Noreen Allen -  Kevin Spurway
January 28, 2022

B2B Brands, Want to Grow? Go IPO

Guest: Noreen Allen - Kevin Spurway - CMOs, Bandwidth - Similarweb

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A CMO doesn’t join a B2B organization to keep things the way they are, they join to lead that company into the next phase of growth. That’s the mindset that CMOs Noreen Allen (who recently stepped down after 10 years at Bandwidth) and Kevin Spurway of Similarweb have brought to their roles over the years, evidenced by the integral roles they’ve played in bringing companies public.

In this episode, Noreen and Kevin share what it takes to prepare for an IPO and what it feels like to ring that bell in Times Square after months of hard work. This discussion is not just for those CMOs getting ready for an IPO, either. It’s a call to action for marketing leaders to embrace the IPO mindset: where strong positioning, a cranking predictable revenue engine, and a healthy set of attribution metrics can fuel next-level growth.

What You’ll Learn in This Episode

  • How 2 CMOs took their companies public
  • What CMOs need to prepare pre-IPO
  • Why you should always act as if an IPO is coming

Renegade Marketers Unite, Episode 277 on YouTube

Resources Mentioned

Time-Stamped Highlights

  • [0:00] Cold Open: This is Renegade Marketers Live!
  • [1:42] Noreen’s IPO Experience
  • [6:21] Noreen on Preparing to Take Bandwidth Public
  • [11:30] Noreen on the Day Bandwidth Went Public
  • [14:26] Kevin’s IPO Experience
  • [16:45] Kevin on Going Public During COVID and Engaging Employees
  • [20:27] Kevin on The IPO Roadshow Video
  • [25:37] On CMO Huddles
  • [27:11] IPO Metrics That Matter
  • [37:55] IPOs: Are They Worth It?
  • [40:50] What Changes After an IPO
  • [43:23] CMO Tips for Taking a Company Public

Transcript Highlights: Drew Neisser in conversation with Noreen Allen and Kevin Spurway

[0:00] Cold Open: This is Renegade Marketers Live!

Drew Neisser: Hello, Renegade Marketers! If you’re a first-time listener, welcome! If you’ve been here before, welcome back! You’re about to listen to a recording of Renegade Marketers Live, our live show featuring CMOs of CMO Huddles, a community that’s sharing, caring, and daring each other to greatness almost every week. In this one, I had the pleasure of speaking with Noreen Allen of Bandwidth and Kevin Spurway of Similarweb, two extremely knowledgeable CMOs who discussed the roles they played in taking their companies public.

This show on IPOs has been one of my all-time favorites. It’s got incredibly useful and specific advice for CMOs that are taking their companies public, but it also has even larger implications than that. That is, what it takes to prepare for going public is something to bring to the CMO role every day. A CMO doesn’t join a B2B organization to keep things the way they are, they join to lead that company into the next phase of growth. Without further ado, let’s get to the episode—I hope you enjoy it as much as I did.

[1:42] Noreen’s IPO Experience

“Before I take any job, I'm always looking at the long-term potential for the company.” —@noreena @bandwidth Click To Tweet

Drew Neisser: I’m your host, Drew Neisser, live from my home studio in New York City. Perhaps as a marketer, it is your dream to be at the helm when your company goes public. You might think this is a highly unusual scenario, but I looked this up. Thus far, in the first nine months of 2021, there were 770 IPOs. It’s incredible and if you add in a couple hundred from 2020, that’s over a thousand IPOs.

So, with so many IPOs, you might wonder how you get in that position in the first place. What sacrifices, if any, do you have to make along the way? What the heck do you do in preparation for an IPO? And what changes in the role of the CMO after going public?

To answer these questions and more we’ve got a superstar tandem of CMOs: Noreen Allen and Kevin Spurway. With that, let’s bring on Noreen, CMO of Bandwidth. Hello, Noreen!

Noreen Allen: Hey, Drew. Great to be here with you today.

Drew Neisser: How are you?

Noreen Allen: Hey, Drew, doing well.

Drew Neisser: So first of all, where are you?

Noreen Allen: I’m in Raleigh, North Carolina.

Drew Neisser: I knew that! That’s cool. Okay. So, let’s go back a little bit. You started at Bandwidth almost 10 years ago. When you started, did you have any inkling they would be going public?

Noreen Allen: Well, I certainly hoped so. I hoped that would be part of the plan at some point, but you never know. You never know if that is ever going to become a reality. But yeah, that was something that I was hoping for, when I was evaluating the company on the front end and before I joined.

