Tumblr Deal: Will Marissa Get It Right?

One thing’s clear about Yahoo Yahoo’s CEO Marissa Mayer:  she knows how to generate tons of buzz!

But can she follow it up with results?

It’s true that Yahoo’s stock has been red hot, with a gain of 73% since Mayer came on board in mid-July 2012.  Yet the move is likely the result of the boost from the company’s Asian assets, Alibaba and Yahoo Japan.

Of course, Marissa wants to go beyond this — and a key is the $1.1 billion deal for Tumblr.  The microblogging site generates enormous amounts of traffic, has young users and yes, there is an interesting mobile play.

So will the Tumblr deal be what returns Yahoo to its former glory?  To see, I reached out to a variety of top people in tech:

Roman Stanek, the CEO of GoodData

“Tumblr marks Yahoo!’s ninth acquisition this year … There’s no secret behind this acquisition spree. Tumblr is Marrisa’s bet on the future and Yahoo!’s potential inroad into a younger, hipper demographic.  Are they betting on the right horse?  I believe social networks are generational. While Facebook Facebook might be the social network of today, Tumblr might very well be the network of the next generation.”

Marc Smookler, the Co-Founder of Written

“It’s a big bet on a young entrepreneur but also a bet on the way people communicate and how content will be delivered and consumed. Ultimately, it’s a smart move by Yahoo as it’s expected to drive Internet traffic and will bring a social media aspect to its overall business strategy. Facing stiff competition from Facebook and Google Google, advertisers should be more compelled to spend as more users engage in Yahoo services. The key for Marissa will be to keep Tumblr ‘separate’ from Yahoo and allow it to thrive and keep its culture and management teams intact.”

Josh Alexander, the CEO and Co-Founder of Toopher

“There are comparisons to the Facebook/Instagram deal.  But keep in mind that Facebook was built on sharing photos, and given Instagram’s popularity and growth, Facebook could not afford to let that opportunity grow outside of its brand. Plus, at that point in time, the Instagram purchase only cost 1% of Facebook’s market cap. The Yahoo/Tumblr acquisition does not offer the same sharp edges. While Yahoo was built for search, it has grown well beyond those boundaries; however, its identity is not a blogging and photo-sharing platform. As such, this acquisition seems beyond the scope of its wheelhouse. Further, I can appreciate the need for legacy players to buy innovation, but at 3.8% of its market cap, Tumblr is a significant investment to not own the market.”

James C. Foster, the CEO and Founder of Riskive

“Marissa Mayer is not Billy Beane. She has no intention to build up the Yahoo business via singles and doubles alone. While this is a proven model, think Southwest Airlines Southwest Airlines or Costco, this strategy requires a different approach and team architecture. Marissa has architected her team to be lean and mean to free up cash for this exact type of premeditated opportunity. She needs the big wins – she needs the eyes and wallets of the media – and quite honestly she needs the big at bats to get those wins. Tumblr will be the first in a series of big swings that will take at least nine months (or innings) to play out.”

Christian MacLean, the CEO and Co-Founder of Beaucoo

“In the past you’d see high growth/zero revenue companies get big acquisition offers and turn them down, only to see them get ridden over the falls as the next consumer platform takes off.  The challenge going forward will be keeping Tumblr’s young user base happy when Yahoo decides it needs to clean up the platform’s content (look at Reddit’s challenges) and monetize .  The switching cost is so low and it’s not hard to carry your friends with you to a new platform that doesn’t want to show you ads or apply a content policy.”

Tableau IPO Bounds Into the Stratosphere

Tableau Software (DATA), which provides software for analyzing trends and data, might not be a household name, but it certainly caught the eyes of Wall Street on Friday.

Ahead of today’s initial public offering, Tableau boosted its transaction from a range of $23 to $26 to a range of $28 to $30, and also increased the number of shares issued from 7.2 million to 8.2 million.

Tableau ended up pricing the deal at $31 to raise $254 million, then investors bid shares up as much as 60% in the first few hours of Friday trading.

So why the excitement?

Tableau is one of the leaders in a red-hot market: Big Data. Amid the surge in mobile, social networking and the cloud, companies need better tools to make sense of the subsequent deluge of information. Tableau’s software not only makes it easier to access this data, but also to put it into understandable forms, such as graphs and charts.

Think of it as Excel on steroids.

Speaking of steroids, Tableau’s growth has been almost unnaturally robust, with revenues surging from $34.2 million in 2010 to $127.7 million in 2012. The company is even profitable, with net income coming to $1.4 million last year.

In all, Tableau currently boasts more than 10,900 customers, including top-notch organizations likeDeere (DE), Deloitte Touche TohmatsuVerizon (VZ) and DuPont (DD).

