IPOs have a way of becoming defining events in the tech world. Netscape's IPO showed the world that the internet was about asset creation, not profit. Ebay's IPO broke through what had otherwise been a rocky 1998. As much as anything, it marked the beginning of a second wave of internet boom that very quickly turned into the dotcom bubble — a story best punctuated by theglobe.com's IPO a few months later.
While Google's IPO wasn't a roaring success (thanks to a strange auction process, dual class ownership structure and general feeling of arrogance to Wall Street), it did give the company a currency with which it almost single handedly supported the next 4 years of internet exits. Anyone think Google would have paid cash for You Tube?
I mention this because on Friday OpenTable filed to go public. As has been noted in the press, there's a difference between filing for an IPO and actually succeeding in (or even intending on) going public. IPO filings can be used tactically for everything from stirring up private investors to playing chicken with a potential acquiror. While I know a few members of the board of OpenTable, I have absolutely no insight into their process and can only assume that the company does intend on going public.
Will a successful OpenTable IPO create another clip for the tech boom highlight reel? If the company can pull off what they seem to be hinting at, it would certainly go a long way. While there's not enough information in the first draft S-1 to start talking about valuation expectations, it is notable that the company has 250 million common shares and didn't do a reverse split before filing. Since there are a lot of reasons to avoid a stock price under $1, it's not hard to infer that the underwriters expect a valuation substantially north of $500 million.
That would be amazingly good for the rest of us.
The internal and external legal costs of filing an S-1 are quite high. Given that everyone is in cash conservation mode, I've got to believe that OpenTable probably incurred most of those charges in 2007 or very early 2008. I'll bet a dollar that this S-1 is a cry for help to the Private Investment world. As the real economy gets slammed, and restaurants take a beating over the next 12 months, one of the first things to go will be discretionary software like opentable.com. It makes sense. Rather than spending three months on the road with a pitch book glued to his hand, OpenTable CEO has effectively opened the kimono to any and all PE shops/large VCs/whomever. No need to get an NDA in place. Not a bad idea.
After using Opentable twice while my aunt and uncle were in town, and being embarrassed TWO nights in a row thanks to opentable, I'm not a fan. Did you know many restaurants don't offer the seat inventory on opentable? It's better to call.
Posted by: Caswell Brownby IV | February 01, 2009 at 08:50 PM