Coupa IPO: Is The Unicorn Dead?

Posted on September 9, 2016

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Right out of the gate, I want to clarify an important point.

I would rather walk down a dark alley at midnight in the worst part of town with $100 bills hanging out of my pocket, than invest in the stock market. In other words, my money is safer in the dark alley than it is in the markets.

With its promise of great wealth and its equally devastating disappointments, a phrase that was used in describing Robert Sobel’s expose “The Big Board: A History of the New York Stock Market,” the markets have always been a world of contrasting realities and conflicting moralities.

You have to look no further than the pages of this blog for examples of how going public has had a negative impact on both a service provider’s clients as well as the everyday investor.

Here are a couple of specific examples.

The Myth of Ariba

In what many consider to be a controversial article titled The Myth of Ariba, a former executive for the company said the following; “Ariba was a real company with a real product that got swept up in its own hype, with unfortunate consequences,” and that “Ariba was basically a fraud . . . creating [the impression that Ariba was constructing a global marketplace]. . . even though this was seen as being “a rather impossible task.”

According to the article and related book, they “went through the motions” of building this marketplace because “the stock was the only thing that mattered. A valuable stock gave Ariba currency it could use to buy other companies.” In the end, “Ariba started out very much as a real company, but was actually blindsided by the Internet boom.”

Oracle: The Numbers Don’t Add Up

The origins of my disenchantment with Oracle go all the back to the vendor’s early days, when Larry Ellison was forced to lay off approximately 10 percent of the company’s workforce due to questionable accounting practices.

The practices to which I am referring centered around upper management encouraging Oracle sales representatives to push customers to buy “the largest amount of software all at once” without actually paying the full pop. The company’s finance people then claimed these future sales in the then present quarter. Problems arose when said revenues failed to materialize, leading the company to restate its earning on two separate occasions.

Not surprisingly, this led to a class-action lawsuit that was ultimately settled out of court. Even though Ellison later admitted that “Oracle had made an incredible business mistake,” for me the die was cast as it demonstrated his inability to look beyond the here and now.

So What About Coupa?

Back on November 11th, 2015, I wrote a post titled If Coupa goes public, will it ruin the company?

My short answer to the above question was yes . . . with a qualification.

You can read that post for the specific details as to the reasons for my position.

However, with yesterday’s announcement that Coupa has filed the preliminary paperwork to take the company public by way of a $75 million IPO, the purpose of this post is to help you to avoid getting caught up in the usual analyst speak and blogger assessments.

In the new age of the commoditized cloud – where technological differences between one provider and the next are becoming increasingly indistinguishable, it is the people behind the company that matter the most. In particular, those in positions of leadership.

With Coupa, the person on the hot seat in terms of whether this will be a good thing or not, is CEO Rob Bernshteyn.

coupa-unicorn-rb

Image Credit: Screenshot

I have been covering Coupa since 2009 – you can read all of the articles by simply typing Coupa in the search box.

In a Jun 25th, 2009 segment of the PI Window on Business Show (Emerging Giants: The New Titans of the SaaS World), I interviewed Rob along with the executives from a number of up and coming – at least at the time – service providers.

It was an interesting interview, and one that I would encourage you to listen to, as it will give you an idea as to Rob’s view of the business and market back then, as compared to his view today.

It is through recognizing the similarities and the differences that you will find the answer as to whether or not this IPO is good or potentially bad, for Coupa’s customers – both existing and prospective.

So, what do you think? Is the Coupa IPO a good thing or a bad thing, and for whom?

Share your thoughts in the comment section below or – as some of you prefer, send me an e-mail directly. As always, I will treat them as confidential if so indicated.

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Posted in: Commentary