So You Want to IPO – Tips From an Investment Banker
The following notes come directly from a recent talk given by leading investment bankers in Silicon Valley. The topic was — how to prepare for going public. With Twitter’s recent announcement that they have filed for an IPO, the timing was right to share these insider tips. The information was presented to a small group of executives at high-growth technology companies. The meeting was invite-only, but the lessons are valuable for every entrepreneur.
The session covered a wide range of IPO preparation topics and the following is a synthesis of the key themes and most important advice. Our team at Aha! — the new way to create brilliant product roadmaps — has worked at numerous pre-IPO and public companies and the advice rings true, no matter the stage of your company’s growth.
It is a journey Building a sustainable business takes hard work and time. The IPO process itself takes about 18 months. It is not a sprint, but rather a long adventurous trek. And because it is a complicated journey your company needs to stay focused and keep driving the business forward. Continued growth during the process is a requirement. You should start 18 months prior to when you think you will be ready to go public, mapping out the required steps and your marketing cadence, so that you can continue the same level of activity during the IPO quiet period (e.g. increase your blogging now, add more product announcements, expand the number of executives who act as company spokespeople, speak at thought-leading conferences, etc.).
Look in the mirror and know who you are Have a really strong sense of who you are as a company before you start this process. This is fundamental because, as mentioned, it is a journey. And you and the team are going to be stretched. It needs to be easy to communicate about who you are and what you stand for as company. You need a short company story (one paragraph) that is relevant for everyone and custom messages for analysts, investors, customers, and employees.
Go team You may think the IPO process is mostly about accountants and lawyers, but it is actually a team sport. Marketing and corporate communications must be involved early in the process and work closely with the CEO, CFO, and legal teams. In a number of recent IPOs, the marketing team actually led the process of writing the full S1 draft. This allowed the best storytellers in the company to work through the narrative. So when the team started on the official S1, a lot of the content was aligned with the key messages and well drafted. Because the process is long it is best to make getting ready for the IPO a cross-functional endeavor. And if you do, be clear on roles and responsibilities from the beginning.
Love your employees Employees make your business go and you should assume that they will learn about the IPO plans even if the information is not widely shared at the beginning of the process. So, be transparent with your entire team and explain what they can and cannot talk about. Give them a clear role in the process, even it if it is just the fact that they have insider knowledge about it. You should have a clear internal communications plan as a component of your overall plan. But make sure the company is focused on growing the company and delighting customers. That is what made you successful in the first place and will ensure continued post-IPO greatness.
Those crazy competitors Your competitors (the big threatening ones and all the ankle-biters) will likely see your news as an opportunity to tell their own story. And if they are crafty, they will be heard. Plan for this. Write down what they will likely say, so you are prepared when it happens. But whatever you do, do not put out a press release or forcibly seek press or analysts ears to refute their claims. Just have a clear story and a simple way of explaining your point-of-view in a non-defensive way. Make your point and transition the conversation back to your story and what you do well.
It is too bad that we cannot review Twitter’s S1 yet, but that’s because the company’s annual revenue is less than $1 billion. Usually when companies announce plans to go public, they have to file an S1 — the securities filing that companies use to provide details about their planned initial public offerings. However, companies with less than $1 billion in revenue can file confidentially.
Regardless, it is likely that they followed many of these tips along their own journey.
If you are looking to build software and a company that matters, use Aha! to build brilliant product roadmaps. We cannot guarantee that you will IPO, but we can promise that you will get your product management mojo back and customers and engineering will love you.