TaskUs IPO pop on Nasdaq values company at $2.8 billion

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TaskUs co-founders Bryce Maddock (left) and Jaspar Weir

TaskUs

For Bryce Maddock and Jaspar Weir, the journey to the Nasdaq started in high school in southern California, continued through an entertainment venture for high-school kids and a failed yogurt business in Argentina, and finally ended up in a Texas town best known for its historic waterpark.

Now in their mid-30s, Maddock and Weir are each worth about $400 million and oversee a business with 27,500 employees worldwide. Thirteen years after they plowed their life savings into a venture called TaskUs, the company held its stock market debut on Friday and is valued at about $2.8 billion. The stock, trading under ticker symbol “TASK,” jumped 26% to $29.

TaskUs provides customer support services to fast-growing tech companies including Uber, Netflix, Coinbase and Zoom. Employees are spread across eight countries, and TaskUs dedicates hundreds or even thousands of staffers to its top clients so it can handle all their support-related issues. Revenue climbed 33% last year to $478 million, and TaskUs is profitable — a rarity among newly public tech companies — showing annual net income of $34.5 million last year.

Maddock, the CEO, said TaskUs is most commonly serving companies that “realize their growth is going to be so aggressive that they can no longer do it all themselves.”

For instance, Zoom called in early 2020, when the video chat company’s pandemic-fueled growth spurred a thirtyfold jump in support requests, according to the online roadshow ahead of the IPO. TaskUs soon had 700 employees working on the account.

Clients such as Zoom are the reason Maddock and Weir, the company’s president, were headed to the Nasdaq on Friday to ring the closing bell. But the trajectory wasn’t always up and to the right.

High school summer parties

They moved back in with their parents and invested the $20,000 they’d saved up from the events business into their next venture: a task-based virtual assistant. They chose to start in the Philippines, one of the top countries in the world for call centers and outsourcing.

“We used our combined life savings to rent a one-room office on the side of a highway an hour south of Manila and hire our first few employees,” they wrote in the founders’ letter portion of the prospectus.

In their initial conversations with start-ups, Maddock and Weir said they quickly learned that busy executives didn’t want task-based help, but rather needed more thorough support services to assist them as they grew. TaskUs broadened its focus to cover more business processes, and the founders got some venture-backed start-ups on board.

“As we earned their trust, we took on more critical parts of their operations such as advanced technical support and critical content review,” they wrote.

By 2012, TaskUs was established enough to hit the radar of Uber, which was still early in its development although expanding rapidly and raising large venture rounds. Maddock said the message from Uber at the initial meeting in San Francisco was that the ride-hailing company would never outsource its services. That changed completely the following year.

“They called us back and said that outsourcing sounds like a good idea now,” Maddock said.

TaskUs started working with Uber in 2013, reviewing and onboarding drivers, according to the prospectus. In 2014, it began helping on rider and driver support. A year later, TaskUs had more than 2,000 people dedicated to Uber.

Similarly, TaskUs began working with Coinbase as demand started surging. That was in 2017, when “bitcoin became a mainstream obsession, and support volumes spiked through the roof,” the filing says. Over time, TaskUs started handling fraud, compliance and customer safety needs for Coinbase.

The Philippines is still the company’s biggest hub, with more than 19,000, or 70%, of its employees located there. The U.S. is its second-biggest country, with over 4,000 employees, followed by India and Mexico.

TaskUs was originally headquartered in Santa Monica but started moving to Texas in 2016 with the opening of a San Antonio office, then to nearby New Braunfels, which became its current headquarters. New Braunfels is home to the Schlitterbahn, a 42-year-old water park that covers over 70 acres and is one of the 80,000-person town’s largest employers.

Schlitterbahn Waterpark and Resort in New Braunfels, Texas.

Erich Schlegel | Getty Images

Maddock and Weir both live in Austin, about 50 miles north of New Braunfels. Prior to the pandemic, they said, they spent about 75% of their time traveling to their various offices, including six to eight trips a year to the Philippines.

They’re anxious to get back on the road and into the air, though as the key persons for a publicly traded company, they have insurance policies that “forbid us from traveling on the same plane,” Maddock said.

‘Phantom stock’

In addition to Maddock and Weir, the TaskUs IPO is a big windfall for Blackstone Group, which invested about $250 million in 2018 and eventually controlled about two-thirds of the company. Including shares sold in the IPO, that stake is now worth about $1.7 billion.

Maddock and Weir were each able to maintain substantial ownership — 16% at the time of the IPO — because they’d only taken $15 million in outside funding prior to the Blackstone deal.

“We bootstrapped the business for seven years, living on a shoestring budget with our parents,” Weir said, in an interview. “Fortunately our parents didn’t charge us rent.”

Unlike the typical venture-backed tech company, TaskUs didn’t issue traditional stock options to its employees, because it was originally structured as a limited liability company. Rather, it created a “phantom stock plan” in 2015 and doled out grants that would appreciate in value as the company reached milestones and liquidity events.

Maddock said that following the Blackstone transaction in 2018, the company paid out $44 million to over 200 employees who owned phantom stock. After the IPO, he said a total of over $120 million will be paid to more than 400 employees.

“We have teammates and leaders in the Philippines who will make hundreds of thousands and, in some cases, over $1 million,” Maddock said.

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