As a note, Tableau is just the second Big Data company to come public. The other was Splunk(SPLK), which hit the market about a year ago and has since gone on to post a gain of 163%.

Still, despite the clearly mouth-watering possibilities, investors should approach DATA stock with caution in the short-term. It’s typical for shares to cool down after such a hot opening — as was the case with Splunk, which shed about 25% within two months of its offering before finally snapping back.

VIDEO: Investor Opportunities in the Cloud

Cloud operators have been the star of the IPO world thanks to deals like WageWorks(NASDAQ:WAGE, +188% since IPO), Workday (NYSE:WDAY, +132%) and ServiceNow(NYSE:NOW).

One of the early investors in the cloud space is Emergence Capital.

“Ten years ago when we started our firm, we believed that the Internet would change everything in the way businesses use technology,” Emergence partner Kevin Spain said. As a result, Emergence invested in breakout companies like Salesforce.com (NYSE:CRM), SuccessFactorsYammerand Box.

“There are things you can do in the cloud that are not possible with the traditional client-server approach,” Spain said. “For example, you can do things like collaboration. In fact, a company likeLinkedIn (NYSE:LNKD) could only be possible with the cloud.”

While Spain remains bullish on the industry, he still recognizes that some sectors are tougher to crack than others. One is enterprise resource planning, especially when it comes to bringing Global 2000 companies onboard. Oracle (NASDAQ:ORCL) and SAP (NYSE:SAP) still have a hammerlock on the market, and various government sectors like intelligence and defense have been tough to sell into.

Despite this, the market potential is still enormous — and there should be numerous opportunities for investors. Spain discusses this more at length, expounding upon M&A and public offerings for cloud companies, in the video interview below.

 

Interview With Cyan CEO Mark Floyd

Today Cyan pulled off its IPO, raising about $88 million. The company is a top player in the software-focused networking space.

No doubt, the growth ramp has been substantial. From 2010 to 2012, revenues soared from $23 million to $96 million.

I had a chance to talk to the company’s CEO, Mark Floyd. He certainly has a great background, leading companies like SafeNet and Entrisphere. He was also a venture capitalist at both Sevin Rosen Ventures and El Dorado Ventures.

Here’s what he had to say:

Q: Since the telecom implosion a decade ago, there has been little investment in the equipment space. That’s been a benefit for Cyan?

A: We do not have the legacy problems of companies like Alcatel-Lucent . This gives us a significant advantage in terms of innovation.

But it has not been easy. Cyan was started five years ago when there was no interest in funding companies like ours. But the timing turned out to be spot-on in terms of the market opportunity for the technology.

Q: A key is that the network was meant for voice not social networking, cloud apps, games and so on?

A: That’s right. The network has become too expensive to scale up by adding routers and equipment.

This is where Cyan comes in. We are focused on softwae defined networks (SDNs). This allows our system to be more flexible and open. The architecture is also much more simplified.

We think of ourselves as the VMware  of the network. VMware virtualized the data center, which resulted in huge gains. We plan to do the same with our systems and software. We look at this as a fantastic opportunity

Q: What about the business model?

A: For our Z-Series hardware, we recognize revenue when the product ships.

But then we have our Blue Planet software, which we sell on a subscription basis. This is available even if a customer does not buy our hardware.

In the coming years, we think Blue Planet can turn into a large business, with a strong base of recurring revenues.

 

 

VIDEO: GoodData Is Trailblazing Big Data

Big Data might be transforming into a big business, but at this point, there’s only been one IPO in the sector: Splunk (NASDAQ:SPLK).

Granted, that single IPO has been a big winner — SPLK came public a year ago at $17 but now trades around $44 — but the field’s looking kind of lonely.

Though maybe not for long.

One IPO possibility in the Big Data is GoodData. Founded in 2007, GoodData leverages cloud technologies to help companies with business intelligence, which involves helping clients to get a better sense of key trends affecting their sector.

The industry is currently dominated by legacy players like IBM(NYSE:IBM) and SAP (NYSE:SAP) that use on-premise solutions. But GoodData is becoming a growing presence.

Last year, GoodData’s revenues surged by a multiple of five (though the company has not released actual figures), and the customer count increased three times over to more than 8,000. More than 40 of its deals were for six-figures.

IDC projects the Big Data segment to grow 32% annually and hit $23.8 billion by 2016, so the market opportunity is massive.

To scale out, GoodData has raised a total of $53.5 million. Investors include tier-1 players likeAndreessen Horowitz, General Catalyst Partners, Fidelity Growth Partners, Next World Capital, Tenaya Capital and Windcrest Partners.

