Hewlett-Packard Co. famously started in a Silicon Valley garage. Perhaps one day, ExactTarget’s humble beginnings—in $200-a-month space in a Greenfield business park—will be the subject of similar lore.
ExactTarget is no HP, at least not yet. But in just over a decade, the interactive marketer has rocketed from bootstrapped startup to New York Stock Exchange-listed company with a market value of $1.5 billion.
And spend a few minutes around Scott Dorsey, the company’s CEO and co-founder, and it’s clear he believes the company is just getting started. It expects to reach more than $275 million in revenue this year and is shooting for $1 billion, Dorsey told attendees of the Powder Keg tech startup conference Oct. 19.
The company started as a permission-based e-mail marketer, and it remains a leader in that field. But in recent years, it has broadened its marketing offerings beyond e-mail to help clients bond with customers through mobile, social media and websites.
To help establish itself as a one-stop shop for marketing technology needs, ExactTarget unveiled two major acquisitions this month. It paid $96 million for Atlanta-based Pardot LLC, broadening its reach into business-to-business digital marketing, and $21 million for Carmel-based iGoDigital, which helps companies like Amazon and Wal-Mart recommend products to customers based on their personal information, their previous buying habits and their online queries.
The deals brought 150 employees into the ExactTarget fold. The company now has 1,000 employees in Indianapolis and another 500 elsewhere in the United States and as far away as Brazil and Australia.
It was just the kind of inspiring story budding tech entrepreneurs in the Powder Keg audience wanted to hear: an Indianapolis-based startup climbing to heights that would be impressive even in the technology hotbed of Silicon Valley.
“We were fortunate,” Dorsey said. “We got off to a fast start and really, really kept going.”
That’s not to say it was easy. Dorsey and co-founders Chris Baggott and Peter McCormick had to rely on friends-and-family funding for the first $200,000. (The group was richly rewarded: A $5,000 investment then now is worth $1 million.) And there was nothing glamorous about those early days. To prove its e-mail software actually worked, the company turned to Greenfield’s Mozzi’s Pizza chain, among other businesses in the area.
Dorsey doesn’t sound like a man who has let success get to his head. “Frankly, one of our strengths is, we just knew there was so much we didn’t know, and we were unbelievably open to feedback,” he said.
He said angel investor Bob Compton, one of ExactTarget’s early backers, was a key mentor, as were venture capitalists who started pumping money into the company in 2004. He said the outside investors “helped crack open our minds that this could be something far bigger than we had conceived of originally.”
Baggott, another Powder Keg speaker, said ExactTarget also benefited from being willing to make tough decisions early on, including replacing a succession of chief technology officers who didn’t work out—a gutsy move considering the founders didn’t have the tech expertise to step in themselves.
And some stumbles actually paid off in the long run. ExactTarget first filed to go public in 2007, but the financial crisis derailed that effort, prompting the company to turn to venture capitalists for additional funding.
It then made big investments in R&D that caused steep losses—a strategy public company investors probably would have punished. But by the time ExactTarget revived its IPO plans late last year, performance was on the upswing—and investors began lining up to buy the stock.
In its preliminary prospectus, ExactTarget projected the shares would fetch $15 to $17 apiece in the IPO. The company ended up pricing them at $19, and when the shares debuted March 22, the first trade was at $23.05.
Dorsey, who rang the opening bell on the New York Stock Exchange that day, recalls the IPO as an exhilarating, “out-of-body experience”—with a little confusion thrown in.
“For weeks, bankers were telling me, ‘Dorsey, you get to buy the first share. You get to buy the first share.’ I kept thinking, “How am I going to pay for it? Do I need to bring cash? Do I need to bring a check?’”
It turned out the purchase was ceremonial, not a real transaction, he said with a laugh.•