Benner on Tech: Box Investors Make a Killing. So Does Tim Cook.

Katie Benner is a Bloomberg View columnist who writes about technology, innovation, and the cult and culture of Silicon Valley. She lives in San Francisco.
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People are Talking About…

Who made what money on the Box IPO?

The folks at Equity Zen, a marketplace for private investments, sifted through the filings, crunched the numbers and came up with a very handy set of graphics that show different returns for different venture firms.

Early investors like Draper Fisher Jurvetson and U.S. Venture Partners had quadruple digit returns of 4,780 percent and 2,026 percent, respectively. Later investors such as General Atlantic and ITV  had returns of 7 percent and -22 percent, estimates Equity Zen. They could still do much better if the stock rises before they're able to sell when the lock-up expires in July.

TPG and Coatue bought preferred stock at $20 a share, well above the $14 IPO price. BUT!!!!....those firms had what’s called a ratchet, which means they got as much common stock in an IPO as needed so they wouldn't lose money. Using the formula laid out in the S-1 filing, the firms got about 1.59 shares of common stock for every share of preferred stock they owned, which gave both firms a slight return. If you were wondering why these huge late stage investment rounds could possibly make sense, it’s usually because there are protections in place like that to mitigate risk.

Other tidbits of interest: The float is small, only 12.5 million shares out of 109 million. Coatue is an interesting player here because it has the option to buy another 10 percent of the float as part of the IPO, and there seems to be nothing restricting its hedge fund division from buying and selling additional shares on the open market.

Shareholders who buy Box stock basically have no voting rights thanks to the dual class share structure. Class B shares have ten votes to every one vote that a Class A share gets. Equity Zen tallied up the number of A shares versus B shares, and found that Class A shareholders currently have about 1.2 percent of the voting power. Tech investors seem to not care very much about this stuff. Facebook, Zynga, Groupon and a host of other companies have similar structures. Google sold a class of stock with zero voting rights and no one batted an eye.

** Fortune unleashed a mega-startup issue and I can’t wait to read it in all its print magazine glory. (I subscribe!) If you’re impatient and want to check it out online, highlights include:

* Dan Primack and Erin Griffith explain why there are so many billion-dollar startups (aka "Unicorns"). Griffith talks about why Fab was never in this cohort.

* Scott Cendrowski goes deep on China’s zui da Unicorn, Xiaomi.

* Adam Lashinsky takes a hard look at Jawbone, a Unicorn that’s lost its way.

* Heather Clancy is on IPO watch.

* Benchmark’s Bill Gurley explains why all the late stage investing rounds with the complex deal terms make him anxious.


Uber Growth…

** Uber released a lot of statistic about driver pay in what I imagine was a bid to show the world that driving for Uber is both lucrative and rewarding. As lots of outlets have reported, Uber drivers make more money than their taxi driver peers. But that pay increase is probably wiped out to some degree when you factor in the insurance and auto maintenance costs that Uber drivers have to carry and that cabbies do not.

This led the Wall Street Journal to wonder just how good these jobs are. The survey led me to wonder what the company’s rapid expansion means for quality control. The company said that last January there were fewer than 1,000 new drivers starting at the beginning of the month. By December 2014, almost 40,000 new drivers gave their first Uber rides. Both the urgent need for drivers (gotta justify that valuation with hyper expansion…) and the fact that you read so many more stories about Uber driver assaults than taxi or Lyft assaults make me wonder how the company stays on top of the background check game.

** The company applied to become a licensed radio taxi operator in order to relaunch in Dehli. The Wall Street Journal says this is a significant change to Uber’s business model. Radio cab operators must have a 24-hour call center, a fleet of 200 vehicles and panic buttons in their vehicles.

Startup v. Startup. New York City has been using Palantir’s data analytics platform to find Airbnb users who are essentially running illegal hotels, reports WNYC.

Andreessen Horowitz published a list of 16 themes for 2015. Some are unsurprising, like Bitcoin, virtual reality and big data. But insurance and the so-called “sensorification of the enterprise” caught my attention (because I’m a huge dork.)

People and Personnel Moves

Mickey Drexler, the CEO of J.Crew, will leave Apple’s board in March, 9to5Mac reports.

Craig Barratt, Google’s senior vice president for Access and Energy, is the man who’s leading the company’s plan to connect the whole world, reports the Wall Street Journal’s Alistair Barr.



The company is working on a deal to acquire Annapurna Labs, an Israeli semiconductor company that could improve the Amazon Web Services cloud division, Bloomberg reports.


** CEO Tim Cook made $9.2 million last year, more than double his 2013 compensation, Bloomberg reports.

** Head of retail Angela Ahrendts had a much larger $73.3 million compensation package, reports the Guardian.

** The Apple Watch’s battery could last between two and a half and four hours with constant use, but could last up to 19 hours if users mostly let it sleep, according to 9to5Mac.


The company is creating a pool of users that post Super Bowl related content so advertisers can target this audience during the game, Adage reports.


Tumblr launched the Creatrs Network, a group of artists who help brands make appealing ads for the site, the Verge reports.


** Shares jumped yesterday because of an unsubstantiated rumor that Google was going to buy the social media company, Bloomberg reports.

** The company has teamed up with Bing to translate your tweets, reports VentureBeat.

Media Files

Whither Comcast’s lobbyists? As the company’s deal to buy Time Warner Cable becomes more uncertain, the Wall Street Journal says that Comcast’s influence in Washington has dimmed.

News and Notes

Tech luminaries outlined future global digital challenges for the Davos crowd, the New York Times reports.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the editor on this story:
Timothy L. O'Brien at