Drew Neisser: That’s interesting, because you were hoping, which means that maybe it had to do with your compensation package, that you went into this—I mentioned this notion of sacrifice. Was that part of your calculation? That if they did go public, and as part of you taking the job?

Noreen Allen: Yeah, absolutely. Before I take any job, I’m always looking at the long-term potential for the company. I want to make sure on the front end, that the company’s got great product market fit and that there is the potential to really grow the business. Whatever that might mean.

It could be IPO, strategic M&A activity, global expansion, it could all of the above, but going into it, I wanted to be part of a growing business and a business that was going to do really well.

That would then translate into more opportunity for me. That’s part of the evaluation process for me on the front end to make sure not only is it a cool product, fun company, and good culture, but I want to make sure that the ingredients are there for that long-term potential.

Drew Neisser: Right. So, there’s a big, big reward at the end of all the hard work that goes into getting there. Help us understand—at what point did you learn this was going to happen and how did you feel? Because this was your first, right?

Noreen Allen: It wasn’t actually.

Drew Neisser: Oh, okay. Good. That’s excellent. You had done this before. Where did you do it before?

Noreen Allen: A company called SpectraSite Communications. SpectraSite went public twice, actually. First in 1998. Then the company grew and expanded quite a bit. Then when the market collapsed after the dotcom bust, the company went through bankruptcy. The company was in and out of bankruptcy in 80 days, then we came out again, and were listed on the New York Stock Exchange. That was in 2002 when SpectraSite IPO’d twice.

Drew Neisser: Do you think when you got hired at Bandwidth, the fact that you had been at a company that had gone public? Was that part of their thinking in bringing you on?

Noreen Allen: I think it was. I think it was not just the IPO piece, but it was prepping a growth-stage company for that next phase of growth. So, whether it was getting the company ready, building that revenue engine, positioning the company the right way to attract funding and to scale the business.

I had done that at four companies before Bandwidth. I think the experience of having done that, the fundraising, the strategic M&A activity, the global expansion, and the prior IPO prep experience… I think that part was certainly attractive as Bandwidth was thinking about me as a candidate.

Drew Neisser: And all these things go together because if you’re not going to go public, you’re probably going to be raising money if you’re in that growth trajectory.

[6:21] Noreen on Preparing to Take Bandwidth Public

“I spent a bunch of time going out and pulling down the S-1s for all of the companies that went public in the year prior and then companies in our category that went public in the several years prior.” —@noreena @bandwidth Click To Tweet

Drew Neisser: So, at what point did you learn that you were gonna go IPO?

Noreen Allen: Sure, so Bandwidth—just for a little context for folks, we’re a communication software company. If you’ve heard of Twilio, we’re similar to Twilio. We went public in November of 2017. We started the process probably two years prior.

My work started in about 2015 as we were evaluating various different paths for the company, including going out and raising money doing some M&A activity. But my work really started with strategic positioning. It was looking at the broader category that we were in and carving out a position for Bandwidth within that category, a unique position for Bandwidth, and then getting out and educating the market on that story.

So, my work really started with the industry research analysts. It included all of the big names that we all know of. The Gartners and IDCs and Forresters of the world. But also there are a number of smaller boutique analysts like more niche-y, independent shops that are really influential with the investor community.

We spent a lot of time getting out and educating that analyst community about our position within the market, and really carving out that unique position for Bandwidth, then getting out and validating that position with: We’d have the analysts work on collateral pieces, webinars, and different things, whitepapers, to support our position within the industry.

Then you started to see the industry trade press talk about Bandwidth and talk about our position within the industry. Then it made it a lot easier, when we started reaching out to the investment banks, which was very early 2017, we started reaching out to them about the potential for an IPO.

They go right to the industry analysts to better understand the market, and to better understand our position within the market. So, all of that work we had done the two years prior really started to pay off because they understood how we fit. Then you fast forward to writing an S-1 and it’s a heck of a lot easier to talk about your position within the market when it’s understood and it’s easy to support and easy to show that TAM and how you fit into it.

Drew Neisser: What’s so interesting to me, first of all, you needed the analysts to be this credible thing, but you also had to go to these analysts and essentially market to them and convince them that there was some whitespace between you and a competitor.

You had a luxury of time in that way to build the brand in a way that would be the most appealing from analysts to investors. It’s really interesting and I know when we talk to Kevin next, he didn’t have that much time. So, it’ll be interesting to hear how he dealt with that.

