As a software securities analyst, Richard Davis spends 200 days a year on the road visiting software companies. He goes to public companies such as Oracle and Salesforce.com, but he also visits up-and-coming software companies he thinks will go public in the near future. In his new column, Davis is going to talk about some candidates he thinks may be ripe for the IPO class of 2012 or 2013.
In the course of roughly a half decade, we have witnessed the emergence of Software, Platform and Infrastructure as a Service. oDesk is converting talent into Labor as a Service. The firm has built a very cool network of individual contributors — often programmers, but increasingly more disciplines ranging from content creation for web sites to translation services. The firm vets these people beforehand and its software tracks the working activity levels on contributor’s computer (which apparently doesn’t bother today’s global, younger generation who like the flexibility of being able to “live where you work”).
This was my first meeting with the CEO Gary Swart, so the discussion was relatively high level. I’ve met several firms in this space over the past decade but none has really broken out. oDesk appears to have found the right combination of technology and that old fashioned idea of delivering good value to both sides of the customer base (employers and talent suppliers). This is one of those network businesses, so the firm has the potential to become very big and very profitable as it reaches escape velocity and scale. We’d guess that oDesk is 12 to 24 months away from reaching the public markets.
We had the chance to meet with CFO Josh Siegel in our Boston office two weeks ago. Cyber-Ark provides identity and access management solutions to protect privileged users, applications and sensitive information from both a compliance and security perspective. The firm has been around for nearly a dozen years, during which it has amassed an impressive list of more than 900 customers, including roughly 35 percent of the Fortune 100, and seven of the 10 largest banks in the world.
Cyber-Ark’s technology works on-premises, off-premises and in the cloud, so the firm is well positioned to work with nearly any potential customer requirement. The firm has been growing quite nicely, so we plan to visit with more of the management team for a demo at company headquarters (which is on this analyst’s way home) in the coming weeks.
I headed to Austin, Texas to visit with, among others, my long-time pal Dave Sikora, CEO of Digby. The company was an early innovator in mobile with its Digby app for the Blackberry, years before mobile apps became hot. Today, the firm is a leading platform that enables physical retail (that’s 93 percent of a $4 trillion market in the U.S. alone) to access, optimize and analyze customer visits via mobile. What this means is that Digby works on mobile and rich applications for iPhone, iTouch, Blackberry and Android devices. The applications are remote storefronts that are accessible on these devices.
Next generation marketing is going to be a very big thing in software. The change in the methodology by which firms encourage and enable consumers to purchase items will have ramifications up and down the software stack. This means BI, big data, e-commerce and especially mobile are about to change dramatically, and the vendors that capture this wave will see extraordinary growth for the next decade. Mark my words, this is a very big deal.
I’m in the midst of visiting a bunch of companies in this space with the goal of writing the first significant research piece from a sell-side research analyst. Digby is one of the quite exciting and promising companies in this space. We’re a big believer that management matters, so we are doubly enthusiastic about Digby’s prospects because Dave Sikora is in the top tier of all CEOs we know.
Rimini Street, MarkLogic, Intaact, On24 and e2Open
This was not technically a “let’s talk in detail about the business” meeting. Instead, I invited the CEOs and CFOs of these very exciting companies to a box at the San Francisco Giants versus Cubs game during the week of Dreamforce. Most of the conversation was social, but each of these companies is doing quite well. We also stopped by the booths of Marketo, Workday, iContact and several other firms. These conversations were mostly with individuals we assume were salespeople. In each case, the products demonstrated were impressive.
Richard Davis is managing director of enterprise software for the brokerage firm Canaccord Genuity. Before joinging Canaccord, he spent 10 years as a senior analyst at Needham & Company. Previously, Davis was at Tucker Anthony, where he was a managing director and launched the firm’s Internet and enterprise software coverage.
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