Workiva files to go public

Workiva?  It sounds like the love child of Workday and Kiva Systems, but it is not.  You have likely never heard of Workiva for three reasons:

  • In July of this year it changed its name from Webfilings
  • It is headquartered in Ames, Iowa, which is quite nice, but qualifies as “fly-over country” for most VC and PE firms, even for those based out of Chicago!
  • It sells to the CFOs and GRC folks at Fortune 500 companies (in fact, it is now installed at 60% of those companies.)

I’m not going to provide a complete review of the prospectus, because I am getting tired of doing those, so I will just provide the highlights my warped mind found most interesting.   (Heck, it’s a free blog.)

1.  When I first read Workiva’s description of themselves, I was not impressed:

Workiva has pioneered a cloud-based and mobile-enabled platform for enterprises to collaboratively collect, manage, report and analyze critical business data in real-time. Our secure software platform, Wdesk, allows users to integrate and control all of their business data, regardless of format or location, with innovative live-linking technology. Our proprietary, integrated word processing, spreadsheet and presentation applications, built upon our data engine, allow thousands of users to collaborate simultaneously on data-linked reports and documents.

It sounded like Google Docs or Microsoft 365 on steroids.  But as you dig into the company more, you learn that even if it is Google docs on steroids, it’s an attractive sounding offering positioned as a Governance, Risk and Compliance (GRC) application for finance.  Building on Webfiling’s legacy of helping public companies meet SEC filing requirements, Workiva has built a “single source of truth” platform for all sorts of filings, presentations, and other compliance related documents.  Very smart.

It’s a dirty little secret that CFOs hate spending money–except when it comes to their own systems!!  What CFO does not live in fear of a mistake in consolidation in Excel spreadsheets or in an investor presentation?  And if you can sell to CFOs based on fear, you can build a great company.  Just ask SAP!  CFOs and GRC folks love the “single source of truth” or “system of record” concept.

2.  The article this week that a spreadsheet error by Goldman Sachs meant a $100 million change to the valuation of Tibco probably helped sell a lot of product!

3.  Workiva’s rise has been rapid.  Check out this timeline from the company’s website:


The company finished the latest 12 months with over $100 million in revenue and losses of $31 million.  Other than during the bubble era, you don’t see a lot of B2B companies go from $0 to $100 million in revenue is six years.  Veeva did it, and Hubspot may do it, but many take a few years longer, if they make it at all.

4.  Workiva’s prospectus provided a cohort analysis for the customers they added in 2011, their first big year.  The numbers were impressive.  They did not provide any analysis for the 2012 class, however.  For me, providing this kind of analysis has become a litmus test in looking at SaaS enterprise offerings.

5.  Workiva is the first company I have seen go public on the Google Cloud Platform.  I’m sure there are more, but it still stood out.

6.  As you’d expect, Workiva is spending like crazy on R&D and sales and marketing.

I’m not an expert in the GRC space, but it would not surprise me to see one of the big players try to short-circuit the IPO process and acquire these guys.  Workiva seems like a great fit.  (If I were one of the big GRC players, I’d be rooting for continuing volatility and perhaps a downdraft in the market to keep these guys from going public.  Though that seems unlikely.  After all, Hubspot debuted last week and has held up just fine.)

IBM, Oracle, and SAP used to have the oligopoly on the “fear factor” sale, which is a great motivator.  Maybe Workiva has found a little spot in that world for themselves.

Adult Entertainment Payment Service

Alert readers of this blog (all four of you) know that I love specialized invoice and payment companies –for freight, clinical trials, facilities management, meetings and events, temporary labor, health care, liquor, media, etc.

One alert reader, who shall remain nameless, has provided me with many examples of such companies.  As a joke, he recently introduced me to Zombaio, which specializes in payment processing for the online content and adult entertainment industry.  (My nameless source assures me that he knows of this company only for professional, not personal, reasons.)

Another alert reader, who shall also remain nameless to protect his heretofore unsullied reputation, shared with me Zombaio’s fee structure for online payments as found on their website:








To be fair, these are rates for adult content and webcam sites; the rates for adult dating sites are much lower.

Based on these prices, I’ve come up with a great new tagline for Zombaio.  How about this: Screwing People Watching People Screwing Since 2003.  Catchy, huh?

Nobel Prizes and B2B Marketplaces

Okay, maybe the headline is a slight stretch, but the news today that Jean Tirole of France has won the “Nobel” Prize for economics makes it a lot less of a stretch.

