UI grads, entrepreneurs file to go public with the SEC

Ten years ago in Iowa City, before social networking websites such as Facebook and Twitter burst onto the scene, University of Iowa graduates Bill Lynch and Matt Tucker launched an Internet start-up that uses social networking tools to connect corporate employees and customers.

Today, Jive Software - which boasts having pioneered social business from its modest Iowa roots in 2001 - has its headquarters in the technology hub of Silicon Valley, has five offices around the world, and on Wednesday announced plans to raise $100 million in an initial public stock offering.

With big-name customers like Nike, Cisco and Toshiba, Jive uses social networking tools to “significantly improve how enterprises collaborate and share information with employees, customers and partners,” according to Jive's filing with the Securities and Exchange Commission.

In an email, Lynch told The Gazette that Jive grew out of an Internet venture that he and Tucker started while attending the University of Iowa in the late 1990s. Coolservlets.com, Lynch and Tucker's first venture together, gave away simple computer programs for websites - called servlets.

“It was a fun side project and was a way for us to learn more about a technology we loved and how to run a website,” Lynch wrote in the email.

After graduating from the University of Iowa in 2000, Lynch and Tucker - who also both graduated from Iowa City High - moved to San Francisco to work for a business called 4charity.com. But they maintained the project on coolservlets, and when the .com industry crashed and 4charity floundered, Lynch and Tucker decided to move back to Iowa City and put their energy toward the vision that became Jive, Lynch said.

The idea was to take a known concept, a discussion forum, and use it in an up-and-coming technology. The pair received a lot of interest from potential clients, particularly in the discussion forum aspect of the software, according to Lynch.

Lynch and Tucker signed on their first customer, Sun Microsystems, in February 2001 and officially founded the company “so we could be a proper business vendor and get paid,” according to Lynch.

“From day one, we had a paying customer, a viable product and a fantastic reference,” Lynch said.

Jive grew slowly at first, according to Lynch, but eventually gained steam and moved into Silicon Valley in 2009. Because federal law restricts what companies can say about operations after filing a public stock offering, Lynch declined to comment about why company leaders decided to go public now.

Experts have cautioned against filing for an initial public stock offering when the markets are as volatile as they are currently. Todd Houge, a lecturer in the University of Iowa's department of finance, said very few companies filed with the SEC in the last month because of the huge drops and spikes the market has seen with the nation's credit downgrade and other international factors.

“Normally what you see when the markets become volatile are companies that were considering an IPO start to rethink that decision,” Houge said. “You would like to avoid your first day of trading being some really catastrophic downturn.”

On the other hand, Houge said, companies like Jive that are in a newer industry like social networking don't have as much flexibility about when to go public.

“Some of it is a matter of coming to the market at a time when the market is really receptive to that type of idea,” Houge said. “And now might be the time to do that.”

Lynch declined to comment about the gamble of entering the market right now, because of the federal restrictions, but Jive addresses some of the risks of investing in Jive in its SEC filing.

“Although we have experienced revenue growth in recent periods, you should not consider our recent revenue growth or growth rates as indicative of our future performance,” according to the filing, which notes that expenses are slated to “increase significantly” as the company continues to grow at a rapid pace.