Amid all this talk of a social media and tech bubbles, one might think yesterday's bonanza debut of Splunk—which reached a $3 billion market valuation on its first day out—is just another indication of the impending tech bubble, but there's something different about this IPO. It really doesn't sound unlike all the other wildly overvalued companies going public and making money these days, at least not from the opening lines of today's Wall Street Journal article about Splunk's huge first day on the market. "An unprofitable business-technology start-up with a funny name turned in the best stock debut this year on Thursday, underlining how investors' appetite in the latest tech boom now extends beyond hot Web companies like Facebook Inc," writes The Journal's Ben Worthen, But maybe Splunk doesn't fit the narrative we've come to expect from a tech IPO.
Splunk's a technology company, but it's got nothing to do with social networking or coupons. Rather, the company which got its name from the term "Spelunking" is about "Big Data," what Worthen describes as the "next wave" in tech start-ups. "[Splunk] helps businesses organize and make sense of all the information they collect," writes Worthen. Working with companies like Bank of America and Comcast, Splunk uses data management and analytics products as it "collects, monitors, indexes and analyzes the machine data generated by IT applications and infrastructure--physical, virtual and in the cloud," per the company's site. "This machine data is massive in scale and contains a definitive record of all transactions, systems, applications, user activities, security threats and fraudulent activity. This data is largely untapped; Splunk helps organizations unlock its value," it continues. So, unlike some others, Splunk has a product to sell, using it to help companies like automotive website Edmunds, for exmaple, which uses the software to organize all the data generated by people using its website. The company has a revenue source, it just hasn't made a profit because of general expenses, marketing, product development and hiring.