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IPO advice from the CEO of a recently public company

IPO advice IPO advice
Photo credit:

Sebastiaan ter Burg 

The road to going public is infamously intense, but Suresh Vasudevan, Nimble Storage CEO, has completed it and, here, offers his advice for entrepreneurs looking ahead.

The figures for Suresh Vasudevan’s company, Nimble Storage, are impressive.

More than 5,000 enterprises, governments and service providers have enabled Nimble Storage solutions across 38 countries, allowing the company to report record revenues for 2015: $228 million, up 81% year-on-year.

Founded in 2008, Nimble Storage provides hardware and software products for data storage whilst also enabling enterprises with significant improvements in performance and storage capacity.

Last year, after 6 years in existence, the company decided to go public.

It’s a major milestone in any private company’s trajectory and one Vasudevan, as CEO, led from start to finish.

So what IPO advice does Vasudevan have and what knowledge did he have to gain in order to make Nimble Storage’s public debut a success?

Vasudevan joined Nimble Storage via its board in 2009, which he has sat on for 2 years before taking on the role of CEO.

There were a couple of factors behind this transition.

“About 3 months after shipping our products our then CEO decided that it was time to scale again, which coincided nicely with the acquisition of my own company; it was very clear to me that I could reshape storage and step into the CEO role.”

When Vasudevan attained his leadership position, there were around 35 members of staff at Nimble Storage, but that quickly doubled, then tripled.

“If I look back at the important factors behind our hyper growth, it mainly included the kind of people we were hiring; people who were willing and eager to join a startup – an entrepreneurial group of people.”

That’s not the whole story though.

Nimble Storage, led by Vasudevan, had also led extensive market research into their customer base, their competition and the nuances of the space they were entering into. This meant that upon scaling, they had software applications that could allow them to leapfrog their competitors.

Vasudevan’s first 2 pieces of IPO advice for a quickly scaling startup: hire well and research well.

That being said, however, the art of choosing a moment to go public is notoriously difficult.

“There is never a perfect time [to go public] and so leading up to the event we had lots of intense debates: going public would mean we would have more visibility, traction and more reach to more customers.”

The cons of going public usually include the level of scrutiny that your company’s finances face, but for Vasudevan, that wasn’t a problem.

“A year prior to the IPO we had been operating within the disciplines of a public company – road testing regular financial reports for example – so that particular engagement wasn’t hard for us to continue.”

Another piece of IPO advice: make sure you’re aware of the changes your company will face and test drive them…because the experience tests the mental strength of many a leader…

“The year prior to our IPO was the most intense period of my career.”

This was for several reasons.

As well as making sure all your books are in order, validating sessions with law firms and relying on a central controller to oversee the transition, Vasudevan had to meet with many investors to voice his company’s message and make sure that it resonated with them.

“We couldn’t have done it all without bringing on the people we did, they had the drive and they were interested in taking it public.”

Another piece of IPO advice: make sure the investor appetites are whetted.

Whetted could be an understatement actually, once Vasudevan explains the fortnight before going public.

“We went on 2 IPO roadshows: one 2 weeks before [the IPO] and one 2 weeks before that, a non-deal roadshow.”

During the less intensive non-deal roadshow, Vasudevan met with 10 large investors to explain what the underlying tech platform was and how that translated into customer wins.

The fortnight long IPO roadshow after that is when the real magic was weaved.

“I think we met around 8-10 investors every day for 10 days. The entire purpose was to tell each investor our entire story: who; what; why our future will translate into an interesting investment…you want to get them excited in being a future shareholder.”

Judging by the figures, the roadshow clearly worked, but there’s a caveat: Nimble Storage did its homework to minimize failure.

“There are instances where roadshows don’t work – but then it’s really your own fault anyway. You should have tested the appetite of the investors and tested the model enough so you knew exactly how the fortnight would play out…it’s extremely rare that you suddenly find yourself in new waters.”

Another piece of take-home IPO advice therefore is to seriously understand your potential investors and explain and prove your vision is watertight.

The one thing you can’t plan for, admits Vasudevan, is your valuation.

“Your banking team advises you on pricing IPOs based on past precedents prior to the roadshow, based on a good sense of the investor demand, which you get to change a couple of times…but it needs discipline.”

Discipline is an odd noun to use, but there Vasudevan emphasizes the need to strike a balance whenever you approach the subject of pricing.

“If you price too high you obviously raise more capital but then disappoint late investors who see a higher price, but set too low a valuation and you could be left irrationally raising it later.”

The IPO advice here is harder to articulate; there’s certainly an element of gut feeling within this process, but if that isn’t scientific enough for you, listen to the advice of the banking team and don’t get greedy.

So 18 months after going public, how does Vasudevan feel.

“I’m very comfortable; we set out what we wanted to achieve: we have a much broader visibility, a larger platform for our vision and we have doubled our customer base.”

Despite the positives however, there are still challenges that face a newly public company.

“As a startup you take private capital to increase that top line, to grow, but when you go public, as well as growing that top line, you have to have the discipline of managing the bottom line, in operational improvements.”

The final piece of IPO advice therefore is to be absolutely certain of what awaits you as a public company: the journey, the responsibilities and the change of dynamics that you’ll have to manage.

Vasudevan obviously enjoys these challenges, and he is very honest about what would happen if he found himself without those hurdles.

“When you get to the point where maintaining a status quo becomes more important than reimagining things, that’s when it gets boring and that’s when I’ll simply move on.”