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Brier Dudley's blog

Brier Dudley offers a critical look at technology and business issues affecting the Northwest.

December 1, 2014 at 12:16 PM

Tableau starts charity with pre-IPO shares

Here’s a Seattle tech holiday story.

It starts alongside the Lake Washington Ship Canal in Fremont, where Tableau Software has quietly grown into one of city’s larger tech companies.

A few years ago, when the company was coming into position for its initial public offering of stock, the founders tried to figure out what they would do with all the money the IPO would raise.

They had spent a decade building Tableau into a leading provider of data-visualization software tools. It was finally time for founders, investors, employees, friends and family to benefit from the big exit.

Dilution is always a concern when it’s time to cash in, but the company decided to go a step further and set aside shares for charity — 150,000 of them. Founders Christian Chabot, Chris Stolte and Pat Hanrahan added more from their stake.

Chabot, left, and Stolte in a 2004 photo by John Lok, Times staff photographer.

Chabot, left, and Stolte in a 2004 photo by John Lok, Times staff photographer.

Tableau hit the jackpot when it went public at $31 in May 2013, raising $254 million in what was at the time the year’s biggest tech IPO. Last week the shares were trading around $81.

The company now has 1,700 employees and a market capitalization of about $5.7 billion. Sales were up 71 percent last quarter to $104.5 million, though the company ended up with a net loss of $4.6 million.

The shares set aside for charity established a foundation — being announced Monday — that’s starting out with assets of more than $20 million. Tableau plans to give away about $1 million a year to charities locally and around the world.

“We’re too new to commit to an absolute number, but that’s the ballpark we’re focusing on,” said Neil Myrick, a former program-management director who began leading Tableau’s fledgling corporate social-responsiblity program in May.

It’s fairly common for individuals to donate pre-IPO shares, often through charitable organizations that will manage and administer foundations on their behalf.

Tech companies have been using pre-IPO shares to jump-start charitable foundations since eBay first did this in 1998, but it’s still relatively rare, especially outside of Silicon Valley.

The trend is just catching on in the Seattle area, where Tableau is among a handful of companies that have taken this approach, according to Fidelma McGinn, vice president of philanthropic services at the Seattle Foundation.

Two years ago the foundation began offering new services to help small to midsize companies take this path. Tableau was one of the first and set a high bar with the size of its initial commitment, McGinn said.

“They’re setting kind of the high-water mark,” she said.

Other companies moving toward IPOs are working with the foundation on charitable programs, McGinn said, but they’re not yet ready to be disclosed.

The conditions seem favorable. So far this year 261 companies have gone public — up 25 percent from last year’s pace — raising $82 billion, which is 66 percent more than last year’s crop, according to statistics compiled by Renaissance Capital.

Using IPO proceeds for charity isn’t universally popular, however.

Investors may balk at idealistic founders giving away large amounts of capital just as their companies are getting started, especially those still investing heavily in growth and posting quarterly losses.

Wall Street pushed GoPro stock down 10 percent in October after founder Nicholas Woodman disclosed plans to donate around 5.8 million shares to charity during the post IPO period when shares are generally locked up.

Corporate giving also raises questions about whether companies are properly managing their resources on behalf of investors. This is a particular concern for those who believe it really is all about creating shareholder value.

But opposing these new corporate citizens’ generosity seems awfully miserly, given their momentum and the phenomenal wealth created by their IPOs.

The opposition also is penny-wise, pound-foolish. Tech companies aren’t being absolutely benevolent with their charitable programs. They tend to make donations that, while helpful and kind, also strengthen their brand and the reach of their products.

The Tableau Foundation’s first big gift went to Seattle-based PATH, which had asked for software to help visualize data it was gathering to address the HIV epidemic in Western Kenya.

This became a learning opportunity for the foundation, which opted to do more than just make the gift. It looked at the overall project and ended up donating not just software, but also training, professional services and cash.

Tableau also tapped into its network of expert users, which it calls “Tableau Zen Masters,” and found volunteers to help work with the data and produce “world-class visualizations to help solve this problem in Kenya,” Myrick said.

When Dimagi, a Cambridge, Mass.-based organization, asked for software to help with a project tracking Ebola in West Africa, Tableau responded in 16 days with a package of software, training, support and help from the Zen Masters.

Other recipients include education programs Code.org and MathCounts, and victims of the Oso mudslide and Typhoon Haiyan in the Philippines.

Myrick said the philanthropy complements Tableau’s mission to help people see and understand data.

“It fits the values of the founders and the values they’ve built into this organization from the beginning,” he said. “The IPO was the mechanism to make it happen, but the genesis started many years before.”

Charitable programs are also valuable recruiting tools, particularly for companies competing for young, engaged workers who place a high value on philanthropy.

Chabot last month told the GigaOM blog that his biggest challenge now is competing for talent.

So perhaps it’s not a coincidence that his company is now calling out its foundation and related programs. These include an internal “giving portal” used to match employees’ charitable giving and volunteer time with grants of up to $500 per year. It’s also giving employees a day off every year to volunteer time, and it’s involving them in a community grant-making program to support local charities in Fremont, Kirkland and other cities where it has office locations.

Tableau didn’t have to look far for role models. Its headquarters are next to the Fremont offices of Google, which has a foundation that annually gives away $100 million in cash and products worth $1 billion.

Then there’s Microsoft. It’s been matching grants and spawning philanthropists since the 1980s when Bill Gates’ mother Mary — a prominent United Way leader — urged him and Paul Allen to pay it forward. Microsoft employee donations and grant programs were more than $1 billion in its past fiscal year, including $119 million in cash and $948.6 million worth of in-kind donations.

In comparison Tableau’s just a pipsqueak. But you have to start somewhere.

Comments | Topics: Bill Gates, Philanthropy, seattle

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