MobileIron CEO Bob Tinker says going public isn't an exit but the start of a new financing round. You need $100 million revenue with strong growth, audited financials, reliable forecasting, and a leadership team ready for quarterly guidance and stock-price volatility.
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Third thing about growth, eats capital, which for us is why we went public. So the takeaway on going public is that there's a misperception that going public is the end. Yay, a liquidity event. That's actually not what it is. Going public is a Series A with a new set of investors, the public markets. It's a great opportunity to raise capital from very sophisticated investors, and it's a really good marketing event. Beyond that, it's back to work. And the way we think about it is, Going public is really just the beginning, not the end. And the decision to go public—I want to share a couple things that we thought about as we were thinking about going public. Need to first look at the market opportunity you're focused on. Clearly, your business has to be at a certain stage before getting to that point, but you want to make sure you're in a market that's big enough. That you need the capital. Because otherwise, why would you do it? The public markets, at the end of the day, want to invest in profitable companies. They're willing to deal with unprofitable companies for a short period of time. But at the end of the day, they want to see profits from your business in the long run. You need to be able to look yourself in the mirror and say, I can see how this company can become a profitable company. Not just now, but for a long period of time. Tactically speaking, one of the other things that's really important is make sure your sales forecasting is really solid. Because once you're public, you have to provide guidance to the market and say, here's what we think our plan is going to be, and then you have to deliver against that. So your sales process, your sales leader, your assessment of the market, you've really got to have forecasting figured out. Like right now, we're reporting earnings next week, and we got to talk to Wall Street about what our earnings are going to be for the next quarter. Once you're public, you have to do that every quarter. Yes?
I'm wondering if a typical enterprise software company is earning a typical annual sales growth range that determines the best time to go public?
So the question was, is there sort of a specific number for an enterprise company beyond which you should start thinking about going public?
I think if you grow 300% a year, you will want to go public. You will want to close that.
The timing is a trade-off between a couple different things. Typically, you want to have over $100 million in revenue. You just want to be at a certain scale. You want to be growing at a certain rate. You want to have visibility to a path to profitability within a reasonable window, and you need to actually have a good use for the capital. Because public market investors, if they give you capital, they want you to do something with it to generate returns. So you need to be able to make sure you've got a plan to be able to do that. But typically it's about $100 million at the top line.
What about the bullshit investors?
Yeah, there is a trade-off between growth and time to profitability, and there's no hard and fast rule for that. One of the other things that often doesn't get talked about, and this is something that I think we did a particularly good job of, is you gotta be real about your systems and your data. Before going public, you're gonna have to have audits back several years. You gotta make sure your financial systems are in place. You gotta make sure your forecasting systems are in place. You've got data to be able to back up your customer trends and every customer and contracts. This is a big deal to go public. You need to make sure you have your act together on it. One of the things that we did in the early days that turned out to be really helpful is even when we were a 50 or 100 person company, we had a real CFO that actually ran real books for MobileIron. So bookings, revenue, expenses, we actually had real financial data going all the way back to the beginning. And it was kind of a pain in the early days because at the end of the day you could just sort of run the business on cash, cash in, cash out.
Yeah.
But putting those systems and disciplines in place when you first start booking revenue and sales so that you have the discipline and the systems as you grow makes it a lot easier to try and do it at the end. I will tell you there is one company I know of that went public last year that apparently was— they were doing over $100 million a year and they were still running the company on QuickBooks. It literally gave their investment bankers aneurysms trying to figure out how to take QuickBooks and turn it into real financial data to be able to go public. The last one is that your team is ready. Going back to the point that going public is really just the beginning, not the end, you're taking a big leap together to say, we are now going to go raise capital from public market investors, grow the business, drive to profitability. You've got to make sure you have the right folks in your team. That are ready to be able to do that. So what are some of the pros and cons of being public and what I wish somebody had told me? So what I love about being public is the capital and access to capital for growth. 2, I love the transparency. One of the things as a late-stage private company that's tricky is you start— you have to start being more private about your data. Because you can't be sharing it as publicly as you used to. And we always had a big culture of transparency inside the company, so that really frustrated me, that as we got closer to going public, we had to be sort of more constrained with sharing information. Now that we're public, it's great. Transparency for everybody— investors, employees, everybody gets the same data. Love it. It's a terrific way to drive accountability and transparency. What I wish somebody had told me is the emotional impact to the team of having a stock price that gets marked to market every minute of every day, up and down, up and down, up and down, up and down. In many cases, it has absolutely nothing to do with anything you did that day. Actually, most of the time, it has nothing to do with anything you did that day. Yet people come in and look at their spreadsheet and run it and say, ah, yay, I'm up. Oh, I'm down. And so one of the things I wish somebody had told me was that we should have had a more robust conversation as a team about what it feels like to be like that. Because at the end of the day, it's about shareholder value over 12, 24, 36-month period. That's what matters. Your stock price day to day doesn't really matter, but it's hard emotionally to not feel it.
