
Asana S-1 - sean_lynch
https://www.sec.gov/Archives/edgar/data/1477720/000119312520228462/d855753ds1.htm
======
supernova87a
Wow, this is a torrent of IPOs today. Investors / boards are wanting to get
money out before things turn south I feel.

Aside from that, I'm surprised how much it costs Asana on engineering R&D, for
essentially a ticket management system. How does a team grow to ~300+
developers ($89M R&D) to figure out how to attach PDFs and videos to tickets,
and email people when there's a change in status? (ok yes I'm oversimplifying
a bit, but not that much)

And (as with all such companies) how much they need to pour into
Marketing/Sales to sell this thing. These above costs basically wipe out the
gross profits by 2x.

~~~
PragmaticPulp
> How does a team grow to ~300+ developers ($89M R&D) to figure out how to
> attach PDFs and videos to tickets, and email people when there's a change in
> status?

As with most of these companies, user-facing feature development is only a
small part of the engineering workload.

I would assume the majority of those engineers are working on less visible
tasks: Devops, build systems, infrastructure monitoring, security, backups and
data integrity, internal tooling for customer support, billing and accounts
management, and other critical but otherwise invisible tasks.

Duplicating the core 80% of Asana's features as a one-off product wouldn't be
extraordinarily difficult. Scaling it into something that can operate as a
business with hardened security, reliable data storage, consistent uptime, and
reasonable internal tooling for customer service is where things get
difficult.

That said, companies often go overboard with hiring in the run-up to IPOs or
acquisitions. Excessive R&D spends can be fixed on the road to profitability.
Restoring a company's reputation after a major data loss disaster or a
security breach is much more difficult, so it's safer to err on the side of
throwing too many engineers at polishing everything. If they can't scale
revenues to match, expect the engineering workforce to be cut down
significantly.

~~~
dcolkitt
This makes a lot of sense. But in some ways it shows the downsides of the
modern obsession with SaaS.

How many of those jobs would be required if Asana was simply sold in a shrink-
wrapped box that you installed on your desktop or the downstairs server run by
the corporate IT guy.

In some ways SaaS is a big win because it offloads all those tasks to a
centrally hosted service. No IT guy or tower server in the corporate mail room
required. OTOH not everyone has the same ops requirements. Not every customer
needs 99.999% reliabilty. Or ultra-hardened HIPAA-compliant security. Or heck,
even remote access outside the office LAN.

By delivering Asana as SaaS instead of shrink-wrapped software, it means the
Asana hosting team has to deliver to insanely tight operational requirements
to every single customer. If one customer requires 5-9s of uptime, then
basically every customer requires it. That certainly explodes the cost-of-
goods-sold beyond selling shrink-wrapped software.

~~~
freehunter
If it was shrink wrapped software they would need a bigger sales team, a
bigger support team, a bigger professional services team, etc. It’s just trade
offs.

~~~
AlphaSite
And honestly its actually even more work in many ways, since you need to be
able to work anywhere, not just in a well known environment.

~~~
jmnicolas
In the age of VMs and containers I'm not sure it's still true.

~~~
dx034
I've been involved in debugging a bug in a software that occurred on
Kubernetes cluster at the client site but couldn't be reproduced locally.
Reproducing that is so much harder than a similar software installation. You
have so many moving parts that it's pretty much impossible to create a test
cluster with the same properties.

Also, with SaaS you can get access to log files, if it's installed on prem
that can be heavily restricted by regulation.

------
aresant
An article by Tom Tungz that relates SAAS co marketing budgets to to annuity
grabs helps me contextualize this S1.

Asana's gross margin is ~85%!

Their net retention is tracking @ 120% in 2020.

So every $1.00 dollar of sales to a customer last year turned into $1.20 this
year.

AKA negative churn.

Which explains the reason you see them spending $105m in sales & marketing to
generate $142m in topline.

Obviously this runs its course eventually, but at that point you cool down
your S&M & R&D engine and try to keep up with counting all the cash flows.

SAAS is just a remarkable business, absolute cash pigs.

