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Can Workday Satisfy the Street?

September 13, 2012

Back in the late 90’s when I was a high-powered “rekkid executive,”1. I had the opportunity to participate in one of those high-flying Initial Public Offerings (IPO). The internet bubble was inflating and we were uploading mp3’s of some of our bands songs for promotion. Anyway, on IPO day I watched my $28/share investment rocket to $105 and then decline to my sell price of $72. That all happened in about a half hour! The street burned down MP3.com though, and within about 3 months it was worth about 3 bucks. IPO’s aren’t as exciting these days, and FacePlant, uh, I mean Facebook’s performance (down 45% since their May IPO) won’t help the public appetite for them.

In spite of that, Workday filed for an IPO just before Labor Day. We do see them in some deals, so I’m interested. A Wall Street Journal analysis speculated Workday could see a valuation of 13X revenues! At current revenue estimated at $270M, that’s a $3.5B valuation. That’s real money, and they haven’t made a profit yet. You can read the full S-1 filing here, but one thing that jumped out at me was “customer satisfaction is an element of our executive and employee compensation models.” I dug for more on that, but couldn’t come up with any more details. Of course their leader, Mr. Duffield, successfully built PeopleSoft with a similar dedication to the customer experience, so to see it in his new venture is no surprise.

Kronos is similarly dedicated to the customer experience. This year we won a third party customer satisfaction award for the 12th straight year, and have a formal program to survey thousands of our customers yearly, and personally follow-up with any customer who’s experience has been less than outstanding. We also have a three decade record of profitability and about 3 times the revenue of Workday. They are growing fast though… I wonder how much their focus on the customer experience is driving their success? For that matter, how much does it drive ours? Oh, I wish I had that answer…

 

1. Two partners and I put out 9 records and had a lot of fun on a very low budget. We remain good friends.

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