30/05/2022, 14:19

Why Rokt and TDM are pushing ahead with a 2023 float

TechnologyVenture capital

Why Rokt and its
biggest investor arepushing ahead with a2023 IPO
Yolanda Redrup [/by/yolanda-redrup-j7gdq] Reporter

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Why Rokt and TDM are pushing ahead with a 2023 float

May 30, 2022 – 1.33pm

Rokt CEO Bruce Buchanan was already a member of theGuzman y Gomez board when TDM Growth Partners’ Tom

Cowan joined in mid-2018. The crossing of their paths, it turnedout, was serendipitous.
The former Jetstar boss who had been building the marketing
technology company since 2012, had already raised more than $30
million for his fast-growing business, but he realised quickly that
Cowan and his fund’s approach was different to other investors.
Fast-forward almost four years and TDM is now Rokt’s biggest
shareholder and the pair are navigating the choppy waters ofvaluation volatility, [https://www.afr.com/technology/aussie-start-upinvestors-hold-firm-against-valuation-jitters-20220426-p5aga4] at a time

when the $2.75 billion company has already flagged intentions tolist in 2023. [https://www.afr.com/street-talk/rokt-s-458m-raise-gets-itready-for-us-ipo-20211216-p59i5y]

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Why Rokt and TDM are pushing ahead with a 2023 float

Rokt CEO Bruce Buchanan and TDM Growth Partners’ Tom Cowan first met on the Guzman yGomez board.

Bruce Buchanan“Tom is the only investor or board member that I have a weekly
call with. We have an hour together every week.

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Why Rokt and TDM are pushing ahead with a 2023 float

Part of that is his role as lead independent on the board, but part of
it is just for us to check in and have a sounding board on all things
going on in the business, what’s keeping you up, and what we’rethinking about doing on particular points.
TDM are not a spray and pray type of business where you invest in
50 different businesses. The typical VC model is not their model.
They spend a lot of time getting behind a business... a lot of myinvestors tell me how much they can do for me, but whatsurprised me is how much TDM actually do. You have aconversation with Tom, say you have a problem, and he says ‘letme do some work on it.’To have people with resourcing and capability to do heavy liftingfor you on certain problems... it’s a unique model.
When they invested, we didn’t have a particularly strong or robust
finance team, and TDM essentially took on the tasks that a
traditional finance or CFO function would do.

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Why Rokt and TDM are pushing ahead with a 2023 float“My perspective is it’s better to havelower expectations and to exceed those
expectations ... I prefer to list in a market
that’s really bad.”— Bruce Buchanan, Rokt.

They thought about remuneration structures, board structures,investment stories and managed a bunch of things we didn’t havethe capacity or bandwidth to do.
We hit the start of COVID-19 and most investors were panicking
about cashflow and the end of the world. In the first six weeks ourrevenue declined 65 per cent. It was kind of scary.
Tom’s counsel at the time was that businesses that treat it theright way will get through much, much stronger.
He said they believed so much in where we’re going to get to, andunderstood the business so well that they would do a Series D andinvest more money.
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Why Rokt and TDM are pushing ahead with a 2023 float

This would allow any of the shareholders that were suffering, orstaff that want to sell, to sell, but make sure we had the capital tobe able to invest through the cycle.
It was a particularly tumultuous time... but they came in behind usand backed it up.

Bruce Buchanan formerly ran Jetstar.
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Why Rokt and TDM are pushing ahead with a 2023 float

We hired about 150 people through the COVID-19 period,including a lot of senior talent in different roles. Towards the endof COVID-19 the market got very competitive. But, because wewere able to move earlier, there was no one recruiting in Q2 andQ3 of 2020, and we got access to incredible talent.
That set us up for where we are today. We did a lot ofstrengthening in our go-to-market function... and our support
areas. We had some new key executives, a new CTO, a new head ofpeople - we took advantage of the fact everyone else was in turmoil
and didn’t have that certainty, and it made a lot of difference when
we came out of COVID-19.
I take a contrarian view on managing investor expectations. Tom
had a laugh when they invested in the Series C and he said wewere the only investment they’ve ever made where the forecasts
we gave them, we beat them.
My perspective is it’s better to have lower expectations and toexceed those expectations. It creates longer-term trust andalignment with the people you want to work with to create
something extraordinary.
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Why Rokt and TDM are pushing ahead with a 2023 float

I look at the public markets the same way. I prefer to list in amarket that’s really bad and investors will have lower expectations
on forward outcomes than what would be at the frothy peak of themarket at November last year.
A listing is not the stamp at the end, it’s a step toward getting towhere you want to get to [https://www.afr.com/street-talk/rokt-s-458mraise-gets-it-ready-for-us-ipo-20211216-p59i5y] and if I get a bunch ofpeople who invest in the business at that time, and they feel really
good about what happens from there on in, they’re going tocontinue to be strong advocates and support the business as wemove forward.
We picked the investors in the Series E in the same way. If you lookat Tiger, Wellington Management and Whale Rock CapitalManagement, we picked them for their similar alignment, values
and thought processes as TDM. They won’t sell out the minute wehave an IPO.”

