When the world ground to a halt in March of 2020 as the coronavirus rapidly spread across the globe, the initial public offering (IPO) market seemingly dried up for the foreseeable future. While business travel ceased and market uncertainty reigned, with the volatility index (VIX) surging to record highs, companies—particularly those geared toward leveraging technology for business operations—continued to perform well. One such company, ZoomInfo, saw the opportunity to go public, even in these unprecedented times, and its IPO in June of 2020 “cracked open the IPO market,” according to Jeff Thomas, head of Western U.S. Listings and Capital Markets at Nasdaq.
At this year’s Silicon Slopes summit, Thomas and ZoomInfo Co-founder and Chief Executive Officer Henry Schuck spoke about how the dynamics of the IPO process changed amid the pandemic. Schuck also shared his journey as an entrepreneur, detailing how he started and grew the business to become a company with a $27 billion market cap.
ZoomInfo (ZI), which provides a go-to-market intelligence platform for sales, marketing, and recruiting teams, had planned to go public on March 16, 2020. Schuck had been preparing to go through the “testing-the-waters” process, followed by the roadshow—11 days of multiple in-person meetings with investors across North America leading up to the IPO.
But in the weeks leading up to that date, COVID-19 changed the climate of the market as the VIX spiked to more than 80, prompting the IPO to be postponed. But as the pandemic persisted, ZoomInfo performed well, and the banks began adjusting to a more virtual world. By the end of April, one ZoomInfo board member asked the questions that would reignite the IPO market: “Could we IPO? Could we be the first one out of the gates?”
Since Nasdaq operates an electronic exchange that does not rely on a physical trading floor, it could continue operating normally throughout the pandemic, Thomas noted. Bankers also shifted to a virtual roadshow format, so the IPO process for ZoomInfo restarted.
“We did the set of meetings from my office in Vancouver, Washington,” said Schuck. “It was the same sort of setup, except that I was behind a computer. It was meeting after meeting, after meeting, after meeting, after meeting with investors, and on the last day, we went public virtually.”
On June 4, 2020, ZoomInfo became a Nasdaq-listed company and one of the first companies to hold a virtual bell-ringing ceremony to mark the milestone. Thomas said that Nasdaq prepared for this pioneering event by recording Schuck’s opening remarks in his home and then broadcasting them on the Nasdaq tower at MarketSite in Times Square in New York City. Nasdaq also paired his comments with a video of ZoomInfo employees cheering from various locations across the globe.
That’s one of the things we’ve taken away from COVID: We found ways to use technology to make those experiences much more inclusive so that more people can participate in the celebration than just the folks who are lucky enough to be there in New York.
The journey to ZoomInfo’s IPO, even without COVID, had been an arduous one, filled with moments of triumph and even doubts. In 2007, Schuck and his co-founder Kirk Brown began the company, then known as DiscoverOrg, in his law school dorm room, with each of them putting $25,000 on their personal credit cards.
“We didn’t know what [venture capital] VC and private equity money were; that’s just how we built the business,” Schuck said. “But when we did it, one of the great benefits that we had was we were selling data on IT decision-makers to software and hardware companies’ sales and marketing teams. The product-market fit and that ideal customer profile was so tight that we didn’t have to boil the ocean to get an opportunity.”
In the first few years, DiscoverOrg leveraged email marketing to build its business, giving customers “a taste of what our product was,” Schuck said. As DiscoverOrg’s business picked up and gained investors, the company began making acquisitions. However, after acquiring RainKing, one of DiscoverOrg’s competitors, Schuck realized that the company might be in trouble.
“One weekend, I went, ‘We’re in a lot of trouble because the number two player in the space is a company called ZoomInfo. And if I was the CEO of ZoomInfo, this is the motion that I would run. This is exactly what I would do, and I would disrupt us over the next 12 months,’” Schuck said. “It was this really stressful moment because you had convinced the board and your employees to trust you in this acquisition. And then, all of a sudden, there was this big existential threat out there.”
Upon this realization, Schuck went back to the board and convinced them to raise the capital to instead acquire ZoomInfo. Six months later, in February of 2019, DiscoverOrg had merged with ZoomInfo, eventually taking on the ZoomInfo brand. About a year-and-half later, the company went public.
“What ZoomInfo unlocks within the platform is the ability to be highly targeted so I can build a universe of individuals who are exactly my buying profile,” said Schuck. “What we’ve been working on at ZoomInfo for the last two years is really building the workflow automation around it so I can build a perfectly defined audience with all sorts of unique signals that weren’t available before.”
While Schuck built the company without initially understanding the opportunities that venture capital and private equity funds can provide, today, there are more free resources than ever for entrepreneurs looking to scale their business and prepare for an IPO.
“Seven years ago, we launched the Nasdaq Entrepreneurial Center in San Francisco. It started as a physical space. We would convene educational sessions and bring in resources for early-stage entrepreneurs. With the pandemic last year, we, of course, had to go virtual,” Thomas said. “Now, all that content is online, and we run a number of different programs for early-stage founders to help them accelerate their business.”
As ZoomInfo continues to flourish in the public market, Thomas also noted that more sales tech firms are looking toward an IPO.
“We’ve got a lot of companies that are raising large amounts of venture capital at pretty lofty valuations—and those venture capitalists are going to expect a return. When you look at the universe of potential acquirers for that technology, you’ve got a handful like ZoomInfo, but a lot of those are going to be standalone public companies,” Thomas said. “I think we’ll see at least half a dozen to a dozen sales tech companies go public in the next 12 to 24 months.”