When you read about people launching tech careers in the mid-1980s, it’s easy to chalk up their success to serendipity. Rick Rudman was lucky to be in tech at the moment in history when the PR industry needed to be automated. However, nothing else about his remarkable journey was a given.
This is the story about how instinct, discipline, and being true to himself led to Rudman, Chairman and CEO of Vocus, a marketing software company, riding off on a motorcycle in 2014, the day after a $1/2 billion cash transaction, with the song “Best day of my life” playing in his head. And, why in 2016 he’s back in the game as CEO of Tracx, “a social business cloud for building brands and managing customer experience in the social-enabled web.”
Young, Reckless, and Disciplined
Rudman grew up in Maryland and told the crowd at Connectpreneur that when he graduated from high school in 1979 he didn’t want to go to college. Instead, he joined the Air Force and started studying technical training in electronics. He says with a self-deprecating laugh: “Six months into my tour, I thought, oh wait, I do want to go to college.”
Determined to fulfill his commitment and follow his instincts, Rudman took night classes as he completed his four-year tour. Along the way he was promoted to Sergeant. He took 51 credit hours in his last year at Maryland and graduated with a degree in accounting. He is proud to have graduated within months of his high school classmates. It was the mid-1980’s, the internet was starting to come alive. After Rudman graduated he got an accounting job at a private company, started teaching himself how to program computers at night, and switched to the data processing department.
Leading and Learning
In 1992, Rudman and a friend from junior high school, Bob Lentz, started a consulting business to provide computer programming for large organizations, such as KPMG and the Department of the Navy. They were introduced to the idea of selling off-the-shelf software by people who approached them with a product idea to help big companies keep track of their grass roots lobbying and political action committees. “We thought hey, we can keep selling the same software over and over again and we don’t have to charge for programming services? That’s for us!”
By 1997, the software business had about $2 million in revenue from its government relations software and a buyer had come along offering to buy the business for $6 million in cash.
“My co-founder and I were young and single. We thought, hey, we’re rich! After all the paperwork, we had a closing dinner.We were at our lawyer’s office the next morning waiting for the wire transfer. We got a call saying the deal was off.”
A Defining Moment
The co-founders didn’t know why their prospective buyers pulled out. However, they did know that the investors were planning to put their government software together with a PR software company. Despite their profound disappointment, this detail did not escape their attention.
“When the deal fell through, my co-founder and I looked at each other and said ‘PR software sounds like a good idea.’ And, we went off and wrote PR software, which basically became the flagship product for Vocus for the next 15 years. That’s what took us from a couple of million in revenue to almost $200 million.
The PR industry required automation as it expanded from distributing press releases to newspapers to become direct to consumers and online search. A $30,000 loan from the co-founder’s father enabled the team to found Vocus and build software for the PR industry and sell it to very large enterprises and midsize agencies.
A Brash Decision Worked Out
Vocus, based in Beltsville, MD, also turned out to be one of the first wave of Software As a Service (SAAS) companies in 1999-2000. Rudman explains:
“The tools were barely there, but we were lazy. We didn’t want to write Web-based software AND desktop software. So, we wrote everything for the ‘net. The good thing was we were young and reckless. Had we been more seasoned we might have thought the PR market is going online so we’ll write software plus a web-based product.”
The company was profitable in year one and reinvested in growth. They learned to partner with organizations such as Associated Press (AP), which in 2007 began allowing Vocus users to distribute press releases within the AP network. They accelerated their growth by acquiring businesses in the space, such as PR Web. At some point, they ended up acquiring the company with which their would-be investors had planned to pair them. Vocus grew by about 38% each year.
Learning from Mistakes
As Vocus grew, Rudman’s co-founder indicated the need for more funding with a quote from the classic movie, Jaws: “We’re going to need a bigger boat.” Though still expanding, the company was on the verge of not making payroll for 52 employees. The co-founders cut their team to 40 and figured out they had to make $300,000 a month or Vocus would be out of business. By the end of the year, Vocus was making $400,000 a month. The co-founders had passed on the first funding offer from Edison Ventures because they felt the valuation wasn’t high enough. Six months later, in a rare move, the venture capital firm returned. They opened up a $2 million A round.
The co-founders made a major mistake of scaling up sales and marketing before they had their model right. “We pretty much wasted the money,” admits Rudman. They learned from their mistakes and fared better with their $13 million B round. Rudman says,“By that time, we knew what we were doing.”
When Vocus went public in the beginning of 2006, it still had $5 million of the $13 million left in the bank. “It was a different era,” says Rudman.
“When things are going well, it’s great. The IPO process really isn’t that hard at all if you have a great CFO, which we did…In 2009, when the economy crashed it started not to be fun anymore.”
Grow Fast; Know When to Pivot
The company continued to grow by about 38% a year for 15 years. When the economy crashed in 2009, for the first time its annual growth shrank to just 5%. “That was a tough year,” says Rudman. “We spent the next two or three years just trying to grow back to a high-growth model.” High-growth software models get higher valuations.
By 2010, the company was able to accelerate its growth by acquiring similar public relations software companies, such as Datapresse, BDL Media, and Help a Reporter Out.
“We started to bounce back on the growth side,” says Rudman. “We also came to the conclusion that software for the PR industry was brilliant when we got into it in 2000 but we couldn’t sustain the same level of growth. It was time to transition from PR to the broader marketing automation space.”
To expand its focus quickly, Vocus made a major move and acquired iContact, with $50 million in revenues. It paid off. Rudman recalls:
“That took us to $180 million. So, that was the path we were on. We were maybe a year into that transformation with a couple of hard years ahead of us to transition from PR to the broad marketing space and GTCR came along and offered us a 50% premium on our stock price and it was a good time to get out.”
GTCR, a Chicago-based private equity company, took Vocus private in June 2014 later that year merged Vocus with Cision AB, a Swedish company, to form Cision Inc. By that time, Vocus had over 1,500 employees in the US, Europe, and Asia. As CEO and Chairman, Rudman had led the company through 32 quarters as a public company. He felt it was time to leave on his own terms. He explains:
A lot of private equity firms have a financial engineering strategy. They buy two or three companies, put them together, cut a bunch of costs, leverage it with debt, then pay down the debt within five years and get a 2x return. I said, ‘That’s a good investment strategy, but I have no interest in running that kind of company.’ We agreed I would go. They asked ‘How long do you want to stay?’ I said, ‘One day would be good.”
Like software legend, John Cullinane, the author of The Entrepreneur’s Survival Guide, Rudman says he got tired of living his life in quarters, not seasons. He also learned that who you work with, both in the company and on the investor side, is as important as the company itself. When Edison approached him to become CEO to build a solid infrastructure for Tracx, he explains: “I knew I was going to be a real CEO, set the strategy, choose the acquisitions I think are important.”
Rudman is enthusiastic about heading up the subscription-based company in the large and growing social media space. They serve large customers, like Sears, Kraft and the PGA tour, monitoring everything that’s being said across all the platforms, except for Snapchat, for now. He explains:
Whenever you have over 2 billion people that are active on some type of network, forum, physical location — anywhere — marketers will go there. You have access to 2 billion people. What I love about this space is it’s fundamentally changing the way companies are doing business. Social’s not a fad or even a channel. It’s how companies are engaging with customer/prospects and doing research…I think you can build a lot of value. The space is enormous, it’s still developing, and it’s going to change over the next 2-3 years.
Tracx, created in Israel, will maintain a small New York City office but open its main space this August on Woodmont Avenue in Bethesda, MD.
Read Rudman’s personal account of life after his big company exit and why he jumped back into the CEO role with Tracx here.