Maynard Webb's Advice for Startups Going Public

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Nov. 13 (Bloomberg) -- Yahoo Chairman Maynard Webb gives his advice for startups and tech executives. He speaks with Jon Erlichman on Bloomberg Television's "Bloomberg West." (Source: Bloomberg)

To talk about what goes on behind the scenes as companies like twitter navigate the move from a private company to a public one.

What is the main tip you have for ceo and board members during transitions like this?

X first, it's nice to be with you and congratulations to twitter on a great ipo.

But my biggest tip is going public is an exciting time and it's a a day, but it's only a day.

The ceo's focus on the board off focus has to be on building a great and enduring company.

Lex the office for twitter in san francisco, on ipo day, they decided to close it to outsiders.

Just to allow people to reflect for a few hours and then get back to work, what is the biggest challenge in the weeks following the ipo when everyone is coming off this high?

Lex hopefully it is a big high.

There are ipos that don't do so well.

It's about calibration and making sure people realize you have to now be a predictable company and every quarter, you have numbers to report and you have to keep going upward and onward.

You have a lot of new regulatory issues that you have to deal with that you did not have to deal with before.

You want to get your employees fixated not just on the stock price, but what they do every day in building a great service, like what twitter has done.

I think that word protectable is important.

Can a company be relevant to young people even if you have to be protectable?

Giving wall street analysts a sense on where you are going to be going every three months with your business?

Absolutely eerie there are several great companies that have done that.

I'm on the board of salesforce, and we are relevant, not just as a consumer company, but we are relevant, protectable and growing fast.

Growth is what most companies need.

I also don't think you cannot innovate.

It doesn't mean you have to make money all the time, you just have to live up to what you told people you were going to do.

A lot of people on the lead up to twitter's ipo, they talked about what's going to happen in six months when employees start selling stock.

One thing that you have to keep in mind is that it's workforce has absolutely x loaded over the last year.

People if they have stock options, twitter has obviously had some strong stock performance, but it could be a while before it is in your interest to be selling stock.

What do we miss when we are talking about that when the insiders start selling their shares?

First of all, it doesn't last that long.

Number two, a lot of those shares are still vesting.

It's not like everybody has all of their shares that hits on that day if they are eligible.

Some of the early founders have quite a bit available.

But if they are believers in the company, what you like to see is the stock price be the worst on the day you go public.

You are supposed to actually grow the company quite a bit and the stock would be worth a lot more as you go forward.

We do know that when a company goes public, inevitably, some employees will leave.

Probably at the same time new employees are coming in because the company is growing.

What are some of the ways to navigate at in terms of keeping everybody focused?

We went through quite a bit of that at ebay.

You have to make sure that people know that it's an evolution and what is most important is you have an engaged and committed workforce that has totally bought into your strategy.

If someone has made a lot of money and wants to go sit on the beach, it's probably better to let them do that then hold everybody else back while you are trying to get to the promised land.

What about for the board at companies that have just gone public?

In the lead up, it's probably all-encompassing, this idea of which hangs are we going to work with and what prices the ipo going to be done at question mark it's a chance to focus on where you want the company to be, but you have to be protectable.

How do you balance that?

Lex first of all, you add some board members with public money experience.

You will have a committee chairman who knows how to make sure everything goes well.

You put more committees in place and have governance and hopefully make sure you spend the majority of the time growing and helping the business as opposed to just governing the business.

Before we go, to get back to that example of saying if the stock has a lousy first day, it's not necessarily a bad thing for the company.

What kind of comments would you be making if we have a hypothetical company with a bad earth day of trading and morale and down 24 hours?

Lex the first thing i would say is let's go to twitter for a second.

Everyone may be all excited about that, but the people that bought in at $27 on the first day and then it jumped into the 40s made quite a bit of money.

They took their money out at 27. you could argue that maybe the management team lost too much money on the table for investors that first day.

I would be saying this was a successful ipo.

We now have the money we need to achieve the next steps in our journey.

We did not get the pop we had hoped to get, but let's focus on the next quarter and next the month and the stock to come back.

Look at where facebook is today versus where it came out a little over a year ago.

A very good point.

Great insight and always great

This text has been automatically generated. It may not be 100% accurate.


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