Welbourne: Lessons learned from the three-eyed IPO monster

Editor’s note: This post was republished with permission from the Ewing Marion Kauffman Foundation’s Growthology blog.


There is tremendous scrutiny getting ready for an IPO and life as a public company. Like a three-eye monster, a company must face three perspectives when going through an IPO: the public eye, the operations eye and the internal eye.

Photo courtesy of ClkerFreeVectorImages/Pixabay
Photo courtesy of ClkerFreeVectorImages/Pixabay

There’s no doubt the passing of the Sarbanes-Oxley Act of 2002 reminded everyone of the importance of being in the public eye. However, the operations eye can be neglected when the management team is focused on internal meetings about the IPO and then later head out for weeks to do the road show (meet with potential investors). The company must continue to operate. It’s not only the CEO who is distracted by the IPO process; many members of the leadership team who are either part of the IPO process or covering for the people who are away on IPO business also have additional duties.

Which leads to what I call the third eye of the IPO—and the one most-often neglected–the internal eye. The internal eye focuses on what the employees are seeing and experiencing. As business focus moves to the public and operations eyes, often it is assumed that managing those two well will automatically cover the needs of the internal perspective. Time and time again I watch organizations ignore the internal eye and then suffer consequences that later negatively affect operations (firm performance goes down) and subsequently the public eye (stock price declines). Any leader desiring to complete a successful IPO must pay attention to the internal eye – and earlier rather than later.

Culture of Communication

One CEO who understands the importance of internal eye, and with whom I had the pleasure of working with in 1996 when he took his company public, is Robert W. Felton. In 1996, he was leading a successful software firm, Indus International. It had grown quickly and Robert (Bob) built a culture focused on open and frequent communications. He understood that the IPO had the potential to damage the culture because the way the firm communicated would change. There are many types of information that were freely discussed and shared pre-IPO, which due to the strict reporting requirements in place post IPO, could not be shared easily with employees. However, Bob’s response was to be open with other information and continue to support the company’s cultural norms as much as he could. In this vein he was incredibly creative.

The Road Show Diary

The “road show” is a grueling but energizing endeavor that every IPO firm’s leadership team experiences. It involves about three weeks of non-stop travel and continuous meetings. Days are filled with one-on-one meetings, large group presentations at lunch, more one-on-one meetings in the afternoon, schmoozing events, group meals and very little sleep. The employees back “at home” know the leadership team is out drumming up business for their IPO, but most really don’t understand the process. They do, however, know that the CEO and team are gone.

It’s a big event and, in most cases, a giant black hole that can create internal or employee-based problems if not considered carefully and managed. Thus, Bob created a small and simple invention he called the “Road Show Diary.” It provided the needed personal touch combined with facts to keep his team as energized as it has been during its growth to date.

Bob wrote personal notes, talked about meetings, not specifically but generally. He shared no confidential details, but he was able to discuss the cities he visited, his reactions to events, food, people and more. He used the diary to teach and to share the experience as if they were part of the road show team.

I know that it wasn’t easy for Bob to end every evening by writing diary entries and sending to his employees, but the response he received was so positive that it kept him going. Employees appreciated it so much that at a few of the stops the leadership team found care packages awaiting them. The Indus employees pitched in and put together care packages with personal notes, stuffed animals, homemade cookies and more for the team.

The positive effect the Road Show Diary had on the process and team kept his firm’s culture alive during the events of the IPO. During the rest of the IPO and post IPO, continuing into a merger post IPO, the leadership team at Indus innovated and built a structure that continued to support growth.


Theresa Welbourne, PhD, is a professor at the University of Nebraska and contributes to the Kauffman Foundation's Growthology blog. | Courtesy of the Kauffman Foundation
Theresa Welbourne | Courtesy of the Kauffman Foundation

Theresa M. Welbourne, PhD, FirsTier Banks Distinguished Professor of Business, University of Nebraska-Lincoln and Affiliated Research Professor, Center for Effective Organizations, Marshall School of Business, University of Southern California.

Welbourne also is a contributor to Kauffman’s entrepreneurship research blog, Growthology, which is syndicated by Missouri Business Alert.


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