
Hype and plunder: Domo a new low for self-indulgent IPOs - randyzwitch
http://www.latimes.com/business/hiltzik/la-fi-hiltzik-domo-ipo-20180604-story.html
======
jmull
I take this as one of the two central themes of this article:

"...points to a persistent flaw in Silicon Valley financing: the willingness
to give start-up founders unassailable control of their companies, to the
point that investors have no recourse if things go blooey."

That's not a flaw, it's a fundamental part of how it is meant to work.

The investors generally don't _want_ to invest in companies run by a committee
of investors... or else they would certainly do just that. Not to mention the
larger investors could self-fund their own companies, if that's what they
wanted to do, and retain all control. They are investing in the ideas, talent,
and execution of the founders and other principal executives. It would be
pointless to turn around and take control away from them.

(I think the other main theme of this article is that Domo is a mess... which
is probably true. I only know what I read in the article, but it seems they
have real revenue? It would have to more than double to match their rate of
spending, but that can happen if they really provide value. It's hard to have
confidence, though, in a CEO who is funneling money out of the company to his
family and himself. Just the willingness to put that kind of cloud over the
company, is a red flag.)

~~~
throwaway5752
Practically speaking Satya Nadella runs MSFT, not the board of directors.
Nadella does not have control of MSFT (he isn't the majority holder of
shareholder voting rights), though.

Investors don't want to run the company. But the question is should they be
able to fire the person running the company, even if that person is acting
against the interests of the rest of the shareholders.

* ps, yes, the BoD can fire a CEO even if the the CEO has majority control of voting rights through various share classes. But the CEO can turn around and fire that board in that case (and the CEO has presumably already used their voting power to install a friendly BoD)

~~~
s73v3r_
Shouldn't the law prevent the CEO from doing just that? I mean, the board is
presumably the only check on the CEO's power, so even if the CEO is the
majority shareholder, they shouldn't be able to control the board.

~~~
madamelic
No.

What's the worst they could do? It's their company. Worst case the CEO runs it
into the ground and everyone loses their money.

CEO =/= President of the United States.

~~~
s73v3r_
And people lose their jobs, and get kicked out of their homes, etc.

~~~
rmdashrfroot
That is a old armchair argument made from those in an ivory tower.

If it was YOUR business, you would want to control your dream, your vision --
not a bunch of rich folks who could decide to kick you out from your dream if
your main goal is not to _remain profitable to the shareholders_.

~~~
John23832
Once you take investments, you are deciding to me be beholden to those rich
folk.

~~~
paulddraper
Depends on the quantity and terms of investment.

------
NorthOf33rd
I'd love to see the LA Times go back and revisit the Utah Valley region and
the culture that helped contribute to this. The Utah Valley is chock full of
startups with a serious inferiority complex to their big brothers in Silicon
Valley, hence derivative name. More importantly, Utah is the “multi-level
marketing capital of the world [1]” This kind of sales and growth tactic is
not limited to the diet smoothie and cosmetics world, but is absolutely
pervasive in the valley. Note- SLC and the Utah Valley may be united in the
Silicon Slopes moniker, but they are about as similar as Austin and Waco, TX.

A few observations on Domo

1) The product is weak. It’s pretty dashboards with very limited “real” BI
capabilities. The connectors are custom, not OOB/end user configurable –
unless end user happens to be IT.

2) They seem to be aware that the product is weak, as their demos include an
NDA. Until recently there was almost no “real” information available on what
exactly Domo is or does. Only void marketing speak.

3) Their absurd domopalooza (or DP for short, no joke) events included artists
like Kesha and Macklemore.

4) Their totally overblown marketing hype surrounds an incoherent me-too
product roadmap. Rather than focusing on building a quality product they are
going for checkboxes and chasing after Slack etc with features like Chat

5) They have a billboard that reads “If Hillary Had DOMO She would have won.”

I've been predicting for a while that DOMO’s hubris would cause it to be one
of the first in the scene to fail spectacularly. What worries me about that
prediction is the economic harm that would do to the rest of the Valley
especially given the impact of MLM economics.

1- [http://kutv.com/news/local/follow-the-profit-how-mormon-
cult...](http://kutv.com/news/local/follow-the-profit-how-mormon-culture-made-
utah-a-hotbed-for-multi-level-marketers)

~~~
joshdance
I work in Utah Valley at a tech startup in the space.

