True Value

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Robert Herz of FASB testifies on expensing of stock options in 2004. Photo by Bloomberg.
True Value

Tech Companies Sow Confusion by Refusing to Mind the GAAP

By Jonathan Weber · Aug 28, 2014 7:08am PDT · 1 comment
Did Twitter make a profit last quarter? That seems like a simple enough question, one that public companies are required to answer in very specific fashion. Yet a quick perusal of news coverage of the July 29 earnings announcement shows two drastically different answers: Twitter either had a $15 million profit, or a $145 million loss. The... Did Twitter make a profit last quarter? That seems like a simple enough question, one that...
Ebay CEO John Donahoe. Photo by Bloomberg.
True Value

PayPal’s Future Still in Play

By Jessica E. Lessin · Aug 21, 2014 7:09am PDT
Activist investor Carl Icahn’s quest to compel eBay to spin off its PayPal unit ended with a whimper in April. But the maneuvering over PayPal, a giant in the red-hot payments sector, seems to be just beginning. Ebay has been telling potential recruits for the position of PayPal CEO that it’s considering spinning off the payments... Activist investor Carl Icahn’s quest to compel eBay to spin off its PayPal unit ended with...
Sen. Elizabeth Warren, a champion of the Consumer Financial Protection Bureau. Photo by Bloomberg.
True Value

Risks Loom Large as Financial Innovation Accelerates

By Katie Benner · Aug 14, 2014 7:13am PDT · 6 comments
Travel back in time a decade and you’ll find a world awash in game-changing innovation that was supposed to make life less expensive, more efficient and better for all. Instead of apps and data analytics there were mortgage-backed securities, credit default swaps and other derivatives. There were specialty lenders. And there were massive... Travel back in time a decade and you’ll find a world awash in game-changing innovation that...
Salesforce.com CEO Marc Benioff. Photo by Bloomberg.
What’s a Subscription Software Company Worth?
By Katie Benner · Aug 7, 2014 7:40am PDT · 3 comments
Salesforce.com CEO Marc Benioff. Photo by Bloomberg.
True Value

What’s a Subscription Software Company Worth?

By Katie Benner · Aug 7, 2014 7:40am PDT · 3 comments
If you remember Enron, Worldcom and the dot-com 1.0 preference for eyeballs over revenue, you can understand why people are wary about the unfamiliar accounting metrics used to justify big valuations for subscription software companies. Salesforce.com, Jive Software, Dropbox and Evernote don’t need profits to be worth billions, the... If you remember Enron, Worldcom and the dot-com 1.0 preference for eyeballs over revenue, you can...
The New York Stock Exchange floor. Photo by Bloomberg.
True Value

Scarcity of Shares Driving Internet Stocks Higher

By Katie Benner · Jul 31, 2014 7:21am PDT
With the springtime selloff behind us, tech stocks suddenly seem like the bell of the public market ball. The Nasdaq gained 24% over the past year; Facebook soared 99% and Google notched a 32% gain. Even once-moribund Twitter is coming back to life, and bankers expect the Alibaba offering to be a blockbuster. But there are some subtle... With the springtime selloff behind us, tech stocks suddenly seem like the bell of the public...
Silicon Valley Bank CEO Greg Becker. Photo by Bloomberg.
True Value

The Hidden Costs of Venture Debt

By Katie Benner · Jul 17, 2014 7:21am PDT
Biotech entrepreneurs are increasingly borrowing money rather than raising equity. So-called venture debt seems like a tempting option for all startups that need large up-front investments but will generate almost no revenue for many years.   Companies say they’re attracted to the deals because debt doesn’t dilute existing... Biotech entrepreneurs are increasingly borrowing money rather than raising equity. So-called...
Federal Reserve Chair Janet Yellen. Photo by Bloomberg.
True Value

