REDWOOD CITY -- Rocket Fuel landed on Wall Street with a full tank of new cash Friday, and shares exploded after an initial public offering that valued the ad-tech company at nearly $1 billion.

Rocket Fuel announced the sale of 4 million shares Thursday night for $29 -- the top of a range that had already been increased -- producing a total take of $116 million at a valuation of $942.5 million. That wasn't nearly enough for investors, however: The stock opened Friday morning just before 8 a.m. Pacific time at more than double the IPO price, $59.95, and traded in a range from $54.51 to $62.50 before closing at $56.10, a first-day "pop" of 93.5 percent.

The Redwood City enterprise software firm is among a small but growing number of companies in the so-called "Salesforce Mafia," having been launched by a former official at Salesforce.com.

CEO George John spent three years at Salesforce, overseeing software analytics to help the company capture more revenue. In 2008, he founded Rocket Fuel with the goal of making online advertising work better via the cloud.

'We were pretty confident" that investors would react warmly to the stock offering, John said -- though he admitted that hadn't been the case earlier this summer when several other advertising-related companies went public with middling results. What sets Rocket Fuel apart, he said, is artificial intelligence software that has its roots in John's and co-founder Richard Frankel's earlier careers designing spacecraft for NASA.


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Salesforce CEO Marc Benioff sparked the tech industry's current "Software as a Service" craze by replacing traditional customer-relations management software with cheaper online alternatives. Other companies launched by Salesforce alumni using a similar model include online security startup Okta and SlideRocket, a cloud-based competitor to Microsoft's PowerPoint that VMware acquired in 2011.

"These emerging software companies that are delivering into the enterprise space are bringing disruptive technologies," Bryan McLaughlin, a partner at PricewaterhouseCoopers who advises startups on the IPO process, explained earlier this week.

John learned about more than technology at Benioff's knee: He's borrowed liberally from the zany Salesforce culture, instilling a "chief love officer" at Rocket Fuel and offering kayak rides for employees.

The company's venture capital backers include Mohr Davidow, Nokia Growth Partners, Labrador Ventures and Northgate Capital. Mohr Davidow is the only one of those firms that's selling shares in the IPO, but it's still retaining a third of Rocket Fuel's stock -- making it by far the company's largest stakeholder.

Rocket Fuel's big-data software helps digital advertisers target their marketing dollars more effectively. The company doubled its revenues to more than $100 million in 2012 and raked in nearly as much in the first six months of 2013 -- but the it also has a history of losses.

To turn that around, Rocket Fuel said in its SEC filings that it will invest part of the stock offering's proceeds in research and development, sales and marketing and back-end infrastructure.

Wall Street seemed to like the idea. After initially planning to sell its shares between $24 and $27, Rocket Fuel this week hiked that range to $27-$29.

Contact Peter Delevett at 408-271-3638; follow him at Twitter.com/mercwiretap. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/jowens510.