What I Wish I Knew Before The IPO

There are many paths to an IPO but nearly all culminate in a ten-day dash around the country known as the roadshow. During this process, a company’s leaders construct a coalition of shareholders and secure commitments from bankers and large institutions who plan to buy and hold shares before an initial public offering. Only, this year there was a pandemic. CEOs needed a virtual solution.

For Pierre Naudé and the team at nCino, whose long-planned IPO took place on July 14, that meant no ten-day tear of ordering takeout and changing suits in the rental car. “Suddenly you realize you’re not going to New York to ring the bell,” says Naudé. “It’s a mindset shift.” Instead, his bankers scheduled meetings over Zoom.

This year has been so riddled with change it makes last year feel like a distant, Arcadian past. What do new norms for health safety and social advocacy mean for teams now running public companies? And what will it mean for entrepreneurs considering an IPO?

Today, three CEOs who oversaw successful IPOs—Therese Tucker, CEO of BlackLine, Zander Lurie, CEO of SurveyMonkey, Pierre Naudé, CEO of nCino—share their thoughts and what they wish they’d known before.


You need a formal CFO and who you choose matters enormously

“I’ve been here for eight and a half years and for that entire time, we had the idea to go public,” says Pierre Naudé, founder and CEO. “And right as we planned it, COVID-19 disrupted it. Imagine. The VIX is up, the markets are crazy, and suddenly we realize what we really need to guide us through is a formal CFO.”

nCino had a large accounting staff but the raise was a different beast. “We had all the internal controls in place, we built the company to be large, but when we found David Rudow, he gave us a perspective on the beat and the markets because he had been an analyst on both the buy-side and sell-side. He was a tremendous asset.”

Experience aside, however, Naudé and the team’s top criteria was always culture fit. Any CFO joining them would have to mesh with the team who’d built the company from scratch. They’d need the technical competency to enforce Sarbanes-Oxley (SOX) compliance but not be so overbearing the company couldn’t operate. It didn’t matter if they’d been a public company CFO before. “It was ‘team member first,’” recalls Naudé.

nCino’s new CFO David Rudow joined and realized the company had done many things differently. To begin, the founders had decided to only ever sell common stock. “I had a simple formula,” says Pierre. “You take the contract with annual recurring revenue and multiply it by 10. That’s the valuation.”

Yet despite having a strong CFO on their side, guidance from investors such as Bessemer, and managing nearly every aspect with precision, an initial public offering, frankly, is inherently a high-intensity milestone for any company. This is why it’s so important to have someone experienced and competent to manage it. “You can go through the motions and pricing committee and say it’ll be 31 and still have it run to 90, as happened with us,” says Naudé. “There’s no way to predict that. Today, I don’t discuss stock prices. I’m concerned about my customers, my employees, and how we make the next quarter.”

Being CEO of a public company demands discipline and offers influence

Zander Lurie led SurveyMonkey through its IPO in 2018 and arrived convinced that it was really about achieving communicatory discipline. “I was a public company CFO for a short stint back in 2008 and then interim CFO at SurveyMonkey before we hired our existing CFO—Debbie Clifford,” says Lurie. “I knew from experience that the skill I had to develop in the run up to the IPO was being a disciplined communicator. I relish the opportunity to be extemporaneous and creative and so we needed a CFO with a different skill set.”

Lurie set out with very specific goals for the person he wanted to hire. “SurveyMonkey has been on a journey to become an enterprise SaaS business after starting in end-user subscriptions so I really wanted somebody who had lived in that world and was steeped in sales, finance, LTVs, and building that long-term model,” says Lurie. “And frankly, I wanted somebody who had an MBA in finance.”

Many CFOs today tend to be more bankers or consultants, explains Lurie—the same world he came from. “I knew I wasn’t the world’s best accounting CFO and was looking for someone who could mentor our accounting organization and build a world-class FP&A organization.”

Being CEO brought change–mostly, Lurie says, for the better. Being CEO of a public company gives you a global platform. “Going public has afforded us opportunities to speak up and do things that as a private company we just didn’t have access to,” he says. “We now have this incredible position—our voice, our employee-base, our resources, our products—and we can harness those to make change in the world.”

And partly, that’s because being public comes with increased scrutiny, which Lurie welcomes. The data SurveyMonkey collects shows its employees care deeply about their mission. “They’re watching our every move. Are we walking the talk?” says Lurie. “It means you must be vigilant about communicating your strategy, mission, priorities, values, and what you count as success. That takes discipline and it’s something I will try and develop even more as I grow as a leader.”

