Are Some Companies Trapped by High Valuations?

REPLAY VIDEO
Your next video will start in
Pause

Recommended Videos

  • Info

  • Comments

  • VIDEO TEXT

May 6 (Bloomberg) -- Kleiner Perkins Caufield Byers General Partner Matt Murphy discusses valuations and his investment ideas on Bloomberg Television's "Bloomberg West." (Source: Bloomberg)

Into the enterprise.

Amid rising valuations, joining me now is kleiner perkins gerald partner matt murphy.

How competitive was this inside sales deal?

Seven term sheets is pretty unusual.

At least from where our initial offer was.

One of the most competitive ever in terms of how the price move again.

But you were willing to pay it.

Why?

It starts with the company growing 100% year-over-year.

Reimagining enterprise applications and had to change workflows and modernize them.

It really took analytics.

If you took a work flow and made it more analytic and things that could help to make better decisions, you could them pre--- you could increase that and on top of that, had a dynamic ceo i know you've met and we really believe he can take the company to be a big public company.

Valuations are kicking up across the board.

Do you feel like it's getting too high?

Do you feel like we are in bubble territory?

The private markets seem to be willing to pay more.

Some of that based on historical hedge fund like fidelity and t rowe coming down and they have a different thing with growth funds.

That's one of the dynamics going on in the market right now.

The main thing making this happen is it's one of the best times in the last two decades in the world of enterprise as we the should -- as we see the shift to cloud computing.

It never been easier to sell enterprise ruddock's. now when you sell, there are five different paths.

You can sell the sale, so how you can sell, the way you can sell, how quickly these companies can grow, we've never seen in 20 years.

Even on the enterprise side, you see a company like box delay its ipo.

Would you say these companies are tracked by their valuations?

Ultimately, the choice for each of those companies whether they want to accept the price these companies are willing to pay.

That's why brought up the delta between the public and private markets.

Can they go public?

Absolutely, but they may not like the valuations they get.

Why not stay private longer?

Valuations are bouncing around because we are in a choppy market will stop some of those valuations were so high that there was no shame in any kind of down round all stop in the end, this is about what they were worth when investors and employees sell their workshops will stop you don't get too caught up in little blips in the market.

What do you think about what's happening with twitter today?

If it is employees who are selling and supposed to believe in the long-term future of the company more than anybody else, isn't that more of a concern?

I don't know the dynamics, except the lockup is open and that can create uncertainty in the market about what's going to happen.

Yet to look a month or three months from now and see where things land.

There was a run on facebook stock and things like that, but what happens in these stocks is a bunch of institutional buyers need to build these must hold kinds of stocks.

We'll get back where these people are buying.

I understand everybody needs a little liquidity.

I don't think anybody is selling 100% of their stock.

Let's give it up couple of months and every buddy will be just fine.

How confident are you in twitter's long-term story?

It's a phenomenon.

It has revolutionized the way a lot of us get our news and the way we communicate, so that's a very strong phenomenon.

It's done some pretty disruptive and important things around the world.

I don't think there's any risk in terms of what this will he come.

In this environment, lots of companies getting acquired in valuations really high.

What do you have your eye on?

I think it's what we've talked about before.

The phenomenon in the enterprise where you have these large and small companies rethinking the way they build their infrastructure.

The companies that used to lead are not the names that are brought up anymore.

People are rethinking the way they build their infrastructure with new software ventures, which is why it's a nice time to be growing companies like this.

We've seen a number of traditional e-commerce and web companies have had their user bases grow to 80% mobile.

Same thing is going to happen with the enterprise.

The screen you want to be looking at is no longer going to be that screen.

It's going to be your phone and the tablet and the implications of that and infrastructure is huge.

If you look at the rise of companies like workday and how people get work done, it used to be the way you bought software was you'd go through i.t., a long cycle of six to 12 months, integrated, deploy it, and see whether anybody cares.

Now people just login to the application and get immediate value.

You can do a short cycle and it's just a different world in terms of how you build and scale companies.

The old model used to be maybe one the first year and there are companies that are two of the fastest-growing enterprise companies we've ever seen by a factor of three x or four x.

This text has been automatically generated. It may not be 100% accurate.

Advertisement

BTV Channel Finder

Channel_finder_loader

ZIP is required for U.S. locations

Bloomberg Television in   change