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Hype and plunder: Domo a new low for self-indulgent IPOs

latimes.com

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Re: Hype and plunder: Domo a new low for self-indulgent IPOs

#51

Post by dv_dt »

untog wrote: post #32
jmull wrote: post #22

I take this as one of the two central themes of this article: "...points to a persistent flaw in Silicon Valley financing: the willingness to give start-up founders unassailable control of their companies, to the point that investors have no recourse if things go blooey." That's not a flaw, it's a fundamental part of how it is meant to work. The investors generally don't want to invest in companies run by a committee…

> That's not a flaw, it's a fundamental part of how it is meant to work. And, as the article demonstrates, it is not without risk. A CEO spending huge amounts of company money on other ventures he owns for no discernable reason is a pretty great example of why this SV model can be hugely problematic.

It can be problematic, but so can investors in SV companies demanding that scale-out takes off too early or too quickly. It's difficult to quantify which of many problems are a bigger issue, or even relevant from case to case.

Re: Hype and plunder: Domo a new low for self-indulgent IPOs

#52

Post by rdlecler1 »

jmull wrote: post #22

I take this as one of the two central themes of this article: "...points to a persistent flaw in Silicon Valley financing: the willingness to give start-up founders unassailable control of their companies, to the point that investors have no recourse if things go blooey." That's not a flaw, it's a fundamental part of how it is meant to work. The investors generally don't want to invest in companies run by a committee…

Don’t throw the baby out with the bath water.

Re: Hype and plunder: Domo a new low for self-indulgent IPOs

#53

Post by JumpCrisscross »

"Domo also has spent $600,000 for catering services from Cubby's Chicago Beef, which describes itself as 'a cute little sandwich and salad restaurant.' It’s owned by Josh James and his brother Cubby. ('The menu does look delicious, but there must be caterers in American Fork, Utah, that aren’t owned by the boss,' remarked Shira Ovide of Bloomberg). Domo also has bought $200,000 in furnishings from Alice Lane Home Collection, an interior design company partially owned by James, at which Drew James, another brother, is an executive."

Wow.

Re: Hype and plunder: Domo a new low for self-indulgent IPOs

#54

Post by cookiecaper »

tardo99 wrote: post #46
reaperducer wrote: post #26

Earlier quoted context omitted.

>silly Domopalooza[1] lifestyle events Reminds me of a particular west coast startup I was associated with that took its final round of funding and blew most of it on a massive out-of-town party. Flew in all of the A-list bankers and tech types it could find. The idea was to make the (failing) app look like a huge deal in the eyes of investors and get bought, thus fulfilling its exit strategy. It worked.

Is the identity of this startup a secret? Maybe someone with a throwaway account could post it? Super curious here...

FWIW I had a startup as a contract client that sounds like they did something similar. Spent hundreds of thousands throwing a "relaunch party" to pander to investors. I assume this strategy is not rare. Only difference is that it didn't work for them and they went under a few months later.

Re: Hype and plunder: Domo a new low for self-indulgent IPOs

#55

Post by cookiecaper »

vinceguidry wrote: post #21
toomuchtodo wrote: post #18

Earlier quoted context omitted.

The issue is not the amounts, but the flagrant self-dealing.

Sure, but that stuff is ubiquitous in the biz world, it's just not usually done so flagrantly as you say. So it's not as interesting to me as the GP's question, how in the holy heck can a brand new company run through $800MM in 3 years? If this is routine, then shit, I'm wasting my life.

Josh James got immediate and easy buy-in from investors because he founded Omniture, a $1B+ exit. So you'd probably need at least one successful exit to get this much leash. Presumably, investors will start to watch much more closely if he can't make good on Domo.

Re: Hype and plunder: Domo a new low for self-indulgent IPOs

#56

Post by vinceguidry »

mikestew wrote: post #28
vinceguidry wrote: post #15

Earlier quoted context omitted.

Did you even look at those numbers? That's a drop in the bucket compared to $800MM. Very curious myself as to how that breaks down.

Did you even look at those numbers? One might safely assume that parent did just that, given the detail of what they posted. How do people pulling down six figures a year (in somewhere other than SV) not have any money at the end of the month? One $4 latte and NewEgg impulse buy at a time. I get the impression that you're looking for the big ticket item(s). Maybe there isn't one. Maybe it's just one $1.8MM jet rental…

Man, if people really are going to be this blasé about it, I guess it really is a routine occurrence.

Re: Hype and plunder: Domo a new low for self-indulgent IPOs

#57

Post by JumpCrisscross »

jmull wrote: post #22

I take this as one of the two central themes of this article: "...points to a persistent flaw in Silicon Valley financing: the willingness to give start-up founders unassailable control of their companies, to the point that investors have no recourse if things go blooey." That's not a flaw, it's a fundamental part of how it is meant to work. The investors generally don't want to invest in companies run by a committee…

> The investors generally don't want to invest in companies run by a committee of investors

There are governance structures between one where the CEO spends "$600,000 for catering services from...[a] sandwich and salad restaurant...owned by Josh James and his brother," and committees of directors. Uber, where a supermajority of the Board (which contains independent directors) can vote off the CEO, is one amongst many examples.

Re: Hype and plunder: Domo a new low for self-indulgent IPOs

#58

Post by alasdair_ »

tntn wrote: post #41
dpark wrote: post #29

> Domo actually is part of the Salt Lake City region’s “Silicon Slope,” one of several regional offshoots of Silicon Valley. Going off on a tangent, this is really dumb. It’s not an “offshoot” of Silicon Valley. It’s a distant, unrelated region that happens to also have a tech industry. Are Austin, Seattle, and Portland also “offshoots” of Silicon Valley? How about New York? Zurich?

Right on. "Silicon Slopes" is surprisingly effective attempt by Utah County people to get investors to dump money there. Quick summary of the companies in "Silicon Slopes": Qualtrics (surveys), Domo (vapor), Adobe, Micron (fab only, but claim to "silicon" in the name), Nu Skin (MLM cosmetics/diet supplements) , doterra (essential oil MLM), NatureSunshine (MLM). Great place to be. Lots of innovation in MLMs.

>Great place to be. Lots of innovation in MLMs.

Religion and MLM companies seem to be strongly correlated.

Re: Hype and plunder: Domo a new low for self-indulgent IPOs

#59

Post by Bahamut »

throwaway5752 wrote: post #35
jmull wrote: post #22

I take this as one of the two central themes of this article: "...points to a persistent flaw in Silicon Valley financing: the willingness to give start-up founders unassailable control of their companies, to the point that investors have no recourse if things go blooey." That's not a flaw, it's a fundamental part of how it is meant to work. The investors generally don't want to invest in companies run by a committee…

Practically speaking Satya Nadella runs MSFT, not the board of directors. Nadella does not have control of MSFT (he isn't the majority holder of shareholder voting rights), though. Investors don't want to run the company. But the question is should they be able to fire the person running the company, even if that person is acting against the interests of the rest of the shareholders. * ps, yes, the BoD can fire a CEO…

> Investors don't want to run the company.

Sometimes they do - I've certainly seen it happen at one company I've worked at, to the point where the board decimated engineering.

Re: Hype and plunder: Domo a new low for self-indulgent IPOs

#60

Post by sbr464 »

yazr wrote: post #12

> $3,276 per flight hour [for a leased private jet] I am no expert. But this seems cheap to me ? Can you really cross the USA in a private jet for less than $20K ? Edit: i am assuming this is not a new fancy Drone ..

It depends, but smaller jets I’ve seen invoices for 12-20k several times.
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