What are some of the most important things to factor in when deciding when to take a company public? originally appeared on Quora - the knowledge sharing network where compelling questions are answered by people with unique insights.
Answer by Dheeraj Pandey, founder, CEO and Chairman of Nutanix, on Quora.
Four things to consider before taking a company public:
- Predictability, predictability, predictability. Demand machine's funnel science, repeat customers/business, customer churn, year-over-year cohorts, leverage (customer acquisition costs), distribution costs, etc.
- Whether the company has developed the "thick skin" to brush aside short-term perturbations, knowing fully well that staying power is key in this raucous coliseum of the public markets.
- Employee liquidity for them to checkpoint a bit of their hard work, take some deep breaths, and then start the next sprint in the marathon that company-building is.
- For B2B companies, penetration within rich customers. The Global 2000 takes longer to trust a new story, and they like open financials to judge longevity of their "partner" innovators. Going public can help with that journey, provided the early-majority mid-market customer has blessed and baked the product and customer service for a few years. The brand can get a shot in the arm, if the company had an honest Main Street story for Wall Street. The two Streets can go hand-in-hand and fuel each other in a virtuous cycle, if the company were authentic. By authentic, I mean, just the right balance between honest products/service and a dreamy-eyed storytelling.
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