The Upside of an IPO
Charting the future of public relations
Holmes Report
CEO

The Upside of an IPO

The opportunity: A strategically placed article underscoring webMethods’ milestones, core values, and capabilities. The challenge: The article would be timed near the company’s IPO.

Paul Holmes


 

This placement was one of the rare occasions when the PR process drew the ire, and not the cheers, of many people, including investors, executives, lawyers, and editors. Through it all, Schwartz navigated all the unexpected trials, smoothed over fears, and stayed on track toward the goal: delivering a high-quality placement. The result is an unabashedly candid story of a visionary entrepreneur who founded a start-up ahead of its time and now helms a company that continually outperforms for its customers. More importantly, the feature article was published prior to the company’s record-making IPO on February 9, 2000.


  CHALLENGE OR OPPORTUNITY:

The opportunity: A strategically placed article underscoring webMethods’ milestones, core values, and capabilities. The challenge: The article would be timed near the company’s IPO. As with many IPOs, Schwartz faced a time constraint. It was critical that all contact with business press occur before the official “quiet period,” and that the article’s debut occurred at a calculated time. Schwartz could not reveal its need for speed, and instead, had to abide by the schedules of editors and reporters who took their time in completing feature articles. At the same time, Schwartz worked under pressure from lawyers who strictly ensured that all the rules of the SEC were adhered to—Everyone wanted to avoid a Webvan incident.


  RESEARCH AND PLANNING


 

When webMethods retained Schwartz in August 1999, we reviewed the history of webMethods’ public relations efforts to determine what would make the most sense in helping build momentum for the company before its planned IPO. webMethods had received substantial local press in the Washington, DC area, and had achieved a significant article about the company in the Wall Street Journal following its third round of funding.


 

In speaking with reporters and industry analysts, Schwartz found some surprising info: Only a very small handful knew exactly what the company did. Some were familiar with the webMethods name, and still others had entirely different notions of the company. Moreover, the CEO had rarely had the opportunity to meet face-to-face with the press. Schwartz determined that webMethods needed to become more of a “household” name in the high tech industry. Schwartz needed to tell the company’s exceptional story, raise the profile of webMethods’ CEO, and demonstrate how his early vision of a little-known language called XML will lead to a revolutionary way of doing business.


 

Our goal: an in-depth feature about webMethods. Better yet, Schwartz intended this article to appear at a crucial timeframe to help buoy the IPO. Schwartz planned to reach as wide an audience as possible, but for our homerun feature, we targeted three new economy publications in particular. A hit in any or all of them would achieve our objectives.


 

CAMPAIGN EXECUTION:

With a planned IPO in Q1 2000 looming in the near future and the quiet period to work around, Schwartz immediately planned a media roadshow to introduce Phillip Merrick, CEO of webMethods, to key business and technology industry editors and reporters—many of them for the first time.


 

Within a month, Mr. Merrick was in the San Francisco bay area. One of the meetings scheduled was with a senior editor at Upside magazine. After the meeting, Schwartz contacted the senior editor, who expressed his fascination by the company’s history, solid track record, and articulate CEO. He enthusiastically stated his intent to do a profile about webMethods and assign a reporter.


 

What followed were six weeks of ongoing phone conversations and email exchanges before a decisive action was taken by the editor, who was unaware of the time constraints Schwartz was working under. Together, timing for the article was discussed and agreed upon. Once a reporter was assigned, Schwartz followed up expeditiously with press kit materials and arranged an interview with Mr. Merrick. In the meantime, Schwartz called pre-selected industry analysts, customer references, and investors to obtain their participation and arranged those interviews.


 

As the filing date for webMethods’ S-1 drew nearer, Schwartz had to convene with lawyers over the pending Upside article to ensure all interviews could be completed before the quiet period commenced. One final interview with Mr. Merrick was arranged with the reporter to go over last-minute questions, and then it was a wrap for Schwartz. All media with the business press stopped at this point.


RESULTS


 

The year 1999 was one of record-breaking IPOs. As the year 2000 rolled around, the question on everyone’s mind was who would be the first big hit. On February 9, 2000, webMethods (WEBM) debuted on the Nasdaq substantially above its opening price. By the time the day ended, the stock had risen even more to close at $212 per share, a 505% percent gain. This stellar performance earned webMethods the number four spot on the Top Performing IPO list.


The program that Schwartz executed for webMethods played an important role in setting the stage for the company’s resounding success on the public market. On that day, the national print and broadcast media clamored for the attention of webMethods, and the company became a corporate icon to be imitated. In November 2000, when Upside released its list of who’s who in the New Economy, Elite 100, Phillip Merrick debuted at number 89.

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