New IPO for Social-Network Software Has Jive Rivaling Salesforce.com: Tech

Jive Software Inc., planning to sell
shares to the public as soon as this year, is wagering that it
can outpace Salesforce.com Inc. (CRM) and Lithium Technologies Inc. in
luring companies to set up social networks.

Jive chose Morgan Stanley, Goldman Sachs Group Inc. (GS),
Citigroup Inc. (C) and UBS AG (UBSN) to manage its IPO, which may happen
this year depending on market conditions, people familiar with
the matter said yesterday.

The 10-year-old company is vying with bigger rival
Salesforce, startup Lithium and more than 100 software makers to
attract customers in a market Gartner Inc. predicts will surge
60 percent from last year to $1 billion in 2012. Jive will also
need to overcome the slump that’s forced at least 13 companies
to postpone or withdraw IPOs since the U.S. had its credit
rating cut by Standard Poor’s, causing market swings.

“The market space is very crowded,” said Jeremiah Owyang,
an analyst at research firm Altimeter Group in San Mateo,
California. Still, Jive and Lithium are the most important
startups in the field, he said. “Jive has become one of the
dominant players.”

Jive may be valued at more than $1 billion in its IPO, with
the company possibly selling a 10 percent to 20 percent stake,
one of the people familiar with the matter said. Ana Andreescu,
a spokeswoman for the Palo Alto, California-based company,
declined to comment, as did representatives from Morgan Stanley,
Goldman Sachs, Citigroup and UBS.

Sequoia, Kleiner Perkins

Founded a decade ago by Bill Lynch and Matt Tucker, Jive
has raised $57 million in venture funding from Sequoia Capital
and Kleiner Perkins Caufield Byers, the two firms that backed
Google Inc. Chief Executive Officer Tony Zingale joined the
company’s board in 2008 and became CEO last year.

Gartner estimates that Jive’s revenue more than doubled
last year to $70 million. Companies are bringing social-
networking software into their offices, following the surging
popularity of consumer applications Facebook Inc. and Twitter
Inc., as well as business-networking site LinkedIn Corp. Jive’s
software lets company employees collaborate on projects and
communicate with customers.

The software also incorporates analytical data that track
how customers are talking about and using a company’s products.
For instance, NetApp Inc. (NTAP), the maker of data-storage technology,
uses Jive to enable conversations about its equipment between
customers, partners and employees.

Pizza Hut

Yum! Brands Inc., owner of the KFC and Pizza Hut restaurant
chains, has its 6,000 corporate employees use the program to
discuss business initiatives. Nike Inc. and Cisco Systems Inc.
also are customers.

Salesforce, meanwhile, introduced its Chatter social-
networking software last year. It’s now used by more than 80,000
companies. To bolster its social business, the San Francisco-
based company paid $326 million in May for Radian6 Technologies
Inc., adding the ability to track what’s being said about
companies on networks such as Facebook and Twitter.

Microsoft, the world’s largest software company, isn’t a
direct competitor, though its SharePoint server programs let
customers’ employees create internal websites and collaborate on
projects. Microsoft could invest in the market and become a
bigger challenger to Jive at any time, said Altimeter’s Owyang.
It has more than $52 billion in cash and short-term investments.

Facebook Partnership

Microsoft also has existing partnerships with social-
networking companies, such as Facebook and LinkedIn.

“We believe that social networking can deliver real
business value for all kinds of organizations and we have made
investments to make this possible,” the Redmond, Washington-
based company said in an e-mailed statement.

Lithium, a startup based in Emeryville, California, says on
its website that ATT Inc., Barnes Noble Inc. and Best Buy Co.
are all using the company’s social software. The company helps
businesses work more closely with customers and, unlike Jive is
less focused on internal communication, said Lyle Fong, CEO of
Lithium.

Jive’s IPO may face other challenges. Until last week, 2011
was on course to be the biggest year for IPOs since 2007. Then
Standard Poor’s cut the U.S. credit rating on Aug. 5, leading
to a surge in market volatility. The Nasdaq Composite Index
moved more than 4 percent on four consecutive days, and
companies such as WageWorks Inc. and InvenSense Inc. postponed
their IPOs.

Jive is unlikely go forward with its offering unless the
market gets back to the “frothiness” from earlier this year,
said Sam Hamadeh, CEO of PrivCo, a provider of financial data on
more than 20,000 private companies. Instead, Jive is probably
setting itself up to be acquired, he said.

In Play?

“It’s more pressure to get the price up and try to get
people to know that Jive Software is in play,” Hamadeh said in
an interview from New York. “They’re an attractive acquisition
target, and I think Goldman and Morgan Stanley (MS) signed on to sell
this company.”

Still, Jive has taken steps to prepare for an IPO. In
March, the company added executives from Google, Facebook and
McAfee Inc. to its board. Google’s Sundar Pichai, Facebook’s
Jonathan Hilfiger and McAfee’s Dave DeWalt brought the total
number of directors to nine. DeWalt has since resigned from
McAfee, which is now part of Intel Corp.

Zingale said in March that becoming a public company would
improve access to capital for acquisitions and make Jive a more
visible competitor to Microsoft, International Business Machines
Corp. and Salesforce.

“We’re here to build the next great enterprise software
company,” he said in an interview when the board appointments
were announced on March 30. “The time was right to expand the
board and bring on this kind of expertise.”

To contact the reporters on this story:
Ari Levy in San Francisco at
alevy5@bloomberg.net;
Serena Saitto in New York at
ssaitto@bloomberg.net

To contact the editors responsible for this story:
Tom Giles at tgiles5@bloomberg.net;
Jennifer Sondag at jsondag@bloomberg.net

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