A roller coaster ride to a new era
ivet Software, the Denver provider of financial reporting software, is banking on its newly announced management and strategy overhaul to turn adversity into victory. In what the company is calling a “sweeping strategic restructuring,” executives are counting on the changes to overcome a tumultuous history marked by manic highs and disappointing lows.
"It's a thrilling time for Rivet, a rebirth of sorts," says Madelaine Rohan, the company’s new CEO. Rohan, the wife of founder and former CEO Michael Rohan, has been running the company as acting CEO since the death of her husband last July. That role has now become permanent.
Other management changes include the appointment of Scott Calvert as Chief Revenue Officer, Chris Hoar as Chief Visionary Officer and Jordan Woodard as Director of XBRL Business Development. A new Chief Technology Officer will be announced soon.
Rivet Software offers web-based collaborative financial reporting tools. Its cornerstone product, Crossfire, is a web-delivered document management and SEC filing platform. It allows teams to collaborate simultaneously in Microsoft Word to produce financial statements required by government agencies. Businesses use it to file HTML and XBRL-based reports directly to the SEC from a single source document.
The saga of Rivet Software has all the drama and turns of fortune worthy of a Charles Dickens novel. It is also a classic story of competitors battling in a niche market that in the end can probably sustain only a limited number of winners. To fully appreciate the challenges that the new Rivet executives face, some history is in order.
IN THE BEGINNING
In the beginning there was EDGAR. In the mid-1990s, the Securities and Exchange Commission introduced the Electronic Data Gathering, Analysis and Retrieval initiative, a reporting system that public companies must use to send financial data to the SEC. As of 1996, all public domestic companies were required to submit their filings to the EDGAR database, which in turn could be viewed by the public on the SEC's website.
That regulation created a huge opportunity for ambitious entrepreneurs eager to provide electronic data processing services to businesses required to file SEC documents. Between 1996 and 2009, the cumulative number of filings grew from 300,000 to more than 4 million.
Initially, most companies keyed in their data manually, until the system was revamped to accept HTML and PDF files in the latter part of the 1990s. But the real revolution came in the early 2000s with the emergence of XBRL (eXtensible Business Reporting Language), an XML-based tagging language for financial documents. The popularity of the specification grew so rapidly that by the end of the decade, the SEC would issue rules mandating all public companies to provide their financial statement information using the XBRL standard.
The new SEC rules, officially invoked in January 2009, triggered a gold rush among companies seeking to provide the necessary tools and services to file EDGAR documents in the new format. Among them was Rivet Software.
Rivet was founded in 2003 by Michael Rohan and Emily Huang, who worked with Rohan at a previous software company.
With Rohan at the helm, the company grew rapidly. In early January 2009, with the new SEC rules in place, Rivet was poised to take full advantage of the new filing requirements. That year, the company says, a quarter of all Fortune 500 companies filed their documents using Crossfire, Rivet’s new SaaS-based financial reporting platform. Before long, the company ballooned from about 40 employees to nearly 500.
THE BEST OF TIMES
In early 2010, Patrick Quinlan, the company’s president since 2009, was promoted to CEO, replacing Rohan, who continued as Rivet’s Chairman. Optimism ran high as the company braced for increasing business in the wake of the SEC requirement to use XBRL.
"Rivet Software is poised to capitalize on this increasing need for reliable XBRL solutions,” Quinlan said at the time, “and I am greatly looking forward to leading the company to further growth as the organization's CEO."
But Rivet was not alone in the race to provide XBRL services. Other fish were lurking. Big fish like printing giant RR Donnelley, as well as smaller ones like EDGAR Online, were not about to concede the XBRL marketplace without a fight.
Donnelley in particular was anxious to jump on the XBRL bandwagon through its Financial Services arm. As early as 2006, Donnelley had partnered with EDGAR Online, a Rivet rival that was also pushing its XBRL financial filing solutions. The two companies extended that relationship in 2008, allowing Donnelley to continue offering XBRL services using EDGAR Online technology.
Rivet, however, did not escape Donnelley’s attention either. In July 2010, Donnelley — perhaps hedging its bet on EDGAR Online — made an equity investment in Rivet Software, sealing a partnership in which Donnelley would use the Rivet Crossfire Platform for its document processing business.
The Rivet-Donnelley partnership yielded considerable success. In 2010 and 2011, the company says, Rivet completed more XBRL filings than any other software on the market.
Rivet was on the rise in 2011. The company was getting a lot of flattering media attention. In May of that year, Gov. John Hickenlooper visited the company and spoke with employees. A video of the governor praising Rivet as "the most exciting and innovative company in Colorado" was posted on the company website.
The Colorado Technology Association crowned Rivet as its 2011 Technology Company of the Year and executives were ecstatic when their company made the Inc. magazine 500 list in both 2011 and 2012. In fact, the company financial statistics were nothing short of spectacular.