Okay, so you went from analysts, then we go to the press, and then you go to the investment community. Talk a little bit about an S-1 and what your role is in that?

Noreen Allen: Sure, so in the drafting of the S-1, there are several different sections of the S-1 where you’re talking about your business, the market, and the risks that exist for the business. My role in that was pulling together a lot of the market information, so information about the total addressable market for Bandwidth.

What’s the market we’re going after? How is that market growing? Talking about the buyer personas that we’re going after, all the different use cases that we have that represent the different unique segments of the market that we’re going after. We pulled a lot of that information together. Customer information, customer use cases were a big part of that as well. So, there was a lot of material that we had been working on in advance that fed into that.

Drew Neisser: And who prepares that list? Is there a standard list that your investment banks just say, “Okay, you need all these things”?

Noreen Allen: I don’t recall that there was a standard list, but I’ll tell you what I did a lot of in the lead up to this because while I had been through the IPO process before it had been quite a while and it’s changed a lot over the years.

So, I spent a bunch of time going out and pulling down the S-1s for all of the companies that went public in the year prior and then companies in our category that went public in the several years prior. I pulled their roadshow videos. I pulled a lot of their material. I went back and looked at their website on the website Time Machine, pre-IPO and post-, to try to see what they were changing. I learned a lot through that.

I wasn’t really following a checklist, but it was learning from what other companies have done. Companies that had successful IPO’s, I’d go back and try to unpack, what was it? What seemed to have worked here that resonated with investors? And tried to get ideas that way.

Drew Neisser: Well, I tell you, boy, if you actually wrote all that stuff down, that would be an invaluable little thing to be able to share among the huddlers who are out there thinking about going IPOs, because that—what is smart—now I know it’s changed even in the last four years. And we have Kevin who will be able to talk about that. But wow, really smart, do your homework, get to know what success looks like, and then try not to make the mistakes that the folks didn’t do as well.

[11:30] Noreen on the Day Bandwidth Went Public

“It was such an incredible, emotional moment when you know it represented so much work.” —@noreena @bandwidth Click To Tweet

Drew Neisser: We get to November 10th, 2017, the day you went public on NASDAQ. Talk about that day and how you felt.

Noreen Allen: It was so exciting. It was such an exciting day. I’ll tell you, our lead up, it ended up being a very fast process. While we were prepping from a messaging perspective, we came out in about January/February of 2017 and said, “We want to take a shot at this.”

It then went really quickly. Like, there are steps you go through in terms of working with the investment banks and everything, so it went pretty fast. Right before you go public, you’re out on the road doing a roadshow, so our CEO and CFO were out on the road for that, trying to generate interest and get all the investors on board.

It literally comes down to… That night, the night before, you’re waiting to see, “Is this a go or no-go?” And I remember, there was another company that was supposed to come out the same day as Bandwidth and IPO and they didn’t make it. They didn’t have enough interest from investors. You’re not totally sure until that very last minute.

So, here we are in New York, we had a big group of employees that came in with family members and we’re all staying at a hotel in Times Square, and we had this big celebration dinner planned for Thursday night. The IPO was on Friday. Folks back in Raleigh had this big celebration planned in the office and we had said to folks in the office—not everyone knew what was happening.

They didn’t know it was happening that day. They knew we’d filed the S-1 and were in the process, but folks in Raleigh, we said, “Okay, if we don’t end up crossing the line here and we’re not going to come out tomorrow, we will flip the celebration in Raleigh to be a Veterans Day celebration when people come in and see all of the balloons and breakfasts and everything.”

But day of, when you’re in Times Square, we’re listed on NASDAQ and NASDAQ does a fantastic job of just creating a really cool experience for employees. I’m sure everyone has seen. You do the Time Square takeover and you have your logo all over Times Square. In fact, I’ve got a picture of my office behind me of the Bandwidth Times Square takeover where you see the Bandwidth blue everywhere.

It was such an incredible, emotional moment when you know it represented so much work. The company had been around for 17 years at that point. But to get to that point, and to be able to celebrate it with your peers and with family members and to see it all right in front of you… To ring that bell and to see the logo all over in Times Square—it was so emotional. It was a really, really cool experience.

Drew Neisser: Yeah, it’s got to be incredibly gratifying and when you think about how many years of work that actually went into it, and you get to that last minute, and it may or may not happen… Just for the folks, I don’t know if we shared this, but you raised $80 million by selling 4 million shares, which is great.