(1) [https://tomtunguz.com/does-better-ndr-imply-greater-
toleranc...](https://tomtunguz.com/does-better-ndr-imply-greater-tolerance-
for-higher-cac/)

------
gen220
Can someone in-tune to this world explain why Moskovitz purchases equity
through a trust, in the form of convertible promissory notes? It seems like he
isn't taking any compensation in stock or cash, but prefers to "invest" in the
company's stock, through this trust and promissory-note scheme?

If you're confident that the company's eventually going to exit (obviously a
big "if"), and you have the cash liquidity (which he obviously does, as one of
the original co-founders of fb), is this essentially a method of getting
compensation that isn't taxed as compensation? I'm trying to understand what
the justification is for maintaining what looks like a fairly complicated
transaction. It looks like they've done it a few times (2017, 2020 jan 2020
june). His entities also participated as investors in the Asana Series D and
Series E rounds.

Not meaning to cast aspersions, just curious because I haven't seen these
kinds of setups in S-1's before. But most S-1 companies don't have people with
pre-ipo, >1bn net worth founder-CEOs, so it makes sense that this one might be
a bit anomalous.

~~~
simonebrunozzi
That's a fair question. I am not a lawyer or accountant or anything in that
field, but I can try to answer anyway.

1) Often trusts and LLCs are used for liability protection and anonymity; you
see this used by investors owning multiple residential real estate properties.

2) Your comment on tax is interesting; of course, capital gain in the US is
taxed at 20% (plus your state), while income tax gets to roughly twice that.
So, potentially, that could be a way to reduce how much taxes you will pay.

However, in relation to #2, I doubt that Moskovitz really cares to save
100k-200k a year in taxes. It's probably more about #1.

Again, this is my $0.02. Please correct me or improve my comment if you know
the subject more than I do.

~~~
dmoy
Trust tax brackets are steep enough that income tax and cap gains benefits are
negligible. Anything that could be done in a trust w.r.t. cap gains could also
be done as an individual, so there's no win there.

Inheritance tax benefits might be substantial though.

You're probably very right about the liability and anonymity aspects.

------
dmart
I've found Asana to be a much, much nicer product to work with than Jira (at
least as a developer, not sure about from the management side.) I genuinely
wish them success and hope they're able to grow their marketshare.

~~~
godot
Do you have up-to-date experience on both? I ask because, this year is my
first time using Jira in 10 years. I was in big corp 10 years ago and we were
on Jira and it was a disaster to have to use. UI was a mess and it constantly
went down or went slow (big corp; self-hosted.). My current startup started
using Jira Cloud recently and I found it to be much better than my past
experience, and better than Asana.

I last used Asana at my last company, which I left 2 years ago. It was slow
and a resource hog even on our pretty beefy work MacBook Pros. Compared to my
current Jira Cloud experience in 2020, I much prefer Jira now.

~~~
dmart
This was about 2 years ago - at that time I found both Asana and Jira to be
similarly slow, so kind of a wash in that regard. But it was corporate self-
hosted Jira, so perhaps Jira Cloud is a smoother experience.

~~~
core-questions
Jira self-hosted is actually often a lot faster than Jira Cloud, if you have
decent gear to run it on. You run the database too, so it's a matter of how
much cash you want to throw at it. Jira and Postgres on decent storage can be
pretty quick, though of course it's still 100x slower than any normal 1990s
desktop app.

------
peter_l_downs
Am I reading this correctly in that they had a net loss in 2019 of $50.1 (42.4
adjusted) million dollars, and then in 2020 a net loss of $118.6 (68.2
adjusted) million dollars? (bottom of page 58)

And that their plan is to just continue trying to upsell and acquire new
customers?

Hmmmm

~~~
encoderer
Yeah, what is going on at Asana?

R&D costs outpacing revenue in the year before IPO really surprises me (from
~54% to ~62%).

For comparison, Atlassian went from ~38% to ~36% in the year before IPO.

~~~
gregd
The thing that drives me absolutely bonkers with Asana (others do this as
well) is that the freelancer has to upgrade their "free" account to roughly
$70/month to get functionality like seeing a Timeline (think Gantt). Their
pricing isn't clear that to upgrade to Premium (to get Timeline) says it's
$10.99/month. It's not until you get to the next screen that it tells you it's
5x10.99/month because there is a five person minimum.

Almost none of these project management tools are built with full
functionality for a freelancer who manages projects and people doing the
tasks/projects, but doesn't need them to log into the project management tool.