While I agree that there are some startups with 'inferiority complex' etc,
there is a growing number who are happy and proud to be a Utah startup and
what that entails, not just chasing Silicon Valley.

The instant connection to MLMs is unfortunate and something we are trying to
move past. I would argue Utah has a very strong sales culture not solely
because of MLMs but for other reasons.

~~~
phamilton
> other reasons

Like door to door summer sales, and the massive bro culture associated with
that.

That gripe aside, there are a lot of lifestyle companies. And it's great. They
aren't chasing silicon valley, they are just some small business owners trying
to make a good living and provide employment for people in the region.

~~~
tntn
> Like door to door summer sales, and the massive bro culture associated with
> that.

But just sign up, you'll make $50000 in 3 months!

/s

~~~
phamilton
I feel explaining this for everyone not in the know is appropriate.

Mormon missionaries are usually young men ages 18-20 who go out into various
places around the world for two years. They learn a lot, generally work really
hard, and when they return they usually go off to school.

Someone figured out that 2 years knocking on doors to talk about God isn't
that different from knocking on doors to talk about <insert product here>.
Various companies selling pest control, home security systems, etc. have set
up summer sales programs. You sign up, get sent to a random city for the
summer and sell the crap out of whatever it is you are selling. Top sellers
will clear $50k for the summer. Even moderately successful sellers will make
$10k or so.

After a summer of sales, many of the companies will allow their top sellers to
get recruitment bonuses. So they spend the school year holding information
meetings with free pizza to try and recruit for the next summer.

This leads to a huge bro culture. The top sellers flaunt their success by
driving BMWs to school, wearing high end designer watches and stuff. Some of
the bigger sales companies even have lounges close to school where sales
people can hang out and study. It ends up being very clear who is into summer
sales, and most students shake their heads and try to just ignore it all.

~~~
airspace69
Wow - just wow! You nailed it on the head! I've been trying to figure out what
was off here, and you succinctly identified the key areas that make the
"valley" the way it is! (I'm recently retired from the Air Force, moved here
from Hawaii and ended up working in the tech field - I'm also a "member", did
the whole missionary thing, and I've been racking my brain trying to figure
out why the culture here seems to be so "off" compared to my military
background and being around LDS outside of Utah). This place has become a huge
multi-marketing campaign with everyone trying to squeeze each other for every
buck they can make! Sorry, I better stop my rant! Thanks for the insight
though!

------
dpark
> _Domo actually is part of the Salt Lake City region’s “Silicon Slope,” one
> of several regional offshoots of Silicon Valley._

Going off on a tangent, this is really dumb. It’s not an “offshoot” of Silicon
Valley. It’s a distant, unrelated region that happens to also have a tech
industry. Are Austin, Seattle, and Portland also “offshoots” of Silicon
Valley? How about New York? Zurich?

~~~
pm90
Its a lazy way to jump on the SV bandwagon. So Austin is/was known as Silicon
Hills or something and there are many other Silicon Something monikers for
other places.

~~~
yongjik
Well, at least they copied the meaningful part of "Silicon Valley". In Korea
we have Pangyo Valley and Teheran Valley. (And no, they aren't valleys.)

~~~
DonHopkins
Silicon Sinkhole

------
huy
I work for a BI startup (competitor to Domo), so as part of my work, we did
our own analysis of Domo product, and also chanced across prospects/customers
that are current/ex-Domo users.

Domo is very "business users friendly", they do this by:

\- Very pretty (and drag-and-drop capable) visualization. Not as compared to
Tableau though, but still.

\- Native mobile apps

\- Their Domo cache + datasets concept, that makes it easy to load simple data
into Domo and visualize

\- Their commenting system?

I suspect that it's these things + all the marketing that made them sell well
in certain contexts.

They have the dataset concept that ties to their cache, which makes it easy
for business users to upload a file and "just explore", but then joining these
datasets together is not quite straightforward. And you have to load each
dataset one by one. So it's good for very basic use cases, but for advanced
stuff that requires proper data preparation, it starts to fall behind.

Also soon Domo customers would run into performance problem, since Domo hosts
the data for the customers.

Besides that, I feel like the entire product is a patch work, without proper
thorough design/thinking. Feels like they hire a lot of different product
managers, each responsible for one feature, but the features they don't fit
together very well.. Some I even find redundant (seriously what's the 3D
visualization of datasets/data sources in the product homepage for?).

It's been very interesting for me to observe the space. Our startup, we took
the directly opposite approach to Domo in building our business: totally
bootstraped with no funding. We've been profitable since year 1, working with
customers from unicorn startups, public companies to fast-growing startups.
We're very conscious/aware about the space to shape our product strategy.

I think ultimately the team and the product are the most important in the
long-term success. I can say that among the solutions, we're most impressed by
Tableau, PowerBI and Looker.

In case you've read this far, do check us out:
[https://www.holistics.io](https://www.holistics.io)