[14:26] Kevin’s IPO Experience

“We took @Appian public in May of 2017, about four years before @Similarweb went public.” —@KevinSpurway Click To Tweet

Drew Neisser: Now we’re going to switch gears and we’re going to talk with Kevin Spurway, CMO of Similarweb, who happened to be a star of Episode 137 of Renegade Marketers Unite. Hello, Kevin.

Kevin Spurway: Hey, Drew, it’s great to be back with you.

Drew Neisser: It’s lovely to have you here. First of all, where are you?

Kevin Spurway: I’m in Northern Virginia. Leesburg, Virginia, specifically. Out by Dulles Airport about an hour west of DC.

Drew Neisser: All right. Well, we’ve got the East Coast contingent, if you will, on this Renegade Marketers Live. Now, you heard a lot of what Noreen was talking about. She had two years to prepare. It seems to me when you joined Similarweb in September 2020, you didn’t have that much time.

Kevin Spurway: I definitely did not have that kind of time. From the time I joined to the time we did the IPO was nine months. It was a drinking from the firehose type of a situation for sure.

Drew Neisser: But you knew that this was part of your being brought on? Right?

Kevin Spurway: I certainly had an idea that Similarweb aspired to go public. I didn’t have a clear picture of the timing coming in. And of course, as Noreen said, as you go through the process, timing is something that can change based on a whole variety of different circumstances.

It’s really go, no-go potentially up until the last minute when you actually go through that process and you see what the investor demand is. It’s something where I came in and found out very quickly what the timing was for the company, and then had to figure out how to dig in and drive a lot of change quickly.

Drew Neisser: Yeah. And it’s interesting because, again, unlike Noreen’s situation, she’d been there, knew the brand, had a lot of insights in it. You’re new to everything and it’s, “Oh, by the way, we’re going public.” Now, I’m guessing that part of the reason they were attracted to you here was that you had been on the team that took Appian public, right?

Kevin Spurway: Yeah. So, we took Appian public in May of 2017, about four years before Similarweb went public. I did the IPO at Appian, so I had been through that drill before and had that experience fairly recently.

Drew Neisser: Yeah, it’s got to be so you’re not going, “I don’t know what I’m doing here.” So, you know what you’re doing.

[16:45] Kevin on Going Public During COVID and Engaging Employees

“It really is a great opportunity to engage employees and thank them for contributing everything that they've contributed to the success of the company.” —@KevinSpurway @Similarweb Click To Tweet

Drew Neisser: I know that Appian is listed on the NASDAQ; Similarweb is on the New York Stock Exchange. Did that have a difference in the impact on your prep at all?

Kevin Spurway: It did a little bit. So, there are definitely some differences between the two exchanges in terms of what they offer in terms of the day-of experience. But really, for me, at least the bigger difference between the 2021 IPO and the 2017 IPO wasn’t the exchange itself, but it was the limitations around IPO activities due to COVID.

2017 was a very different animal because you could really have the much bigger group involved, you could have that big company celebration back on the other end. It made it easier to kind of pull in certain resources.

2021, very different story. It was a very small group that was there, it was handled very differently and there was a whole virtual dimension that actually both exchanges have innovated in that direction as a result of COVID and created some ways to connect the employee base better into the experience through virtual means.

Drew Neisser: Talk about that. I’m interested in that because it is a different experience than Noreen was describing.

Kevin Spurway: Yeah, it’s interesting. In a lot of ways, I think the employee experience is more connected now than it was a few years ago because they’ve had to, like I said, innovate in these different directions.

They’ve got an app that enables employees to take a picture of themselves and digitally project the facade of the New York Stock Exchange with the banner and all of the branding. You could post it up on Twitter or LinkedIn.

They do a big, huge live stream news show that gets streamed out to the employee base and literally runs for like two hours, it’s kind of like the play-by-play of the entire event. And that’s not stuff that they really had, at least in terms of the scope of it back in 2017. So, they’ve done a good job to fill in the gaps there.

Drew Neisser: Yeah, that’s really interesting. And of course, not having experienced that, I would have no idea about that. You talked about employees, Noreen talked about employees, why are engaging employees in this process so important and so much part of it?

Kevin Spurway: It’s a good question. I think it’s one of these things where certainly for employees that have been with the company for a while, it’s—to Noreen’s point—it’s an emotional moment. Even though you’re not actually there, the company is taking a step into a new kind of maturity. It’s a special time for that reason but work that you’ve put in over the course of potentially many years is actually coming to some type of fruition, if not like an endpoint, a new next stage or a new beginning. I think that that’s very meaningful.

