KnowBe4 hits milestone as it goes public

The co-presidents of KnowBe4 rang the opening bell on Nasdaq Thursday morning, as the Clearwater cybersecurity firm launched its initial public offering.

Krish Venkataraman, co-president and chief financial officer, and Lars Letonoff, co-president and chief revenue officer, were at Nasdaq’s Times Square site for the opening bell ceremony.

The company’s stock began trading at $16 a share under the ticker symbol of KNBE.

KnowBe4, founded in 2010 by CEO Stu Sjouwerman, offers security awareness and simulated phishing platforms to train workers to become human firewalls to stop cyberattacks. It’s been one of the fastest-growing companies in the Tampa-St. Petersburg area, posting $174.9 million in revenue in 2020. With the backing of private equity investors, it was the area’s first technology unicorn, a designation for a company with a valuation of $1 billion or more.

The IPO sends a message about the local technology industry, Sjouwerman told the St. Pete Catalyst in an interview Thursday.

“From my perspective, it shows that the tech hub in Tampa Bay is alive and kicking and that starting a company here certainly is a competitive advantage,” he said. “ I encourage any other tech company to join us in expanding in Tampa Bay.”

Expansion opportunities

KnowBe4 is the fifth company Sjouwerman has started, but the first one he’s taken public.

Stu Sjouwerman

“Being public gives us international expansion opportunities, good visibility and good credibility. It also helps us with possible M&A. We are always looking at mergers and acquisitions and being public definitely facilitates that,” he said. “You can offer people a combination of cash and stock for an acquisition.”

KnowBe4’s corporate culture has been a contributor to the company’s success, the company said in a filing with the Securities and Exchange Commission. Sjouwerman said he considered that carefully in the decision to go public.

“We decided to continue our culture of radical transparency. Like a few other public companies, for instance, HubSpot, we are treating every employee as an insider. They are being trusted with corporate proprietary non-public information and we are expecting that to guarantee our corporate culture,” he said.

In addition, employees will be able to get KnowBe4 stock.

“As a public company you are able to do an employee stock purchase plan, or ESPP,  which enables employees as part of their monthly wages to get paid by stock. That’s an exciting new opportunity,” he said

Day One

KnowBe4 has been preparing to go public for more than year.

Sjouwerman said the process has gone smoothly, and he singled out Venkataraman and his team, who he said “worked their butts off” in preparation for the IPO. Sjouwerman called the IPO a great milestone.

“We’re super happy to be here but this is only Day One. There’s huge potential out there. There’s a $15 billion total addressable market, and that’s yearly. We’re excited to get back to work and start expanding,” he said.

Sjouwerman, who gives a video pep talk to KnowBe4 employees nearly every morning, had a special message for the workforce Thursday, encouraging them to keep their focus.

“The stock market does what it does. We should  focus on our objectives and key results and make our numbers, and don’t lose sight of what’s important, which is expansion,” he said.

Sjouwerman did not go to New York for the IPO launch. He stayed in Clearwater to do press interviews all day Thursday. But he had a video address for the national audience watching the opening bell ceremonies.

“Tens of billions of dollars are spent in cybersecurity but the number of data breaches is going up. Everyone can see what’s wrong with that picture.

“Organizations need a way to manage the problems and risks related to social engineering.

“Our mission today is the same as it was in 2010 when I started KnowBe4, to enable employees to make smarter security decisions. With over 37,000 customers and almost 1100 employees in 11 countries, today is the next step in our journey.

“I would like to thank everyone who helped us get here, that includes our loyal customers, our awesome Knowsters and our investors.

“It’s time to start ringing that bell now.”

The company is offering 9 million shares of common stock and some of its existing stockholders are offering 500,000 shares of common stock. Underwriters have been granted an option to purchase an additional 1.425 million shares at the initial public offering price.

Morgan Stanley, Goldman Sachs, BofA Securities and KKR Capital Markets are acting as lead bookrunners for the offering. Citigroup and UBS Investment Bank are acting as additional bookrunners for the offering. Baird, Canaccord Genuity, Cowen, Needham & Company, Piper Sandler and Truist Securities are acting as co-managers for the offering.