Founded in 2006, Houston-based Symplr provides software and services that help healthcare organizations meet accreditation and regulatory compliance requirements. Its customers include HCA, Dignity Health, NewYork-Presbyterian Hospital, Lee Memorial Health System and Houston Methodist. It’s owned in part by CapStreet Group and Pamlico Capital. CEO and president Rick Pleczko joined the company three years ago after holding senior executive, marketing and technical positions at several software companies, including Idera, NetIQ Corp., Mission Critical Software, Platinum Technology and LBMS. He has executed several acquisitions for Symplr, including Vistar Technologies this past May, Cactus Software last year and CBR Associates in 2015. Last month Pleczko was named EY’s entrepreneur of the year in the technology category for the Gulf Coast area.
Going public too early in the U.S. It was in the mid-to-late 1990s and I was in the U.K. working for an IT services company. We saw a bigger opportunity to move from services to software.
We hired a team to develop the product, but we found it was fairly capital intensive. We also realized that software companies have a better support infrastructure and value in the U.S. than in the U.K., so it would make sense for us to be public on the Nasdaq. We already had a U.S. operation based out of Houston, so we thought, let’s build that up and then go public on the Nasdaq, which will significantly increase our company’s valuation and help fuel development of our software.
It takes about a year to prepare for an IPO, which to some degree detracted from the growth in our business. Our revenue stream was also rather lumpy, as it depended on us winning pretty big deals. We typically sold to larger, Fortune 1000 companies.
We spent the year preparing for the IPO and we went public, but then we missed our first quarter. We had institutional investors screaming at us, saying, “You just lost me large amounts of money.” We were completely hammered and the stock was underwater.
Don’t do things that are obviously wrong, measure twice and cut once, and earn the right to say no.
There were several lessons I learned from that. The first was: Don’t do things that are obviously wrong.
The market in the ‘90s for software companies was wild. Everyone was going to IPO on the Nasdaq, even just people with power point presentations. But we were too early going public in the U.S. We didn’t have a stable enough revenue stream and growth, and the markets didn’t like that. We should have hunkered down, ignored the irrational exuberance and waited until the right point where we had stable revenue growth.
Two, we had painted ourselves into a corner, needing that money for the investment. When you have major inflection points like this, you should measure twice and cut once. We knew we were living off this lumpy revenue stream, but we had faith we’d win large transactions and we would make the quarter.
In reality, we should have said that we are not fit and ready to be a public company on the Nasdaq.
The third lesson was: When you build a business, do it so you earn the right to say no at any point in your evolution. If we had enough capital or invested at a pace whereby we weren’t painted into the corner and needed capital, we would have thought, no, it’s not the right thing to do. If you can build business so you haven’t painted yourself into a corner, and you can say no, the life of your business is not jeopardized. At my last company, Idera, there were a number of times people wanted to acquire the business. But we had stable growth and didn’t need to sell; we wanted a better return for our shareholders.
So don’t do things that are obviously wrong, measure twice and cut once and earn the right to say no. Those three basic tenets have helped me along the way.
Follow Symplr on Twitter at @symplr.
Photo courtesy of Rick Pleczko