Eric Lefkofsky is a serial entrepreneur with a net worth of nearly $4 billion. He has taken three businesses public in the past and is now preparing for the initial public offering (IPO) of his latest venture, Tempus, a genomic testing and data analysis company. While Lefkofsky’s previous IPOs were not without their challenges, he is determined to create a valuable and long-lasting company with Tempus.
One of Lefkofsky’s most well-known ventures is Groupon, which went public in 2011 at a valuation of nearly $13 billion. However, Groupon’s IPO and subsequent years were plagued by controversies. Lefkofsky was accused of pocketing over $300 million from Groupon’s pre-IPO round, leaving the company with little working capital. This decision resulted in revised S-1 filings and a significant decrease in reported revenue. Additionally, Lefkofsky’s past deal of selling his dot-com-era company Starbelly.com to a company that later filed for bankruptcy raised concerns about his track record as a long-term value creator for investors.
Despite these challenges, Lefkofsky’s other two companies, InnerWorkings and Echo Global Logistics, performed well after going public. InnerWorkings, a supply chain startup founded by Lefkofsky in 2001, sold to private equity in 2021 for a fraction of its IPO market cap. On the other hand, Echo Global Logistics experienced steady appreciation in its stock price during its 11-year public life before being sold to private equity at a premium.
With Tempus, Lefkofsky aims to build a successful and valuable company. The inspiration for Tempus came from his wife’s successful breast cancer treatment, which made him realize the lack of data-driven decision-making in cancer care. He stepped down as CEO of Groupon in 2015 when the company’s value had significantly declined. Since then, he has focused on Lightbank, an early-stage venture firm.
In recent years, Lefkofsky has not taken a salary from Tempus. However, the S-1 filing reveals that he is due to receive a salary and bonus starting in 2025. He has also received dividends and other benefits from the company. Tempus’ financials show promising revenue growth, with $531 million in 2023, a 66% increase from the previous year. However, the company is still facing significant net losses. The silver lining is that the operating loss margin has decreased from 83% in 2022 to 37% in 2023.
There are indications that Lefkofsky exerts significant control over Tempus. The company has granted his shares 30 votes per share, which is higher than usual for a CEO in the healthcare industry. This level of shareholder influence may affect investor interest and could be subject to change in future filings.
Despite the challenges, Lefkofsky’s marketing and fundraising skills have been crucial to Tempus’ growth. The company has raised $1.42 billion in funding from investors, including Lefkofsky’s firm Lightbank and prominent firms like SoftBank. However, the S-1 filing states that Tempus will need to raise additional capital in the future, which could impact its share price.
Tempus is positioning itself as an AI company, although AI revenue currently accounts for only a small portion of its total revenue. The company plans to embed AI in its diagnostic tools, but some experts question whether Tempus has proven its capabilities in this area.
In conclusion, Eric Lefkofsky’s journey as a serial entrepreneur has been marked by both successes and challenges. With Tempus, he aims to create a valuable and long-lasting company in the field of genomic testing and data analysis. While his past experiences have raised concerns among investors, Lefkofsky’s marketing and fundraising skills have been instrumental in Tempus’ growth. The company’s upcoming IPO will be a test of its potential and its ability to overcome the hurdles it faces in the healthcare industry.