~~~
john_moscow
Single-license freelancers are never the target audience. From my experience
running a similar business, this is the hardest category of customers to deal
with. Stuff like demanding very project-specific features for free overnight
and cursing you when you explain how requests are prioritized from user
numbers. Or demanding instructions on tangential topics (like how to
troubleshoot some network issue their customer has) by claiming that it stops
them from using the product.

I mean, there are nice guys as well, but statistically it's just not worth it.

~~~
PragmaticPulp
Sadly, I can confirm this is true.

Most single-seat customers are fine, of course, but a very vocal minority can
cause a lot of problems.

I believe it's due to the mindset shift. If a team or company decides to use a
specific software, people are more likely to accept the decision and learn to
work within the tool's features and limitations. The cost of switching tools
is high, so they tend to stick around for a long time.

Single-user freelancers can change tools at any time, because they don't have
to negotiate with anyone else. As such, they feel they have more leverage in
threatening to cancel their subscription if the company doesn't cave to their
demands.

Most of them don't realize that the company isn't making much, or any, money
off of their single-seat license when they're consuming hours of customer
support or social media engagement time every month. It's better to see the
squeaky wheels just leave the platform.

For another data point: At scale, you get a lot of threats from people
claiming they're going to Tweet about how bad your product is to their
thousands of followers, or write a newsletter about how much they hate your
product, unless you implement the specific feature they're demanding. These
threats exclusively come from the single-seat users, because no company is
dumb enough to try to extort another company with threats of tarnishing their
reputation in public.

It's unfortunate, but it's true. It's vastly easier to just deal with
enterprise customers or larger teams who have better things to do than tie up
customer support time for every little complaint or suggestion (or demand)

~~~
switch11
this is super true

we also sell to both single users and to companies

single users will write things like

I will destroy your business

you have no idea how many followers I have

etc etc

A single user with 10,000 followers on Twitter thinks they should be treated
like they are GM or GE or Ford

~~~
john_moscow
Fun fact. If you don't reply at all, and completely ghost them afterwards, no
matter what they say, the chances of them carrying anything out gets close to
zero.

------
gizmo
According to the filing Asana has 1.2m paying users. Each user is worth maybe
$1000. That puts Asana at 1.2bn.

The median forward revenue multiple for public enterprise SaaS companies is
10x, and with 2020 revenues of 150mn that results in a 3bn market cap.

A third data point is they raised 75M 16 months ago at a $900m post money
valuation. With growth at 100% annually that puts their current valuation at
2.5bn or so.

Three different 30 second valuation strategies that result in the same
ballpark numbers.

~~~
user5994461
Their business plan is $30 a month, so I'm tempted to say each paying user is
definitely not worth $1000.

Given their revenues of 142M and 1.2M paid users, that's an average a tad
below $120 a year per user, which would actually be less than their cheapest
plan. That doesn't add up, it smells of free trials counted as paid users.

~~~
gizmo
Asana's pricing is per user per month -
[https://asana.com/pricing](https://asana.com/pricing)

~~~
tims33
Many of those 1.2M users are on large corporate deals that are at a small
fraction of list price. This is a common phenomenon in SaaS.

------
paloaltokid
Based on a few of the comments on this thread, I wanted to point out that
filing an S-1 is not something that you just do overnight. When companies
decide to go public it's a lot of work usually involving multiple dedicated
teams on the business side. It takes many months and can take over a year.

So while the timing here is interesting, nobody decided on Friday that many
well-known tech firms would declare their intent to go public on Monday.

~~~
grey-area
No, they decided that 6 months ago (or whatever the lead time is), but
everyone decided at the same time, for fairly obvious reasons.

~~~
svbanker
This is false. A lot of these companies started their IPO process earlier but
then got delayed due to COVID. Not everything is as pessimistic as you’re
making it sound. It just happens to be before November (companies usually dont
go public during election season) so this is the only viable window for
companies to go public for the remainder of the year.

------
ryanmccullagh
In case anyone forgot, Asana was founded by Facebook co-founder Dustin
Moskovitz.

~~~
josh2600
And FB early employee Justin Rosenstein.

