Winter is Coming for the Tech Industry
Summer is over and pumpkin spice season has started. And Snowflakes around the corner!
Warren Buffett invests in the Snowflake IPO
The stock market has been in a whirlwind this year. Last year Warren Buffett built a notable position in Apple, his first tech stock. Now he's investing in his first tech IPO. In the past, Buffett has warned against investing in IPOs and the tech market. Now he's doing both.
Was Snowflake’s IPO mispriced or just misunderstood?
Snowflake is a cloud data warehousing firm. The initial public offering started at $120 per share, way above the initial range of $75-85 last month. The company raised $3.4 billion with the backing of Salesforce (CRM) and Warren Buffett's Berkshire Hathaway (BRKB).
I've never used Snowflake so I recommend learning about the system from the CEO. In the video below, Frank discusses Snowflake's Cloud Data Platform and how it enables the Data Cloud to seamlessly store, unify, and analyze all your data. A broad cloud story focused on growing profitably. Just not at all costs. This is a unique unicorn business for sure.
Frank Slootman is a First Class CEO
I read about Frank for the first time last year by accident. Someone recommended I read Tape Sucks to learn about the technology industry. Frank wrote this book about his time as CEO of Data Domain, which he later sold to Dell EMC. He then went on to become the CEO of ServiceNow, another billion dollar tech company before joining Snowflake.
Frank has an exceptional track record of building capital efficient businesses. Data Domain and ServiceNow raised less than $20 million and created billions in shareholder value. I also highly recommend reading Frank's LinkedIn article, Amp It Up!, about his time at Data Domain and ServiceNow. Bottom line: There is room up in organizations to boost performance by amping up the pace and intensity.
Restructuring During the Covid Madness
On Saturday, I participated on a Covid Distress panel for the Asian American Bar Association of New York. Courina Yulisa, Vincent Roldan, William Hao and I discussed the major challenges businesses are facing in the environment today.
The major ask was: Where do we go from here?
There is no doubt we are in an uncertain environment. The economy is unstable and the polarized media is not helping. But the Covid Challenges are a Main Street problem. Wall Street is doing fine and prepared to inject more cash into the system.
The bankruptcy courts have seen small business bankruptcies increase +50% since last year in Q2 & Q3. Right now the hospitality and commercial real estate industries in pain. This is alarming to say the least. Next the local municipalities and hospital systems will enter a distressed environment. Another trillion dollar stimulus plan is in the works. But I don't think much will be resolved until the election is over this year.
Fortunately in 2019, a new bankruptcy proceeding called Subchapter 5 was designed for small businesses. The CARES Act earlier this year allowed businesses with liabilities up to $7.5 million to file Subchapter 5 cases to speed up the cases. Many businesses have used this subchapter to file for an expedited case to restructure their books. Personally, I'm working on a major restructuring case in NYC right now for a client and very aware of the challenges small businesses are facing today.
LinkedIn Stories is Finally Here
LinkedIn has become a critical tool for businesses to transact remotely. The previous iterations of LinkedIn worked great in a pre-Covid environment. But now we need better video products to engage with our community.
On Friday, I started to post market update videos to test the platform and it works well!
Don't worry if you haven't seen LinkedIn stories yet. It is slowly rolling out across the U.S. You can only watch the videos on the mobile app at the moment. This update comes along with a new refresh to the entire platform. LinkedIn now has a smoother feel to it. You can also send Zoom or Google Meet invites through messenger now!
Subscribe to the Financier for more Tech Investing Content.
I’m publishing this series to discuss tech stocks and trends. Please subscribe to my Financier series to follow my latest commentary.