Biz Builder Mike

You can't sail Today's boat on Yesterdays wind - Michael Noel

The Real Lesson of the Snowflake IPO

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On Wednesday, Snowflake (SNOW) went public in one of the most highly anticipated IPOs ever. 

Snowflake is a cloud data platform that helps companies efficiently organize and analyze huge databases. The company’s revenue is growing at a rapid 133% year-over-year rate.

Snowflake’s IPO priced at $120 for a valuation of $33 billion. That alone made Snowflake the most valuable software company ever at the time of their IPO, according to Fortune.

There are two primary problems here for those of us who are “retail investors.” First, only well-connected investors got in at the initial $120 price. Demand for this deal was so high that shares opened to the public at $245 and were trading at $290 at 12:47PM EDT on Wednesday.

Snowflake trading for $290.98 at 12:47 ET on Sept. 16, 2020

So unless they happened to have a connection at a major investment bank or Snowflake, most investors probably didn’t get in at the $120 IPO price. Warren Buffett’s Berkshire Hathaway — and other well-connected firms — invested at that price. But the rest of us didn’t have that option.

The second problem is that on its first day of trading, Snowflake was already valued at more than a $60 billion market capitalization! As a comparison, Twitter currently trades at a market capitalization of $32 billion. It’s true that Snowflake is growing much faster than Twitter. But it also only has a fraction of the revenue which Twitter does and is currently losing a lot more money.

The issue is that this week is the first time most investors will get a chance to buy Snowflake shares. And it’s already worth more than $60 billion. Snowflake is an impressive and disruptive company, true. But at that high of a valuation, there’s only so much upside left (and quite a bit of risk). The biggest gains were already made by Snowflake’s early private investors. The public never got a chance to buy when it was still small. 

One more thing. In February of this year, Snowflake raised $479 million at a $12.4 billion valuation from private investors. What could have possibly changed between February and today that made the company 5x more valuable? I believe the spike can only be explained by the bubbly financial environment we’re in today.

Private markets are where tech growth happens

Snowflake isn’t the only hot tech company to IPO at a crazy valuation. Today it’s rare to see any hot tech company IPO at a valuation of less than a few billion dollars. Just take Uber’s IPO at an $84 billion market cap and how Facebook was worth $104 billion when it went public as a couple of examples. Those are monstrously large IPO valuations. And Snowflake is right up there with them.

Nowadays when a really hot tech company goes public, it’s often already a big and mature business. And the majority of investors’ gains were made in private markets.

This is one of the main reasons I continue to invest in private startups. It’s one of the only ways to get access to very fast-growing companies today. Of course, there’s also more risk involved in private markets. But that’s balanced out by the higher upside potential. Startup investing also requires a lot more patience than trading stocks — but in my experience that’s a benefit and not a bug.

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A Day in the Life of Entrepreneur Lenja Doms, Creator of Lazlo Sunglasses and Partner at Yuma Labs

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Running your own business is no easy feat. It takes a healthy dose of passion, discipline, and commitment. Ever wondered what a day in the life of a small business owner and founder is like? We’re here to give you a glimpse!

This week, we’re featuring entrepreneur Lenja Doms, co-creator of Lazlo, a new line of premium, polarized sunglasses that are made from recycled plastic. Read on to see how she spends her day as a partner at Yuma Labs, the Belgium-based team responsible for creating Lazlo and running their current crowdfunding campaign. Then scroll down for a brief Q&A to get to know her better and get inspired!

“When I sketch my day, I have to be completely honest right away. I’m very bad at time management, and structure is a work in progress. Every day looks mostly different,” Lenja shares. “Since we’re a small startup, it’s possible that our day can change in a minute. Sometimes that’s good, but I could appreciate some structure from time to time. I would like to give an overview of one single day, during the early preparation period of our campaign.”

5 A.M. My alarm goes off at 5:30, I’m an early riser, thanks to my boyfriend who works in construction. First task in the morning: take a shower.

6 A.M. I have breakfast with my boyfriend and then I meditate for 15 minutes. To be completely honest, when I’m stressed, I might skip these important minutes, unfortunately. Depending on the location where I work, I take the train and hurry to the office. about an hour-and-a-half commute. Or I work from home and put myself at the desk. I work half-time at home, alone, and the other half I work together with the team at the office. 