~~~
leahgnyc
Who founded [https://www.oneproject.org/](https://www.oneproject.org/)

------
archit3cture
In the "History" section (p.2) they state that

"We started Asana because our co-founders experienced firsthand the growing
problem of work about work. While at Facebook, they saw the coordination
challenges the company faced as it scaled. Instead of spending time on work
that generated results, they were spending time in status meetings and long
email threads trying to figure out who was responsible for what. They
recognized the pain of work about work was universal to teams that need to
coordinate their work effectively to achieve their objectives. Yet there were
no products in the market that adequately addressed this pain. As a result of
that frustration, they were inspired to create Asana to solve this problem for
the world’s teams."

I can only imagine that the complexity of the coordination inside Facebook
continued to grow after Asana was created.

So is Facebook a client of Asana to solve this problem ? How does a company
like Facebook handle the "coordination problem" ? Do they have one tool that
solves all the issues or a myriad of project management tools ?

------
jimnotgym
I know Asana is prettier than MS planner but:

1\. Planner is bundled with 365

2\. Planner works with Azure AD SSO for free.

3\. Planner is 100% integrated with Teams.

This makes Asana an outside bet for me.

~~~
gregd
Except Planner has no timeline or Gantt charts, despite claiming most of last
year, that Gantt charts where on their roadmap. I've found Planner to be
nothing more than a glorified Kanban board, which is also something Trello
does much better even on their Free Tier using your 1 powerup of a Gantt
chart.

~~~
jimnotgym
Trello does it much better for a small team in a non-enterprise setting.
Having to manually add and remove users, and manage external sharing is a huge
drag in any bigger environment

------
jasondc
5 IPOs (S-1 filings) from Silicon Valley today:

\- Unity (San Francisco) \- Jfrog (Sunnyvale) \- Snowflake (San Mateo) \-
SumoLogic (Redwood City) \- Asana (San Francisco)

~~~
sdfhbdf
Maybe even more just these 5 are on HN homepage...

~~~
foxdev
You can get a rough idea of it by looking at submissions from the sec.gov
domain:
[https://news.ycombinator.com/from?site=sec.gov](https://news.ycombinator.com/from?site=sec.gov)

~~~
marviel
Hey thanks, this is a neat tip.

------
snake117
I've read a lot of comparisons between Asana and Jira, but I was curious if
anyone can explain the difference between Asana and Basecamp? I don't have
experience with either service.

------
nv-vn
This filing looks like it has a ton of red flags about the way Asana is
running their company. As an example, one of the images tries to highlight
Asana's timeline and their achievements [1]. One of the things they mention is
opening an international office with ~100 employees and <11k customers. Based
on their current figures of 75,000 paying customers and revenue of
$142,606,000, you would expect a revenue of ~$19 million for 11k customers.
Why is a company with 100 employees & <$19 million in revenue opening
international offices? Likewise, why is the company spending 74% of revenue on
sales and 63% on R&D? How are they managing to lose 83% of revenue? It seems
like the company has 0 responsibility with how they spend their cash and
beyond that, it's unclear whether they even have a path towards profitability
if they're spending 75 cents on the dollar just to make a sale and throwing
almost $100 million at R&D every year. Despite substantial revenue growth y/y
(~70%), they've managed to outpace it by growing losses twice as fast at
~140%. It seems like the company has a pretty good product and a great gross
margin as well as good revenue growth, but I don't see them becoming
profitable with their current management -- it seems like the folks in charge
right now have no clue how to run a successful business and will just throw
money away as soon as they're given it.

[1]
[https://www.sec.gov/Archives/edgar/data/1477720/000119312520...](https://www.sec.gov/Archives/edgar/data/1477720/000119312520228462/g855753g47s60.jpg)

Disclaimer: I'm not a professional investor and I'm not familiar with Asana's
business

------
2T1Qka0rEiPr
As a non-American who knows little about the IPO process, is there a reason
why there have been a flood of S-1 reports listed on HN over the past 24
hours?

~~~
mark_mart
It seems just coincidence.

The reason for coincidence might be cash-out for investors due to fear of
covid-19? I do not know that.

------
minimaxir
...is there a reason a ton of tech startups are dropping their IPOs today?

~~~
CleanItUpJanny
last chance to exit scam before the bubble pops

~~~
toomuchtodo
I _totally get_ the feeling behind this, but you can't blame market
participants for taking actions that are rational, regardless if the overall
market fundamentals are/seem to be irrational.

