Rubicon Project's Frank Addante: Why An IPO Is Only The Start

Story by Benjamin F. Kuo


Los Angeles-based online advertising technology provider Rubicon Project ( recently had its IPO, making it one of the big success stories of Southern California's technology startup world. However, according to founder and CEO Frank Addante--it's important to think of the IPO not as an exit, but as just another milestone and funding event in the company's life. Frank talked to us about the IPO, the market, why supporting the Los Angeles startup community was important to the company's growth, and more.

Congrats on the recent IPO, how was the experience for you this time?

Frank Addante: As you might know, this is the second company I have been involved with taking public. When you do something the second time, you draw on the experience of the first time, and you get to learn from all of the previous mistakes you made, and the things you did right. You can try to improve the second time. There are a few things that were important in going through the process the second time. One, was making sure we had the right team in place. That might sound obvious, but public and private companies are two very different things. You need to have people work with you, who you trust, and go through the process together, because managing the IPO process ia a beast. Second, the thing you have to continue to do, is execute against your vision and your plan. With an IPO, it's very easy for it to be a distraction against that. You need to have a team in place so you can manage both the business and the IPO in parallel.

The second thing you have to do, is keep the team in focus. An IPO, while it's a big and exciting event for a company, really is just a financing event. It's a way to raise capital, and it's not an exit, and not a liquidity event. It's a way for you to raise capital, to execute against your vision, and accelerate that. You have to keep your team focused on that, and reminded of that, because it's very important.

The third thing, is you have to continue to focus the company on managing the business, and not the stock price. Prior to our IPO, I told the company that I can guarantee the following: the stock will go up, and the stock will go down. What I can't guarantee, is how much the stock will go up or down, or when. Markets move, and you can only control what you can control. What we can control, is the operation of our business. We can't control the market. We keep to try them focused on executing on the vision, and managing the business, not the stock price.

It was a long road to an IPO from your first funding - did you expect that, and should companies just expect that nowadays?

Frank Addante: It is a long road, and the road today feels even longer. You're just dealing with so much. It's dealing with lawyers, and bankers, and accountants, and regulatory and government bodies. And, I think that for companies that are high growth, who are disruptive, and innovative, sometimes those things are counterintuitive to how you have been operating in the past. However, you need stability and strong processes in place. Myself and Greg, our president, plus Todd, our COO and CFO, all have funded and taken companies public before. We were aware of that, so we tried to soften the culture shock to the company. The way that I've run the company from day one, was preparing for this. I've always tried to execute the operations of the company as if we were a public company. Everything from transparency, to the way we communicate with our private investors, to the way we communicate with the team. That makes it so it didn't feel as much of a long road. If you're going from scratch for the first time, however, it's quite a tough road. Particularly difficult, is for people with lots of opinions, one of the toughest things is going into a quiet period where you can't talk about what your business is doing. Those months of time in the quiet period for a company feels like years.

I guess my advice, is realize what you're getting into, understand that it's a journey, not a sprint, and look at the IPO as just another milestone in a company's journey, just like a private financing or product launch, and treat it as such. It's really important to do it right, and not rush it. Our culture is to go fast, but don't hurry, and that' particularly important with the IPO process.

How was building a big company here this time, instead of Silicon Valley -- I know you had moved StrongMail, your prior company, to Silicon Valley?

Frank Addante: I moved StrongMail to Silicon Valley, although that came with lots of promises and enticing from investors. The promise we saw when I moved StrongMail, was that there was a lot of talent in Silicon Valley, and lots of capital, and that's where business was strong. I quickly learned, after moving StrongMail, is all of that is true--but there sure is a lot more competition for those resources and capital. In starting Rubicon Project here, I felt that there was plenty of talent in Southern California, but it was just very disconnected. It was all over, geographically, and we did not have a strong community of entrepreneurs. I think that has changed. When I moved back down to Los Angeles, and started Rubicon Project here, we started hosting events, Thursdays In The Mix. This was even while we were still in stealth mode. I told my investors--I'm going to be investing in some of the things that might not seem like they make sense. We're spending money on these events, which are not marketing our product, and not marketing to try to get customers, but to pull the Los Angeles community together. With a strong community in LA, that would do a few things. One, it would help make talent more accessible, and two, it would create a strong sort of core that could attract talent from all over the world, or at least, all of the country, or even just Silicon Valley. Third, it would help create a stronger core, so that investors would pay attention to what was happening here, to pay attention to the talent and innovation in Los Angeles. All of those things have happened since then.

That's created a good foundation and platform for Los Angeles companies in general, and certainly for companies like ours. We went form private funding, to strategic funding from our customers, ultimately, to public funding. As you know, we also were able to acquire a number of companies. We've acquired four companies to date, and that's because of a combination of our investments and culture, and our investment in the Los Angeles ecosystem, making it a place where people want to be.

There are quite a few companies, like yourself, in the online ad market who have recently gone public. Is it necessary today to be public to compete?

Frank Addante: First, I'll say that there was an incredible opportunity in advertising when I started Rubicon Project a little over seven years ago. We looked at the market, and thought--why can't someone do for advertising what the NASDAQ does for stock trading. We wanted to automate ads, in the same way the NASDAQ does for stocks, the same way Amazon does for retail, and the same way Sabre does for travel. We also believed that the market would grow. We sort of started this revolution in advertising automation. When we first started, people reacted as though we were three headed aliens, it was just like how people did in the early days of IBM, when they started putting computers on people's desks for the first time. I grew up in Chicago, in a pretty small town, and my parents were immigrants to this country. I recall that my mom worked at company where everything had been done by hand, and they put a computer on her desk one day, and it had her terrified. She worried that if they were installing computers at work, would they be replacing her job? I chuckled, and told her, Mom, they are not going to replace everybody, because all of those computers require a human to operate. It just makes you more efficient. It was very funny to see that reaction.

When we started pioneering advertising automation, we had that same reaction. If you're using computers for this stuff, what happens to those human jobs? It was a similar reactio to when IBM started putting computers on desktops. However, automation doesn't replace people, it just helps those people and companies become more effective. The result, is that markets grow. If you look at this market, there is a $200 billion opportunity to automate advertising, and it's growing. I think there are few markets that have been around for as long a time as advertising, and yet have continued to grow at such a rate of speed. That said, with such a big opportunity, people become attracted to that opportunity. There are small competitors, and there are large competitors. However, I don't think you need to be a large public company to compete in this market, because there are plenty of other ways to raise funds. We chose the path we chose, because we've been very aggressive with growth. If you saw our Q2 earnings, you saw that we have reached pretty large scale, and grew 49 percent over the prior year. It was a pretty outstanding year, and we grew faster than the market did for automation. The public funds accelerate that vision. Those public funds, by the way, are more than the money we've raised in total in the company prior. It's a huge market, and those funds help us accelerate our execution against that market. For others, I think they need to choose the best path for them, which fits whatever it is they are trying to accomplish.