What It’s Like to IPO
When baby sea turtles are born on the shore, they immediately rush by the thousand towards the ocean. Every predator in the area swarms to devour as many as they can. Only a few dozen make it to the water. An even smaller number make it to adulthood, and ultimately return to start the next generation.
Startups, like Mother Nature, are a brutal numbers game. This is what it’s like to become one of the few turtles that makes it back to the beach.
12 Years Before
You’re standing awkwardly in a one-room office. A guy in a T-shirt hands you a laptop, but tells you to factory reset it first. It belonged to a different engineer yesterday. The startup doesn’t have enough money for excess laptops. It’s 10am and there’s nobody else in the room.
He’s talking about how there’s a form to early-exercise your stock options, and you’ve got 30 days to mail a different form to the IRS, and do you have a check, and this is really important if there’s a “liquidity event” one day… you can already feel your eyes glazing over. You ask where you can grab a notepad and pen to take notes for the rest of onboarding. Laptop Guy stares at you blankly. This conversation is the entire onboarding, and there aren’t any notepads or pens, either. He says that if you need office supplies you can buy them at CVS and he’ll reimburse you.
“So, uh… what do you want your email address to be?”
6 Years Before
You go to Thanksgiving and tell your grandma the name of the startup, again. Your mom tries to describe what it does and gets it about 40% right. It doesn’t matter. Everyone’s moved onto discussing their fantasy football teams.
You were a smart teenager. You went to an amazing college, and your family was so proud. How did you wind up here? Your startup’s CI runs on a Mac Mini under your desk. It burns your legs. You have $0 in revenue. You’d think that this was rock bottom, but you’d be wrong. The startup used to have some revenue, but you churned it away, so now you’re back to $0. You’ve had 3 Heads of Sales in as many years – this at least does make sense, since they never seem to sell anything.
You have no idea whether more funding will land, but you can tell that you need it. Your best friend from high school just graduated med school. Pass the gravy.
* * *
12 Hours Before
The stock market has closed for the day, and the IPO is now inevitable. Aspects of the deal are still being discussed, the Book is being built, but there is nothing left that can disrupt it. You have spent weeks worrying about disasters that could have caused an issue in the markets and canceled the deal. It’s become a paranoid loop running in your head. But the big day has finally arrived and there aren’t enough hours left to fuck it up.
The adrenaline dump after a decade of white-knuckling the steering wheel is intense. You’ve worried about the company’s fortunes constantly, for years, and you can’t really turn it off, even on the eve of the IPO. You check your phone – same email address, same Slack handle that you picked in that office years ago. When the menus arrive for the celebration dinner you barely have the mental energy to order.
9 Hours Before
You’re looking at memorabilia that you’ve kept stuffed in a folder at home, relics from when the startup was tiny, seed stage. You opened up the printed (!) directory of an event from a decade ago. Techcrunch Disrupt. You remember it well – huge waterfront venue, full soundstage, two days of presentations, hundreds of booths, your team tucked in the back by the water coolers with the other fledgling startups. So much positive energy, so many excited faces, so many teams with such bright futures.
Based on a quick scan, your company is the only one that’s still in business. None of the other turtles made it home.
1 Hour Before
You arrive at the stock exchange to an extensive corporate buffet. It’s a huge reunion with people flying in from across the world. You haven’t seen some of them in-person in years. You’ve never seen any of them in a suit this early in the morning.
The CEO, founders, and early execs are celebrities. A Director who joined 8 months ago comes up to you – this is their chance to meet in person. “Did you expect this day would come?” Dude. That’s like asking if I expected to get hit by a meteor.
10 Minutes Before
You’re in a sterile, brightly lit holding pen. The exchange has sent in what can only be described as a corporate hype-man to get everyone fired up before the big moment.
The experience of having this high-budget camp counselor run a 5 minute pump-up exercise is utterly bizarre. For you, this is the most important day of your career. Your grandparents fled their home countries under literal gunfire to help you get here, to America, to the center of the capitalist universe. Today is a crowning moment in that saga. For Gary the hype-man, it is Tuesday.
