TaskUs IPO on Nasdaq Values ​​Company at $ 2.8 Billion

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

TaskUs

For Bryce Maddock and Jaspar Weir, the journey to Nasdaq began in high school in Southern California, continued through a high school children’s entertainment company and a failed yogurt business in Argentina, and eventually ended in a city of Texas best known for its historic water park.

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 invested their entire life savings in a company called TaskUs, the company made its debut on the stock market on Friday and is valued at around $ 2.8 billion. The stock, which trades under the ticker symbol “TAREA,” was up 26% to $ 29.

TaskUs provides customer support services to fast-growing technology companies, including Uber, Netflix, Coinbase, and Zoom. Employees are spread across eight countries, and TaskUs dedicates hundreds or even thousands of employees to its major customers so you can handle all of your support-related issues. Revenue jumped 33% last year to $ 478 million, and TaskUs is profitable, a rarity among publicly traded tech startups, showing an annual net income of $ 34.5 million last year.

Maddock, the CEO, said TaskUs often serve companies that “realize that their growth will be so aggressive that they will no longer be able to do it all themselves.”

For example, Zoom called in early 2020, when pandemic-driven growth from the video chat company fueled a thirty-fold increase in support requests, according to the online roadshow before the IPO. TaskUs soon had 700 employees working on the account.

Clients like Zoom are the reason Maddock and Weir, the company’s president, headed to Nasdaq on Friday to ring the closing bell. But the trajectory was not always up and to the right.

High School Summer Parties

Maddock and Weir became best friends two decades ago while attending Santa Monica High School, just blocks from one of California’s most famous beaches. Weir stayed close by for college at the University of Southern California, while Maddock crossed the country to New York University.

Still, they pooled their heads and pockets and formed their first business, an entertainment agency that rented venues around Los Angeles and threw alcohol-free parties for high school kids.

“We grew up in Los Angeles, and one thing we realized was that in the summer, high school kids don’t have much to do,” Maddock said in an interview. They called the business Club Access and ran it from 2005 to 2007, attracting 800 to 1,000 kids on average on Monday nights.

After college, they decided to give Buenos Aires a chance. Weir had studied abroad in Argentina and wanted to start a business there. He and Maddock decided to open a frozen yogurt shop. They flew together and encountered investors and chemists who could mix the flavors. However, they quickly learned that starting a small business in Argentina and earning pesos was not a way to build wealth, and they abandoned the idea before it took off.

They moved back in with their parents and invested the $ 20,000 they had saved from the event 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 life savings to rent a one-room office on the side of a highway an hour south of Manila and hire our first employees,” they wrote in the founders’ part of the letter of the prospectus.

In their initial conversations with startups, Maddock and Weir said they quickly learned that busy executives didn’t want task-based help, but needed more comprehensive support services to help them as they grew. TaskUs broadened its focus to cover more business processes, and the founders got some company-backed startups to join.

“As we earn their trust, we take 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 in an early stage of development, though it expanded rapidly and generated large rounds of risk. Maddock said Uber’s message at the kickoff meeting in San Francisco was that the private transportation company would never outsource its services. That completely changed the following year.

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

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

Similarly, TaskUs started working with Coinbase when demand started to rise. That was in 2017, when “bitcoin became a major obsession and support volumes soared through the roof,” the document says. Over time, TaskUs began to handle customer fraud, compliance, and security needs for Coinbase.

The Philippines remains the company’s largest center, with more than 19,000, or 70%, of its employees located there. The United States is its second largest country, with more than 4,000 employees, followed by India and Mexico.

TaskUs was originally based in Santa Monica, but began moving to Texas in 2016 with the opening of an office in San Antonio, 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 more than 70 acres and is one of the largest employers in the city of 80,000 people.

Schlitterbahn Waterpark and Resort in New Braunfels, Texas.

Erich Schlegel | fake images

Maddock and Weir live in Austin, about 50 miles north of New Braunfels. Before 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 are eager to get back on the road and in the air, although as key people for a publicly traded company, they have insurance policies that “prohibit us from traveling on the same plane,” Maddock said.

‘Phantom stock’

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

Maddock and Weir were able to maintain substantial ownership (16% at the time of the IPO) because they had only received $ 15 million in outside funding prior to the Blackstone deal.

“We started the business for seven years, living on a tight budget with our parents,” Weir said in an interview. “Fortunately, our parents did not charge us the rent.”

Unlike the typical venture-backed technology company, TaskUs did not 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 distributed grants whose value would increase as the company reached milestones and liquidity events.

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

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

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