Most companies might consider reining in their loftiest ambitions after an IPO plan falls far short of expectations.. Then again, most companies aren’t run by Ryan Wuerch.
Wuerch is the founder and chief executive of Bellevue, WA-based mobile software company Motricity (NASDAQ: [[ticker:MOTR]]). The company, founded in 2001, filed for its IPO in January. At the time Motricity, which had generated more than $100 million in revenue in 2008, though it was not yet profitable, was expecting to raise as much as $250 million from investors in its initial public offering.
Instead, the company, met by a tough economic climate, was forced to lower its expectations. First, it sought to raise $85 million, then $62 million, before finally settling on a much lower $50 million to seal the deal. But a less than ideal IPO, Wuerch says, isn’t enough to speak to the well-being of the company, and won’t be enough to curtail its ambitions.
“Stock price doesn’t indicate the strength of a company,” Wuerch says, adding, “We were waiting for that window.” Timing certainly didn’t help Motricity. On the last day of the company’s road show in May, just when Motricity was trying to whip up enthusiasm among dozens of investors, the Dow Jones Industrial Average fell 1,000 points in a very scary 16-minute period. The window Motricity had been waiting for was suddenly gone, but Wuerch and the company decided to move forward with its plans regardless.
“It’s a very difficult market and we feel very fortunate that we did get out,” he says. “We didn’t have to go public.”
The reasoning for moving ahead with the public offering was three-fold. First, Wuerch was eager to have transparency with the customers that comes with the territory of being public. Second, there was an obvious opportunity for the company’s some 355 employees, as of March 31, to benefit from the transaction by enabling them to potentially cash out their stock options. Third, the company had some rigorous international expansion plans in the works that required extra capital.
Motricity had a number of prominent stockholders going into the IPO, including Advanced Equities (28.6 percent), billionaire investor Carl Icahn (13.8 percent), Technology Crossover Ventures (10 percent), and New Enterprise Associates (9.8 percent).
Although the public offering was no doubt humbling, Wuerch says the company has already bounced back. Motricity posted revenue of $113 million in 2009. And although they haven’t yet become profitable, the company’s revenues are climbing and losses are narrowing. In 2008, the company reported a loss of $78 million. In 2009 its loss was down to $16 million.
The company is ready to move forward—and aggressively so—with plans to ramp up its local presence, and expand to Asia and India. Citing the famous children’s fable, Wuerch says actions speak louder than words. His motto around the office is “maniacal execution against the plan.”
“My largest investors actually bought in the IPO, so if there’s any indication to the strength of the company, that’s it,” he says. “It has nothing to do with how much money you’re raising.”
And so far things are looking up. The company’s second quarter results—some $30.4 million in total revenues—exceeded expectations, Wuerch says. As the domestic market has improved for Motricity, Wuerch says it has enabled him to think more about international expansion.
Motricity relocated from North Carolina to Bellevue in December 2007, coinciding with the company’s $134 million acquisition of the mobile division of Infospace. But Wuerch had other reasons
