As 2020 became unexpectedly a favorable year for digital companies, many of those born in the course of the 2010s, and a few others decided to go public.
The pandemic has worked as an amplifier for tech
business models. And among those, companies built on top of the cloud seem to be the ones that are growing at a faster speed.
Many tech companies are going public this year to rush to the market in a favorable year for digital businesses. Some of them also quickly IPO to get liquidity due to their
cash negative balance.
Whatever the reason is, this is an opportunity to look under the hood of companies that have been build from scratch in the last five-ten years.
Below the list of the most notable companies getting listed, both at consumer and enterprise-level:
Airbnb is a platform business model making money by charging guests a service fee between 5% and 15% of the reservation, while the commission from hosts is generally 3%. For instance, on a $100 booking per night set by a host, Airbnb might make as much as $15, split between host and guest fees.
Started as a pay-later solution integrated to merchants’ checkouts, Affirm makes money from merchants’ fees as consumers pick up the pay-later solution. Affirm also makes money through interests earned from the consumer loans, when those are repurchased from the originating bank. In 2020 Affirm made 50% of its revenues from merchants’ fees, about 37% from interests, and the remaining from virtual cards and servicing fees.
Asana is a software company whose aim is to enable teams to work together and reach their goals at scale. Its Work Graph combines tasks, projects, portfolios, goals, and the relations among those. Asana follows a subscription-revenue model with a free basic plan that fills its marketing funnel of leads processed by direct sales, which turn them into enterprise accounts.
C3 AI is a cloud-based Enterprise AI SaaS company. It built a set of proprietary applications (known as the C3 AI suite) that offer its clients the ability to integrate digital transformation applications with fast deployment and no overheads. C3 AI makes money primarily via its subscription services and professional fees.
DoorDash is a platform business model that enables restaurants to set up at no cost delivery operations. At the same time, customers get their food at home and dashers (delivery people) earn some extra money. DoorDash makes money by markup prices through delivery fees, memberships, and advertising for restaurants on the marketplace.
GoodRx is a healthcare platform that compares prices on thousands of medications by enabling consumers to get access to discounts. GoodRx makes money either through a fixed fee or commission as consumers complete the prescription transaction to the parter’s website or location. By 2019, GoodRx generated over $388 million, primarily through prescription transactions.
Palantir is a software company offering intelligence services from governments and institutions to large commercial organizations. The company’s two main platforms Gotham and Foundry, are integrated at the enterprise-level. Its business model follows three phases: Acquire, Expand, and Scale. The company bears the pilot costs in the acquire and expand phases, and it runs at a loss. Where in the scale phase, the customers’ contribution margins become positive.
Snowflake is a cloud-based platform whose vision is to enable organizations to have seamless access to explore, share, and unlock data value. With the mission to break down data silos. The company runs through a consumption-based revenue model, enhanced by its professional services. Primarily an enterprise solution, Snowflake leverages on direct sales.
Sumo Logic is a cloud-based Continuous Intelligence platform, based on a subscription revenue model, serving primarily customers from IT departments, development, and security, both from small organizations and enterprise, leveraging on self-serving digital channels for new customers’ acquisition, coupled with inside and field sales representative to expand the adoption of the platform.
Unity is a platform for 3D content development, free for companies below $100K in revenues, and subscription-based for companies beyond that. It also makes money on a revenue-share basis with its Operate Solutions helping creators monetize their 2D and 3D content across several platforms. Unity also generates revenues through revenue-share arrangements with strategic partners and within its Asset Store marketplace.
Wish is a mobile-first e-commerce platform in which users’ experience is based on discovery and customized product feed. Wish makes money from merchants’ fees and merchants’ advertising on the platform and logistic services. The mobile platform also leverages an asset-light business model based on a positive cash conversion cycle where users pay in advance as they order goods, and merchants are paid in weeks.