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“It’s not cheap to go public,” concedes CFO Steve Cakebread, echoing the oft-repeated refrain that founders and CFOs confront when considering the prospect of selling shares in their companies to the public.
Concessions aside, it will come as little surprise to Wall Street and private investors alike that Cakebread—a seasoned finance leader who has taken public such companies as Salesforce, Pandora, and his latest firm, Yext—has come not to bury IPOs, but to praise them.
And 2020 might be the year when founders and CEOs are prepared to listen.
Certainly, few of Cakebread’s CFO admirers are likely to question the finance leader’s keen sense of timing. In fact, more than a few will likely be making room on their bedside tables for Cakebread’s soon-to-be-released The IPO Playbook: An Insider’s Perspective on Taking Your Company Public and How to Do It Right (Silicon Valley Press, 2020).
“With all of the macroeconomic and pandemic issues going on, there have been as many—if not more—IPOs through August than there have ever been in the past couple of years,” says Cakebread, signaling an optimistic note for U.S.-listed publicly held companies, which have seen their numbers cut in half over the past two decades.
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Guest: Steve Cakebread
Headquarters: New York, NY
Steve’s Book: The IPO Playbook: An Insider’s Perspective on Taking Your Company Public and How to Do It Right
Exposing the path to the market opportunity
CFOTL: For many CFOs – the IPO process is challenging in terms of the demand for regular communication with various stakeholders.
Cakebread: That’s a good part of it. I mean, you have to be able to one, love your business, have a passion around it, explain it to third parties that may not have a good idea of what you’re doing. The IR function is really critical. The good news is, there’s a number of very capable IR firms that can help you get through that early stage of communication. Not the least of which is your investment banker that can help you write the story of the S1, and then there’s others that I’ve worked with my whole career and even after we’ve been public for five or 10 years, I still use those same IR people to bounce ideas off of, to look at my problems differently and how to communicate. Yes, if you want to be shy and introverted and don’t want to talk to people, this is probably not a company that you want to take public, but you learn speaking skills, which is good for all of us, I think.
You learn how to approach and answer questions and explain your story. None of that is hard. It just takes a little bit of work, but shouldn’t prevent you from going public because personally, it is kind of interesting. I actually find it tougher to work with VC boards because all they care about is the numbers. They don’t care about the opportunity so much. What I found in my career is science and numbers are important, but there’s a little bit of art that you need to make a really successful bottle of wine or a successful company. It can’t all be driven by numbers and I’ve been around long enough to know. If you remember, General Motors at one time, was known as the organization that the bean counters ran the company. Well, that company went broke and they had to bring in people with a little bit more vision and a little bit more art to the car, not all numbers. I think that’s a good opportunity to really help the company see itself, not only mathematically, but in a different vision, and talking to investors is a great way to hone your story in terms of how you might talk to a customer.