Hype and plunder: Domo a new low for self-indulgent IPOs

"...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.)

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...

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?

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

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/

Wow.

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.

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.

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.

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 ..

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."

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.

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.

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.