Perfect Storm Boosting Megadeals May Be Short-Lived

By Katie Benner · Jul 10, 2014 7:35am PDT
With Apple’s $3 billion acquisition of Beats Electronics and huge telecom and cable company sales in the works, a megadeal storm has hit techland. But one technical ingredient that has fueled big deals may begin to dry up: ultra-low interest rates. We could already be seeing the effects of a gradual shift in the Federal... With Apple’s $3 billion acquisition of Beats Electronics and huge telecom and cable company...
Photo by Shutterstock.
With Secret Contracts, Employees Skirt Bans on Share Sales
By Katie Benner · Jun 26, 2014 7:54am PDT
Photo by Shutterstock.
True Value

With Secret Contracts, Employees Skirt Bans on Share Sales

By Katie Benner · Jun 26, 2014 7:54am PDT
Companies like Uber, Airbnb and Dropbox are known for keeping a tight rein on employee stock, essentially prohibiting private share sales of the type that were quite popular among pre-IPO companies just a few years ago. Some say the clampdown is unfair to employees. Others say it’s a prudent way to keep a handle on ownership and prevent... Companies like Uber, Airbnb and Dropbox are known for keeping a tight rein on employee stock,...
JD.com founder Richard Liu Qiangdong. Photo by Bloomberg.
True Value

Soaring Chinese Tech IPOs Show Big Shift in Sentiment

By Katie Benner · Jun 19, 2014 7:48am PDT
As the world awaits Alibaba’s public offering with a fervor not seen since the Nintendo 64, the iPhone and the birth of Christ, it’s hard to remember that just a few years ago Chinese companies were toxic. A series of scandals dogged Chinese stocks starting in 2011, when software maker Longtop Financial Technologies was caught... As the world awaits Alibaba’s public offering with a fervor not seen since the Nintendo 64,...
Uber co-founder and CEO Travis Kalanick. Photo by Bloomberg.
True Value

The Math Behind Uber’s $18 Billion Valuation

By Katie Benner · Jun 17, 2014 8:11am PDT
When the ride-dispatching company Uber announced recently that it had raised $1.2 billion in a deal that valued that company at $18.2 billion, a casual observer might have assumed that the company would need to be worth that much or more for the investors to make money. In fact, an analysis of Uber’s multiple rounds of financing shows... When the ride-dispatching company Uber announced recently that it had raised $1.2 billion in a...
GoPro CEO Nick Woodman. Photo by Bloomberg.
True Value

Tech IPO Market Rebounds, with Less Froth

By Katie Benner · Jun 12, 2014 8:01am PDT
Remember when investors shunned tech IPOs? This spring’s tech offering drought felt like a thing of the past when network equipment maker Arista Networks debuted last week at $43 a share, well above its $40 target. Security software maker MobileIron priced at the middle of its range and gained 22.4% to end its first day of... Remember when investors shunned tech IPOs? This spring’s tech offering drought felt like a...
Athenahealth CEO Jonathan Bush. Photo by Bloomberg.
For Investors, ‘Cloud Computing’ Moniker Demands Scrutiny
By Katie Benner · Jun 5, 2014 7:46am PDT
Athenahealth CEO Jonathan Bush. Photo by Bloomberg.
True Value

For Investors, ‘Cloud Computing’ Moniker Demands Scrutiny

By Katie Benner · Jun 5, 2014 7:46am PDT
Hedge fund manager David Einhorn's 66-slide attack on Athenahealth hasn't done much to change the company's share price, which dipped briefly but is now up nearly 2% from where it traded when Mr. Einhorn called the healthcare tech company wildly overvalued.   Investors may be shrugging off the short seller, but he raises... Hedge fund manager David Einhorn's 66-slide attack on Athenahealth hasn't done much to...
Square founder Jack Dorsey. Photo by Bloomberg.
True Value

A New Skillset for Tech Startups: Managing Credit Risk

By Katie Benner · May 29, 2014 7:58am PDT
When Cafe Grumpy, the coffee shop featured in the HBO series Girls, needed money to open up a Grand Central Station outpost, it got funds from Square as part of an initiative to give capital to small businesses. Square Capital, which gives cash advances to companies in exchange for a flat fee and was formally introduced this week after a trial... When Cafe Grumpy, the coffee shop featured in the HBO series Girls, needed money to open up a...
Photo by Bloomberg.
True Value