~~~
thongda
On the product side, another way to say is lacking of vision, strategy and
roadmap

------
thisisit
I first heard of Domo last year when we were trying to find a better
alternative our BI system. And boy, we were in for a ride.

The first warning sign was that their pitch was full of cool sounding words.
They kept referring to the product as a "cloud based operating system",
whatever that meant.

When we asked them to demo, their presales consultant struggled to create
anything other than a canned demo.

Personally, I even find their site annoying:

[https://www.domo.com/](https://www.domo.com/)

~~~
sologoub
> When we asked them to demo, their presales consultant struggled to create
> anything other than a canned demo.

The opposite experience is what sold me on Looker - super competent team and
very clear in how “the magic works”. All logic and queries are right there to
copy/paste into your own editor to fiddle with if you so choose, or use the
built-in SQL runner. At the same time, non-tech users need not worry about
such stuff.

~~~
numbsafari
Same here... I just wish Looker had visualizations at least on par with ...
Excel. They’ve been promising to remedy that for two years now, and now they
are promising a move to HighCharts by end of year... but will they fix all the
issues, or just slap on a new coat of paint?

I can only wait and see for so long.

~~~
dgudkov
At least? Excel has excellent, top-level visualizations. They might not look
sexy, but for everyone who works in the area of data visualization it's
obvious how much effort and thought have been put into designing Excel charts.
Getting data visualization right is far far less trivial than it might seem.

------
JumpCrisscross
"Domo also has spent $600,000 for catering services from Cubby's Chicago Beef,
which describes itself as 'a cute little sandwich and salad restaurant.' It’s
owned by Josh James and his brother Cubby. ('The menu does look delicious, but
there must be caterers in American Fork, Utah, that aren’t owned by the boss,'
remarked Shira Ovide of Bloomberg). Domo also has bought $200,000 in
furnishings from Alice Lane Home Collection, an interior design company
partially owned by James, at which Drew James, another brother, is an
executive."

Wow.

~~~
dustinlocke
For real though Cubby's is so good. If I worked there, I wouldn't be upset
about the relationship because it's a very popular restaurant.

~~~
austenallred
Having lived in Utah and eaten at Cubby's, that's the one part of the story
that shouldn't raise an eyebrow. If it's between Cubby's or Kneaders give me
Cubby's all day.

------
Gys
For the EU this might be a good general summary:
[https://seekingalpha.com/article/4179302-may-scariest-ipo-
fi...](https://seekingalpha.com/article/4179302-may-scariest-ipo-filing-ever-
seen)

~~~
Thev00d00
Or
[https://web.archive.org/web/20180605140133/http://www.latime...](https://web.archive.org/web/20180605140133/http://www.latimes.com/business/hiltzik/la-
fi-hiltzik-domo-ipo-20180604-story.html)