The IPO is just the beginning and can unite employees, partners, and leaders

For Therese Tucker, CEO and founder of BlackLine, an IPO is a coming together moment that can grow your organization into far more than the sum of its parts. “There are a lot of advantages to being public beyond liquidity,” says Tucker. “And while you don’t want people always watching the stock price, the fact is, they have an opportunity to share in the upside.”

Having your employees put away for houses and college funds helps with retention. And if they understand that the vast majority of that wealth gain will occur after the IPO, says Tucker, it galvanizes them. “I have loved seeing employees tell me that they’ve bought things that were dreams to them because of what the stock has done,” she says. “That’s exciting.”

It can also show you who’ll stand by you. One of BlackLine’s long-term investors pulled Tucker aside during their roadshow and said, “We don’t do a lot of IPOs but if you ensure we get a great allocation then we will stick by you forever,” says Tucker. “That shareholder is still in our top-five shareholders and they have supported us through all kinds of volatility. That ability to find those long-term faithful shareholders that actually believe in what you’re doing, that’s gold. That’s the best thing you can do.”

And unlike Naudé’s team who held their roadshow over Zoom, Tucker and her team really did hit the road back in 2016 and found it was equal parts exhausting and generative. “One of the things that sticks in my memory is how close you grow to your team,” says Tucker. “To the point where we would all climb into the third backseat of the suburban and change out of our suits at the end of the day.”

Plus, it puts you in a position to be a role model beyond your ecosystem. “There aren’t many tech companies with women CEOs right now, much less ones with pink hair, so it’s cool to get to be a role model for young women who are wondering if tech is a career that’s available to them,” says Tucker. “Some of the speaking and mentoring I get to do is really beautiful because you just see so much potential in these young women. They’re so hopeful that they can go out and conquer the world. I’m here to help remind them that they can.”

Full Transcript

Zander Lurie (00:16): Hi, I’m Zander Lurie, the CEO at SurveyMonkey, based in San Mateo, California.

Therese Tucker (00:21): I’m Therese Tucker. I’m the CEO and founder of BlackLine.

Pierre Naude (00:26): Hi, I’m president and CEO of nCino in Wilmington, North Carolina.

Zander Lurie (00:33): Therese and Pierre, one question for you. On route to your IPO, what was the skill set you needed to build or refine on your journey?

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Therese Tucker (00:40): Well, certainly, I think one of the most important for me was learning the appropriate level of transparency. You have to be very careful about forward-looking statements. My style would be to tell you everything that I think is going to happen in the next 10 years. Obviously, my CFO was not particularly happy with that approach. We had to strike a balance in terms of what was appropriate to reveal, what level of detail, how much, in order to give our investors enough confidence in us to know what we were doing, but not so much that I was absolutely over-promising.

Pierre Naude (01:24): I would say the discipline that we have to develop is that fine balance between celebration, transparency and truly trust to people like we’ve done, how we build the company and the culture that we’ve built versus what is material nonpublic information? How do you treat information as confidential? Because realize we sell to banks, and we deal with bank data every day. We already have that discipline in place to understand where those lines are drawn. But when we went public, all of a sudden people would say, well, can we celebrate a big deal? Can we celebrate we signed a big logo in Europe, et cetera? I think threading that needle is a challenge for all of us, because you want your people to be unbridled and really celebrate with you, but then how much of that can you make public? What is actually then classified as material information?

Zander Lurie (02:13): The skill that I had to focus on developing on the run up to the IPO was really about discipline. I’m sure every CEO will tell you that she or he has a different skill they need to refine and a gap, maybe, in their skillset. For me, I kind of relish the opportunity to be extemporaneous and creative, but I think part of the job of the CEO, especially a public company CEO, is about communications to all of your stakeholders and starting with your employees and your customers, most importantly, but your shareholder base and now increasingly the community and all the different partners in your ecosystem.

Zander Lurie (02:50): I think the consistent messaging, recognizing that people have a lot going on, they’re often distracted when you’re talking and to get everybody really rowing in the same direction, you need to be vigilant in communicating your strategy, your mission, your priorities, what you count as success, your values. That was something I really continued to try and develop as I grow as a leader.

