Seven years ago in small office space in the Fremont neighborhood, Tableau Software CEO Christian Chabot boldly told me that his 25-person enterprise software company would be the next billion dollar company from Seattle. “We believe it, like we believe anything,” Chabot said at the time.
Today, that belief finally became a reality as Tableau skyrocketed in an initial public offering that valued the company at nearly $2 billion. It marks the biggest tech IPO of the year, and the first in Washington state since Zillow went public in July 2011.
Executives like to say that IPOs are nothing more than financing events, but for Tableau it marks a significant milestone for a company that took the long, hard path of bootstrapping its way to success.
I got a few moments to chat by phone today with Chabot, who was still flying high after ringing the opening bell on the New York Stock Exchange where the company started trading under the ticker symbol “DATA.”
Here are excerpts from the remarks:
You are now a $1 billion plus company, so what made this dream become a reality? “We’ve been working our whole lives to become an overnight success as I think you know. (laughs) This has been a journey, and it started when I moved the company from Silicon Valley to Seattle in 2003 during our first year. We were just the three founders at that time when we moved to Seattle. We’ve been hiring great team members, mostly from Seattle, over the years. It has been a business building process, brick by brick, putting our shoulder to the cold stone of tradition, trying to do something different. And it has been working out well for us.”
Tableau was not an overnight success story. There has been a lot of work and toil here, right? “Absolutely. Most startups can be really successful over a much longer period of time. And hopefully Tableau will be a new emblem of not getting disheartened when you are not an overnight success. And, hopefully, we will encourage the next-generation of startups.”
Wall Street has bought into the message. You are up more than 53 percent right now. Why do you think the stock has taken off the way it has? “Well, I just came off a two-week, cross-country IPO road show, and the sentiment we found is that investors all over the country are extremely enthusiastic about data and analytics, and the promise that it can bring to people this century. And I think part of the warm enthusiasm is that there might be technology that finally puts the power of data into the hands of ordinary people, which is really the piece that is missing.”
You couldn’t have timed the IPO much better. There is the trend towards big data and enterprise software and simultaneously Wall Street is performing very well. I know you can’t time the IPO per se, but can you talk about the timing a bit? “We didn’t time the market. Preparing to take a company public takes a long time, and so I don’t even know the people who want to do that end up being successful. We’ve taken it public because it is the right time for our business. We always told the employees of the company that we wouldn’t go public until we had crossed a $100 million revenue mark, and we finally did that last year. And so, $100 million is now in the rear-view mirror. We are targeting much bigger revenue numbers in the future, and taking the company public is just about positioning the company for many more years of growth.”
You slipped to a $4 million net loss in the first quarter. Should that be a worry for Wall Street? “No, because, investors realized on the road show that it is extremely rare in the history of business software, going back decades, that a company has grown like Tableau has from bedroom to $100 million while being cash-flow positive and profitable. That feat is so special and rare, the fact that we are now investing more in our future and making longer-term investments, people generally view as the sensible thing to do, and something that will payback for investors.”
Speaking of that, do you think the company will be operated on Wall Street more in the style of Jeff Bezos at Amazon.com, who makes bold bets and invests for the long-term, or will you manage it more quarter-to-quarter. What’s your style? “Our style always has and always will be to focus on the long-term. And, in fact, the types of investors we courted in the IPO process are long-term growth oriented investors. And there is broad agreement by the investment community today that Tableau at this juncture should be focused on top-line revenue growth. So, we can go forward down that path without much conflict.”
I know you will say this won’t change things at Tableau and this is just a financing event. But it is a big deal, and things do change once you become a public staff. So, for the staff, what does today mean and what will change? “It is really rewarding that we have had so many people who have been laboring with the company — 5, 6, 7, 8, 9 years — that they take a moment to recognize what an achievement this is and what an important milestone it is for the company. There is celebration in all of Tableau’s offices right now, and that is just deeply meaningful. And then on Monday, we all get back to work. That’s the basic situation (laughs).”
What does today mean for you? “The thing I now know, 10 years later, and I’d probably tell my younger self in a dream is the most rewarding thing you can do in life is work with a team of people you respect, towards a goal you all believe in. And I’ve been very fortunate to have had that journey with this team Tableau over the past 10 years, and I can’t wait to do it going forward.”
What are the growth plans and how will use the funds? “I think the most important thing is that Tableau has the highest R&D ratio of anyone in our industry. I would submit to you that there aren’t many business software companies that are extremely R&D intensive. When we look at companies that we admire, we look at Google and Facebook and Amazon and Apple. Companies that are just incesentally dedicated to making the next breakthrough, and in the world of business software there aren’t many companies like that. So, we will be expanding the R&D team, and hopefully making more great products that people can use each day.”
What about acquisitions? “Potentially, it is not a core part of the business strategy, but we are certainly open to them.”
Has Tableau ever made an acquisition? “We never have to date.”
Question via Lew McMurran on Twitter: “Can I take a tour of Christian’s yacht after the lock-up period ends? “You can tell the gentleman if he’d like to take a tour of my smelly minivan, he’s welcome to. (laughs). That’s about as fancy of transportation as I’ll be getting.”
The three founders were able to retain 48 percent of the company, which is really rare. This IPO is making you very wealthy. Do you have any plans for the funds, and does this change anything for you personally? “No, not at all. We started as a bootstrapped company. And we have never been very focused on the money piece of the equation. We are really focused on the mission, and building this business to the next level. That is the fun part.”
Anything else I am missing? “Just how grateful we are to our passionate customers. And, also in this case, to the Seattle community. Moving the company from Silicon Valley to Seattle turned out to be one of the best decisions we ever made. We are really grateful to be in the Seattle technology ecosystem, and we hope to be there for many years to come.”
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