Real Estate Crowdfunding Brings Promise and Peril

By Katie Benner · May 22, 2014 7:28am PDT
As a financial reporter a few years ago, I watched real estate morph from the great creator of Main Street riches to the primary weapon of global economic mass destruction, all in the course of about 18 months. So few things trigger my skepticism like the proliferation of real estate crowdfunding sites that promise amazing investment... As a financial reporter a few years ago, I watched real estate morph from the great creator of...
Venture capitalist Marc Andreessen. Photo by Bloomberg.
True Value

With Billion-Dollar Funds, Venture Firms Stay Bullish

By Katie Benner · May 15, 2014 7:55am PDT
Public markets may be souring on Internet companies, but a wave of fresh cash flowing into the venture capital business will go a long way in keeping many parts of the startup ecosystem afloat. While late-stage fundraising will get complicated, a broad pullback in traditional venture investing does not appear to be in the offing. “If I... Public markets may be souring on Internet companies, but a wave of fresh cash flowing into the...
David Bonderman, founding partner of TPG. Photo by Bloomberg.
Private Equity Investors Press for Control
By Katie Benner · May 8, 2014 11:41am PDT
David Bonderman, founding partner of TPG. Photo by Bloomberg.
True Value

Private Equity Investors Press for Control

By Katie Benner · May 8, 2014 11:41am PDT
As the public markets become less friendly to high-growth tech companies, private equity firms will loom large in more ways than one. These investors tend to do large, late-stage investments that help companies avoid having to go public, which could be a great alternative if the IPO window closes. But the terms on private equity-led deals... As the public markets become less friendly to high-growth tech companies, private equity firms...
Y Combinator President Sam Altman. Photo by Bloomberg.
True Value

Startup Employees in the Dark on Equity

By Katie Benner · May 1, 2014 4:51am PDT
A few years ago, a venture-backed ad tech company was sold for about three times the amount that investors had put into the company—but employees got a rude surprise. The VCs who held preferred stock got $6.80 per share, while employees who held common stock got about $1.40, according to documents related to the sale. One employee... A few years ago, a venture-backed ad tech company was sold for about three times the amount that...
Brian Rogers, chairman of T. Rowe Price, with Dick Costolo, CEO of Twitter. Photo by Bloomberg.
True Value

Surge in Late-Stage Investing Crimps Post-IPO Gains

By Katie Benner · Apr 24, 2014 12:45pm PDT
It’s almost every week now that another private company takes late-stage funding from hedge funds, mutual funds, private equity firms and lenders, even amidst a jittery stock market. On Wednesday Pure Storage announced a $225 million investment led by asset managers T. Rowe Price, Tiger Global and Wellington Management. Tiger recently... It’s almost every week now that another private company takes late-stage funding from hedge...
Peter Thiel. Photo by Reuters/ Yuri Gripas.
True Value

Palantir Faces Challenges on Revenue Growth

By Katie Benner · Apr 17, 2014 9:00am PDT
Palantir, the much-hyped data analytics company co-founded by investor Peter Thiel, has raised more than $800 million and was valued at about $9 billion in a recent funding round, making it one of the highest-priced venture-backed companies in the world. But those big numbers, while lending prestige, can also be a burden: Palantir needs to show... Palantir, the much-hyped data analytics company co-founded by investor Peter Thiel, has raised...
Matthew Vascellaro
Biotech IPOs Begin to Show Cracks
By Katie Benner · Apr 10, 2014 7:28am PDT
Matthew Vascellaro
True Value

Biotech IPOs Begin to Show Cracks

By Katie Benner · Apr 10, 2014 7:28am PDT
Despite recent declines in high-flying growth stocks, bankers remain uniformly optimistic that the IPO window will be open for many quarters to come. But one important bellwether—the biotech sector—suggests that investor appetite for the riskiest startup companies may indeed be starting to wane. Certainly 2014 so far has been a great... Despite recent declines in high-flying growth stocks, bankers remain uniformly optimistic that...