Two years since WebFilings launch, CEO says it’s pulling the market
Founded in 2008, WebFilings develops and markets a cloud-based application dedicated to meeting SEC reporting requirements.
In the 1990s, Rizai led Engineering Animation Inc. (EAI), which went public in 1996 and has since morphed into other entities. Today, his exacting focus is on scaling WebFilings, the company he built in 2008 with trusted key players from his EAI days.
"Our management team is one of our competitive advantages. All of us have done startups. Since we had worked together before, we could do it in a focused way, we could trust each other. We have a very deep bench," Rizai (left) said.
"At EAI, it took us three or four different markets before we figured out what we were really good at. To be able to find the right technology platform that fits with the right product and in the right market is a huge deal," Rizai said about hitting the mark with WebFilings.
After launching WebFilings, a cloud-based financial reporting software, in March 2010, Rizai predicted that two years later it would be pulling the market.
"That's happened for us. Now we are getting the calls instead of us reaching out to our potential customers," Rizai said.
'A conductor leading an orchestra'
WebFilings allows users to create and edit documents in a word processor environment tuned to the needs of accounting professionals (top). The product also features spreadsheet creation and editing capabilities (bottom).
WebFilings is a privately-held Los Altos, Calif. and Ames, Iowa-based company that sells subscriptions to companies – such as Best Buy, Coca-Cola and Groupon – for its proprietary software.
The company aims to make more tolerable work out of meeting strict U.S. Securities and Exchange Commission (SEC) reporting requirements, a high-level collaborative process often fraught with legendary hassles – even for seasoned corporate teams.
"It gives flexibility and value. It's less expensive than using a financial printer," Evans said. "I think the SEC would like to see (reporting) go as electronic as possible. I do not see this trend changing."
Sackett explained that in the past, corporate officers would collaborate to get the SEC reporting done, but without integrated systems. Sackett said competitors like Bowne & Co. (acquired by RR Donnelley in 2010) and Merrill Corporation trailed WebFilings in terms of riding the recent technology wave.
"(RR Donnelley and Merrill) have been reactive to what WebFilings has done," Sackett said.
"It was well-timed because with the new (business reporting language) they took these hyper-technical reports and made them more informative and user friendly – and in some ways a bit more uniform," Sackett said.
WebFilings enables companies to submit regulatory and compliance reports, such as 10-Ks, 10-Qs and the recently-mandated XBRL instance documents, directly to the SEC.
The 'poster child'
"WebFilings is a great Iowa company that really is the poster child for all startups," said Debi Durham, director of the Iowa Economic Development Authority (IDEA), a state agency that supports business and community development in the state of Iowa.
"WebFilings is a great Iowa company that really is the poster child for all startups." - Debi Durham, IDEA
"We have been able to participate in helping this company grow using a continuum of programs – from supporting early-stage proof of concept activities to the more traditional job creation and capital investment initiatives," Durham said.
Since 2009, IDEA has awarded WebFilings more than $3 million in direct assistance, through programs such as the Iowa Values Fund and Demonstration Fund, and has granted it tax credits through the High Quality Jobs Program in the amount of $2,515,380. In WebFilings' last funding disclosure, which was a part of its $12.5 million Series B round in October 2010, it reported that its total financing since inception was $24 million.
"Now, WebFilings is a growing, innovative company that is on its way to becoming a major employer in our state," Durham said. At the end of 2010, the company had 75 employees. Today, it has 350, with roughly half of them in its Iowa office.
A privately-held company, WebFilings keeps its earnings quiet. "We're exceeding our (financial) projections," Rizai said.
Regulatory relief bills that currently appear in Congress, some of which aim to exempt smaller companies from the mandatory requirements laid out in the controversial Sarbanes-Oxley (SOX) Act of 2002, could have an effect on WebFilings' customer base.
"If the reporting threshold goes from 500 to 1,000, it will reduce the number of companies required to report, which of course reduces the number of prospective WebFilings customers," Sackett said.
"However, my sense is they've gotten the greatest traction with larger companies anyway, and the changes being considered in Washington will have far less impact on those companies. There have always been reporting companies and likely always will be.
Rizai wouldn't speculate on federal regulations, maintaining that his focus was growing his company.
"Number one, we're a software company, number two, we're a business-to-business software company and number three is that our approach is to become a relevant software company," Rizai said.
Packing 'critical mass'
As for growing the Silicon Prairie, Rizai says Iowa today has an improved business climate.
"Trust me, Iowa today is in bounds and leaps in better shape to attract technology companies than it was 20-25 years ago. The rural aspect of Iowa isn't that relevant anymore. It's not a matter of is the (business) in Palo Alto or a corn field, it's an issue of critical mass. WebFilings is going to pack more critical mass with our own company. I look at the (Ames) Research Park today and see that the buildings are full with companies. In 1990, when (EAI) took this space there was nobody around here," Rizai said.
"Twenty years ago, it was a rough, rough, going."
Even with earned success, Rizai remains vigilant.
"We haven't 'made it' yet. We have a long way to go before we can say 'we've made it,' " Rizai said. "Come back in five years and we'll talk about whether we made it or not. We have a lot of work to be done."
Credits: Screenshot of WebFilings website from webfilings.com. Photo of Matthew Rizai courtesy of WebFilings. Screenshots and descriptions of software courtesy of WebFilings.
Note: Danny Schreiber contributed to this story.