Catching up on SoCal IPOs

On Thursday September 25, 2008 our then fledgling executive search firm hit the wall that turned into the Great Recession. In week prior we had a client rescind two offers to our candidates and another put off another offer “indefinitely”. “Indefinitely” grew into forever because that company didn’t survive the downturn. I couldn’t tell you exactly what the news items were in the larger world (not good!) but that day it was clear that Southern California growth was done for some time and new plans had to be made. I tell that snippet to explain the arbitrary cutoff date that relates to this post.

In the last few weeks, Rubicon Project (Playa Vista, NYSE:RUBI, jobs) completed its IPO on the NYSE. I’ve been a fan of their business since the earliest days of PivotPoint Executive Search and so that bit of great news got me thinking about the path of SoCal business since late September 2008. One way to break down these years is in terms of public offerings… and so springs this post.

My focus has always been “tech and digital media”—an arbitrary delineation, but I figure we have to put something of a picket fence around our main interests. There are some businesses that don’t clearly fall inside or out, so we’ll consider them part of our world based on feel. For example, Green Dot (Monrovia, NYSE:GDOT, jobs) went public in our timeframe back to September 2008, but we’re going to call them “banking” and not “tech” so that’s the only mention in this space. By one quick, sloppy count, there have been about 20 IPO’s in the biotech/biopharma industries! That’s an interesting and surprising result, and so I’ve promised myself to visit those IPOs in some detail in the near future.

I’ll also mention some companies that have flirted publicly with making an offering, but haven’t yet or changed their minds: LegalZoom (Glendale, jobs), NewEgg (Whittier, jobs), Hulu (Santa Monica, jobs), Nexsan (Thousand Oaks, jobs), and Fallbrook Technologies (San Diego, jobs). Dropping the idea after a due diligence period is not unusual…these are all very good companies. Of additional note: NO Southern California cleantech (I use my own wide definition) companies have made the leap to stardom. Fallbrook fell short. Perhaps Tesla Motors may be the first, but they’ve defected to the Bay Area.

Chomping at the Bit

There wasn’t a single tech IPO in the neighborhood from September ’08 until April 2010. It was not a good environment. . So it’s easy to imagine some pent up IPO energy that needed to be released once the floodgates opened – or there was a slight ray of sunshine.

MaxLinear (Carlsbad, NYSE:MXL, jobs): Jumped into the public markets in April 2010, leading the way forward out of the downturn. Just when you thought that semiconductor companies were starting to fade into stability, a fabless house like MaxLinear jumps up. Gross proceeds were $89.6M and current market cap is $314M. Their chip designs allow for high-speed broadband reception on all sorts of devices—speeds that allow for video streaming among other applications.

ReachLocal (Woodland Hills, NASDAQ:RLOC, jobs): This stock started trading May 2010. ReachLocal is the go-to move for all those local businesses that don’t know anything about Internet marketing. Sounds like a really big list to me, and a great opportunity. The NASDAQ agrees, giving ReachLocal a recent market cap of $288M.

RealD (Beverly Hills,
NYSE:RLD
, jobs): Since their July 2010 IPO, RealD has continued to be one of the “Big 4” independent (RealD, IMAX, Dolby, Xpand) theatrical 3D formats. RealD emerges as the winner here. Recent market cap of $541M.

Building the Momentum

With the cap off the bottle, there was a mini rush to the NYSE and NASDAQ over the next year…

Inphi Corporation (Westlake Village, NYSE:IPHI , jobs): Yes, Inphi has officially moved to Santa Clara, but I continue to claim them for SoCal. They listed publicly in November of 2010 and have a recent valuation of $449M. Like MaxLinear, they can be generally described as mixed-signal (digital and analog) semiconductors. Such chips compute, convert, and store analog signals like light and sound measurements into digital signals like jpeg photos and MP3 audio files. Inphi is focused on the super-high bandwidth hardware needed at big regional data centers.

Demand Media (Santa Monica, NYSE:DMD , jobs): It’s not simple to explain what exactly Demand Media does. It requires a few more words than any other company here. They’re a domain registrar, and make money selling top-level domain cyber real estate. They’re also a very wide-ranging Internet publisher. They employ hundreds of people (we see them hiring a lot) writing specific content that gets found by search engines and they run advertising against it. Have you forgotten how to make peanut butter and jelly sandwich? Demand’s eHow brand has your answer. Without looking to actually answer this question, I don’t believe Demand has been profitable (net income, not EBITDA) over any quarter. (I’m sure I’ll be corrected). For one thing, the dramatic demise of Lance Armstrong’s reputation has severely damaged their Livestrong.com brand. Recent market capitalization: $379M; IPO: February 2011.

Cornerstone OnDemand (Santa Monica, NASDAQ:CSOD, jobs): A big player in cloud-based software for managing human resources (Human Capital Management). Like all cloud-based/service-oriented architecture/software-as-a-service providers, Cornerstone makes it easy for their customers to pay a monthly bill, open a browser, and solve all kinds of complex business issues. Their IPO was March 2011, and current market cap is $1.9B.

Boingo Wireless (Los Angeles, NASDAQ:WIFI, jobs): Boingo supplies WiFi systems to airports, hotels, and the like. To go along with them, they provide software that runs on your computer or device to connect up. They went public in May 2011, and recent market cap is about $244M. I’ve always loved the name so they were among the first companies I ever mentioned.

Active Network (San Diego, jobs): Weird story here. Active Network went public in June 2011. A little more than two years later, they were bought out and taken private. Soon after…massive layoff, a split of the product group and what looks like a move sometime soon to Austin, TX (a town becoming a real tech player for those not paying close attention). They deliver cloud-based software to run all manner of events. Their roots were in sports leagues, running events, etc…thus the name.

A 14 Month Lull in Tech IPOs

Peregrine Semiconductor (San Diego, NASDAQ:PSMI, jobs): A third semiconductor company for our list. Their products are centered on their patented UltraCMOS®process. In short, they make stuff that runs wicked fast at low power for your smartphone or smart-whatever-device. Public since August 2012 with a current market cap of $185M give or take.

And 20 Months Later…

Rubicon Project (Playa Vista, NYSE:RUBI, jobs): And so we’ve come full circle. Rubicon went public just this month. They’re one of a few supply-side platforms (as opposed to the many demand-side platforms) that bundles internet publishing real estate in a platform that automates and optimizes the sale of associated ad space. For quite a while, I didn’t know of any other company doing this. There are others, but Rubicon is top of the heap.

And so we’re caught up. Rumors suggest that Santa Monica’s TrueCar might be the next to tackle the public markets. When I saw their first TV commercial a few months back, I knew something big was on the come. Whoever next joins this company, I’ll update this post. With luck, they’ll come faster and faster as Silicon Beach (and the other tech districts) prosper.