Eyeing to Go Public? Here’s What You Need to Know Before Your IPO

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There’s endless advice out there about the path to an initial public offering (IPO). I’ve contributed plenty on this topic in my co-hosted podcast Zero to IPO, where I equally enjoy sharing my experiences and hearing those of others. There’s no denying that everything on the path to IPO, including the famed Roadshow, is all-consuming and that we all benefit from advice here. But planning for life post-IPO and always having an eye on the bigger picture, even before you make your public debut, is also critical.

Here are a few key lessons and insights from my IPO-to-public-company journey:

An IPO is like high school graduation.

I often offer this expression to entrepreneurs: It’s not about going public; it’s about being public. Many founders get caught in the trap of looking at the IPO as an end goal. In reality, it’s just a stepping stone.

Think of your debut on NASDAQ or the NYSE (or LSE, etc.) as a milestone comparable to your high school graduation ceremony (I have to give credit to my co-founder Todd McKinnon for coming up with this analogy). When you walked across the stage as a teenager, you still had a lot of life left to grow into– and I’m sure you didn’t want your high school diploma to be your peak lifetime accomplishment. Similarly, when you ring the bell to open trading on your first day as a public company, you don’t want that to be the pinnacle of your career.

It’s a milestone moment in your company’s history, but there’s so much more that follows. The goal should always be scaling your company, hiring incredible people, and serving your customers in the best way possible. The only thing that’s different is that you are now a public company. The earlier you can internalize this mindset, the more successful you’ll be.

Keep in mind that many great companies grow to be much bigger after their IPO, with some extreme examples like Microsoft (with a market cap today of $2.16 trillion versus $777 million at IPO), Google ($1.8 trillion today vs. $23 billion at IPO) or even my company Okta ($32 billion today vs. $2.1 billion at IPO).

Keep your eye on the prize (and the prize is not the IPO).

When Todd and I were preparing for Okta’s IPO, we worried that our team, so focused on hitting goals, would start to get discouraged and distracted by stock prices and earnings reports. Since the company’s inception, we have always been very vocal about sharing our long-term vision of becoming an iconic tech company. But months, and even a year pre-IPO, it was critical that we continued to reiterate that message and keep the team’s focus on the bigger picture. Reinforcing this vision helped our team concentrate on our long-term plan and not get lost in the day-to-day minutiae and excitement.

This strategy worked well for us but it took a concerted effort to be consistent and continue to remind the team of their immeasurable impact on our company’s growth. Of course, we paid attention to earnings reports and stock prices but also continued building strong relationships with our customers, developing great products, and supporting our people. No matter what happens with your stock price on a day-to-day basis, this should remain your focus.

Responsibilities change over time.

While keeping your eye on the future is essential, be careful to avoid restricting yourself to a single path or set of responsibilities. Inflexibility might be the single biggest downfall for entrepreneurs. We learned this first-hand as we navigated Okta’s growth from startup to public company. At first, Todd and I found it difficult to part ways with what we had been doing since Okta’s inception. For me, that was directly interfacing with many of our customers, even leading some of our biggest customer pitches and giving contacts my personal cell number. Having started my career in sales and business development, it was hard for me to let go of this part of my role.

However, we learned that hanging onto our past responsibilities was not sustainable. Our initial lack of delegation in our early startup years led to some mishaps, such as low customer numbers and missed revenue targets. We learned the hard way that the leadership team’s roles naturally have to change if you want your company to grow. As a company matures, founders have to learn to let go of the day-to-day details of managing every corporate function. Instead, as author Stephen Covey once said, they have to keep the main thing the main thing. For me, that means hiring and developing the best talent, working with our largest customers and helping public market investors understand our current results and future plans as we continue to build and grow.

Many founding teams struggle with accepting these responsibility shifts– but you need to recognize the importance of delegating and hiring the best people to take over those areas of the business. When we brought on new, experienced executives to build out our leadership team and take over some of those responsibilities, it helped us change the company’s course.

Pivoting is part of the process

Another thing many business leaders don’t realize is that your target customer base might shift as your company matures, on the way to or even after you go public. It can be difficult for entrepreneurs and founders to accept this. Understandably, we often get attached to those early customers who helped us launch our businesses.

When we started Okta, we primarily sold to small- and medium-sized businesses that were moving to the cloud. More than a decade later, we now have customers that use our products in ways we couldn’t envision when we started the company, from government agencies to nonprofits and large enterprise companies.

Often, an IPO serves as a stamp of approval in the market. Many companies find that when they go public, new, risk-averse customers that didn’t want to take a bet on a smaller, private startup are now willing to buy-in. If we hadn’t been open to our customer base shifting, we would have missed out on many business opportunities and long-term growth.

Don’t get lost in the IPO

An IPO is a huge achievement. It takes an incredible amount of teamwork, strategy, coordination, and execution to pull one off successfully. Similar to any other company milestone, whether it’s a major product launch or an annual customer event, it’s one of the many pieces of the pie that make your company successful. The way we managed and scaled our business after going public was equally, if not more, important than the work we did leading up to that moment.

That is a lesson I could have only learned after going through the extensive IPO process myself. Be flexible, be forward-thinking, and continue to put all efforts into achieving your vision. Business leaders who are able to strike that balance will be successful long before they even ring the bell.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.

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