7 A.M. I love it when my first emails get out before 6:30, but I can’t do this every day. When I need to take the train to the office, I listen to podcasts or read a book. From my home to the train station, and from the train station to our office, I use my e-step. 

8 A.M. Mostly my day starts with my to-do list from the day before. I plan from day to day, so I’ll decide in the morning which tasks I’m going to do and when.

9 A.M. Social media hour – I try to block off one hour in the morning for our social media channels to interact intensively with our community. 

10 A.M. Sprint call with our growth agency. For our campaign, we decided to work together with an agency. Certainly, for the technical aspect of ad management we can use their help well. Two times a week we plan a sprint call to plan our actions for the week and evaluate what works well.

11 A.M. Follow up sprint call. During our sprint calls there are sometimes twenty small things I need to follow up on and it’s important to do those things immediately. 

12 P.M. Since I eat breakfast around six, I’m hungry at exactly 12 PM. I eat lunch with the team. Usually we don’t have a very elaborate lunch. Luckily, we can still find a jar of jam and some crackers somewhere at the office, and this is our meal. It has become a real joke at the office that when we become rich we can afford a real lunch

1 P.M. E-mailing

3 P.M. Reading grant call from the city. The city of Antwerp decided to give grants to startups who had suggestions for new kinds of economic models post-COVID-19. We at Yuma Labs believe that the circular economy will be the future and is even more relevant after the corona crisis. 

4 P.M. Brainstorm with my colleague about a project for the city. 

5 P.M. Writing proposal for the city 

8 P.M. I come back home and eat something. It’s important to be able to discuss and vent about my day a bit, luckily my boyfriend (mostly) wants to listen.

9 P.M. I prepare myself to sleep, I try to be asleep at 10 P.M.

10 P.M. Zzz

Now that you’ve gotten a glimpse of what her day is like, get more inspiration in our exclusive Q&A with her below!

INDIEGOGO: How did you become an entrepreneur? 

LENJA DOMS: My parents are entrepreneurs and on my 18th birthday (when it’s legal in Belgium to do business) my father thought it was high time for me to start my own business. First I had an events agency, and then I became a freelancer, so it was pretty clear. But when I discovered that you can do business and change the world with that, I was completely hooked.

IGG: What makes your Indiegogo project unique? 

LENJA: Yuma Labs launched a pair of sunglasses called Lazlo. Our sunglasses are fully circular, which means three things: we start from waste; we design them in such a way that they never become waste again (made for disassembly); and we recycle them again into new sunglasses by asking you to send them back with our special case, and rewarding you with a discount code for the next purchase. 

IGG: What’s your biggest piece of advice for women who want to start their own business?

LENJA: Surround yourself with good people. I have the best friend in the world. Not only are they the perfect distraction on Friday nights after a difficult week, but they’re also my sounding board. I’m lucky that in my close circle there are also many entrepreneurs, so I can share a lot. If you don’t have that, go and look for it. Before you know it, you’ll discover great like-minded people close by.

IGG: What tools would you recommend to anyone starting their own business, crowdfunding campaign, or project? 

LENJA: It’s important to know that entrepreneurship can be a bumpy road. And I believe that you can only be on top of your game as an entrepreneur if you are also as a person on top of your game. So, my main ‘tool’ to be the best version of myself as an entrepreneur and a person is to take enough time to take care of myself. Meditation is my important ritual (I’m a big fan of Headspace and my Muse headband), and, of course, sports: yoga and fitness (always with my Apple watch to track my progress). Oh, and I try to read on a daily basis but I’ve been losing that habit for the last few months.

IGG: What’s your favorite Indiegogo campaign, or a campaign you’ve recently supported?

LENJA: I’m a big fan of wearables and since a few day’s I received my FOCI to track my focus. I’m not completely there yet, but I think I will figure it out and use it day to day. I like to measure my body and challenge myself on that data.

To support LAZLO, check out their Indiegogo campaign page.

To learn more about YUMA LABS, follow the team on Facebook, Twitter, Instagram, LinkedIn, and Pinterest.

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