One of the most valuable and rare CEO skills is the ability to turn an idea into a public company and keep the company growing rapidly.
One CEO who seems to be off to a good start is Jaime Ellertson, CEO of Everbridge, a Burlington, Mass.-based provider of a services that help customers "aggregate and assess threat data, locate people at risk and responders able to assist, and automate the execution of pre-defined communications processes," whom I interviewed on April 25 and May 30.
Everbridge has enjoyed rapid revenue growth and a soaring stock price -- since its Sept. 2016 IPO, shares have soared nearly 206% to $46.61 on June 1 to a stock market capitalization of $1.3 billion -- but it has not made a profit. Since 2013, revenues have increased at a 36% compound annual rate from $30 million to $104 million in 2017 -- during which time it consistently lost money posting a negative net profit margin of 18.8% in 2017.
(I have no financial interest in Everbridge securities).
Ellertson has a track record of making money for investors. For example, he took over Waltham, Mass.-based software company, Interleaf, in 1997 when it had a market capitalization of $18 million and sold it to BroadVision in January 2000 for about $852 million.
Ellertson also ran Web experience management software provider, Gomez, starting in 2005 which raised a total of $66 million before Compuware acquired it in October 2009 for $295 million in cash.
In November 2010, Ellerston founded CloudFloor -- which used the cloud to notify a company's employees in the event of an earthquake, wildfire, or terrorist event. He merged CloudFloor with Everbridge and became CEO in September 2011.
Everbridge provides two-way communication in critical situations where keeping the system working can save lives. As Ellerston said, "We have significant data on people and message them quickly via multimodal communications. For example, during a shooter event which typically lasts three minutes we can notify people that a shooter is in Building A and those in Buildings D, E and F should barricade themselves."
Everbridge posted 34% revenue growth in the first quarter of 2018 and expects to keep growing fast. Here are the four growth hacks that could keep Everbridge going up in value.
1. Create a Growth Trajectory
Everbridge has been growing at "35% to 45% per year [through multiple growth vectors] over the last six to seven years." As I described in Disciplined Growth Strategies, there are five such vectors including:
- Current and new customer groups (it has added vertical markets including government, healthcare, oil and gas and financial services); and
- Built or acquired products (it has to its platform features like maps that show how close an event it to a customer's staff, situational awareness, and encrypted, secure SMS).
(The other vectors are current and new geographies, current and new capabilities, and current and new culture).
2. Keep Customers and Employees Happy
Customer retention -- Everbridge's ranges from 97% to 98% -- is critical to the company's growth which largely happens thanks to the strength of its team.
As Ellerston said, "We have a unique culture -- every day we save peoples' lives. We value caring and safety. And our stock has done well -- out of 30 recent IPOs, ours has outperformed all but two. Our top leaders have done it before, we have a clear mission and metrics. And we have high retention of our top team -- only one of which has turned over in the last five years."
3. Use Formal Processes To Manage Growth Predictably
Everbridge hopes to see revenues grow from $125 million to $1 billion. In addition to having the right team, getting the right processes is a key to achieving this growth. "We had no pressure to go public from an outside investor and we made sure that we were operating for a year with the processes for reporting and forecasting to investors before the IPO. The benefits of being the first in the industry to go public -- more press attention, the perception that we are the market leader, and more operating leverage -- outweigh the $3 million to $7 million in additional extra costs for auditing and public reporting," Ellerston explained.
4. Create The Future
Growing Everbridge also requires that he lead a longer-term planning process. As he said, "We have a three year planning cycle in which we agree on five or six themes such as entering new markets, raising our average selling price, and recruiting better staff. We create 30 to 40 teams and get buy-in on these themes. Each department then puts together a two page business plan which includes specific, measurable goals and a budget."
Significantly, Everbridge uses these plans to run the business. "We create a 25 page company plan that includes quarterly deliverables that every employee gets and signs. And we have a dashboard that tracks the percentage completion of each goal and red, yellow or green colors to summarize each goal's status. Every other month we have all hands meetings with food that last two hours to answer questions and share key information."
Reaching $1 billion in revenues will require Everbridge to keep delighting and retaining its customers and gain a bigger share of their budgets by adding adjacent products that can work wirelessly around the world for its 4,000 customers many of which have employees working around the world.
Though you may not achieve Ellerston's level of success, you can benefit by applying the four growth hacks that have helped him create $2.4 billion in value for his investors.