I’ve known the founder and CEO of GoodData, Roman Stanek, for some time. He’s a veteran of the tech world, previously launching NetBeans (which was sold to Sun) and Systinet (which was sold to Mercury Interactive). In the video interview below, I talk to Stanek about the company and the mobile enterprise:

Mobile Metrics Investors Really Care About

Building a great mobile app is not just about having a good idea, strong technology and a cool design. You also need to have analytics.

And one of the leading players in the market isMixpanel. Last year, Andreesen Horowitzinvested about $10.25 million in the company. Interestingly enough, a key reason for the deal was that the venture partners kept seeing Mixpanel analytics embedded in investor pitches!

As of now, the company has over 1,000 customers, which include breakout operators like Airbnb, Fitbit, Path, Sidecar, Zeptolab and TaskRabbit. The platform crunches about 11 billion actions per month.

No doubt, Mixpanel has the typical features. That is, there is an SDK that you hook into an app — which beams data to a server — and you can track things via a dashboard.

But there is definitely more.  “Companies should have lots of metrics,” said Suhail Doshi, who is the co-founder of the company. “But often they are not useful, such as downloads or page views. With Mixpanel, you can measure the actions of users. The purpose is to understand engagement.”

This is especially important with a mobile app. “Engagement is hard to fake,” he said. “It also shows how good a product really is.”

But of course, Mixpanel provides other useful features. For example, you can track the lifetime value of a user. Oh, and then there are some nifty marketing capabilities.

Consider one of Mixpanel’s customers, BeauCoo. “Traditional analytics tools were not working for us,” said Christian MacLean, who is the company’s CEO and co-founder.

But with Mixpanel, BeauCoo has been able to supercharge its business. “We actually first test on the web and then go to Android and then to iPhone,” he said. “It’s worked very well.”

Christian also noted that Mixpanel has helped allow for better targeting of the user base. “We can segment our traffic and make relevant push notifications,” he said. “Actually, we use no other analytics tools except for Mixpanel.”

Facebook’s Q1: A Split Decision

Investors were left guessing Wednesday night following Facebook’s (NASDAQ:FB) first-quarter earnings report.

FB registered a slight beat on revenues, posting $1.46 billion vs. expectations of $1.44 billion. However, the bottom line was light, with adjusted profits of 12 cents per share coming in a penny shy. The reaction? Fractional moves up and down, at least in the early hours of postmarket trading.

Facebook has been investing heavily in its mobile efforts, such as with ad platforms and new apps. On this front, the company is starting to see some amount of payback — on a quarter-over-quarter basis, the mobile ad business grew from 23% of revenues to 30% (for a total of $375 million).

Another positive: FB continues to attract scores of users. Monthly active mobile users spiked 54% year-over-year to 751 million — more than triple the figure tallied in Q1 2011. Also of note: Facebook currently has about 189 million mobile-onlymonthly users.

On the conference call, Mark Zuckerberg provided a couple other interesting tidbits. One that stuck out was that Instagram now has 100 million monthly users and is growing at a faster rate than Facebook did at this level.

Facebook also is becoming a core part of the overall mobile experience. Keep in mind that 81 of the 100 highest-grossing Apple (NASDAQ:AAPL) iPhone apps are integrated into the platform, and half of them are using Facebook ads.

Not all is well on the mobile front, however. Its recent Home app — essentially a homepage forGoogle (NASDAQ:GOOG) Android devices — is getting pounded early on in the form of poor ratings and comments on the Google Play app store.

Naturally, Zuckeberg says it’s too early to determine Facebook Home’s success or failure.

Is Shazam Prepping to Go Public?

Given the horrible performances of Facebook (NASDAQ:FB), Groupon (NASDAQ:GRPN) and Zynga (NASDAQ:ZNGA), there has not been much activity with social IPOs. Instead, investors seem more interested in enterprise cloud operators, as seen with hot deals like ServiceNow (NYSE:NOW) and Workday (NYSE:WDAY).

Still, at some point, it’s inevitable that we’ll start seeing social IPOs hit the market again — especially those that have a mobile-first focus.

One good possibility: Shazam. The company has an app that allows your phone to recognize a song or TV show by hearing the lyrics or grabbing a screen capture. From there, you can get more information and find similar content.

So why might Shazam think about going public? First of all, the company has been around since 2002. In other words, there is probably lots of pressure from investors to get a return on their initial investments.

Plus, Shazam has recently hired a new CEO: Rich Riley. He has a strong corporate background, having been the former executive vice president of the Americas for Yahoo (NASDAQ:YHOO). In fact, it was noted in the press release that a big reason for his hiring is to help prep for a public offering.

Whenever that happens, the Shazam IPO is likely to be a hot one. The company has over 300 million users across 200 countries. In fact, there are about 2 million new users added every week.

