“If your dreams do not scare you, they are not big enough.” That was Ellen Johnson Sirleaf, at Harvard Commencement 2011. She was the first elected female head of state in Africa and if you’re going to be first at something, it’s going to be a little scary. Big dreams are scary. They require tedious work, dedication, and most of all, vulnerability.
As a SaaS operator, I’m sure you have personal, team, and company goals. If done properly, each of these aspirations serves one another eventually leading to prosperous outcomes for all. When everyone’s aligned this can often be when your company is ready for an exit like going public. And while you won’t be the first to go public, it’s a pretty exclusive club.
Today’s guest, Eugene Levin, president of SEMrush. As a gold medalist in capitalism, Eugene has valuable insight into what it takes to get to the top of the podium. He gave us an inside look at the nitty gritty process, as well as advice that you don’t typically get to hear. Listen on and hopefully by the end of this you might feel more comfortable with those big, scary dreams.
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But once I got to the New York Stock Exchange, [I] felt very, very relieved, and I was like, 'yeah, that was totally worth it...'”
Initial Public Offering (IPO)
An initial public offering, or "going public," refers to a private company making its shares available to the public for the first time. And by offering shares through the primary market, it gives companies the opportunity to gain capital.
Schedule a time to meet with your leadership team to discuss whether an IPO is right for your company.
What to do next:
If you've determined that going public is the right path for your company, you now need to develop your IPO strategy and begin the complex preparation process to ensure that you meet the stringent criteria in accordance with the Securities and Exchange Commission (SEC).
Furthermore, aside from the preparation for the technicalities associated with the requirements and regulations of going public, part of this process should include preparing your leadership team (and all of those directly involved), both mentally and physically, for the demands this process will include.
The road to IPO is time consuming and expensive, so companies embarking on this journey should have a high level of confidence that it will happen. Our guest, Eugene Levin, knows firsthand what it takes to get there, and he explains the three biggest steps in the preparation process, which we share below.
Step 1: Craft your company story
Many underestimate the importance and power of your company story. But the sooner you can solidify it, the better — for many reasons. However, shaping your story is not as easy as it sounds, and it's likely that you'll need a bigger team involved. Make sure that by the time you start talking to investors, your story makes sense and that there's evidence that the story is happening. Based on how investors understand your story is how they'll base their questions and conclusions.
Work internally but also get advisors, including bankers, as they can help shape your story in a way investors will understand.
If your macro thesis is sound, move on to numbers.
Every company is unique, but keep in mind that most investors do focus on numbers and the long-term outcome.
Answer the tough questions thoroughly and honestly.
Ensure that there are no holes in your story.
Step 2: Ensure all company systems/processes are in order
The next big step is to ensure your company is operating properly and is compliant across the board. Be sure to check all departments for efficient and productive processes.
Conduct a company audit
Ensure all systems are in place
Though you don't need to be fully compliant at the date of the IPO, you'll need to be soon after. Because this is such a time-consuming process, it's in your best interest to start as soon as possible.
Step 3: New composition of your team (as a public company)
As Eugene explains, "The level of accuracy that is tolerable for a private company is not tolerable for a public company." The stakes are higher, so the investments you make in new systems, new roles, and people you hire are more crucial than ever.
A whole team for financial planning and analysis (FP&A)
Hire top-notch talent
As a public company, the people you hire to fill any critical role, including the ones mentioned above, will be scrutinized.
Accounting roles will be some of the most affected once you go public as their work life will essentially be run by legislation. They'll have more deadlines and legal reviews, etc. So hiring the right people for the role, is imperative.
One thing to take away is that whether or not you think you might want to take the road to IPO one day, following these steps from the get-go is simply smart and good for business.
What to do next?
As mentioned, the process to IPO is intricate and long. So the sooner you get started on these three steps the better. As with anything, you'll want to review and iterate to ensure there are no holes left before moving on through the process.
These three initial steps that Eugene explains are only part of the process of preparing to go public. As he mentioned, depending on your company and how much from these steps you may already have in place, the time to IPO may be more or less than the average two years.
Who should own this?
Your leadership team/s.
Who's up next week?
Next week, Arvid Kahl gets into building in public and what vulnerability-based marketing means.
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