If the market is desperate for returns, and tech equities are one of the few
remaining avenues for such returns, and you are the owner of those equities,
what else would you expect to occur? "No no no, don't buy these valuable
shares of my company, invest elsewhere!" No way, you're going to cash out as
fast as possible before your gains evaporate when the market transitions.

~~~
tehjoker
Most undesirable actions by the powerful have a rational character. It's
bizzare to me that this is so commonly used as a defense. It says to me that
the problems are seen to be individuals, not systems of power.

Note: I'm not commenting on the specific case here, just this argument in
general.

------
1290cc
Makes sense they're going for the IPO at the start of the work from home era.
Asana has been around awhile and my team always used it for remote team
communication and project management. We never saw the need for apps like
Slack or Basecamp because working with the tool is very similar to the Getting
Things Done system (or Toodledo).

------
ourcat
What do they actually do (for 1m+ people)?

I'm looking around their site and blog (and the S-1) and read a lot of
'marketing-speak', but no simple one-liner about what they actually do and
what value they bring.

Am I missing something obvious?

What comparative companies are they like? I saw someone mention Jira. Are they
'a Jira'?

~~~
souldeux
They are an, arguably, prettier Jira.

~~~
ourcat
Got it. Thanks.

More useable too, I'd hope.

------
jariel
Good on them, but can Silicon Valley people stop conflating their corporate
operating bloatware with Eastern Spiritual Terms?

Completing that outstanding customer ticket is not like the process of
achieving englihtenment.

------
bambax
> _Help humanity thrive by enabling the world 's teams to work together
> effortlessly._

I have no idea what any of this means. It's grandiose and therefore,
upsetting.

------
baron816
Anyone else interested in filing to go public today?

------
poisonta
I bet half of their R&D is being spent to figure out how to do Kubernetes the
right way.

------
actuator
While better than Jira in UI, I haven't been able to like Asana as a product
for some reason. In my previous company we moved away from Asana to Jira
because it seemed PMs and higher management found Jira easier to work with.

------
ryanhunt
Dumb question - but with all these tech IPOs, how does one get in/invest at
IPO time without buying on the open market?

~~~
el_nahual
Not a dumb question at all. The thing to keep in mind is that IPO stocks are
allocated. There's a fixed amount of shares, and they are priced hoping for a
"pop". So basically banks use IPO allocations (in hot companies) as a way to
reward good customers. How important are you? Unless you are worth north of
$100MM the answer is "not very."

The first step is to have a relationship with a private banker at a big
bank/asset manager. You can tell her that you're interested in purchasing
stock at IPO. Most big banks will have some allocation available.

Often the minimum ticket size is something like $100K--but there's no
guarantee you'll get it. At some point before the IPO, your banker will tell
you how much IPO stock was allocated to you. This will tell you how important
you are to the bank. They might, maybe, throw you a bone and give you $10K of
allocation.

You have to remember that IPOs are intended to be "free money." They are
purposely underpriced. This isn't actually as nefarious as it sounds--the only
people getting hurt by this is the issuing company, and not _really_. They
want to have as good a relationship with the big bags of money as the issuing
banks do. And there is _some_ risk involved, they don't always pop, etc etc.

An important detail is that, because the IPOs tend to be mis-priced, they also
tend to be pretty _small_. A company going public at a 2B valuation might only
be offering 100MM worth of stock. At a 30% pop, that's basically 30MM of "free
money" to distribute across the entire planet, which is honestly not that
much.

------
m3kw9
FOMO on full blast

------
AHappyCamper
Mazal Tov! =)

------
ponker
I'm not a fan of the product but at least this isn't a company built on labor
exploitation or fucking up some existing ecosystem.

~~~
silentsea90
Guessing you don't use said labor exploiting services?

~~~
Aeolun
The only labor I exploit is my own.

~~~
maximente
my guess is that a detailed account of the consumer goods you have purchased -
including possibly the device upon which you typed out and submitted this
comment to this web property - would indicate otherwise

~~~
Aeolun
Maybe I should have have indicated that no other directly exploitative
relationships exist.

