Loom is probably the simplest billion-dollar piece of software, but it's also excellent software and I am happy they're getting paid.
Screen recording before Loom was a pain. You had to open up some program, start it, save the file, upload the file somewhere, and share it. And if you had to edit the recording at all ... probably start over.
With Loom it's all one click and it's ready to share the instant you hit the Stop button. At my company we make and share dozens of Looms per day and it's a key part of maintaining a remote culture.
My immediate reaction was that value-wise it was a joke, how can they be worth $1 billion?
I agree with what you're saying here though, one click, ACL controlled and simple to use videos.
Concur with the enablement of the remote culture. I would have thought Atlassian could clone that so simply.
The Loom software is super buggy though, I have to open their site or extension or desktop app multiple times before it starts working, but when it does work the editing is just about OK. I have thought about using Google Meet to record my desktop, I've heard the editor in that is pretty good, and you can stop, start, trim/edit & share in Google Drive or share further with a link.
> My immediate reaction was that value-wise it was a joke, how can they be worth $1 billion?
It's probably way more about the in to the large install base of users to start pushing other Atlassian suite products on.
"Hey there happy Atlassian (formarly Loom) customer, since you're now in our ecosystem where products go to die, may we interest you in a Jira or a Confluence? They come with a complementary week of consecutive downtime on the house!"
Don't forget forcing everyone to their SaaS offering only to be shown not to have a validated disaster recovery plan that resulted in almost 2 weeks (4/5-4/17) of consecutive downtime for many customers. Cherry on top was the 57 customers they screwed up the backup restore for and brought back older data. By the time they realized it they had to work with the customers to merge the newer backups with the changes they'd made since the initial restore.
I think the concern is more that they have such a small moat. Their product seems too easy to copy. But given that they are first to market, did a very a good job with what they offer and have acquired a lot of customers, that is all worth a lot of money. Is "a lot" $1B? Hard to say.
The brand also becomes a reinforcing moat in an interesting way when you become a household name. When your employees think to themselves "I want to send a quick video update to team X" and they instantly default to downloading Loom, IT's decision for which vendor to buy a solution like this from is practically made for them.
I had to uninstall the desktop app it was uploading 6MB chunks at random times for no reason I could figure out. I hope this is an opportunity to improve their local software but not holding my breath lol the Atlassian Godzilla.
People pay for it. It’s probably something like 30x revenue or whatever growth valuation but still the point stands: it’s good enough to have quite a few paying customers.
> I have thought about using Google Meet to record my desktop, I've heard the editor in that is pretty good, and you can stop, start, trim/edit & share in Google Drive or share further with a link.
most of the employees came in at later rounds, so play it out. ex: They'd get say $100K in options on paper, but the pitch would be the company is high-growth, so expectation of 2X, 10X, 20X, etc over next few years. That $100K is really $200K next year, $2M the year after, etc.
Except they sold the company at a ~flat multiple over the valuation. If employees got RSUs, then at least they made say $65K after short-term capital gains (30%+). But if as options... no growth over the latest valuation's strike price, so nothing. $65K is not $200K and certainly not $2M.. and $0 is even worse.
FWIW, I'm a happy customer, am happy for the founders, and hope the new features keep rolling out through the acquisition -- our usage of Loom grows every month! The issue here is not the founders, but HR & VC. This is why joining companies with high valuations is a big risk as the VC's have already set inflated prices that ate your potential payout -- you earn on growth over the strike price at time of joining -- and these high markup companies have a lot of revenue to grow into.
That’s not how option pricing works. This is a private company, and it was raising money using preferred shares. The employee shares underlying the options would have been common stock.
At least once a year the company would be required to do a 409a valuation to set the FMV for those underlying common shares and thus the strike price for any options in the next year or less. The 409a valuation for common shares is pretty much always going to be significantly discounted vs preferred for a variety of reasons like lack of liquidation preference, lack of liquidity, etc. These discounts are often 50% plus, but the shares likely have a 1:1 economic value to other share classes in a sale, except the most recent preferred that get to use their preference.
Anyways the reality is going to be determined by each company’s details, but option strike prices at private companies are generally much lower than the current going price for preferred due to the discounts provided by the 409a valuation.
Nothing you said here is wrong, but it also doesn't explain how likely or not employees with those common shares will have made money. Having been on both sides of these transactions, I think it's likely that they made very little on their vested shares, but they likely will have been given new hire packages with Atlassian that will be worth something (RSUs vs options).
Why do I think they didn't make much from vested shares? Simple preference math. While I don't know Loom's cap table, or how each round was structured, I think we can all agree that they gave shares to investors that at least had 1X preference. Given that the sale happened at a substantial discount to their last round valuation, it's likely that preferences ate up most if not all of the proceeds of the deal. There may have been a sweetener of some sort offered to the leadership team, and that may have been distributed to all existing employees, but that would have been independent of the cap table (they're not going to give a package to departed employees that exercised options).
Most employees probably made some money, just not very much.