------
deft
Reading this whole article and it isn't until the end you find out what Domo
even does. Can't believe they've built an 800million deficit this quickly.
Besides the wasteful expenditures described in the article, where is the money
going? This isn't like Uber where they have to spend to grow. They are a
software-only company.

~~~
randyzwitch
They are a BI dashboard company with lots of data integration connectors.
They've been burning money with ads declaring 'spreadsheets are dead' and
silly Domopalooza[1] lifestyle events

[1][https://www.domo.com/news/press/domopalooza-2016-to-
feature-...](https://www.domo.com/news/press/domopalooza-2016-to-feature-flo-
rida-award-winning-musical-artist-as-entertainment-headliner)

[2] [https://www.domo.com/news/press/kesha-joins-the-
domopalooza-...](https://www.domo.com/news/press/kesha-joins-the-
domopalooza-2017-entertainment-lineup)

[3] [https://globenewswire.com/news-
release/2018/02/15/1349133/0/...](https://globenewswire.com/news-
release/2018/02/15/1349133/0/en/Domopalooza-2018-Announces-Pitbull-as-
Entertainment-Headliner-at-After-Hours.html)

~~~
reaperducer
_> silly Domopalooza[1] lifestyle events_

Reminds me of a particular west coast startup I was associated with that took
its final round of funding and blew most of it on a massive out-of-town party.
Flew in all of the A-list bankers and tech types it could find.

The idea was to make the (failing) app look like a huge deal in the eyes of
investors and get bought, thus fulfilling its exit strategy.

It worked.

~~~
tardo99
Is the identity of this startup a secret? Maybe someone with a throwaway
account could post it? Super curious here...

~~~
cookiecaper
FWIW I had a startup as a contract client that sounds like they did something
similar. Spent hundreds of thousands throwing a "relaunch party" to pander to
investors. I assume this strategy is not rare. Only difference is that it
_didn 't_ work for them and they went under a few months later.

------
asah
IMHO the comments here and seekingalpha are unnecessarily critical and
frankly, kind of lame.

1\. I tried Domo a year ago: it's actually quite nice and easy to setup, much
easier than Tableau was. A couple of friends tried to deploy Domo at scale:
it's no easier than other enterprise BI i.e. a pain. The devil's in the
(enterprise) details, and it's fair to say that none of us here on HN really
know.

2\. web BI is severely crowded, so it's natural for a company like Domo to
burn huge amounts of cash to earn marketshare, just like Lyft, GoDaddy,
Monster.com and others did. It's risky, but enterprise BI is risky.

3\. buying services from insiders is a common practice and isn't a red flag on
its own, if the expenses are reasonably justified and the prices paid are
reasonable (i.e. at a discount). There can be big savings in transaction costs
(e.g. salesrep commissions) and potential tax savings (and yes, there's
completely legal versions).

4\. lavish expenses? really? Y'all need to see what startups pay in San
Francisco for rent, let alone salaries. Good on Domo for spending on their
Utah staff! See other comments in this thread about private jets: for business
travel, it can be a nominal expense and staff LOVE IT. I owned a company in
the corporate food space that catered to the top tech companies and VCs: $300K
is not large.

5\. anti-Utah? SV-bias? really? I wish I'd owned IPO stock in Dell, Qualcomm,
Microsoft and Amazon.

disclosure: I don't own stock in Domo, don't plan to own stock in Domo and
know anyone at Domo. Ditto for other companies in the BI space.

------
mathattack
Here’s what was left unanswered.... How will the investors do? If the
investors at a 2 billion valuation take a bath, they will think twice. If they
make money, they won’t care. Same with IPO investors. Nobody forces them to
invest, and there is a move to take these companies out of indexes.

The strange thing is the self dealing. The founder is already wealthy. Why
create the risk of a stink to get a little more money? The damage to the IPO
is much higher than whatever he pocketed. This is the true hubris.

------
at-fates-hands
I've been apart of two companies who did similar things DOMO is doing and
neither ended well. Both had millions of VC money and the CEO burned through
it all on executive boxes at several pro teams, remodeling an office that
didn't need it, travel expenses, and paying himself exorbitantly.

Because of their spending, both companies slashed their runway in half, and
within months, both companies went under before being able to ship a viable
product.

I don't see a good outcome for this company.

~~~
foobarbazetc
The only difference here is they do have a product.

And apparently it’s pretty good?

But yeah this isn’t going to end well.

------
luckydata
I'm so glad the Domo chickens finally came home to roost. It's been pretty
painful to observe all the undeserved hype around this company over the year,
I felt for a long time like I was taking crazy pills.

------
58x14
I share the name of the CEO (it’s quite common) and I own the domain hack
joshjam.es. A few years back I drove out to Salt Lake City to see if he would
have any interest in purchasing it... now that I know the company is throwing
money away, I’m tempted to retry!