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Why Rokt and TDM are pushing ahead with a 2023 float

RELATED

Bruce Buchanan’s Rokt sets venture capitalrecord with $458m raisinghttps://www.afr.com/street-talk/bruce-buchanan-s-rokt-sets-vcrecord-with-458m-raising-20211216-p59i5v

Tom Cowan“I originally thought when we first met, the best thing for Roktwould be to list in Australia. We had that debate and I put forward
our views and Bruce put forward his views and the view now isthat the most likely outcome is they should list in the US.
There was a plan to IPO in November last year, but Bruce came tous and said ‘I know this was the original plan, and if that’s
meaningful to you, I’m happy to commit, but these are the reasons
why I think we’re going to grow and be more successful in a
private setting. Now is not the right time, even though we’re ready’.
We obviously did the Series E in November with Tiger[https://www.afr.com/street-talk/rokt-s-458m-raise-gets-it-ready-for-us-ipo-

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Why Rokt and TDM are pushing ahead with a 2023 float

20211216-p59i5y] and delayed the IPO because it was the right thingfor the business.
When we set up TDM 17 years ago, we set it up to solve thisproblem. We have no constraints around timing, we have no fundlife.

“The market is never shut for highquality, fast-growing businesses.”— Tom Cowan, TDM Growth Partners.

We have an evergreen pool of capital that allows us to invest in
private and public companies for as long as we want.
So, we are very flexible - it’s what is the best for the business andwhat is the right timing on that. We are very aligned with Bruce on
this - we want incoming investors, be it in a Series E or at IPO - tohave a very successful investment.
The markets are irrelevant because we’re always going to price thebusiness for a successful outcome for incoming investors.
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Why Rokt and TDM are pushing ahead with a 2023 float

We think any business with the qualities of Rokt - growing fast,very profitable, strong balance sheet, with a big growth
opportunity over the next 10 years - can be listed at any time.
The market is never shut for high quality, fast-growing businesses.
It comes down to what is the right thing for the business and willthose incoming investors have a successful investment, rather
than any market conditions or macro consideration.
There are a couple of clear things we learnt over those years thatwere very attractive to us in terms of backing Bruce and the team.
The first one is a very rare trait among founders - the ability toscale from small to large.
Bruce had built Jetstar from nothing to a very large business, andso had seen small and had seen large. To have that skill andunderstand the pieces you need to put into the business at thevarious stages is a unique skill and something we value very
highly.
Bruce is a ‘first principles’ thinker (questioning your own
assumptions about a problem).
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Why Rokt and TDM are pushing ahead with a 2023 float

He always goes back to what is the right way to solve this problem.
‘Don’t tell me it’s because this is how other people do it, or this ismarket practice;’ the reason he’s been able to solve this very
difficult problem and continue to do so is because he goes back tofirst principles.
Capital flexibility can be a core competitive advantage. Manybusinesses don’t understand it, but being able to drive to theoutcomes you want to drive to in difficult times, and being able totake advantages of other people’s challenges for your benefit.

RELATED

Rokt’s $458m raise gets it ready for US IPO
https://www.afr.com/street-talk/rokt-s-458m-raise-gets-it-ready-forus-ipo-20211216-p59i5y

In 2020, fundamentally the Rokt business was growing very
rapidly, you just couldn’t see it necessarily because ticketing andtravel was a large portion of the business and transactions went tozero, but we knew it would come back.

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Why Rokt and TDM are pushing ahead with a 2023 float

We wanted to ensure we could use that capital flexibility and takeadvantage of the opportunity to hire all the great people we could ,knowing the business would come out far stronger and that’s
exactly what happened.
They’re growing far faster than they were pre-COVID.
But, for us, the most important thing for long-term success of any
business is people and culture.
For us to have the fortune of working up close with Bruce for a few
years in a business setting on Guzman y Gomez, was a unique
opportunity and something, as Bruce said, it made the wholeinvestment decision much, much easier.
When you understand the problem that’s trying to be solved, andalso have alignment of values, when you hit speed bumps... you’llsolve these problems and come out stronger.”https://www.afr.com/technology/why-rokt-and-its-biggest-investor-are-pushing-ahead-with-a-2023-ipo-20220523-p5anuf

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Why Rokt and TDM are pushing ahead with a 2023 float

Yolanda Redrup
Reporter
Yolanda Redrup is an award-winning senior journalist who writes on technology, healthcare andoccasionally covers Street Talk from our Melbourne newsroom. Connect with Yolanda on Twitter.
Email Yolanda at yolanda.redrup@afr.com

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