Zander Lurie (03:13): Therese, let me ask you, some of the best companies in the world have added the vast majority of their enterprise value since their IPO, whether it’s Amazon or Google or Salesforce. BlackLine I would put in that category, as well. How would you characterize BlackLine being a stronger company as a public entity than you were as a private company?

Therese Tucker (03:34): Well, there’s a lot of advantages to being public. Certainly liquidity for yourself and your investors is a big one, but it is also, frankly, a boon to your employees. While, of course, you don’t want people watching the stock price, the fact that they have an opportunity to share in the upside, they’re putting away for houses and college funds and everything else, is just such a win and such a way to sort of spread the wealth. When they really understand that the vast majority of your wealth is going to occur after the IPO, that gets people excited about the future. It helps with retention. It’s just a win for everybody involved. I have loved seeing our employees come back and tell me that they’ve invested, that they’ve bought things that were dreams to them, because of what the stock has done. That’s pretty exciting.

Pierre Naude (04:33): You know, Zander, I was fortunate. I’ve been an officer of a public company before, but I do think what people underestimate is the value of the story, and the disruption and the long-term future of your company versus the short-term results. If you take an example, like Tesla, who had this vision for the longest time, and today as a market cap, much bigger than the big three automakers combined. I think us as CEOs, you have to look at, what is that long-term vision? Can you actually execute on that path? Yeah, there’ll be bumps in the road. Be honest with your investors, “Look, man, stuff is going to happen.” I’ve got international operations. I’ve got local operations. I’ve got banks buying this economic cycles. But in the end, we’re on that mission. We innovate at pace, and we’ll get there.

Zander Lurie (05:18): I’ve owned a Tesla for years, but not the stock, and wish I could reverse that. Therese, let me ask you. You’ve been at this as a public company CEO for a while. What’s the one learning you would share with aspiring public company CEOs about the balance you need to strike of hitting your short-term goals, but also being long-term-focused in terms of what you’re trying to build?

Therese Tucker (05:42): I’m very long-term-focused at heart, Zander. I have found that the best way to handle that from a public market perspective is, one, your shareholder base. You need like-minded long-term holders, and you need to clearly communicate when you are balancing short-term against long-term. Sometimes long-term decisions have costs. Putting those out there and being very, very clear on why you’re making certain decisions for the long-term, I find has been very well-received.

Zander Lurie (06:17): That’s great. Hey, Pierre, let me ask you since it’s so fresh, how did you, and your team and your bankers think about the right pricing for your IPO and the pop? I don’t, I don’t remember what nCino, how it grew on the first day, but I remember it being pretty well-received, so maybe share some of your thoughts about the IPO process.

Pierre Naude (06:37): I’ll tell you with a big smile what happened. You go through the notions, the pricing committee. I’ve got a great VC, inside venture partners, and we’re debating what the price levels should be. But you start the bidding 29, 31, et cetera, and if that thing runs to like, what happened to us, to 90, there’s no way for you to predict that. There’s a scarcity factor because we only sold something like 9 million shares. On top of that, you don’t know the retail markets, and you try to get some long holders. In the beginning, you negotiate that and what it’s willing to do. Obviously, there’s a market factor that you and I cannot predict.

Pierre Naude (07:17): To me today, I don’t discuss stock prices because I’m not in control. I’m worried about my customers, my employees, and how we make the next quarter, how we beat the numbers and exceed expectations. That’s what I’m concerned about. I can just tell you, I’m very happy with what happened to us and the bankers. In the end, you pitch for five and a half days, because I had a virtual roadshow. You could either celebrate the fact that we moved the market cap from about 2 billion to 7 billion, or you can complain about maybe around 10 million left on the table on pricing, and I’ll take that 5 billion move.

Therese Tucker (07:52): I have found, personally, not having been a public company CEO before, that by far the most important strategic position in the company was my CFO. Zander, you’ve been a CFO before. What qualities, Zander, would you look for in your own CFO, having done that job?

Zander Lurie (08:17): Yeah. I was a public company CFO for a short stint back in 2008, and then I was the interim CFO at SurveyMonkey before we hired our existing CFO, who’s marvelous. Her name is Debbie Clifford. She came from Autodesk. I really set out with some specific goals about the person I wanted to hire. We’ve been on a transformation to become an enterprise SaaS business from an end user subscription business. I really wanted somebody who had lived in that world and was steeped in sales, finance, and really understood LTVs and how you go about building that long-term model. Frankly, I wanted somebody who had an MBA in Finance. A lot of CFOs today tend to be more banker-experienced or consultants. It’s kind of the world I came from. I wasn’t the world’s best accounting CFO. I was really looking for somebody who could mentor our accounting organization, build a world-class FP&A organization.

