6 Takeaways From Boston E-Commerce Firm Wayfair’s IPO Filing

When it comes to consumer tech, much of the Boston area’s hopes and dreams can be summed up in one word: Wayfair. The online retailer of home goods filed its much-anticipated IPO paperwork on Friday.

Wayfair was bootstrapped for many years before taking a big venture-capital round in 2011. The company has been on a growth kick ever since, making acquisitions, spinning out new sites, and raising a total of $350 million-plus.

Interestingly, that’s about the same amount the company hopes to raise in its IPO—it lists the proposed maximum offering price as $350 million (that’s mostly a placeholder for now, though).

Here’s my first read of the S-1 document:

1. The company has come a long way. It was founded in 2002 as Smart Tech Toys—who knew? Most observers had heard of its old name, CSN Stores, but not its original name.

2. Wayfair is officially a billion-dollar company. That’s if you look at its revenues over the past 12 months. In the first half of 2014, the company brought in $574 million, as compared to $383 million in the first half of 2013. Annual revenue has increased in each of the past two years. But the increase has come at a price.

3. “We have a history of losses and expect to have increasing operating losses and negative cash flow as we continue to expand our business.” Wayfair had a net loss of $51.4 million in the first half of 2014, as compared to a loss of $8.3 million in the first half of 2013. Much of the added spending was in sales and marketing. (By contrast, the company was said to be profitable in its pre-VC days.)

4. Wayfair sees as its competitors everyone from Amazon, eBay, and One Kings Lane to JCPenney and Macy’s; Home Depot and IKEA to Target and Walmart; and Crate and Barrel to Bob’s Discount Furniture. That’s a lot of competition.

5. Two e-commerce companies not mentioned in the document: Alibaba and Zulily. The former is planning the mother of all tech IPOs, possibly next month, and that’s making other companies wait in line. The latter went public last November and has grossly similar revenue numbers, but smaller net losses (and turned a profit in a recent quarter). Together, Alibaba and Zulily may act as a rough indicator of how Wayfair can expect to do on the public markets.

6. Wayfair’s founders, Niraj Shah and Steve Conine, still own the majority of the company (28.9 percent each), even after the large amount of VC financing they took. Great Hill Partners owns 11.43 percent, while HarbourVest Partners owns 7.03 percent, Battery Ventures owns 6.15 percent, and Spark Capital owns 4.4 percent of the company.

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