~~~
whatsstolat
Post back on how you do. :-).

------
yazr
> $3,276 per flight hour [for a leased private jet]

I am no expert. But this seems cheap to me ?

Can you really cross the USA in a private jet for less than $20K ?

Edit: i am assuming this is not a new fancy Drone ..

~~~
fjsolwmv
Per web search, that's a normal price. The question is if that's a good use of
investor funds for a low value xompany.

~~~
HelloNurse
It's a matter of utility, not low value. One hour of rental jet costs like 33
$100 airline tickets: even considering saved time, many people need to go to
the same place at the same time, and it has to be a rather distant place (Utah
<-> either coast?), to make a rental convenient.

------
nerdponx
I find it weird that the article doesn't actually say what Domo does.

~~~
hathawsh
Domo is an analytics company: "The pitch for Domo was that it would fill in
some of the gaps in enterprise data analysis that Omniture had left open,
providing access to real-time marketing information that would help CEOs run
their companies more efficiently."

~~~
TheHegemon
Oh god. Omniture is one of the worst software I've had the misfortune of being
forced to implement.

I'm not surprised the same founder is running into issues here.

------
drelihan
Shouldn't the criticism for IPO terms like this be directed at the money
managers buying these shares on behalf of their clients?

It is ultimately those making the capital allocation decision to push back on
unreasonable terms. Seems like they "sort of are":

"Domo acknowledges in its disclosure statement that Standard & Poor’s will be
excluding companies with these structures from some of its indexes, and other
index owners may follow suit. That’s a problem for Domo, because the rise of
passive investments keyed to stock indexes means that many investors won’t be
buying its stock."

------
georgeecollins
As an example of what can go wrong with two tier voting stock, look at the
conflict between CBS and Viacom. I don't agree that a founder should have a
greater voting share than his or her ownership. I know that has got to be a
really unpopular view here. But even if you don't agree with me, how long is
that voting ratio supposed to last? Can it continue after you break up the
company into pieces? Should it apply to ancestors of the founder?

------
Multiplayer
I was at the conference referenced in the photo - SAASTR 2017. The level of
arrogance of the CEO was striking - down to the literal slouch in the chair
for the entire talk.

I've remarked several times to people that he was the most arrogant conference
panelist I've ever seen. The line between confidence and arrogance is pretty
distinct in my opinion and at that time this ceo had no idea where that line
is.

------
JohnJamesRambo
Call it what it is- a pump and dump. People can put lipstick on the pig but
it’s just the same old scam that is centuries old.

------
airspace69
I used to work for the former VP of product for DOMO... the stories he told me
does make me feel surprised by this story. The CEO led by a sort of "cult of
personality" without having a clear direction (that was relayed to the
workers/staff) of what he wanted Domo to do. Its a serious leadership failure.

------
tntn
Seems pretty unsurprising given that domo is by all appearances the result of
the Utah County MLM-royalty types getting into tech.

------
cowpig
Why isn't something like buying goods and services from a company you (or your
brother) own with investor money illegal? Unless I'm missing a reason why that
would be ok, that should be criminal?

And then I don't understand the link between founder control and unethical
behaviour. I've seen plenty of cases of corruption in investor-controlled
companies. The article doesn't even attempt to make a concrete connection
despite implying it over and over.

~~~
twunde
The implication is that because the founder owns so much of the company, there
are very few options left to the investors to correct this behavior. Here the
options are to not invest in a new round or bring a lawsuit. At a normal
company, the investors could force the founder out as CEO, bring in other
execs or force the company to address specific issues.

------
devj
What are the other alternatives in this space? Segment?

------
enknamel
>putative

Never heard that word before. Other than that, the isn't really anything new
in this article. Successful startups are rare. It's rare that they even
survive going public.

~~~
bigtones
It's the almost forgotten cousin to the much overused "alleged".

------
iamben
Is there a GDPR friendly version of this? [sigh]

~~~
ysr23
just seen this tool (outline) on another HN post - works well:

[https://www.outline.com/9eSGhG](https://www.outline.com/9eSGhG)

(i can't think of anyway to write a post recommending something that doesn't
look like a spam link!)