Zander Lurie (09:10): You’re right, the CFO is an incredibly strategic role. I always say to Debbie, “You’ve got a key to everybody’s office. We don’t even have offices, but you don’t need to announce yourself. Just walk in, and you will get exactly what you need.” Super important hire, and I think every CEO just needs to be specific about what she’s looking for in terms of the skillset to build your company, or to compliment an area where that’s not where you spend your time, or you don’t have that much interest.

Pierre Naude (09:33): It’s a very interesting phenomenon as you build a company like this from scratch, the fact that the CFO must be a team member, understand that we’ve got rules, but not be overbearing with rules, and regulations, and stocks, compliance, et cetera, and actually allow the company to operate and function. That cultural foot was very important to me, on top of the technical qualities, et cetera. I wanted to make sure we have a team member for us that understands we all pull in the same direction, and how we treat our people, how we speak to our people, et cetera. That is truly a strategic differentiator for us as a company. Then on top of that, as I mentioned earlier, we needed somebody who understands the street, who understands beat and race, who can actually work with analysts to build the right models, et cetera. I can tell you, we’ve just been extremely fortunate to find our CFO, David Rudow. He came here last October, and he’s done a phenomenal job. We’ll tell him in the next few months exactly how well he’s doing.

Therese Tucker (10:35): Each of you have gone a little bit of a different route there. Do you think it’s important to have a CFO who’s been a public company CFO before?

Pierre Naude (10:45): In our case, it did not matter. I did not look for that. I felt we had the accounting people here. We understood what we were doing. We had auditors for a long time now, E&Y. I felt we were well-prepared. I wanted that investor relationship and street experience, but I do think every company is different.

Zander Lurie (11:04): I agree with Pierre here. I was really looking for somebody who brought a specific skill set to bear. The culture component to me was super important, as well, somebody who was enthusiastic and positive, would crosscheck me against the wall when my ideas were wrong. The experience you build as a private company CFO, or leader of FP&A, can be just as valuable as a public company CFO. I know it looks good on the resume or when you announce it, but I wouldn’t prioritize the metals around somebody’s neck over the skills and experience they bring to bear.

Therese Tucker (11:37): See, I actually was so happy that my CFO had the skills and having done it before, when I hadn’t. It was a great balance in terms of what I brought to the table. The other thing that I tend to just love about my CFO is that he’s a very strategic thinker. He thinks three quarters ahead, and where we might be, and what he’ll say, and where we’re going and how it might work out. I love somebody that just can handle a multi-pronged strategy, no matter, pandemic kits or whatever, he’s got it covered. I so appreciate that in him.

Therese Tucker (12:20): Pierre, you were the only one of the three of us to actually have to do a virtual roadshow. Tell us what the most memorable point in your roadshow was.

Pierre Naude (12:33): All of a sudden, you realize you’re not going to go to New York. You’re not going to ring the bell. You’re not going to travel across the country. It really is a mind shift. We sat with the bankers and planned this thing out. I think if I look back, what the bankers thought is they could schedule me, literally, 10 meetings in a row per day, and we did it all in four and a half days. That was memorable to me from the stamina it took, and the enthusiasm and that drive to do it every day. But I will tell you, I would pace it better next time. But to me, it was extraordinary to tell this story over, and over, and over and every time to see the reaction. Then it actually excites you, because you realize you built a great company, the people around you are fantastic, and this just may be just an awesome experience.

Therese Tucker (13:18): Pierre, having done the actual roadshow, one of the things that sort of sticks in my memory is how close you get to your team, to the point where we would all climb into the third backseat of the Suburban and change out of our suits at the end of the day.

Pierre Naude (13:35): Well, look, I’ve been on the road all my life. I will tell you, that’s the one thing I didn’t miss is to fly across the country, and getting cars and rushing through traffic to make meetings.

Zander Lurie (13:45): Yeah, I would echo some of the same sentiments from both of you. It was an incredible bonding experience with the team. It’s just, the eight or 10 days in a row of just getting on, and bringing that energy and trying to deliver your A-game every day. That was a great bonding experience. I would always try and layer in new stories and feather in new customer stories and creative anecdotes just to keep my team interested and engaged so I wasn’t repeating myself 10 times a day for a couple of weeks. We had a lot of fun memories, playlists that we listened to. It was obviously a huge combination of a lot of people’s hard work. It was a lot of fun to be in Times Square at the NASDAQ and see everybody kind of reveling in the company’s success.