Then for new employees, it’s something where you have an opportunity to really engage people and it’s a cultural event for the company that people can share and commonly experience. It gets people excited; it gets them pumped up.

We actually did a huge employee branding campaign where we took billboard advertising out—we’re actually based, the headquarters is in Tel Aviv. We blanketed Tel Aviv with billboards, thanking our employees for all the hard work that went into building Similarweb to the point where it is right now. We ran campaigns in London and the Boston area, as well—because we have offices there. It really is a great opportunity to engage employees and thank them for contributing everything that they’ve contributed to the success of the company.

Drew Neisser: Really, it’s amazing. I talk about this a lot in my book, how important employees are, and this is so new to me not having gone through the experience, of course, they’d be important. But really, it sounds like in the case of Similarweb, they looked at it as a way of engaging them.

[20:27] Kevin on The IPO Roadshow Video

“It’s an opportunity to engage and story tell and explain the company and the personality of the company in a much more compelling way.” —@KevinSpurway @Similarweb Click To Tweet

Drew Neisser: When you and I talked a few weeks ago, you talked a lot about the roadshow and the roadshow video and how this has become its own art form. Can you talk about that, and the process that you went through to get yours together?

Kevin Spurway: Sure, absolutely. So, the roadshow video, for those who aren’t familiar with it, is basically a 25+ minute high quality video that tells the story of the company. It used to be—this is another thing that’s changed, I think, over the last few years and really evolved over the course of the last 5 or 10 years—it used to be this kind of fairly set format.

It kind of progressed along the same structure as some of the decks that you create as a result of going through the IPO process for equity analysts and things like that. But what it’s evolved into is much more of a storytelling opportunity.

So, we’ve moved away from this CEO talking head shifting to the product owner talking head shifting to the very boring part at the end with the CFO talking for 10 minutes about the financials… To something that is much more of an opportunity to engage and story tell and explain the company and the personality of the company in a much more compelling way.

This is a pretty big video. 25 minutes of high-quality production is a lot, so you have to plan ahead. You have to think strategically about who your speakers are going to be, the people who are internally representing your brand. The executive team, you might want to have other people who are not on the executive team. Employees, depending on how you want to work it. You’re going to script out the whole thing.

Then you’re also going to capture more candid footage and splice it together in interesting ways. Customers, you’ve got to bring them in and line them up and get them ready to speak on the video. That can be something that’s really a challenge because, particularly with COVID, operationally difficult, but also, getting a customer to step up and say, “We believe in this company and the value that they represent,” and do it in this type of a high-profile format.

It’s potentially a big lift, so it’s something you really need to plan ahead to do. Also, of course, you’ve got to hire the right company to help you out with it as well.

Drew Neisser: Yeah, I was going to ask you about that, because this is a very specialized thing and I imagine the people who do this—they command big bucks.

Kevin Spurway: Yes. For sure, it is a high-ticket item and it luckily doesn’t normally—at least in my two situations—hit the marketing budget, it hits the IPO budget. But it’s a big-ticket item and there are a number of companies that do this and specialize, but it’s a limited number.

Last time around, you mentioned how many companies have gone public in the last year or so. Activity levels super high. It is really hard to find the right company that had the bandwidth to actually get it done. I think I can just speak for our experience, I’m really happy with how our video turned out. But, again, you have to you work with the right people and I think we managed to pick a good company to work with.

Drew Neisser: Yeah, it is a specific type of storytelling. I just would imagine that it’s so different and you do it so rarely in your career that you’re relying on experts all the way. I mean, you’d have to right? I mean, it’s not like in the old days, we used to shoot 30 second, 60 second commercials, and you do enough of them, you can speak up. This has got to be tricky.

Kevin Spurway: Yeah, I think there are a lot of different inputs that go into it, it gets a lot of scrutiny from the entire executive team, certainly who are all in some case—in our case—themselves participating and speaking. But having good expert advice, good creative capability. It’s that art of storytelling. I think some of it you bring with you and then having some outside help to help you drive is a huge asset.

Drew Neisser: So, I’m imagining that there is an endless list of things that one needs to do in preparation. And, at the same time, you are still on the hook to drive demand for the organization as the head of marketing. So, I’m wondering how these two—it’s almost like you have two jobs. How do you manage those two demands as you’re going through it over the nine-month period in your case?

Kevin Spurway: Yeah, sure. To your point, the business has to run, right? We have to drive demand generation. If anything, it’s more important now than ever that you’re delivering consistently, you’re hitting the plan. And I think to a certain extent, the IPO related activity—and Noreen touched on a lot of the things that need to happen from a deliverable standpoint—those things have to happen incrementally. It’s “in addition to.”

