Constant Contact Updates IPO Filings, Acknowledges Employees’ Bad Blog Behavior

9/13/07

Seeking to raise nearly $70 million, Waltham-based e-mail marketing firm Constant Contact yesterday outlined terms for its upcoming IPO. Today, in response to our queries, the company acknowledged a bit of bad blogging behavior on the part of some current and former employees during the run-up to the IPO.

Constant Contact outlined its expected terms for the deal in an amendment filed with the SEC. At the mid-point of the stated $12 to $14 per share price range, the firm estimates it would net $68.8 million (after discounts, expenses, and the repayment of a $3.1 million loan) from the sale of the roughly 5.8 million shares that it is offering. A group of current stockholders is selling an additional 870,000 shares. The firm plans to trade on the NASDAQ Global Market under the symbol “CTCT.”

Founded as Roving Software in 1995, Constant Contact is backed by the likes of Greylock Partners, Morgan Stanley Venture Partners, Commonwealth Capital Ventures, Longworth Venture Partners, and Hudson Ventures. As of July 31, according to the filing, the firm had more than 130,000 customers (including Xconomy), the majority of them companies with fewer than 10 employees (including Xconomy). Each customer pays between $15 and $150 per month. In the six months ending June 30, Constant Contact lost $5.5 million on revenue of $21.1 million.

It remains to be seen how investors will like the looks of Constant Contact, but at least one blogger has his complaints. Darren Barefoot, founder and “Head Geek” of Vancouver-based marketing firm Capulet Communications, posted an unflattering review of his experiences with Constant Contact back in May of 2006, and other users piled on in the comments section. A year later, shortly before the firm filed for the IPO, a few suspiciously positive comments from purported Constant Contact customers popped up in the comments stream; Barefoot says he traced the comments back to Constant Contact’s own server, and he spotted what seemed to be another faux-customer endorsement in a comment on a recent TechCrunch article as well. I checked with Barefoot today to see if he had heard anything from Constant Contact since posting his suspicions a few months ago. “Nope,” he responded. “I was even a responsible blogger and emailed them a couple of days before I wrote the first post, to give them a chance to comment.”

We had a bit better luck, and were able to get through to Kevin Mullins, a spokesperson for the company. He acknowledges that the comments on Barefoot’s site were made by Constant Contact employees, but stresses that they acted against company rules. “They acted outside our corporate policy. They were disciplined, absolutely. And obviously, we educated them about the proper way to blog and to fully disclose who you are. We believe in being honest and up front about who you are.” The comment on TechCrunch was done by a former employee who had left Constant Contact around a year earlier, Mullins says. “At the time of the posting, he was not an employee of Constant Contact,” adding that the person was not acting under the direction of Constant Contact. Why would a former employee would go out of his way to praise a company he had left? “He still has that passion,” Mullins says.

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  • http://www.lauraleecoles.com Laura Lee Coles
  • http://www.lauraleecoles.com Laura Lee Coles

    Well, here it is 2008 and employees of Constant Contact are playing games again. I registered to test out the site for myself, and Vancouver, BC non-profits. And, I get this immediate phone call. I tell the guy I want to use the 60-trial to see how the service works before I “sign-up”. Then the next day my access is blocked. So, I asked why they did that. I get another call, same guy, while I am driving, and he argues with me that I entered the info wrong. I told him to call me back in an hour as I was driving. No phone call. The next day I decided to enter my password the way he said I had set it up and WOW, THEY DEACTIVATED MY 60-DAY FREE TRIAL.

    Now, I have started searching the net for other complaints.

    I would say that a company that has employees that take everything personally, and then blocks use of an advertised free trial because the VERY NEXT DAY someone won’t sign up, well it speaks for itself.

    Talk about false advertisement, bait and switch practices or what????

  • Sun Tzu

    I went through with signing up and trying to use their service, however Bob McIlwin the “Customer Service Manager” decided that they would not send anymore of my emails because I exceeded 1 opt out in 1000 emails sent. Are you kidding me .001 percent error rate for sending emails. This guys just makes stuff up and screws over customers at will. Sad thing is that the company would even do any about this guy. Horrible customer service!!!!!

  • PA Walker

    Thanks for the info. I don’t need their aggravation or failure to fix processes.