Did Brexit come into Trustpilot’s IPO plans at all? Not really, says Derek Brown, head of IR at the Copenhagen-founded company that went public in London in March 2021.
Brown, who joined Trustpilot in November 2020 to take it through the listing process, says that while much was made of the Brexit effect when the company listed, ‘it didn’t really feed into our calculations and we certainly weren’t trying to make any political point by going public in London’.
Instead, London simply made sense. Too big for some of the other European bourses, too small for the US and with the UK as its biggest market, Trustpilot found its Goldilocks of listing venues in London. The City’s strenuous listing requirements also tie in with something close to the heart of Trustpilot: transparency. In fact, that was another reason to go public in the first place, notes Brown.
‘When you go public, you open yourself up to a lot more regulation and scrutiny – particularly in London,’ he explains. ‘And we welcome that. It’s a big plus for us in terms of our consumer brand: we’re public now – here are our reports and accounts, our sustainability report and transparency reports.’
Part of the Brexit fuss was also, no doubt, that Trustpilot was a company with choices. The company is interesting not only because of how fast it has grown – and the ‘viral network effect’ that fuels that growth – but also because of what it does, allowing people to review essentially any company or service. Trustpilot is a firm that sells software to businesses, but it is much more than that. It is a consumer brand, too.
‘If you walk across London, you will see Trustpilot emblazoned on the side of a bus or on a billboard,’ Brown says. ‘You see it on posters on the London Underground. If you watch television in the UK, you’ll see Trustpilot banners at the end of TV advertisements.’ He points out that this was another factor in choosing London as the company’s listing venue.
A messaging challenge
While this duality is a big part of the firm’s success story, Trustpilot’s business model also created challenges when it came to prepping the IPO. ‘The messaging was a challenge,’ Brown recalls. ‘We needed to explain to people why they should be excited about this investment opportunity.’
But no one had researched the market for online reviews and the firm needed research to populate its prospectus. ‘We employed a firm of consultants and had it go off and define the market to figure out what it could be worth over time – and in a detailed way,’ Brown says. ‘We were able to offer some useful insights for people.’
That challenge continued into the coverage universe, too. ‘From an IR perspective, no one had ever seen a company like Trustpilot before – we were trying to explain the business but also trying to work out who to talk to in the analyst community,’ recalls Brown. ‘Is it software analysts, is it consumer analysts – or a combination of the two? That did affect coverage.’
The company was also following an ‘aggressive’ timetable for its listing, adds Brown, conscious of what he says was a ‘frothy’ IPO market at the time: ‘We were aware of one or two companies we thought might find it quite tricky to get IPOs done – and we wanted to get out ahead of them.’
He also points out that simply taking a private company – with a ‘private company mentality’ – into the public market is a challenge in itself, with Brown having to deal with everything from building an IR website to educating people about what it actually is that investor relations does. ‘We faced challenges and we overcame them,’ he says. ‘It was quite exhilarating when we got to the end of all that and finally went public.’
So what advice does Brown have after ‘all that’? ‘To anyone contemplating an IPO, I’d say: make sure you have the best advice possible – and listen to that advice – but make sure you’re in control of the processes and of the messaging,’ he says.
This article originally appeared in the Spring 2022 issue of IR Magazine.