Despite COVID-19 slowing global IPO activity earlier this year, tech IPO season is back this fall and in full swing. Companies like Airbnb and Robinhood have made headlines recently as some of the most anticipated IPOs of 2020, and Snowflake, Asana, and Palantir just made their debut on the public market. Sometimes it feels like just yesterday that my cofounder Frederic Kerrest and I were preparing for Okta’s IPO, and all of this talk about going public resurfaced memories of that time back in 2017.
Founders have preconceptions of what it’s like to hit this milestone and ring the bell to open the trading day, but no matter how much you prepare, some lessons you just have to learn as you go and lean on others. Hearing from other founders on firsthand experiences going public and what to expect in the months following helped set our expectations. For any leader on the journey to IPO, here are a few key learnings from a three-year public company veteran.
Shifting the goalpost is key
I worried that when we went public, we’d lose what we loved about our tight-knit, innovative team: our agility, intensity, and dedication to hitting our goals. I thought we’d feel constrained within the boundaries of quarterly earnings and that the daily shifting stock price would distract employees, causing us to lose focus on our long-term vision. Overcoming these concerns meant shifting the goalpost and resetting our broader company vision far before the IPO.
A year or two before we went public, we started seeding a new vision with our team—to build an independent, iconic tech company—which helped employees see further out and transition their mindsets. Once we went public, we doubled down on internal messaging that emphasized our long-term objectives and took focus away from the constantly changing stock price. We started comparing ourselves to impressive, growing public technology companies that went public years before us (for us, it was Salesforce, Workday, and ServiceNow) in order to encourage employees to think more about our future potential.
Building pathways for innovation can keep the startup energy alive
Our culture did inevitably change a bit once we went public, but not in a negative way, in a natural way. It changed the pool of candidates attracted to working at Okta, namely those looking for the stability of a large company versus the grittiness of a younger startup. To ensure we didn’t stop innovating as we grew, we got creative with events (outside of our annual conference, Oktane) that helped us stay collaborative and highlight new projects.
That’s why we introduced internal launch days, an opportunity for engineers and product managers to present new features to the company internally for broader feedback. As an organization scales, it becomes more challenging for employees to stay in touch with the evolving product roadmap and understand the broader ecosystem. It also gets harder to celebrate product wins and hard work together. These internal events offer an opportunity to accelerate the feedback cycle, build excitement about new products, and keep the momentum alive.
Our internal launch days were so valuable that we evolved them into an external event called Okta Showcase—a public launch day featuring presentations from Okta executives, partners, and customers, and demos by product marketing managers that shine a spotlight on our continued innovation.
Your story will be out there now, and that’s a good thing
I may have overestimated how much our culture would change after going public, but I underestimated the benefits that come with being a publicly traded company. One clear benefit that presented itself quickly: once you’re public, it gets easier to share your story with a broader audience. An IPO makes you more visible to a new set of reporters, and this will force you to solidify your vision and corporate messaging before sharing it with them.
Investors will know your story, too—the numbers are out there, and the market is familiar with your business—making it easier to raise money quickly and whenever you need it. When you’re private, it can be a months-long process of meeting with VCs to raise a private round, but public fundraising can happen in the matter of a week. Post-IPO, we issued a $300 million convertible bond, and it took us all of one half-day of phone presentations to get the money. Later, we raised $2 billion in just two quick fundraises.
You’ll need to manage investor expectations and deliver consistently
As a private company, we had a small group of investors we communicated with at periodic board meetings. Post-IPO, we suddenly had a broad, distributed public shareholder base that could constantly deliver feedback through the stock price. For better or worse, quarterly earnings performance relative to market expectations is a key driver of the stock’s performance. A paramount lesson that all public company CEOs must learn: the foundation of a stable, predictable business is staying consistent with your messaging, setting reasonable goals, and exceeding them. For us, that meant focusing and excelling in two key areas: recurring subscription and satisfied customers.
I carve out much more time now for investors and everything IR-related: earnings reports, conferences, and 1:1 meetings. For those CEOs accustomed to the ups and downs and often wild ride of startup life, this day-to-day might sound repetitive—but it can also be challenging in new ways and offer the chance to pick up unexpected, interesting insights. Prior to going public, you might know very little about investor relations, so invest the time in a crash course to get up to speed.
At times, I’d like to forget the memories of our grueling, eight-meeting-a-day IPO roadshow, but for the most part, going public has come with unexpected benefits and exciting new goals for our team to achieve. As Frederic would say, “it’s not about going public; it’s about being public.” No matter how much you know before you IPO, it’s a constant learning process—and playing the long game will ensure you maintain a strategic vision and the resilience to tackle what’s ahead.