Besides having a strong brand and cutting-edge technology, Shazam has also been smart to make its app available across many platforms. These include Apple’s (NASDAQ:AAPL) iOS, Google’s (NASDAQ:GOOG) Android, Microsoft’s (NASDAQ:MSFT) Windows Phone and the BlackBerry (NASDAQ:BBRY) line.

There is a chance that Shazam may not even list in the U.S. — maybe pulling off its offering in London (where the company is headquartered) or even Asia. But again, the U.S. market is going to get hungry for social deals at some point. When that happens, a Shazam deal on the NYSE or NASDAQ would likely attract the interest of investors and also provide a nice slug of capital.

To get some more background on Shazam, I chatted today to talk to the co-founders of a new mobile-first company, BeauCoo. They are a husband-and-wife team – Victoria and Christian MacLean — focused on the consumer space. Here’s what they had to say about Shazam:

VIDEO: Will Broadcom Keep Climbing?

The mobile revolution is hot, but not all companies taking part in it are heating up as a result. Just look at Broadcom Corp. (NASDAQ:BRCM). The company has focused heavily on mobile but has hardly seen its stock climb as a result.

The average return for BRCM over the past five years has been a miserable 4.5%. More recently, the stock has been stuck in a range of about $30 to $35.

Today, though, BRCM showed that it can get juiced up, with the stock gaining about 7%.

Does this mean the company may be on the verge of breaking out of its rut?

Perhaps. No doubt, BRCM posted a solid first quarter, with revenues up over 10% to $2 billion and earnings coming to $191 million, or 33 cents per share, up from $88 million, or 15 cents a share from the same period a year ago. When making one-time adjustments, the earnings came to 65 cents — 9 cents better than the Street expected.

The momentum should continue, too. BRCM’s forecast for the second quarter is for revenues of $2.1 billion, plus or minus 4%. The analysts’ consensus was for $2.05 billion.

Now it’s true that lots of BRCM’s growth has come from sales of chips to Apple’s (NASDAQ:AAPL). And, as seen with the tech giants earnings report, growth has certainly been slowing down.

But this should not necessarily be an issue BRCM. After all, the company has been getting more business from other players in the mobile space like Samsung (PINK:SSNLF).

More importantly, the overall industry should continue to grow for the long-haul. At the core of BRCM is expertise in regards to technology and powerful Internet connections. With the move towards LTE — which will mean much more video — there should be a nice boost.

Plus, there are the huge opportunities in emerging markets, especially in Asia. Smartphones, tablets and phablets are becoming must-have items.

Something else: BRCM is a leader in near-field communication (NFC) technology. Essentially, this allows for mobile transactions. While the market is still in the nascent stages, the potential is enormous. It seems inevitable that smartphones will morph into virtual wallets.

To top it off, BRCM has tremendous scale. Just last year, the company shipped over 700 million mobile combo chips and another 700 million for Ethernet connections. All in all, this is a testament to the company’s core technology.

Then again, the company plows about $2 billion a year into R&D. It definitely helps that BRCM has $3.93 billion in the bank and keeps cranking out lots of cash flow (there was $388 million in Q1).

Going forward, BRCM is likely to remain a top player in the mobile space — and this will drive growth on both the top line and bottom line. And the stock price is still trading at a reasonable valuation, coming to a forward price-to-earnings ratio of about 11x.

In other words, for investors that want to find a long-term play on mobile, BRCM looks like a good choice.

Mobile App Tries to Find the Next Warren Buffett

The stock market may seem complicated if not rigged. But the fact is that many people have done quite well over the years.

So to make things easier — and increase the odds of success — there’s a new iOS app to help out. It’s called Robinhood.

For the most part, you can create a playlist of stocks and track the performance. You can then share your picks with your friends. Oh, and there are also helpful newsfeeds that are based on your portfolio.

In theory, you should be able to get a sense of who the real stock pickers are — those who probably need to do more homework!

At the core of Robinhood is a sophisticated Big Data back-end, which is based on lots of algorithms. Yes, the company’s co-founders, Vladimir Tenev and Baiju Bhatt, are math whizzes and are graduates of Stanford (both got master’s degrees in math). They also have built technologies for institutional investors and investment banks.

“Robinhood is a great tool for surfacing the next generation of Warren Buffets,” said Vladimir. “Investors are constantly on the lookout for new information and ideas. Financial advisors, brokers, and investment research firms derive much of their edge from being gatekeepers of this information. With Robinhood, the aim is to make a transparent and free social platform for investing ideas, and give every investor equal access to this platform. This way, individuals gain access to a wide variety of opinions, and those who perform best are rewarded with more exposure and recognition.”

And how will Robinhood make money? According to Vladimir: “We hope to add a premium set of features at a later time.”

But perhaps the biggest opportunity is to turn Robinhood into a next generation stock brokerage. And yes, Robinhood is already in the process of getting the regulatory approval to pull this off.