641: The IPO Playbook & Creating Opportunity for Others | Steve Cakebread, CFO, Yext

“It’s not cheap to go public,” concedes CFO Steve Cakebread, echoing the oft-repeated refrain that founders and CFOs confront when considering the prospect of selling shares in their companies to the public. Concessions aside, it will come as little surprise to Wall Street and private investors alike that Cakebread—a seasoned finance leader who has taken public such companies as Salesforce, Pandora, and his latest firm, Yext—has come not to bury IPOs, but to praise them.  And 2020 might be the year when founders and CEOs are prepared to listen.   Certainly, few of Cakebread’s CFO admirers are likely to question the finance leader’s keen sense of timing. In fact, more than a few will likely be making room on their bedside tables for Cakebread’s soon-to-be-released The IPO Playbook: An Insider’s Perspective on Taking Your Company Public and How to Do It Right (Silicon Valley Press, 2020). “With all of the macroeconomic and pandemic issues going on, there have been as many—if not more—IPOs through August than there have ever been in the past couple of years,” says Cakebread, signaling an optimistic note for U.S.-listed publicly held companies, which have seen their numbers cut in half over the past two decades.  The coronavirus, it turns out, might in part be the antidote for Wall Street’s IPO blues. As COVID-19 spread, many companies made greater operational discipline and efficiency top-of-mind, which in turn led to the adoption of governance practices more commonly used by publicly held companies. What’s more, they began doubling down on culture, a trend that has prompted IPO-minded founders to more thoughtfully expose the connective tissue between public ownership and social responsibility. “Most founders want to create opportunity both for themselves and for the people around them, and this happens only when you go public,” explains Cakebread, who notes that the social responsibility aspects of going public were a big incentive for each of the companies that he took public, including Salesforce, where he and CEO Marc Benioff identified a number of benefits. “Marc and I talked about it a lot before we took Salesforce public. The discipline of going public makes your organizational governance better. It makes companies more socially responsible, and this was a big item for him and for me. It grows careers and spins off other technology companies,” continues Cakebread, who joined Salesforce as employee #67, when the $17 billion company was eking out a quaint $20 million annually. According to Cakebread, public firms operate with a certain rigor that privately held firms struggle to match—and VC-backed and private equity–owned firms can at times miss the big picture. Notes Cakebread: “I actually find it tougher to work with VC boards because all they care about is the numbers. They don't care about the opportunity so much.” To Cakebread, the IPO process is important because it allows CFOs to realize their role as visionary storytellers with the ability to articulate a narrative that educates others about where the business is headed and what opportunities are being pursued. “You’re always going to have one number out of whack every quarter, but if the sell-side research people understand the underlying story, they can teach the longer vision to their investors and say, ‘This is an upsy-downsy quarter, but long-term, this business is intact,’” he observes. Asked how diminished listings of U.S. public companies have likely impacted industry over time, Cakebread points to the dynamics of wealth creation. “This has meant less access for most of us, and I think that this is helping to create this disparity between people who are very wealthy and people who aren't because they can’t get access to the market,” says Cakebread. “This is a challenging topic for a lot of people, but I personally believe that access is...