Hootsuite Inc. founder and ex-chief executive officer Ryan Holmes has stepped down as chairman as part of a board overhaul in advance of the Vancouver company’s expected initial public offering.
The company, a pioneer in the business of providing software for managing social media, said Tuesday it was adding four new directors, while two, including Mr. Holmes’s nominee, BBTV Holdings Inc. CEO Shahrzad Rafati, and Sara Clemens, a nominee of Hootsuite investor Accel, would leave.
New director Julie Herendeen, a senior digital marketing executive who previously worked at PagerDuty Inc., Uber Inc. and Dropbox Inc., is taking over as chair. The other new directors are Christiane Pendarvis, co-president and chief merchant officer with lingerie company Savage x Fenty, Tucows Inc. chief financial officer Dave Singh and Carl Sparks, managing partner with venture capital firm Interlock Partners.
Mr. Holmes will remain a director, along with CEO Tom Keiser and Jeff Lieberman, managing director of Hootsuite investor Insight Partners.
“These new board appointments are an important step forward for Hootsuite as we transition from an investor board to an independent board,” Mr. Keiser said in a release, referring to the fact the board was previously dominated by directors attached to or nominated by its big investors.
Company spokeswoman Melanie Gaboriault said by e-mail: “We believe having an independent chair makes sense as a matter of good governance.” The company declined to say who, if any, of the new directors were nominees of venture capital firm Accel, an early investor, or Mr. Holmes.
The changes come as Hootsuite, one of the first companies to spark Canada’s technology renaissance following the 2008-09 credit crisis, prepares for a potential $200-million public offering on the Toronto Stock Exchange in the coming months. Hootsuite has engaged investment banks TD Securities and JP Morgan as advisers, and has met with prospective public markets investors in recent weeks to gauge their interest, The Globe and Mail reported last month. Hootsuite has declined to comment on those efforts.
The move toward an IPO comes 16 months after Tom Keiser, former Zendesk Inc. chief operating officer, succeeded Mr. Holmes as CEO and led efforts to revitalize the 1,000-person company.
Hootsuite was born in 2008 as a spinout from Invoke Media, Mr. Holmes’s internet service and marketing consultancy. Hootsuite provided a solution to a new problem. It developed tools for organizations to get a handle on navigating the shift in public communications and manage online activity across emerging social-media channels, including Facebook and Twitter.
Hootsuite became a tech industry darling, drawing financing from big-name U.S. and Canadian venture capitalists. It grew rapidly and built a cult of personality around Mr. Holmes as a digital economy thought leader.
But as Hootsuite reached US$200-million in annual revenue and hit operating profitability, it stagnated. The company missed sales targets and its product didn’t evolve in step with customer demands. Industry dynamics also shifted as Twitter extracted payments from Hootsuite and its peers.
The company stopped a sale process in late 2018, after potential bidders valued Hootsuite at less than expectations.
Months of tense board discussions ensued over whether Mr. Holmes was still the right person to lead the company after prospective buyers raised concerns about performance metrics and high customer and employee churn.
The company laid off 10 per cent of staff in April, 2019, and overhauled its leadership team, with Mr. Holmes relinquishing his CEO post that year. Meanwhile, rivals Sprinklr Inc. and Sprout Social Inc. have since gone public, sporting valuations in the billions of dollars.
Under Mr. Keiser, however, Hootsuite has regained its mojo. He has pulled back on its efforts to woo large corporations to focus instead on smaller-sized enterprises, where it is strongest. He stepped up efforts to convert new or trial customers to long-standing paying clients, recruited senior executives and made two acquisitions.
On Tuesday, Hootsuite said it would open an office in Atlanta in February and hire more than 60 people there next year as part of efforts to expand rapidly in the United States.
Hootsuite’s revenue growth increased to 20 per cent in the second quarter, up from single digits last year and ahead of schedule, but that growth has come at the expense of operating profits, which dipped into negative territory this year.
If Hootsuite goes public with numbers like that, it would follow a string of Canadian software companies that have debuted on the TSX this year with a combination of decent but not high growth by software industry standards, combined with low or no operating profits, including Coveo Solutions Inc., D2L Corp., Q4 Inc. and E Automotive Inc. Investor response has been mixed, with several of the new stocks trading below their issue price during an autumn of shaky performance by technology stocks over all.
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