Veeva Systems (VEEV), which operates a cloud system for the life sciences industry, pulled off a red-hot IPO today, sending shares up 80%. That surge came after the company raised the price range from $12-$14 up to $16-$18.
Not to brag, but as I mentioned in last month’s post for the IPO Playbook, I thought it would “possibly [be] the most can’t-miss IPO of the year.”
First some background: Veeva has three main systems, which include CRM, Vault and Network. They help with critical functions like drug sample tracking with electronic signature capture, rich media demonstrations and master data sets. As a testament to the technology, the company has snagged mega customers, such as Eli Lilly (LLY), Gilead Sciences (GILD) and Merck (MRK).
So to learn more about Veeva, I had a chance to interview the company’s co-founder and CEO, Peter Gassner. He has more than 20 years’ experience in the tech industry, having served at top positions for companies like IBM (IBM), PeopleSoft and Salesforce.com (CRM).
Here’s what he had to say:
Q: How was the roadshow, and what were some of the common themes from investors?
A: The roadshow was a great process, and the cloud story resonated with investors. It’s something they know very well.
But what really piqued their interest was the fact that we are not only a high-growth business but also profitable. They wanted to know how we have been able to do this.
Q: So what’s the secret?
A: We are a new kind of company. Our business model is to be industry-specific. We call this the “industry cloud.”
For us, the first part of making this work was finding a large industry, which life sciences is. The market generates annual revenues of about $1.7 trillion. So we saw there was lots of room for growth.
Then, from the start of our company, we believed the cloud would be the best approach. But it was not just about managing information and workflows — the real value was data. It would help make our customers much more competitive.
Q: And the latest for your data effort is your Network product?
A: That’s right. We think it is revolutionary: The Veeva Network provides for a single, accurate data record of healthcare professionals and organizations. It covers such things as demographics, license information and affiliations.
Many companies already individually collect this kind of information. But with our platform, we can provide a better solution, which is constantly being updated.
Q: I can see how all this helps with growth. But how has it also helped with profitability?
A: With the industry cloud strategy, we have benefited from the word-of-mouth in the industry, [which] has meant much lower sales and marketing costs. Ours are only 18% of sales versus over 50% for the typical cloud company.
Also, by having strong domain expertise, it means we have a much better idea of what to build for our customers and to better solve their problems. I like to say: “We know exactly what to build and who to sell to.”
Q: You certainly have a great background. What are some of the lessons learned along the way?
A: At IBM, I learned the fundamentals of computer science. I was surround by some of the best engineers in the industry.
Then at Peoplesoft I learned about leadership and customer success from the CEO and founder, Dave Duffield. By the way, he went on to create Workday (WDAY).
As for Salesforce.com, I joined the company early on and saw the power of the cloud.
But it has been with Veeva that I’ve learned the most. This is the first company I founded and the first time I’ve been CEO. I’m always learning from my customers [about] how to serve them better and fix their problems.
Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.