Private or Public Different Stories from Dell HubSpot

Private or Public: Different Stories from Dell, HubSpot

5 minute read
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How's Dell doing after going private a little more than a year ago?

We don't know. It's private. The PC giant took the private route in an historic $24.9 billion buyout last year called the biggest in tech since the Great Recession.

But it's not being all hush-hush, of course. It has plans, we're told, to shake up the big data and analytics markets.

Going private only helps, it claims.

"We can make changes swiftly to parts of our business and, ultimately, that helps our customers," Suresh Vaswani, president of Dell Services, told CMSWire about going private. "We were constrained by financial reporting previously and that has now freed up more time for our customers and to devote to innovating our business."

Why Private?

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Why not? For starters, of course, money. CEO billionaire Michael Dell now owns 75 percent of the company and has to answer to, as he once put it, himself. Silver Lake Partners is the other major investor.

Major compliance chores go out the door once private. No financial reporting obligations.

So why Dell and why now?

Officials at Dell, based in Round Rock, Texas and employing about 108,000 people, claimed last year the private takeover will allow the company to "shape the forces of cloud, big data, mobile and security that are changing the way people live, businesses operate and the world works, just as we did when we helped revolutionize the power of the PC almost 30 years ago."

Vaswani broke down the perks of going private this way when asked by CMSWire:

  • Dell is continuing the execution of its long-term strategy and focusing on delivering best-in-class solutions to customers as a private enterprise
  • Under a new private ownership structure, Dell is even more flexible and entrepreneurial, allowing us to do what it does best — to serve our customers with a single-minded purpose and drive the innovations that will help them achieve their goals
  • We are better positioned to shape the forces of cloud, big data, mobile and security that are changing the way people live, businesses operate and the world works, just as we did when we helped revolutionize the power of the PC 30 years ago.
  • Dell has deep relationships with millions of customers worldwide, an outstanding and talented team, a globally recognized brand and a business model that delivers strong cash flow

So why aren't more giants going private yet? Maybe in 2015 we'll see one follow Dell's suit.

Going private is certainly working out for companies like Cargill ($134.9 billion revenue, according to a Forbes report last month), Koch Industries ($115 billion), Bechtel (39.4 billion) and PricewaterhouseCoopers ($34 billion).

Toss in Dell -- at $57.2 billion -- and you've got your top five.

HubSpot's Public Journey

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What we do know is some companies -- albeit much smaller ones -- wanted nothing more than to peel off the private tag in 2014. 

One of them was HubSpot, the Boston marketing automaton provider that in October raised $125 million and earned its IPO.

Mike Volpe, HubSpot's chief marketing officer, told CMSWire that 700-ish-employee HubSpot from the beginning made it clear "that we wanted to build a company that would be around for decades and becomes one of the major software platforms companies use to run their business."

Learning Opportunities

"We never wanted to be acquired," Volpe said, "so going public has always been a goal to hit as part of our long term journey. 2014 turned out to be the right time for both our business and the stock market for our IPO, and we’re proud to be one of the pillar tech companies in Boston. From here we still have bold plans to use our new position as a public company to keep growing and building on what we have done so far."

HubSpot was trading at $32.47 today; its high in three months of trading has been $38.60 with a low of $25.79.

Public Highlights

Volpe said in the third quarter, HubSpot's first quarter as a public company, the company grew revenue 51 percent year over year and grew its customer base to more than 12,000 companies worldwide. 

It announced enhancements to its existing marketing platform such as revenue reporting and attribution reporting, and new sales products including a CRM system and a product for sales reps called Sidekick.

"Our IPO has clearly not slowed down our innovation," Volpe said. "We want to maintain our track record of innovation and use the capital from our IPO to keep funding innovation and growth."  

Ultimately for Hubspot, being public gives it a larger brand, more cash on its balance sheet, and a publicly traded stock, "all of which," Volpe said, "help you grow more through both increased investment and potential acquisitions."

Some, however, don't think it's a great investment -- at least yet.

Private Perks

And Dell? Going private was like taking shackles off in some ways.

"One of the perks of going private," Dell's Vaswani said, "is that we can spend more time on our customers, and we are seeing positive growth across our business this year since we went private."

What are some advantages Dell misses as a private company that it would have in being public?

"We are enjoying being private," Vaswani said, "so right now so we’re not missing anything."

Title image by Andrew Mager (Flickr) via a CC BY-NC-SA 2.0 license.

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