Better for your wallet, but worse for the job. The company changes. The type of people it attracts to leadership roles are not the kind of people you’d start a company with. They bring their “processes and methods” that they promise will scale the company and then they insulate themselves by hiring their friends to report to them. The culture is corrupt at this point and the technologists that built the company begin moving on to new challenges and you see an accelerating attrition. But the new leadership doesn’t mind as it removes credible threats to their questionable abilities. And they can backfill with more friends/lackies loyal to them.
Within a few years post IPO the Composition of the company will have totally changed. The special place becomes a regular corporation. The hyenas will try to move on to the next Prize.
For what it’s worth the same people with the same sales pitch came in several years pre-IPO at my work. Ultimately they will come anywhere there is a lot of money to be made. Their replacements have their own processes and methods for scaling. Once those people move on the replacements will bring in a third round of this and so on.
That seems… cynical. The sorts of processes and. Management needed for a larger company are different than those at a small one. You need more process. There’s no way around it.
It may be cynical but it's also totally true.. I've personally gone through this whole cycle two separate times from smallish company -> private sale -> IPO shortly after. (~30th engineer in one and 11yrs, then day-one for the other and 7yrs).
Say you joined a company relatively early. If you're still around years later by an IPO, you probably liked that early environment where you had low-to-no management overhead, large direct impact, and everybody was personally invested in getting shit done. For most employees that environment was already slipping away pre-IPO, but you know you're close to the finish line and can't get off now. What remains is quickly going to be gone post-IPO.
The early employees get major cash-outs; some probably don't need to work at all anymore, so those that treat their job as a means-to-an-end and not their identity leave immediately. Maybe there's big incentives to stay for a few years, paid out annually, hung over your head so you don't quit immediately. But after a year of more managers and TPS reports and public company corporate governance you get your payout... That annual bonus structure practically forces you to decide if you want to leave now, or signup for a whole 'nother year of this, so a wave of people leave. After a 2nd year of this they're mostly gone to greener pastures.
Less-early employees still get significant cash-outs in a large event like this.
Maybe they use it to take some time off, it's been a long few years. Once you're out for a while, why not look at what else is out there on the market. Some of them find out they liked this new big-company stuff and want more of it, so they'll probably stay for years. Others are like the early employees and want the good-old days back, they have to go find it somewhere else.
The golden handcuffs can be pure torture. Your soul is being ripped out daily as the new leaders destroy anything that was great about the place. You go to an event and you can't even recognize the place anymore; interlopers everywhere and you're the outsider. You smile and cheerfully agree with them about "how amazing the culture is here" even though they've ruined it already.
But you're 2 months away from an early RSU grant from vesting you a few hundred thousands dollars on top of the ISO's you haven't cashed out yet. But eventually the right opportunity comes your way and everyone is shocked you're leaving like you were when a legendary person left 6 months earlier. You take a pay cut and probably worse benefits and more ISO's than you could imagine to join that series a or b startup you connected with as soulmates and it's going to be OK.
I’m not sure we’re disagreeing. Yes larger public companies are different from startups both because of the larger part and the public part. I haven’t gone through an IPO but I have gone through significant growth as a public companies. A lot of things change. Not necessarily for the worse. But it’s different.
That is totally true and those may be great for the growth of the company. But as the parent was saying they are generally worse for the day-to-day job of the old-guard employees, and that's why most of them leave soon after.
> The sorts of processes and. Management needed for a larger company are different than those at a small one. You need more process. There’s no way around it.
There is: don't go public or issue stocks. In Germany, we are famous for non-public companies: the "Mittelstand" is largely owned by the founders or their descendants, which frees them from a lot of external influences - for better (companies can focus on long term goals instead of phony quarterly/activist investor-driven "KPI/OKR" goals, companies save on a lot of the bureaucracy that the law mandates for public/share-issuing companies) or worse (we're notorious for a lack of digitalization and progress as well as inheritance squabbles).
An example are the retail chains ALDI and LIDL or manufacturers Bosch and Heraeus - all tens to hundreds of thousands of employees and many billions of net worth, but it's rare to even find somewhat reliable numbers on them.
You don’t have some of the compliance requirements then but you absolutely still need a lot of process if you have 10s to 100s of thousands of employees.
And a lot of it is driven by compliance obligations as a public company. If you don’t want SOX work and processes, don’t go public (or work at a startup that’s about to go public). If you don’t want SOC2 work, don’t go after large companies.
SOX work can be such a shock to a company the first time around. Because many of the systems have not had to meet these obligations before they typically aren't built in a way to control scope and SOX tends to bleed into places where it seems like it really shouldn't.
Those systems and processes are critical to staying out of trouble with the law after going public.
SOX is one thing. But you also probably get your sales systems and management, demand generation, sales enablement, expense control, etc. etc. better systematized. And yes it changes things. A lot of people who like small companies don’t like larger ones because things have to operate differently.
If you're at a large company, the only thing worse than dealing with processes is dealing with the chaos you have in the absence of processes with everyone running around doing their own thing. (Obviously there can be bad process as well.)
Those aren’t really related everyone can be running around doing their own thing (but slower) with a process - that’s usually a sign of leadership vacuum not absence of the process.
I bet most answers to this question will conflate IPO problems with simple growth problems, and the two are hard to separate. After all, a constant drive for growth combined with accountability to a public board usually makes strong leadership and strategy challenging - it's easier IMO for public companies to fall into "we must do what is easy to hit our numbers now."
On the flip side of the same coin, the ability to offer liquid equity and essentially pay employees using the company's projected growth (RSU issuance) is often financially lucrative for employees old and new and if done correctly, can attract a different group of really strong people who aren't in a place to take the startup gamble.
Hopefully for their RSU awardees the leadership team doesn't hire a bunch of sales/marketing types, thereby increasing operating costs, and tank the stock price. Mostly the market expects to see continued organic growth in these types of companies. Does anyone have experience here? I've only seen it twice.
I was at Facebook when the IPO happened and it was a pretty positive experience overall.
We had an all-night hackathon the night before (one of the hacks was to wire into the "Nasdaq bell" button to post an opengraph story) and the whole company was mostly in a "stay focused and keep shipping" mode.
The leadership team shared a few funny jokes each week at the all-hands events leading up to it talking about the roadshow but prep work for the IPO was mostly framed as "this thing we've got to do" and not as some kind of goal. The company was overwhelming focused on the work at hand.
Overall the IPO was cool and I'm sure for many momentus, but as a somewhat newly acquired employee it was mostly a non-event and no one made me feel like I'd missed out by not joining earlier. Everyone was really just starting to feel comfortable at the newish physical HQ and morale was generally high. Most if not all the internal chatter was around the idea that "this journey is 1% finished" and at least everyone I knew there was in "let's do this and move on" mode.
Mark had publicly committed to not selling any shares for at least a year so no one thought he was going to bail or anything.
The stock price then proceeded to fall from $30's to the $10's and despite the on-paper financial hit for many of us it was kind of validating that "those silly people in wallstreet still don't get it" and that we weren't at the end of anything, we were still at the beginning.
As FB then consistently grew for the next 9 years to nearly $400/share there was still plenty of upside so there wasn't much of a pre-IPO vs. post-IPO tribal thing going on either.
In short, the culture was never built around "let's get this thing to IPO" so it wasn't really impacted negatively by reaching that milestone.
If you want to really destroy morale tell your employees you're gonna IPO and then agree to an acquisition instead. Especially if that acquisition results in only a tiny bump in share price. Ask me how I know.
Within a few years post IPO the Composition of the company will have totally changed. The special place becomes a regular corporation. The hyenas will try to move on to the next Prize.