The $3.5 billion Australian tech firm Rokt is preparing to incorporate as a US company and pursue a 2024 Nasdaq listing, despite being mired in allegations of employee drug use and sexual harassment in its offices, which its chief executive denies.
Rokt’s founder and CEO Bruce Buchanan, who was previously Jetstar’s CEO, denied the allegations of employee wrongdoing in a statement to The Australian Financial Review, after returning from long service leave, saying they were “a mixture of falsehoods and mischaracterisations”.
Elizabeth Buchanan, chief commercial officer of Rokt, says she has been surprised by the litigious nature of doing business in America. Ann-Sophie Fjelloe-Jensen
The company is one of the most successful to emerge from Australia’s start-up scene, and now employs almost 600 people mostly across the United States and Australia. Its IPO was pushed back due to market conditions earlier this year, but is eagerly awaited by its early investors including Square Peg Capital, TDM Growth Partners, Lachlan Murdoch and Carsales founder Greg Roebuck.
The legal action against Rokt was brought by Georgina Milne, who worked as an executive assistant to Mr Buchanan and his wife, Elizabeth Buchanan, who is also the company’s chief commercial officer. It was a gender discrimination and disability lawsuit against the couple and the company filed in New York, last November.
Ms Milne’s lawsuit, which is now in arbitration after being discontinued by the New York Supreme Court on March 3, 2023, painted a picture of a company culture that tolerated “rampant illegal drug use” as well as “sexually aggressive comments” towards female employees.
She alleges she was unfairly dismissed for allegedly misusing credit cards, and that she wasn’t supported by the company following an epilepsy diagnosis.
ROKT CEO Bruce Buchanan is still planning to take the company public.
“We continue to defend against this meritless case on principle and stand by the original decision to terminate for cause,” Rokt said in a statement.
Ms Milne’s lawsuit also references a sexual harassment allegation brought by another staff member against three Rokt executives, in 2018.
This staff member alleged she had been discriminated against because of her gender and had suffered sexual harassment. The lawsuit was dismissed in 2019.
Any air of scandal would be damaging to Rokt’s IPO aspirations, but in an interview with the Financial Review, Ms Buchanan said the company had resolved to fight the allegations, rather than settle quietly.
“We weren’t about to let those who were making these accusations be paid off, which often happens here,” Ms Buchanan said.
“It’s hard for me as an Australian to understand how frequently companies are sued in the United States. But these allegations are wrong.”
Rokt has long had a reputation as a “work hard, play hard” outfit. The Financial Review has spoken with Sydney-based staff who described a high-performance culture that could turn “monkey-like” at the company’s annual global kickoffs that were held in places like Los Angeles.
“We pump out software, we ship things constantly,” one Sydney-based engineer said, on the condition of anonymity as they hadn’t been authorised to speak with media.
“And blowing off steam has been a big part of the company’s DNA. That definitely means big nights out, but it also means showing up the next day and working through the night if you need to.”
Rokt sells marketing and advertising software, with its main product helping online stores offer more sales at the checkout. For example, a Ticketmaster customer may be offered a deal on car parking as they are paying for concert tickets.
It is also expanding its software into other areas related to payments.
The company has been open about its US IPO aspirations, and it had plans to already be a listed company, but was forced to push its listing back earlier this year after rising interest rates slammed the IPO window shut for high-growth software companies.
Ms Buchanan said Rokt has been whipping itself into shape for the public markets, which includes its lawyers preparing to incorporate the company in New York; moving it away from Singapore where it has reported its financial performance for the past three years.
It reported annual revenue of $US336 million for the 2023 financial year, and matched the market’s current distaste for cash-burning companies by swinging from an $18 million operating loss to a $13 million profit for 2022.
Like its fellow Sydney tech success peer Canva, Rokt has raised continuous venture capital rounds, often with side rounds to give employees chances to cash in their stock holdings.
As the IPO window dissipated last year, Rokt went back to the private markets for fresh funding. It completed a secondary share sale last December led by Tiger Global, which valued it at $US2.4 billion ($3.5 billion).
Melbourne-based Square Peg Capital loaded up on more stock in the sale, while it was also able to add US-based investment behemoth Wellington Management and Whalerock to its investor register.
As part of the pre-IPO planning Rokt also been on a hiring spree, soaking up some engineers jettisoned in waves of Amazon and Microsoft redundancies.
The company has opened a new office in Seattle, where the bulk of Microsoft and Amazon’s former staff are housed. Rokt now has offices in Sydney, New York, Seattle, Tokyo, Singapore and London.
Rokt recently hired leading Amazon executives Bill Barton and Srishti Gupta as chief product and engineering officer, and chief product officer.
Ms Buchanan said engineers from the major US tech giants are heading to smaller players like Rokt to escape the downsizing atmosphere and secure better equity packages.
Since inception, Rokt has paid out $US17.5 million ($27 million) to staff, which owns about 29 per cent of the company.
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