Many entrepreneurs dream of taking their companies public. But navigating their company through an initial public offering, or IPO, is just one test they face.
A successful IPO might be the ultimate goal. But getting there first takes crafting a solid business plan, training and motivating employees, and growing a startup into a viable enterprise.
It's important to note, though, the skills that founders need to lead a startup may not necessarily translate into the skills required to transition into a public company.
"During the IPO process, a lot of forces will push you to be something you're not," said Rajeev Goel, co-founder and chief executive of PubMatic. In an effort to woo investors, some entrepreneurs might set unrealistic goals and "claim they can achieve numbers that are too aggressive," he adds.
Goel, who led his advertising technology company through an IPO in December 2020, says that it takes unshakable confidence to manage an IPO. "You have to be comfortable with who you are and what got you where you are as a company," he said.
To pull off a smooth IPO, prepare to make high-stakes decisions and tackle a host of new tasks. How do you stay one step ahead?
Embrace Brevity For IPO Goal
After an IPO, the way you communicate will affect your effectiveness. If you speak clearly and concisely — and support your assertions with cogent facts and evidence — you're more apt to persuade investors and other key players.
"In quarterly earnings calls, I have 10 minutes of prepared remarks," Goel said. "My goal is to get all the major themes out in that time. It's the highest bar in terms of being succinct."
Coordinate Your Message
The chief financial officer must work seamlessly with the CEO to reinforce key points in earnings calls and other investor communication. Goel and his CFO work together on consistent messaging.
"In the first couple of quarters (after going public), we started crafting a narrative and kept iterating," he recalled. After his 10 minutes of remarks in earnings calls, his CFO talks for about seven minutes before they take analysts' questions for 40 minutes. So anticipating analysts' queries and planning concise replies pays off.
Delegate Wisely To Reach IPO Goal
An IPO is a consuming goal. It's going to deplete your time and energy, so prepare to delegate.
"During the IPO process, which can be nine months or longer, half or more of your time is pulled away from running the business," Goel said. "The business can go sideways, so you need to have a good team so that you as the CEO can run the IPO process" while your lieutenants manage day-to-day operations.
Fill Expertise Gaps
You probably can't master every aspect of an IPO on your own. You'll want to assemble a team of trusted advisors — and know when to heed their input.
"I've benefited from good advisors who see things I don't see," said Lane Bess, former chief executive of Palo Alto Networks who led the company on the path to its successful 2012 IPO. "I've surrounded myself with advisors with a diverse set of skills" that complement his strengths.
Be Open To Change On Road To IPO Goal
Meticulous planners may find IPOs vexing. That's because unpredictable events can sink the best-laid plans.
"You need to have a strategy and a plan that supports it," said Bess, now chief executive of Deep Instinct, a cybersecurity firm. "But there's a lot of variability that exists on the path to an IPO."
As good as a plan is, shifting currents in capital markets or other last-minute disruptions may upend it. So gird for changes along the way.