Zander Lurie (14:29): But then you’re back at it the next day. You’re back to work, and you’re trying to build great products, and help your customers and you got quarters to hit. Yeah, I think Pierre’s way was a lot more efficient, but it was a memory that I’ll never forget.

Pierre Naude (14:43): Zander, if you think back over the transition from being private to public, what is your favorite memory of that whole experience?

Zander Lurie (14:52): I think it’s been an evolving one. For me, it’s really leaning into the value of being a public company. I think as CEOs, and you two are founders, so congrats to you, it’s just we have this incredible position today where we have our voice, our employee base, our resources, our products. We have incredible opportunity to not only help our customers, help our shareholders win, but also deliver some change in the world. I think being a public company has afforded us opportunities to speak up and do some things that a private company, we just didn’t have access to.

Pierre Naude (15:25): I would like to ask you to reason, if you look at this, how do you think it’s affected the culture of your company, being public with all the rules, regulations, et cetera, so far?

Therese Tucker (15:36): Frankly, I think we’ve done a really good job of keeping the culture of our company, despite being public, because we have always encouraged and have been able to retain a take care of your customers and take care of each other, serve your customers, serve each other. If you don’t like the word, service, you’re in the wrong company. We have kept that focus in every hire, in every communication. It’s been surprisingly resilient, because there is a pressure to make short-term decisions. There is a pressure to run for that next quarter number. But I have to say the people that we’ve hired have done just a fabulous job of making sure that those values permeate the entire culture.

Pierre Naude (16:28): That is pretty special. How do you coach them not to watch the stock price every day?

Therese Tucker (16:33): I don’t know that you’re ever going to ask people to not watch the stock price. I think the best thing to do is set the example. Don’t watch it yourself. I will oftentimes have people say, “Oh, have you seen?” I’ll say, “No, I haven’t looked at it yet today.”

Pierre Naude (16:48): Zander, all of us deal with challenges of hiring the right people, et cetera. How did you keep your company culture, maintain the employees, prevent the high turnover after the IPO? What is your collective experience around all of that through the IPO process and subsequently?

Zander Lurie (17:06): I think we’ve learned a lot, Pierre, especially in Silicon Valley and technology. There are a lot of challenges in our industry. I think it’s been highlighted, frankly, since the George Ford killing, and Black Lives Matter, racial justice issues that we’re all dealing with. Our diversity numbers are not where we need to be in the industry. I think it’s pushing all of CEOs to really make HR a fundamental part of your job, who you employ, how you pay, who you promote and what kind of culture and values you espouse at your company. I think we all are living in a world now where our jobs and our practices are being scrutinized much more closely. If you don’t steer into it, if you don’t love investing in your culture, this is not a great job to have.

Pierre Naude (17:48): Totally agreed.

Therese Tucker (17:49): There’s not a lot of tech companies out there that have women CEOs right now, and especially women with pink hair. It’s kind of cool to get to be a role model for high school girls, for young women who are actually wondering if tech is a career that’s available to them. Some of the speaking engagements that I get to do, some of the mentoring that I get to do, is really kind of a beautiful thing because you just see so much potential in these young women. They’re so hopeful that they can go out and conquer the world. Being a positive influence on them is very cool.

Zander Lurie (18:31): Yeah. I mean, congrats to Therese, one of the few women CEOs in tech. You got to give somebody like Benioff credit. He has long been an advocate for, you can just do a lot more as a public company CEO of a company with scale and growth and profitability. You don’t need to be confined to just hitting your EPS targets. You actually can speak out and take action on a whole broad range of issues that are important to your customers and your employees. I think we all take that advice, and we can do more with it. It’s been a lot of fun to see our company activate here.

Therese Tucker (19:05): Overall, what a great conversation today, to really hear from other public company CEOs that this is a priority, that overall, the IPO, the public company experience has been very positive. I would echo that, as well. It’s always fun to see people moving in the right direction.

Zander Lurie (19:27): Awesome. Nice to see you, Therese, Pierre.

Therese Tucker (19:29): Nice to meet you.

Pierre Naude (19:30): Good to see you all.

Therese Tucker (19:31): Bye now.

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