The morality and efficacy of going public earlier

May 5, 2021

Steve Cakebread, CFO of Yext and author on IPOs, teams up with Garth Mitchell, CFO of Latch, as they dive into the moral and practical implications of going public earlier in a company's lifecycle. Cakebread argues that early IPOs can foster maturity and enhance returns, while Mitchell shares insights on Latch's SPAC journey. They discuss the dual nature of greed in capital markets, the importance of governance, and the strategic decision-making behind public offerings. And yes, baked beans make an unexpected appearance!

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ADVICE

Go Public Early for Discipline

Go public earlier to improve company discipline and efficiency.
This forces you to implement better systems and processes instead of just chasing VC money.

INSIGHT

Democratizing Wealth Creation

Going public earlier increases wealth creation opportunities for a broader range of investors.
It counters the trend of shrinking listed companies and allows more people to participate in market growth.

INSIGHT

Rewarding Employees

Early IPOs benefit employees by offering better compensation through equity.
Private companies with continuous VC funding can sometimes concentrate wealth away from employees.

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For this week’s deep dive Natasha and Alex and Chris dug into the world of the IPO. Not just the numbers and the metrics and the calculations of valuations at diluted, and non-diluted share counts. No. We wanted to talk about the morality and efficacy of going public.

So to round out our conversation we enlisted Steve Cakebread, the CFO of Yext and Garth Mitchell, the CFO of Latch. Cakebread is known for being aboard the Salesforce, Pandora, and Yext's IPOs. Mitchell has sat on both sides of the table during the IPO process, and is currently helming the money equations as Latch approaches the public markets via a SPAC.

For more context, Yext, a company that first launched at a Techcrunch event back in 2009, provides data tooling and search software to businesses, while Latch builds software and hardware for rental-focused buildings. Yext is public. Latch will be in a few months.

Back to our topic, we asked Cakebread to talk about his thesis on why going public earlier than later can help a company's maturity process and can help provide greater returns to the general public. The CFO has written a rather good book about the IPO process more generally and what it means for a company's internal processes, but his morality notes especially stood out because its an argument far less noisy than the POP critics. Baked beans comes up, somehow!

We also asked Mitchell to talk about Latch's choice to go public, and what opportunities and challenges the SPAC route brings for the company. Of course, there's a SPAC joke in there (or two), but we get into broader "what's next" debates about if more companies will start to leave the private world, venture capital's role in this whole mess, and the financial lift of going to the public market.

Hope you enjoyed the show, and get excited: Equity is going to have more guests on from time to time, and we welcome any suggestions you want to throw at us.

Credits: Equity is produced by Theresa Loconsolo with editing by Kell. Bryce Durbin is our Illustrator. We'd also like to thank the audience development team and Henry Pickavet, who manages TechCrunch audio products.

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