5 Minutes Before
You’re standing on a street level sound stage. You’ve seen this place dozens of times: on the news, in the newspaper, on the glossy websites of the world’s most famous venture capital firms. Surreally, this time you are on the stage looking out. You see the city through soundproofed glass.
Above you on the soundstage are a semi-circle of TVs showing news channels across the globe – Bloomberg, BBC, MSNBC, international versions of CNN that you didn’t know existed. Screens are showing everything from bored looking news anchors to commercials for some Malaysian soap, killing time as the US markets prepare to open. Someone yells final instructions – there will be confetti, remember to smile, clap until we say stop, you’re about to be on TV.
10 Seconds Before
The countdown begins. The emotional tenor of the room reaches a fever pitch. You look down for a moment, and think of the steps that brought you here. Closing that first enterprise contract 9 years ago, the database incident that almost sank the company, the panicked breakfast in the lobby of a Marriott in Seattle after your biggest competitor’s product launch, the conference room you were in when you hit $30M ARR. You can remember everything, and nothing, from the decade-plus journey.
You look up as the TVs change, showing the opening bell ceremony of the stock markets of the United States. You are on every channel.
For a brief moment, all the spotlights in the grand arena of capitalism arc towards a single point, the exact coordinates in the global economy where you’re currently standing. Everyone goes wild – you probably didn’t need Gary hype-man. The guy who handed you the laptop all those years ago triggers the “bell” just a few feet to your left. You clap and cheer for what feels like 5 seconds and 50 minutes at the same time.
10 Minutes After
The confetti has dropped and it’s time for a brief photo op outside. People are taking selfies. As you walk off stage, the thought crosses your mind that you’ll most likely never be in this room again.
You’re hugging people outside – a small group of elated people in suits and skirts taking selfies on the street, like tourists in business casual. There is a fire in your team’s eyes that you’ve never seen before: Relief and excitement, like you’d expect, but in some of them, there’s also a novel confidence. The ones who endured years of anonymity and struggle to get here will retain that fiery, intense confidence forever.
A disoriented Argentinian family is shuffling their children away from an increasingly insistent person in an Elmo costume. Life in New York City goes on. Nobody gives a shit.
1 Hour After
Back at the exchange they’re going through the actual offering itself. People are popping champagne as the numbers tick up, and up, and up. All of the startup’s private venture rounds were run as cloistered secretive events. This time, they’ve literally got some guy with a headset running the deal with the price fluctuating on a live ticker. Bankers and venture capitalists are wandering around everywhere. It isn’t necessarily a bad thing, but you’re starkly reminded that all of your efforts were ultimately distilled into a financial product.
2 Hours After
The numbers stop. The “offering” is over. The Company’s shares, trapped in suspended animation in Carta for ⅓ of your life, are now being bought and sold by total strangers. You call up your stock tracking app and see a name that you’ve typed a hundred thousand times staring back at you. You’re like a caveman looking at the touchscreen console of a Tesla; you can’t process it.
As you walk off the floor, you look back at the screens and see the frozen price where the offering concluded. You remember when you made your 83(b) election after that confusing onboarding session years ago. It wasn’t a lot of money to exercise that initial grant, but exercising options in such a tiny startup felt vaguely irresponsible, like you were getting scammed. The shares you purchased are up 50000x.
Your mind starts calculating. Share Count times Current Stock Price – this is a calculation that your brain will become exceedingly good at over the coming years, as your share price rises and falls, as you learn what it feels like to make (or lose) sums of money that you didn’t imagine you’d ever have over the course of a day, or an hour, or 5 minutes of after-hours earnings market gyrations. But this moment, staring at a small white number on a cool blue background on an anonymous trading floor monitor, is the first time you’ve run the calculation for real. So it takes you a few seconds. You never need to work again.
6 Hours After
That afternoon, you open up Slack. The fanfare is over, and people in faraway countries are still sending you messages, and you’re going to be reporting numbers quarterly… forever. So you open up your laptop – same email address, same Slack handle. And you start crawling your way back towards the open ocean.