Apr 2 2014, 3:57pm CDT | by Forbes
The ad tech world was watching closely on Wednesday as ad exchange The Rubicon Project rang the opening bell at the New York Stock Exchange and began trading as “RUBI.” As the first high-profile IPO of 2014, Rubicon Project’s been something of a benchmark to show a whole class of other larger private firms if Wall Street’s current enthusiasm for tech offerings extended over to the advertising side, too.
So far so good for CEO Frank Addante. While Rubicon’s price point of $15 at the low end of its range had some concerned, Rubicon jumped right off the bat and has traded around $20, up 33%, for most of the day. It was at $20.04 at its first-day close. That’s a major source of validation for Addante, who’s a numbers-driven, punctuality-demanding type of executive.
“It’s been a great day, and the good thing is it’s clearly measurable,” Addante tells Forbes. “For us this is a journey because we’ve got a big mission, a $100 billion market opportunity to validate advertising, so this is one of those points on the journey.
Addante says there weren’t special nerves in the process as he and his management team have taken companies public before. But Rubicon’s had a high degree of pressure, at least from its industry peers. The company isn’t profitable, with losses increasing alongside revenue (about $9 million and $84 million last year, respectively). Other IPOs in ad tech have been a mixed bag, with Criteo and Rocket Fuel performing well, while several video shops, Tremor Video and YuMe, have struggled. Others like AppNexus, MediaMath, Mediaocean and Turn are waiting in the wings.
Rubicon’s first day on the market should be comforting to its advertising peers. Addante says that in his discussions with Wall Street investors, ad tech is no longer misunderstood. “They are seeing that the way this market is shaping out is very similar to other markets that move toward automation,” the Rubicon founder explains. “Look at any other market where billions of dollars move between buyers and sellers, and it’ll move toward automation.”
That’ll be a win for programmatic advertising proponents within ad tech like AppNexus CEO Brian O’Kelley, and it’s a good market trend for Rubicon, which Addante calls “one of two large scale exchanges” in the sector today. “We’ve tried to take a leadership role from a management perspective, in industry standards, and it’s important for us for the advertising market to be successful. This benefits all participants in the market.”
Addante says he has no regrets about pricing at the low end of a range that could have netted the company as much as $100 million but ultimately will inject it with $81.3 million in cash, with another $20 million going to shareholders. First, Addante says he couldn’t predict the market response until it happened. But Addante also says his IPO shouldn’t be considered a liquidity event. Of those cashing out, none of Rubicon’s management and early investors sold in the offering, Addante says.
Until Wednesday, Rubicon has been largely spending its own money, with $30 million on the balance sheet at the end of last year off less than double that in total fundraising. The company had last taken on $18 million in financing alongside closing its acquisition of the Fox Audience Network from News Corporation in November of 2010. Early investors include Clearstone Venture Partners, IDG Ventures Asia and Mayfield Fund as well as Stanford University.
As for the change from private to public, Addante says management structure will stay the same, as well as the “discipline” within the company. And while many companies in ad tech have had their brushes with accusations of murky metrics, Addante says Rubicon will actually have to get a bit more careful with its data. “We’ve had so much transparency traditionally that we’ve shared every single board of directors presentation with the entire company,” Addante says. “We may not be able to share the entire one now, due to regulations. But usually it’s the other way, getting more open, not refining it.”
With Rubicon’s offering materials available for the industry to pick over, one successful playbook for listing publicly is now on the books for 2014. And while Addante says the game stays the same, the founder did admit he found time to reflect on the listing.
“I appreciate where we are and that the market appears to value our mission and our team. Maybe this weekend I’ll stop and hit the pause button for minute.” The celebration will be no-nonsense like Rubicon’s culture, though.
“I’m a Chicago guy. It might be pizza and wine from Lou Malnati’s.”
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