According to Inc.’s 2012 results, Rivet ranked 168th on its top 500 list, with a jaw-dropping three-year growth of 2,011 percent — from $1.6 million in revenue in 2008 to $34.2 million in 2011. That’s not a typo; the percentage gain (2,011%) matching the year (2011) was either sheer coincidence or divine providence, depending on your faith.
But providence notwithstanding, clouds were gathering over Rivet.
THE GATHERING STORM
In 2010 the XBRL marketplace was still a relatively exclusive club. An Ernst & Young analysis that summer of 1,250 issuers of XBRL documents showed this breakdown of the vendors that processed them:
|R.R. Donnelley (Rivet/EDGAR Online)||34%|
|Bowne (Bowne Tagger)||25%|
|Edgar Filings (EdgarizerX)||13%|
The players were in a tight race and some consolidation seemed inevitable.
Then suddenly, as 2011 came to an end, Rivet announced that Quinlan, who had been the company’s CEO for less than two years, was out. Rohan, the company said, would return to his role as CEO while Quinlan would serve in an advisory capacity during a transition period.
It was the beginning of some difficult times for Rivet.
As reported at the time by the Denver Business Journal, the announcement did not state a specific reason for Quinlan's departure, but did say that "Rohan's return reflects the changing requirements of SEC filing companies as their needs shift from services-based XBRL training and implementation into more robust software solutions that provide more control over the entire closing and financial reporting process."
Today, Quinlan is CEO of Convercent, a Denver firm that provides cloud-based culture and compliance software.
Whatever the reasons for his exit, things got rocky following Quinlan’s departure. Fourth quarter 2011 statistics showed some erosion in Rivet’s market share. In fact, a number of XBRL service providers were losing market share to WebFilings, an upstart Iowa company offering cloud-based collaboration tools for business documents.
Then the other shoe dropped.
In May 2012, RR Donnelley announced it was acquiring arch-rival EDGAR Online and ending its partnership with Rivet. It was a devastating blow. Until then, Donnelley had been using both the Rivet and EDGAR Online platforms to service its customers. Now, they would rely exclusively on EDGAR Online technology.
The EDGAR Online acquisition was finalized a few months later on August 15. Despite the setback, Rivet continued on under Rohan’s determined leadership. And then, more bad news.
On July 12, 2013 — less than a year after the EDGAR Online merger with Donnelley was finalized, and just days after the announcement of a new release of Rivet’s Crossfire product — Michael Lacy Rohan died during a visit to his home in France. He was 67 years old.
The death of the company’s founder and longtime leader was yet another arrow in the hearts of employees and supporters who had already withstood a number of unexpected hurdles.
A NEW START
A company that has endured as much adversity — and demonstrated as much perseverance — as its erstwhile founder is not going to fade easily. Now led by his widow, Madelaine Rohan, Rivet Software has wasted no time in rebuilding.
Partnering with a consortium of private investors, the company has new funding and the newly-minted executive team has detailed plans to put the firm back on the path to success.
“With the recent infusion of capital and intellectual investment, along with our extensive restructuring, we’re now able to fully capitalize on the opportunities that Mike envisioned,” Ms. Rohan says. “This is a new era for a renewed company.”
The company has already announced a new version of its Crossfire software that features more efficiencies in filing, improved analytics, and greater ease of use. And the new CEO has outlined detailed goals for the future:
- Accelerate client adoption by scaling up recent competitive displacement strategies.
- Re-invent reporting solutions that improve the way companies, investors and government agencies create, consume and manage financial information.
- Consistently enhance the customer experience by providing an intuitive user interface.
- Continue the creation of cutting-edge technology for financial analysis and reporting.
- Aggressively recruit highly-talented and experienced professionals and advisors.
- Strategically align with key partners.
- Improve operational efficiencies through lean methodologies.
"The purpose of restructuring Rivet is not to stray away from Mike's original vision of transforming financial communications,” says Ms. Rohan, “but to reposition the company for further success and add the necessary resources to fulfill his vision."
Ms. Rohan is no stranger to the rigors of the software industry. She was director of software globalization for FRx Software Corp., a company that her late husband founded prior to Rivet and later sold to Microsoft Corp. in 2000.
Rivet's product roadmap, she says, will continue to focus on its collaborative Software as a Service (SaaS) platform and its “high-touch, scalable services model.” Adding engineering resources and expanding the product line will take Rivet to the next level, she says.
“It’s a thrilling time for Rivet, a rebirth of sorts,” Ms. Rohan says. Ironically, her husband used almost those exact words of encouragement after the devastating staff reductions in 2012: "Rivet is very much a success," he is quoted as saying. "This doesn't change Rivet's potential or what we've achieved or what we will be able to achieve in the future. This is really almost a rebirth for us."