Tirole’s work, in part, includes work on “Two-Sided” markets which describes businesses ranging from Google to Visa and Mastercard, as well as dating sites and yes, even B2B marketplaces.  The Economist ran a good article on his work for lay people here.  His work, and the work of David Evans and Richard Schmalensee, demonstrate the power and complexity of getting pricing right in such markets.  Think of all of the arguments that now take place in B2B commerce over buyer versus supplier fees (Ariba, Tradeshift, Coupa, Basware, Ob10, etc.) as a small part of this debate.

Tirole puts a lot of emphasis on the “winner-take-all” aspects of these markets and the complexity of antitrust regulations associated with these type of potential monopolies.  I think most investors and entrepreneurs in “two-sided” markets secretly hope that some day their platform will have enough market power to attract the attention of the regulators! And eventually a few make it:  EDI VANs, Google, Sabre, Visa/MasterCard, AT&T, and a few others have all had run-ins with the antitrust regulators.  The rest will have to wait with a combination of envy and trepidation.

Take a walk on the Supplier Side

The laws of business physics suggest that for every “Source to Settle” process in a buying company, there is an equal and opposite “Quote to Cash” process at a supplier. (To verify that, I used Google Trends to compare the search frequency of the terms “Procure to Pay” and “Order to Cash”.).


Most of us in B2B commerce, even if we work on networks or platforms, tend to understand one “side” better than the other. (It’s a bit like being left or right-handed.) Often the side we understand best depends on the business model of the platform we work with and which “side” is being subsidized to participate!

Those who work primarily for procurement-related software companies (like me) tend to be biased towards the “Source to Settle” Process.  (I try to force myself to keep the mirrored processes in mind at all times, but it is not easy!)  Recently, I have been working with more clients on the supplier half of the equation and or with networks that are fairly neutral platforms.  It has been a fascinating vantage point from which to work.

Practitioners know the source to settle process can be “sliced and diced” in a variety of ways:

  • The entire process can be outsourced (hence the interest in India of this search term) or
  • The entire process can be outsourced for just some spend categories (e.g., indirect) or
  • Every step in the process can be automated with a point solution or
  • “Chunks” of steps in the process can be automated as part of a suite, and suites can automate the whole process.  Again, this automation can be attempted across categories or with category specialists.

Those of you who follow Source to Settle can think of point, suite, outsource, and even managed service provider solutions at every step along the way in the top three rows below:


Not surprisingly, (though it was a surprise to my biased mind), the exact same options are true for the Quote to Cash process of suppliers.  Following the bottom two rows of the above diagram:

  • Companies can, and do, outsource the entire process, including the sales force in some industries (e.g., Pharma contract sales organizations).
  • Lead qualification can be outsourced or automated by a myriad of providers.
  • There are many software companies selling sell-side proposal software, contract management, and sell side e-commerce sites.
  • Behind the website, companies can automate, or outsource, the entire order to cash cycle or any portion thereof, ranging from just credit and collection, to just e-billing, etc.

In fact, it is incumbent on every B2B company to consider both sets of processes (since all companies have both sides) and determine which are the right pieces of the process to leave untouched, automate, or outsource– and for which categories. Many companies may not realize how many permutations there are and how the right answers may differ by spend category.

Another OpenTable?

OpenTable was a great story. (I wrote about it almost exactly three years ago here.) To refresh your memory, the company went public in March, 2009 at the bottom of the stock market with a market cap of $700 million.  Two years later its market cap rose to 5-6x that figure, before falling back to $900 million.  At that point, many pundits wrote OpenTable off for “dead”, but it worked its way back to a market cap of $2.6 billion when Priceline bought it this past July.

As you know, OpenTable helped diners make reservations at restaurants and helped restaurants get rid of their paper reservation book.  But what about casual dining restaurants that do not take reservations–take TGI Fridays, Buffalo Wild Wings, or Little Serow, the hottest little restaurant in DC?  These restaurants typically ask you to call or come in, put you on a paper wait list that looks sketchy, and then may hand you one of those plastic disks that lights up and buzzes when your table is ready.  A few restaurants may take your phone number and text when your table is ready.

NoWait, which just raised $10 million in their Series B, aims to improve this process for the restaurant and their diners alike. Using their smart phones, diners can find and get in line at participating restaurants without physically being there. The NoWait app ( clearly shows wait times and place in line, and confirmations are delivered by text message. Who wants to wait in the restaurant lobby when you could wait at home, go shopping, or have a drink somewhere?

