July 2, 2020
Image: Eynav Raphael / Protocol
Hi! With markets closed Friday, we're doing Index a day early. This week: What the Facebook ad boycott means for the company, why DigitalOcean's CEO would love to go public, and one CFO's favorite Excel trick.
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"A week ago it seemed to be a trickle, and now it seems to be a flood." That's how William Merchan, chief revenue officer of marketing intelligence platform Pathmatics, described the burgeoning Facebook boycott movement to me.
Financial analysts appear to agree with investors. "[The boycott is] not going to have an impact in the medium to long term," Wedbush's Brad Gastwirth told me.
But Zuckerberg highlighted one way in which this really could harm Facebook, according to the same Information report: "It hurts us reputationally."
To appease advertisers, Facebook will need to make changes. Stephan Loerke, CEO of the World Federation of Advertisers, told me that brands want common standards of what constitutes harmful and violent content and a way to manage their risk across different platforms. He said the WFA's Global Alliance for Responsible Media would announce the initial steps it's taking to address that in the next couple of weeks.
So far, advertisers seem frustrated in Facebook's attempts to rectify things. Unless the company changes, this could snowball even more: A survey of WFA members found that a third of big brands are likely to suspend advertising as a result of all this, with a further 41% still undecided.
Yancey Spruill knows all about IPOs: As CFO of DigitalGlobe and SendGrid, he's been through the grueling process twice. And in his current position as CEO of DigitalOcean, he's yearning to do it again.
But he doesn't think every company should IPO now. It's about having a "great company that has a sustainable strategy to grow profitably," he said. Profitability is a big thing for Spruill.
DigitalOcean isn't ready to go public yet, Spruill said, partly because he only took over as CEO last year. "We've got to get the company ready," he said.
What's one thing people didn't pay enough attention to this week?
Lesbians Who Tech & Allies delivered a stellar "Virtual Pride Summit" with top-tier speakers from business, politics and the arts. Watch some of the recordings on diversity, racial justice and their intersection with technology for a fresh perspective.
What's your favorite Excel trick?
Forget sumif, sumifs, vlookup, hlookup, countif and about five to 10 other functions because this one replaces them all! My favorite function is sumproduct — the Swiss Army knife of Excel functions. Here's an example of a beautiful layout for a complex sumproduct with several conditions: =SUMPRODUCT((range1),(range2),--(range3="condition1"),--(range4="condition2"), ...)
Using a double negative (double unary) to create the conditions speeds up calculations as it converts every array in 1s and 0s. As with every good Swiss Army knife, you can do almost anything — I just haven't figured out how to open wine bottles with it yet.
Has COVID-19 been net good or bad for the tech industry?
Nothing about the COVID-19 global crisis can be called "good," but for the tech industry, particularly for enterprise software such as Contentful, that is a central element in digital transformation projects, it's a net accelerator. It has forced the world to transform rapidly to adapt to a new, digital way of doing business.
What tech stock do you have your eye on?
I follow BioNTech with a lot of interest. Its product portfolio is based on the belief that every cancer patient's tumor is unique and therefore each patient's treatment should be individualized. In collaboration with Pfizer, it was one of the first companies to develop and start human trials for a COVID-19 vaccine. BioNTech is the most recent success story of a German tech company successfully listing on Nasdaq.
What piece of financial advice should a founder ignore?
"Raise the largest amount of money possible at the highest valuation possible." If you do this, you might take pride in the moment; however, the strings attached to this money can drag down your business. Taking venture capital only makes sense if: (1) you're chasing a substantial market opportunity, (2) you have positive and/or improving gross margins, or (3) you have a market that's ripe for disruption with potential excess returns over the long run. A founder chasing a unicorn valuation will often end up with a very binary outcome — only one of which is good.
Thoughts/feedback/tips? Email me — email@example.com — or firstname.lastname@example.org. And subscribe to get Index in your inbox every week. Thanks for reading — have a great holiday weekend, and see you next Friday.