Early employees would be lucky to get options worth 10-20bps of the company, so assuming $800M was distributed to shareholders after accounting for 1x liquidation preference that might only be $800k-$1.6M before accounting for dilution for the very earliest employees, and a lot less for everyone else.
for companies raising 9 figure later-stage rounds? that's not obvious to me
and relevant to this case, often the investor will do a higher valuation (artificially minting a unicorn etc) for optics/vanity reasons, which eats an additional 1+ years of future growth, eliminating the relevance of a discount here
and for folks who many not have followed terms above: investors get preferred shares, with rights over these discounted common shares. These include things like veto rights over acquisitions, first money out ("if $200M raised, no one else sees any $ until that $200M is paid back"), and for high-valuation unicorn rounds, often something like a participation multiple ("guaranteed extra $100M profit, so no one sees anything till $300M paid"), high interest rate on convertible debt portions, etc. So beyond the obvious dilution hit of new investors, there are a lot of these gotchas that trade a bigger bank account for heightened exit value risks to employees.
The people who come up with 409a prices have every incentive to make it as low as possible provided it is somewhat defensible to the IRS.
I assure you they can get more creative than saying that the last preferred price was at $X, therefore our hands are tied and the common must be close to that. They can take into consideration the preferred preferences, the current state of the business, the time since the last round, etc. For example, the 409a value can keep going down and down if the value of the business is (defensibly) going down and down, regardless of the last fundraising round.
This is a thing I'd love to see data for - the strike price discount at time of acquisition for later-stage companies. These same companies in that megaround companies probably have stock on secondary markets, which might be a good proxy for some of this.
And totally agree wrt creative arguments being viable... Just not clear what ends up happening in practice. Ex: I can imagine a split between paper unicorns vs ones w revenue backing it up being closer to market, and those later ones often switching to RSUs. So genuine curiosity here.
Options from the last raise would be under water, but they operated for years before that raise. There are likely a lot of employees doing reasonably well.
Depends on when the 409a was performed and when the exercise happened. When the startup I work at got our Series A, a new 409a was done and increased the share price by roughly the same multiple of the new valuation, and now I have a wide spread for AMT should I exercise my options because of the new 409a.
So it's possible for employees to have joined after the new 409a when it was valued at 1.5bln and early exercised against that value.
I have a hard time actually visualizing this math. Let’s say you join a 1.5B valued company and get offered $100k in stock options, but at $20k. So an 80% discount.Assuming the company meets the revenue goals maybe 10 years in the future but otherwise no other growth beyond the valuation, is it worthwhile for the employee to exercise the options, not early? Presumably they would have to turn around and pay another $20k in taxes the year that they exercised
Nothing is the best case (if they didn't exercise options). You're right: some lost money on the transaction if they did exercise, outside special consideration.
I don't think you can just say that bout the last raise.
Depends on the exercise price. Exercise price is lower than the preferred price that the investor paid. Due to the fact that investors get preferred shares.
Preferred vs common only matters when the company is sold at loss? The preferred shareholders get priority in terms of being made whole before the common shareholders.
In this case, since series C was 1.5bln and sold for $975m, then the preferred shares were bought during C would be made whole first (assuming the prior rounds were made whole first and there's enough left over for series C preferred) before those who exercised right after the valuation for common shares.
Edit: I forgot that preferred shares also come with liquidation preferences too, meaning that in a loss situation, later employees are highly unlikely to get something
How does it compete with macOS screenshot in recording mode? Because that sounds basically the same flow just drag/dropping the output file into Slack.
Click button, record video, paste link into slack/github vs click button, record video, figure out what to do with the useless huge file; also annotations and whatever ai they managed to put in there to summarize the transcript
Huh? Click button, record video, "file" appears in the bottom corner of the screen, drag that into Slack or the Github editor, done. I would be worried about the links expiring, is Loom really hosting arbitrary unlimited sized video content forever for $12/mo? Damn, it's a good thing they got bought.
With loom you can edit it quite easily. I currently use Kap (on MacOS). Tool quality it not as good as Loom. Needs more maintainers I guess.
For me, something like Loom without the online-first approach would be nice. It doesn't exist. I searched. Screenshot tools are a solved problem, screen capturing isn't.
After a screengrab with quicktime you just > edit > trim and then save as. Transcripting audio and summarizing would be nice creature comforts but I'm in the "billion dollars for what now?" camp.
macOS doesn’t record video well at all. QuickTime is the vehicle for it, often crashing, or not stopping the recording. It’s been like that for years. I don’t use Loom, but I’d never ever recommend trying to record your screen on macOS using QT.
Loom is part of ours (our company is fully remote, no offices). One use-case is we use it to create demo videos of our work and attach it to our git pull requests so reviewers can see how to test our code changes. Others might be things like showing buggy app behavior.
Screen recording before Loom was a pain. You had to open up some program, start it, save the file, upload the file somewhere, and share it. And if you had to edit the recording at all ... probably start over.
With Loom it's all one click and it's ready to share the instant you hit the Stop button. At my company we make and share dozens of Looms per day and it's a key part of maintaining a remote culture.