For the restaurant, NoWait offers complete wait list, notification, and floor map management for the front of house, delivered via iPad and/or smart phone. By putting this process in the cloud on an iPad, adding a seating chart and some analytics, adding some ability to make promotional offers in the text to the “waitee” and presumably helping restaurants build a diner database–NoWait hopes restaurants will buy their app and toss out those plastic, flashing, buzzy disks!

Statistically, NoWait appears to be a much bigger idea than Open Table in some ways. After all, only a tiny percentage of restaurants take reservations–though one has to remove fast food from the target market.  And this idea could extend to any business with wait times, not just restaurants–how about the DMV, for instance?!!!

On the other hand, many of the target restaurants may not have a big wait list problem and if they do, they will be unlikely to pay the fees that Open Table was getting. (Ironically, Open Table was starting to get some pressure on its fees and some restaurants stopped taking reservations just to avoid them!)

In any case, there is a lot of room between this $10 million B round for NoWait and $2.6 billion for OpenTable.  Personally, I cannot wait to see how this one develops!

Two Stock Indices for US B2B E-Commerce Companies

For a while, I’ve been wanting to create a stock index of US public companies specializing in B2B cloud e-commerce.  There are many cloud indices, but typically they are not focused on B2B and/or they are not focused on inter-company platforms. Until recently, I had not found the right tool that was simple, free, and would allow me and others to invest (at our own risk)!

Then came along Motif Investing which makes the entire process a snap (and free).  (I highly recommend it for investing nerds).  I have created two indices:

  1. B2B E-commerce which you can view here.  This index consists of 30 stocks of US companies engaged in business to business cloud commerce. (30 stocks is the Motif Investing limit.)
  2. Industry Clouds which you can view here.  This index is a subset of the above index and is limited to similar cloud B2B companies, but only those with an industry or vertical focus.

(Both indices are market capitalization weighted, mainly because it was easy to do the weighting that way and market cap weighting is a common, though problematic approach.)

I created the indices on Monday, September 15.  Since then the returns have been incredible ;-)! (How is that for short-run results!)


















Don’t let this one week of performance mislead you!  As you can see, both indices include Concur (CNQR), which received a take-over offer from SAP at a 20% premium on Thursday, three days after starting the index!

Motif provides a “look-back” on performance for up to five years for any portfolio you create.  Here’s that data for the Industry Cloud portfolio:


This data fits with the overall performance of cloud tech stocks.  Tech stocks came roaring back after the March 9, 2009 market low and then have fallen behind the market as a whole over the past nine months.  The bottom line is that these stocks have tracked the S&P 500 over the past five years with a lot more volatility.  Over the past year, they have under-performed the market, as most small stocks have.

Let me be clear, I’m not recommending that you invest in these portfolios right now, after all, valuations remain quite high.  (I take no responsibility for my own actions, much less yours!)  But it is fun to watch these stocks (which should have decent moats in most cases) and which operate in segments that should continue to grow faster than GDP for a long time.

Concur: Nothing but respect

The announcement that Concur (CNQR) will be bought by SAP for $8.3 billion highlights an incredible story.  Congratulations to the entire CNQR team on an unbelievable run over the last 15 years.

The Concur story comprises many lessons, I will highlight just two:

  • The importance of sticking to your knitting and the benefits of specialization
  • The initially painful, but ultimately rewarding transition from behind-the-firewall to SaaS

Recall that Concur briefly flirted with competing with Ariba and pulled back, instead choosing to focus on T&E.  Also recall that Ariba, IBM, and SAP all had T&E modules during this entire time frame plus procurement modules, and in Ariba’s case a network. On the surface, Concur with its fledgling point solution seemed unlikely to flourish.  But, Concur stuck to the T&E world, integrated with credit cards, bought an online booking tool and made the transition to SaaS earlier than anyone who did not start out that way.

Recall also that Concur did all of this while being a publicly listed company.  In fact, when the B2B bubble burst in 2000, Concur spent the next two years (while they were making the SaaS transition) with a market cap of under $100 million!  Fast forward 12 years later and they sell for $8.3 billion, or more than 1.5 times what SAP paid for Ariba.  That’s why I say nothing but respect for Concur!

Tom Russo, a great value investor, talks about how few companies are willing to make long-term investments that will disappoint the market in the short-turn and thereby risk losing control of the company as the stock price drops.  Concur ran this gauntlet and came out the big winner.

Now watch for the PE and VC firms to try to identify the logical #2, non-ERP player: Coupa, Certify, Chrome River, ExpensePoint, Mindsalt, Nexonia, Deem, or others!