Tableau IPO shows strong interest in BI

Den Howlett Profile picture for user gonzodaddy May 19, 2013
Last Friday, Tableau (who? we'll get to that) debuted on NASDAQ at a whopping 64 percent premium to its placing offer price of $31/share. That 'pop' valued the company at an eye watering $2.

tableau logo
Last Friday, Tableau (who? we'll get to that) debuted on NASDAQ at a whopping 64 percent premium to its placing offer price of $31/share. That 'pop' valued the company at an eye watering $2.9 billion. That's pretty darned good for a company that had only raised some $15 million in funding prior to going public and was placing a miserly 10 percent of its share capital into the market.

Even more surprising is the fact that annual revenue for its 2012 fiscal year was only $127 million. Having said that, Tableau is unusual in that it was profitable for all years 2010-2012 at the time of going public. That will likely change in the current year. Here's why.

According to the company, the main purpose of the IPO is to help raise profile. That's shorthand for 'marketing' but also a useful way to explain why they are relatively unknown, despite counting customers in 114 countries. Whether the money raised - some $31 million - is enough to help it continue its break neck growth trajectory remains to be seen. History shows that it is not unusual for early (ish) technology vendors to spend 45-65 percent of revenue in marketing and sales activity. Tableau marketing and sales spend was a consistent 48 percent in the 2010-2012 period but accelerated to 59 percent in the first quarter of 2013. Expect that trend to continue.

What makes Tableau so interesting? Six words: data visualisation and business intelligence for enterprise. I'm aware that in recent times the company has been winning deals that SAP Business Objects would have normally considered its own. Why?


The way in which Tableau delivers information is simply beautiful and intuitive. (see image) They have clearly spent a LOT of time thinking about what it means to provide easily consumed meaning to data. Customers certainly like what they have to offer:

When I met with key Tableau customers yesterday, including eBay and Hanesbrands, I learned something interesting. Organizations (at least the two aforementioned ones) that rely on Tableau typically have an internal champion for the product who used it in previous employment.  For these champions, Tableau enabled the taming of their data, made their jobs fun and, ostensibly, opened the door to even greater personal success in new positions where they had huge impact…by introducing Tableau.

...even if the desktop edition is considered expensive. When was the last time you heard enterprise software described as 'fun?'

The other thing that Tableau tries to do is get users live with the solution as quickly as possible so that it can 'land and expand' inside the enterprise. This has proven difficult for other vendors but is proving less of a problem for those vendors that have figured out how to quickly aggregate data sources.

An unusual facet of Tableau's IPO is that its prime offerings are on-premise Windows only. It has ambitions to get into the SaaS market but these are far from fleshed out. If that sounds confusing when so much of what one sees is SaaS/cloud then, Phil Wainewright has an explanation:

The variety of contrasting approaches in the market is symptomatic of a category that’s in its rapid evolution phase. Users are educating themselves — often expensively through trial-and-error — as to how analytics can best help them achieve better business outcomes. They want the data that goes into the process to be fresh and up-to-date; they want it served up with meaningful visualization, context and presentation. They may still have more to learn about the intervening phase of preparation to ensure that what comes out is fit for consumption.

So what makes Tableau such a hot stock? Does its potential translate to $2.9 billion worth?

The financial market for enterprise technologies has exploded following a dearth of new listings prior to 2011. Anything that is making a dent in the universe is seen as desirable. The stage was set by Workday which is trading at a valuation around $10 billion on sales that have yet to reach $400 million per annum. Then there is what Christian Chabot, Tableau CEO believes is a genuine differentiator:

...we are too reliant on specialists, and that expanding this "priesthood of people" doesn't get us past the bottleneck.  Chabot said that the  complicated and developer-intensive nature of the vast majority of data technologies is what underlies Tableau's success.

There are clear lessons for all enterprise vendors that can be summed very easily: hide complexity, provide beautiful, fun experiences. The question now is how much clear space can Tableau keep between itself and its competition?

More details about the company can be found in the S/1 stock registration document (PDF)

Disclosure: Workday and SAP are premier partners

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