It has been a big week in Seattle tech circles as two companies (Zillow.com and Impinj) filed for initial public offerings, a rare event that I can’t even recall occurring during the dot-com boom years. It is always kind of exciting when a company takes the IPO plunge, moving from that quirky adolescent phase to a full-grown adult. For data hounds like myself, an IPO filing is a marvelous event.
That’s because it opens the kimono on the inner workings (and financial results) of companies that I’ve covered for years, many of whom have nicely offered the routine “no comment” when asked pressing questions.
In the case of Zillow — a company that I first uncovered back at the old P-I — the IPO filing was especially enlightening. (I’ve got a hilarious story how this unfolded which I’ll try to share later).
But, I digress. There’s so much to glean from the IPO filings this week, and the bigger picture of what it means to the innovation economy in the Pacific Northwest.
It has been a long, hard drought when it comes to public offerings. The last Seattle area high-tech IPO, Motricity, occurred last summer. Before that, you’ve got to go all the way back to Clearwire’s offering in 2007.
Curt Woodward at Xconomy offers some interesting perspective on the topic today, quoting venture capitalists Bill Bryant, Geoff Entress and others about what the recent filings mean. Bryant tells Xconomy:
“You’ve got to go public before you can get your name on the building, and that dream has been largely gone for the better part of 10 years here.”
That’s hard hitting, but true. And it speaks to the challenges the region has faced over the past decade.
Most CEOs will tell you that IPOs are simply a financing event, and just another step toward a bigger prize. That may be true, on some level.
But IPOs are more significant than that.
They bring outside capital into the region, rocket fuel to help power fast-growing businesses. And they help validate (a number of economic studies track IPOs to determine the health of a region, an area where Washington state has been absolutely dismal in recent years).
More importantly, IPOs create a new crop of publicly-traded companies which fill an all-important role. Oftentimes, these are the forgotten companies in the middle of the high-tech food chain — the F5s, Concurs and Blue Niles of the world.
They may get overlooked.
But, without them, a high-tech ecosystem would lose some of its luster. Take F5, which earlier this week posted fantastic financial results and noted that it now has nearly $1 billion in cash on hand.
That cash pile could be used to buy other companies or hire hundreds of employees to create new products — both of which would add new dimensions to the Seattle tech community. Concur has already made some buys in recent months, and continues to grow at a nice clip.
We’ve been missing out on those companies for the past few years, and as a result the tech community is weaker as a result.
Could Zillow or Impinj change that?
It’s too early to tell, as both still need to execute and navigate a tricky public marketplace. But the fact that they are charting that course now is absolutely a good thing for Seattle as a tech region.
Hopefully, others will follow.
