One of these days, we'd like to write a hope-filled, fanboy post in response to the announcement that a New York City-based tech startup with a sky-high valuation is going public.
Today is not that day.
MongoDB, a New York company that sells subscriptions to versions of open-source database software that goes by the same name, filed on Thursday to go public on the Nasdaq Global Market under the symbol MDB.
MongoDB has long been considered one of NYC's most promising and valuable tech startups. The open-sourced database platform was one of NYC's first unicorns when it hit a valuation of $1.2 billion back in 2013. It is currently valued in the ballpark of $1.6 billion and looking to raise $100 million on the IPO.
So, why are we being such killjoys? Let's go to the S-1!
According to its filing, MongoDB pulled down roughly $101.3 million in revenue for fiscal year 2016. That's not too shabby for a subscription-focused data platform play. What does provoke concern though is a net loss of about $86.7 million for the same period. And that hemorrhage does not look to be healing anytime soon. The company is already reporting a net loss of almost $45.8 million for the first six months of FY2017 despite $67.9 million in revenue.
So, we've got a 10-year-old startup with nice revenue but a real problem turning that revenue into profit? Does MongoDB have any thoughts to share on a plan for the future?
While our revenue has grown in recent years, if our revenue declines or fails to grow at a rate faster than these increases in our operating expenses, we will not be able to achieve and maintain profitability in future periods. As a result, we expect to continue to generate losses. We cannot assure you that we will achieve profitability in the future or that, if we do become profitable, we will be able to sustain profitability.
Speaking of eerie similarities to buttfumbled IPOs of the recent past, there are a few details in MongoDB's 25 pages of risk factors that really grab the eye. Especially this little tidbit in the section titled "We currently face significant competition":
We primarily compete with legacy relational database software providers such as IBM, Microsoft, Oracle and other similar companies. We also compete with non-relational database software providers and certain cloud providers such as Amazon Web Services, or AWS, Google Cloud Platform, or GCP, and Microsoft Azure. In addition, other large software and internet companies may seek to enter our market.
So, another startup with long-term profit concerns that is facing direct "competition" from Amazon CEO/buff dad/Destroyer of Worlds, Jeff Bezos? Again, it feels like we've been here before.
What about the stock structuring? Since MongoDB is a straight software play predicated on data and logical thinking, this can't be one of deals where there are two classes of stock but only one comes with any power to affect change, and you can't get that kind if you're not already a MongoDB insider...right?
Holders of our Class A common stock and Class B common stock have identical rights, provided that, except as otherwise expressly provided in our amended and restated certificate of incorporation or required by applicable law, on any matter that is submitted to a vote of our stockholders, holders of our Class A common stock are entitled to one vote per share of Class A common stock and holders of our Class B common stock are entitled to ten votes per share of Class B common stock.
So, MongoDB 10x'ed the voting rights on your stock structure so we can once again watch that cool Millennial sleight of hand trick that goes "Please buy shares in my company...and now shut the fuck up forever while I make tragic decisions that turn your stock certificates into toilet paper!"
This needs to stop. Evan Spiegel perfected that move, it's poseur-ish now.
How are we once again reading the S-1 of a NYC-based tech unicorn with no concrete revenue plan and a shitty stock structure that survives only because Jeff Bezos hasn't sadistically delighted in killing it yet? When is Silicon Alley going to learn that IPOs are not actually a Series Z round of venture funding? And when are Goldman and Morgan going to look at one of these Homeric risk factor disclosures and think "Actually, y'know what? This is a bad fucking idea."
We're not saying that MDB is going to ring the bell in a few weeks and soar into public trading like The Hindenburg, but we're definitely not saying it won't. MongoDB has been one of Silicon Alley's most consistent, slow build all-stars, and it very well might survive or even flourish [ie , get acquired], but leafing through its filing feels like déjà vu. The bad kind.
If Etsy and Blue Apron have taught us anything it's that some tech stars just aren't meant to be public. MongoDB's plan has so many of the traits that those clusterfuck IPOs shared and we don't even know about the nitty gritty of its financials because it filed as an "emerging growth company." That's not a great look when you consider that the company's revenue growth rate for 2017 was 55%, a number that looks good at first but is actually pretty unimpressive for a tech company looking to go public in 2017.
We've said it before so we'll say it again, but this time about MongoDB: What we have here is a pretty solid little company that projects to be a pretty terrible publicly-traded one.
Yeah, we're sick of these too.