Blowing Bubbles

Back in the late 1990s companies filed for IPOs even though they had modest revenues and were losing money. Due to the tulip mentality of the time investors suspended disbelief and bought in anyway, giving way to the crash of 2001. A couple of years after that bankers were telling me that in order to have an IPO you would need “at least a couple of years of solid trading profits”, quarterly revenues of at least $25 million and preferably more, as well as strong growth. Those heady days of the late 1990s were a freak occurrence, like the South Sea Bubble. Certainly technology IPOs dried up almost entirely.

With the recent gloom on Wall Street I was therefore surprised to see Initiate Systems filing for an IPO. They are growing quite rapidly but not only have never made a cent of profit, but their losses appear to be, if anything, widening slightly at about a third of their revenues. Throw in an admitted financial misstatement and does this start to feel to you like the late 1990s again? No doubt Initiate is expertly and expensively advised, but this will certainly be one to watch, as if the IPO goes ahead and well then it will change perceptions of exit strategies for high tech companies.

2 thoughts on “Blowing Bubbles”

  1. Initiate does not really compete with Kalido. Initiate is very much in the identity management and data quality space, and to some extent data migration and de-duplication. Kalido MDM is much more about “collaborative” MDM (automating workflow around MDM) and “analytic MDM” (helping to produce a golden copy of master data than can be fed into a data warehouse). Kalido does not have any direct data quality functionality (or de-duplication) of its own, while Initiate does not cover the territory that Kalido does, as far as I am aware. In theory I can no reason why an MDM project could not combine the two in a complementary way.

    You question raises a good point though. For me the industry lacks a good model to map out MDM functionality. The current alternative architectures (collaborative v analytical v operational) do not really help customers understand where the functionality of one tool ends and another begins.

    You would have to ask Kalido about their future plans.

  2. Interesting Analysis.Do Kalido and Initiate compete for the same MDM space. Also will Kalido be going public any time soon

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