Silverpop CEO: Going Public Will Have to Wait

Silverpop CEO Bill Nussey says the email marketing firm is frequently approached by investment banks urging it to go public. But while an IPO is the end game, he said there is still more time on the clock before.

The Atlanta-based firm, which recently had its 10th anniversary, has been profitable for six years running and has ample cash on hand from venture-capital backers, Nussey said.

Further, an IPO might force the company to manage for the short-term rather than be free to make investments that could take time to pay off, Nussey said during an interview in advance of MediaPost’s Email Insider Summit.

“We’re definitely the size and get offers all the time to do it,” said Nussey, who has been with the company almost from the beginning. “But we’re circumspect about it and want to continue to grow our company privately, so we can take bigger risks and look longer term. But I think at some point, it’s very likely that we’ll go public and it’s a logical outcome.”

Silverpop, which focuses on using email as a relationship-building platform, does not release any financial information, except describing itself as a “multi-million-dollar corporation.” Clients range from the BBC, Red Bull, and Honda.

Nussey knows about the pressures companies can endure once they face the glare of investors, who monitor its performance every three months. He took Internet services firm iXL public about a decade ago. He also has been involved in the investment side of the business at Silicon Valley venture capital firm Greylock Partners.

As Silverpop evaluates the market, it does so with the backdrop of a bumpy economy and email firm ExactTarget abandoning its own plans for an IPO last year. ExactTarget does continue to receive impressive infusions of capital, including a reported $75 million in recent weeks. ExactTarget had $34 million in revenues over the first seven months of 2007, according to a government filing.

Another email marketing firm, Lyris, is publicly traded on the over-the-counter market, posting revenue of about $11 million in the most recent quarter, which was about flat with the same period last year. Its stock was trading Wednesday in the 30 cents per share range.

When publicly traded, Silverpop’s Nussey said investors can grow wary and, worse, unforgiving when profits drop in a quarter. “They’ll decimate your stock.” Nussey said.

So, Silverpop wants to maintain flexibility to make acquisitions and invest in new products. Nussey says Silverpop’s investors, led by Draper Fisher Jurvetson (DFJ), has been supportive of a long-term approach, as long as it justifies the potential “upside.”

Silicon Valley-based DFJ was an early investor in Skype and Hotmail, among other businesses.

Nussey said Silverpop will post a profit in 2009 for the sixth straight year, though it won’t be as robust as previous ones.

In May, ExactTarget received a $70 million investment that it said was similar to what is expected to garner via an IPO. That was followed by the recent $75 million boon.

At Lyris, CMO Blaine Mathieu said the company, though public, has sort of maintained a “low-profile.” But in an interview before the MediaPost event, he said that could change in the year ahead, as it builds out its new Lyris HQ platform. The service integrates email with mobile, social media and search marketing, with analytic capabilities that span those.

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