Seattle Big Data Star Tableau Software Seeks $150M in IPO

4/3/13Follow @bromano

Tableau Software’s much-anticipated IPO filing Tuesday could attract new attention to the Seattle tech scene and its growing big data cluster in particular.

The 10-year-old company—profitable in each of the last three years—aims to raise up to $150 million in what would be the first tech company IPO from the Seattle area since Zillow in 2011.

Tableau’s mission is to “help people see and understand data,” an increasingly valuable service in an era when organizations are trying to make sense of an ever-growing volume and variety of data.

It is a leader among Seattle-area companies and institutions working on new big data applications and tools. These include traffic information company INRIX, another potential IPO candidate and a Tableau customer; Decide, which predicts prices of consumer electronics and other goods; 3TIER, which provides wind and solar forecasts for the renewable energy industry; the Institute for Systems Biology, one of several data-driven healthcare researchers arrayed around Lake Union; and work such as the eScience Institute at University of Washington. All these endeavors are bolstered by the area’s strength in cloud computing, headlined by giants Amazon, Microsoft, and Google.

Tableau, which plans the NYSE ticker symbol “DATA,” is a feather in Seattle’s cap thanks in large part to the region’s quality of life.

The company was co-founded a decade ago by Stanford University graduates Christian Chabot and Chris Stolte, and Stanford computer graphics professor Pat Hanrahan. It might have been another Silicon Valley startup, as CEO Chabot explained to the Washington Innovation Summit last year. After all, he said, everyone knows that “if you really want to make it big, you really need to go to Silicon Valley. Facebook is the famous example, but there’s dozens of them. And we did the exact opposite.”

The founders were burned out on the Valley, and around the time they launched the company decided they would ultimately base it somewhere else.

Chabot had only been to Seattle once before when Tableau’s founders packed their computers in their cars and drove north. “Seattle is such a fantastic place. Mountains and salmon and coffee and rain and the whole thing,” he said. “And in retrospect, although we did it originally primarily for personal reasons… it’s been one of the best things for the business that’s ever happened to us.”

The company has grown rapidly, particularly in the last two years. Its full time work force went from 188 in 2010 to 749 at the close of 2012, including 321 people in sales and marketing, and 205 in research and development. Tableau’s headquarters are in the Fremont neighborhood, and the company has another office in Kirkland, WA, (mirroring Google’s Seattle-area footprint), as well as in Menlo Park, CA, Austin, TX, the U.K., Singapore, Japan, France, and Germany. The company plans to continue hiring rapidly, particularly in sales and engineering.

Tableau had sales in 2008 of $13.2 million. In the last two years, sales nearly quadrupled to $127.7 million, 83 percent of which came from within the U.S. and Canada. Tableau had a 2012 net profit $1.6 million, and $39.3 million in cash and equivalents on its balance sheet.

Business is booming today, but the company endured some lean years. Its solution was ahead of the market, according to Chabot, who explains the “sea change” that occurred in corporate IT during Tableau’s first five years in this 2012 interview with my colleague Curt Woodward.

Tableau sells desktop and server software, and is developing a SaaS version of its commercial products called Tableau Online, which will require significant investments in data centers and related infrastructure. The company also offers a free cloud-based service, Tableau Public, for analyzing public data sources.

While the Tableau concept—that complex information is easier to understand in pictures—is simple, executing it requires significant innovation.

The technologies underlying Tableau’s products include visual query language VizQL, “which translates drag-and-drop actions into data queries and then expresses that data visually,” the company says. That makes Tableau’s software easier to use and accessible to a broader range of people, as opposed to other complex big data tools that only “a small priesthood” can understand, as Chabot has put it. VizQL is backed by the company’s Live Query Engine—which allows non-programmers to seek data across diverse sources, including Hadoop—and technology to speed analysis of big data sets using local memory when databases are too slow or overburdened.

Tableau’s technology is covered by nine U.S. patents, and it has eight patent applications pending, according to its S-1 filing with the SEC.

Tableau breaks its competitors into three broad categories: software and business intelligence giants IBM, Microsoft, Oracle, and SAP; spreadsheet software vendors (Microsoft again); and newer business analytics companies including Qlik Technologies and TIBCO Software subsidiary Spotfire. It also cites competition from open source software.

Tableau’s largest shareholder is New Enterprise Associates, with 37.9 percent of the company’s stock thanks to $15 million invested in 2004 and 2008, money that the company has reportedly never needed. Meritech Capital Partners also invested in Tableau in 2010 and owns 6.4 percent of the company.

Founders Chabot and Stolte each own a little more than 15 percent, while Hanrahan has just over 18 percent of Tableau’s stock.

Benjamin Romano is editor of Xconomy Seattle. Email him at bromano [at] xconomy.com. Follow @bromano

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