterprise software has well and truly arrived, and companies are no longer afraid to try new, innovative cloud technologies,” said Alastair Mitchell, CEO and co-founder of Huddle, which disclosed a $51 million Series D funding round in early December. Huddle is mum on its plans for an initial public offering.
Some of the usual suspects for this list—particularly mobile payments company Square (valued at $6 billion or more) and collaboration pioneers Atlassian ($3.3 billion)—habitually shrug off IPO speculation. But here are 10 companies on this year’s more-likely-than-others list, arranged alphabetically, and all hoping to justify billion-dollar-plus private valuations.
3.) DocuSign: A specialist in electronic-signature software and a competitor to Adobe in that space, it closed a $115 million round in October 2014. Its CFO hinted at a 2015 debut shortly thereafter. Its last reported valuation was $1.6 billion.
4.) Dropbox: You can debate whether or not it is a business technology company, but the six-year-old cloud storage services pioneer is feeling pressure to justify the more than $1 billion it has raised over five different rounds. Is it really worth $10 billion?
5.) Lookout: Focused on securing smartphones and other mobile devices, the company snagged $150 million in a round led by T. Rowe Price Associates. (Total so far: $282 million.) The company has more than 50 million subscribers.
6.) MapR: The company’s CEO recently pointed to late 2015 as the likely timeframe for a public debut. One brag point: 700-plus corporate customers. It has raised about $170 million; its valuation is reported around $1 billion.
7.) MongoDB: With more than 2,000 customers, it is a betherwether for open source database companies seeking to displace proprietary technologies from the likes of Microsoft and Oracle. And it started the new year with another $80 million round. That’s on top of the $150 million raised in 2013. The valuation number being thrown around as of mid-January is $1.6 billion.
9.) Pure Storage: Poster child for enterprise storage startups using solid state technology to steal share from the likes of EMC and NetApp. At last count, it had raised $470 million, and its valuation is more than $3 billion.
10.) Stripe: The digital payments company hitched its wagon to Apple Pay and was just picked as the processing engine for the Kickstarter crowdfunding site. It claimed $70 million in new financing in early December; it’s valued around $3.5 billion.
For more on billion-dollar startups, see the cover story of the February 2015 issue of Fortune, “The Age of Unicorns.”
STARTUPS & DISRUPTORS
This software can write your ad copy. Well, sort of. Persado’s technology offers different twists on marketing messages, so you can test the effectiveness of different variations. The company just disclosed $21 million in Series B funding led by StarVest Partners. TechCrunch
Big bet on Asian big data company. A group of investors led by Goldman Sachs just put $56 million into an 18-month-old Singapore startup called Antuit. It is already a global company with offices in New York, Seattle, Bangalore, and Auckland. The company’s CEO, Arijit Sengupta, is an ex-IBMer. TC
$12 million for cloud management enterpreneur. The Series B round for CloudHealth Technologies was led by Scale Venture Partners. Its pitch centers on automating policy management related to cloud services.
MY FORTUNE.COM BOOKMARKS
How Megyn Kelly’s husband, Sheryl Sandberg (and I) realized she’s a big deal By Patricia Sellers
What are top business execs saying from Davos? By Benjamin Snyder
To build a billion-dollar company, keep your founder in the CEO spot By Erin Griffith
Are we in a tech bubble? Unicorn CEOs respond By Daniel Roberts, Deena Shankar, Robert Hackett
Meet the asteroid mining executive of Davos: No joke By Stephen Gandel
ONE MORE THING
You should stand for this. Yes, we all know we’re supposed to take breaks from being parked in front of our computer screen. This “smart” desk from office furniture company Stir (led by a former member of the Apple iPod design team) keeps track and reminds you when you take a stroll. Wired
MARK YOUR CALENDAR
IBM Interconnect: Cloud and mobile strategy. (Feb. 22 – 26; Las Vegas)
Gartner CIO Leadership Forum: Digital business strategy. (March 1 – 3; Phoenix)
Microsoft Convergence: Dynamics solutions. (March 16 – 19; Atlanta)
IDC Directions 2015: Innovation in the 3rd Platform era. (March 18; Boston)
Cisco Leadership Council: CIO-CEO thought leadership. (March 18 – 20; Kiawah Island, South Carolina)
Gartner Business Intelligence & Analytics Summit: Crossing the divide. (March 30 – April 1; Las Vegas)
Knowledge15: Automate IT services. (April 19 – 24; Las Vegas)
RSA Conference: The world talks security. (April 20 – 24; San Francisco)
Forrester’s Forum for Technology Leaders: Win in the age of the customer. (April 27 – 28; Orlando, Fla.)
MicrosoftIgnite: Business tech extravaganza. (May 4 – 8; Chicago)
NetSuite SuiteWorld: Cloud ERP strategy. (May 4 – 7; San Jose, California)
EMC World: Data strategy. (May 4 – 7; Las Vegas)
SAPPHIRE NOW: The SAP universe. (May 5 – 7; Orlando, Florida)
Gartner Digital Marketing Conference: Reach your destination faster. (May 5 – 7; San Diego)
Annual Global Technology, Media and Telecom Conference: JP Morgan’s 43rd invite-only event. (May 18 – 20; Boston)
HP Discover: Trends and technologies. (June 2 – 4; Las Vegas)