Category: yext

The morality and efficacy of going public earlier

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast where we unpack the numbers behind the headlines.

For this week’s deep dive Natasha and Alex and Chris dug into the world of the IPO. Not just the numbers and the metrics and the calculations of valuations at diluted, and non-diluted share counts. No. We wanted to talk about the morality and efficacy of going public.

So to round out our conversation we enlisted Steve Cakebread, the CFO of Yext and Garth Mitchell, the CFO of Latch. Cakebread is known for being aboard the Salesforce, Pandora, and Yext’s IPOs. Mitchell has sat on both sides of the table during the IPO process, and is currently helming the money equations as Latch approaches the public markets via a SPAC.

For more context, Yext, a company that first launched at a Techcrunch event back in 2009, provides data tooling and search software to businesses, while Latch builds software and hardware for rental-focused buildings. Yext is public. Latch will be in a few months.

Back to our topic, we asked Cakebread to talk about his thesis on why going public earlier than later can help a company’s maturity process and can help provide greater returns to the general public. The CFO has written a rather good book about the IPO process more generally and what it means for a company’s internal processes, but his morality notes especially stood out because its an argument far less noisy than (Read more...)

Snowflake gave up its dual-class shares. Should you?

Snowflake announced earlier this month that it would give up its dual-class shareholder structure, a corporate governance setup that often gives founders and executives superior voting rights, typically involving 10 times as many votes for their own shares as others receive. The mechanism can enable founders to maintain control despite later dilution and may sometimes even grant ironclad control to an individual in perpetuity.

For many companies, these supervoting shares represent a highly powerful tool, allowing founders to have their cake and eat it, too — to go public and receive the advantages of being a public company while limiting the power of external shareholders to influence how they run the company once it floats.

Some founders and their investors argue that these preferred shares protect them from the short-term whims of the market, but the perspective isn’t universally accepted. Dual-class shares are a controversial governance structure, and some wonder if they are setting up an unfair playing field by allowing a cabal to wield outsized power.

Why would Snowflake give up such a powerful tool a mere six months after it went public? We decided to look at the notion of dual-class shares and why Snowflake may have been willing to let them go.

Snowflake’s decision

If one of the primary purposes of dual-class shares is to consolidate CEO power, then perhaps Snowflake felt they weren’t necessary, given the history of CEO-shuffling at the company. While Snowflake’s founders are still part of the organization, they hired Sutter Hill (Read more...)