Best Practices from a Double IPO CFO

 

As the stock market surges to new highs not seen since before the fall of Lehman Brothers and Bear Stearns—Standard Poor's 500-stock index is up 25 percent over the past 12 months—the window for IPOs is beginning to open again. Yesterday, Trulia, a real estate information site, closed up 40 percent on its first day of trading, as the New York Times story described it, “defying the recent lackluster performance of newly public stocks.”

 The surge was the subject of a panel discussion at last week’s high profile KPCB CEO Summit in Pebble Beach, California. One of the panelists was Ken Goldman, a respected Silicon Valley CFO, who has served in that role for Cypress Semiconductor, Sybase, Excite@Home, Siebel Systems/Oracle Corporation, and Fortinet. Having led the IPOs for two of those companies, Mr. Goldman offered the 200+ CEOs at the conference 17 brief pieces of advice, five of which related to presentations. (He had a sixth, which was to utilize presentation coaching, but in the interest of selfless-interest, let’s stay with five).

While very few people get the opportunity to make a presentation that seeks to raise tens of millions of dollars as most IPO road shows do, in each of Mr. Goldman’s recommendations below, you’ll see aspects that resonate with all presentations, along with basic best practices that you can employ for your presentations.

1)      Don’t be bashful - In 1-on-1 meetings, ask your potential investors for their thoughts on the company and if they have any issues or concerns that should be addressed

Mr. Goldman is recommending that CEOs “Ask for the order,” or as sales people put, it “Go for the close.” Faint heart never won fair lady. Does this mean that a presenter should thrust a contract at the audience and ask them to sign on the dotted line? Of course not, but there is a wide gulf between hard sell and no sell.

 A sales person can ask a customer for the order by saying, “We hope that you’ll see how well our product meets your requirements.” An IPO CEO can ask an investor for the order by saying, “We hope that you’ll join us in this attractive opportunity.” Mr. Goldman’s usual call to action for investors is simply, “So what do you think?”

Define your call to action.

2)      NetRoadshow has changed the game – Meetings are primarily Q&A, not a regurgitation of the road show presentation

In 2005, following the stock market excesses that led to bursting of the Internet bubble, the Securities and Exchange Commission mandated, in the interest of full disclosure, that companies offering stock for the first time must make their road show presentation available to the public online. Since then, every company makes a video recording of the management team delivering the pitch and posts it on the NetRoadshow site and its public companion, retailroadshow.com, along with the slideshow that accompanies the narrative.

 

Despite this wide access, the company’s senior management team goes on the road for about two weeks, during which they visit potential investors in about dozen cities across the country, for about 30 or 40 meetings a week for a total of 80 or more iterations—just as they did before NetRoadshow.

 

The reason for this grueling tour is that no investor will make a decision to buy up to a 10% tranche of an offering based on a canned presentation alone. Investors want to meet the executives in person, press the flesh, look them in the eye, and interact with them directly. As a result, many of the meetings are not presentations, but intense Q&A sessions.

 

Prepare for the most challenging questions to your presentation.

 

3)      You control the road show logistics – Despite the hectic schedule, there is enough time to conduct business, hold conference calls, workout and unwind.

Mr. Goldman is referring here to the tried and true concept of time—and personal—management. All too often, when business people have a major project (and there is no project more major than an IPO road show) they allow daily business tasks and physical exercise slip by the wayside. Not a good idea for business and not a good idea for your body.

Make the time. Take care of business. Exercise regularly.

4)      Road show start critically important; Europe or otherwise.

Here Mr. Goldman is advocating a strong launch. Success in the first iterations can generate word-of-mouth within the investment community that creates momentum for the offering. Companies that develop road shows for product launches need the same impetus.  

Run through your presentation multiple times in advance; to your team or to “friends of the court” to refine your pitch. Launch only when ready. Make the first iteration as polished as the last.

5)       Six timing decision points: a) Soft start; b) Formal Bakeoff; 3) Organization meeting; 4) File S-1; 5) Start road show and 6) Price

While Mr. Goldman’s steps are IPO-specific, they represent a high level strategic roadmap with key milestones. Every presentation requires a strategic roadmap laid out in advance so that when D-Day arrives, you are ready for action. 

 

Mr. Goldman knows whereof he speaks: Fortinet, his current company, has seen its stock price climb more than 50% in the past year alone. If adjusted for a 2:1 stock split last year, the adjusted price is $54, more than 4 X IPO price of $12.50

 

Heed his advice.

 

(Note: Parts of this blog will be contained in my next book, Winning Strategies for Power Presentations, due out in December from Pearson.)

New York Magazine 

Can Tim Cook Pass the Steve Jobs Test?

By Kevin Roose

 

 

It's All About "You"

by Jerry Weissman

Barack Obama has endured expected criticism from Republican, Tea Party, and Libertarian naysayers who disagree with his politics; but he has also taken heat from his own supporters who have accused him of being distant and aloof. On the eve of his acceptance speech at the Democratic National Convention, Maureen Dowd took him to task in herNew York Times column:

Obama doesn’t like to share the stage with other politicians or even campaign for House Democrats. He thinks of himself as a singular force, a unique brand, and his narrative has always begun and ended with him. He thinks he did build it himself. But now — because of his own naïveté, insularity and arrogance — he needs Clinton

As if to drive the point home, just as Mr. Obama was about to deliver his speech yesterday, the Times published a lengthy article that analyzed transcripts of his campaign speeches and found that he used the words “I want…” 174 times in 41 speeches. But in his actual speech last night, Mr. Obama turned the tables and the pronouns:

So you see, the election four years ago wasn’t about me. It was about you. My fellow citizens — you were the change.

You’re the reason there’s a little girl with a heart disorder in Phoenix who’ll get the surgery she needs because an insurance company can’t limit her coverage. You did that.

You’re the reason a young man in Colorado who never thought he’d be able to afford his dream of earning a medical degree is about to get that chance. You made that possible.

You’re the reason a young immigrant who grew up here and went to school here and pledged allegiance to our flag will no longer be deported from the only country she’s ever called home; why selfless soldiers won’t be kicked out of the military because of who they are or who they love, why thousands of families have finally been able to say to the loved ones who served us so bravely, welcome home. Welcome home. You did that. You did that. You did that.

If you turn away now — if you turn away now, if you buy into the cynicism that the change we fought for isn’t possible, well, change will not happen. If you give up on the idea that your voice can make a difference, then other voices will fill the void, the lobbyists and special interests, the people with the $10 million checks who are trying to buy this election and those who are trying to make it harder for you to vote, Washington politicians who want to decide who you can marry or control health care choices that women should be making for themselves.

By Jerry Weissman

Last night, former President Bill Clinton returned to the scene of his original crime, the Democratic National Convention, exonerated and honored. Twenty-four years earlier, he gave a speech in the same venue—in nomination of Michael Dukakis—that ran so far over his allotted time, the audience cheered derisively when he said, “In closing…”

There was no derision last night as the seasoned warrior pulled out all the stops in a barn burner of a keynote, trashing the Republicans and making a powerful case for Barack Obama’s re-election. Andrew Rosenthal, the editorial page editor of the New York Times, wrote an excellent analysis of the speech here.