Jive Software, which makes social networks for the enterprise, just filed to go public.
What’s notable about the filing is that Jive not only isn’t profitable, but doesn’t expect to be profitable any time soon.
That this type of thing is happening again is either really good news or really bad news.
- It’s really good news if it means the IPO window is finally open again for speculative technology companies. Companies that are unprofitable and don’t know when they’ll be should be able to go public, if they have big financing needs. As long as everyone knows what they’re getting into, there’s nothing wrong with that. Plenty of companies need a lot of investment before they can be profitable, and it’s one of the functions of the public markets to provide that capital. Heck, it’s what they were invented for.
- It’s really bad news if we’re going back to 1999. Back in the 1990s, people understood that it’s fine for speculative companies to go public. But back in the 1990s we also had a massive tech bubble that ensured that a lot of companies which weren’t “speculative” as much as “worthless” went public and led to a lot of people to lose their shirts, which led to overregulation of the public markets and skittishness on the part of investors, which means we’re where we are today.
Only time will tell if Jive Software can become a self-sustaining enterprise, and whether it portends one or the other trend (or if it’s just an outlier). But as we start this new IPO boom, we should keep watch over which direction it’s going in.
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