So, as you go through the process, it really is a situation where having a great team around you becomes incredibly important because in this situation, you end up leaning on people, your direct reports, other people around you, the executive team—you lean on them more than you normally would just to make sure that the day-to-day is operating smoothly.

I’ve been lucky to work with two great teams through the two processes that I ran. But you have to have those people who you’re comfortable handing things off that normally you might take on yourself.

[25:37] On CMO Huddles

“I get so much out of the sessions and I'm often tapping into the community to just get ideas for vendors and different solutions.” —@noreena @bandwidth Click To Tweet

Drew Neisser: We’re gonna transition here for a second because this is the moment where I am going to plug CMO Huddles. We launched CMO Huddles in 2020. It’s an invitation-only subscription service that brings together an elite group of CMOs to share, care, and dare each other to greatness.

One CMO described huddles as “Timely conversations with smart peers in a trusted environment,” while another called it “A cross between an expert workshop and a therapy session.” If you’re a B2B CMO that can share and care with the best of them, visit CMOHuddles.com or send me an email to see if you qualify for a guest pass. So, Noreen, having been in CMO Huddles for a while, does that description sound about right?

Noreen Allen: Absolutely. Yeah, absolutely. It’s been wonderful. It’s been great to connect with peers across so many different industries to share ideas, whether it’s around things like org structure, new tools we’re implementing, or just dealing with different seasons, things like this, like prep for an IPO. It’s been incredible. It’s really been helpful. I get so much out of the sessions and I’m often tapping into the community to just get ideas for vendors and different solutions. It’s been really, really helpful.

Drew Neisser: Yeah, we love your being active on Slack and all those things because it really is—it’s an amazing network. I know, Kevin, you’re very new to huddles, so I don’t know if you have an impression yet.

Kevin Spurway: I have no impression yet, but the concept to me is amazing.

[27:11] IPO Metrics That Matter

“You've got to have that predictable revenue engine cranking before you even start this process.” —@noreena @bandwidth Click To Tweet

Drew Neisser: Noreen—you’re very popular. Chip and Gabi and Rachel all chimed in and said they want your list. I believe it was the characteristics that you identified of what made these videos good. So, probably between the two of you, you’d nail it.

We talked a little bit about the demand gen; Noreen you had a lot of time. You had the two years to get the brand together. But talk a little bit about, in the last six months, I’m imagining it’s all IPO all the time.

Noreen Allen: Yeah, absolutely.

Drew Neisser: How do you deal with that? And how did you deal with it? Because you’ve got to keep the business running.

Noreen Allen: Yeah, absolutely. So, ahead of time, you’ve got to have that revenue engine cranking. You’ve got to have that predictable revenue engine cranking before you even start this process, right? Because another big part of it is, you have to be able to communicate to investors all the metrics.

And this is another area where you can go and pull numbers from other companies that have gone public to get comps from others in the industry on all the different marketing metrics that they use to evaluate a company. But the marketing metrics are a big part of it.

Investors want to be able to evaluate the health of that revenue engine because they’re thinking about: “If I’m investing money in this and this company is getting a capital infusion, what are they going to be able to generate and in what time period?”

That is a big part of it, so you want to have it in place ahead of time. You want to have a strong leader. You want to have a strong leader that, if you as CMO have to take your eye off of that for a period of time to go heads down on IPO prep, you know that revenue engine is going to continue to crank.

I think, as Kevin said, it really comes down to having strong people around you. We tried to ring fence a team of folks that were focused on the pre-IPO activities, so we weren’t disrupting the entire team. We had a few people that were involved.

There were so many decks that we had to prepare in the months leading up to the IPO for different investor days. We did a roadshow and some other things months in advance—so doing all that deck work, and then working with all of your executives to prep them on media training and presentation training and really getting them good at delivering that company pitch, that company narrative.

I was spending a lot of time on that, and I had a couple of people on my team really helping, but then I had a lot of other people on the team that just kept the business going. I think having strong leaders in place during that period, so that you know the business is going to keep going and you’ll have the time and the cycles to spend on the IPO activity.

Drew Neisser: Listening to you on this, one of the things that I really want to dive into is metrics, but I’m gonna ask Kevin that, and then we’ll come back to you. So, it’s interesting, because we know how difficult it is to have a perfect metrics engine and perfect ROI attribution and predictability.

So, I’m curious, Kevin—since you did this recently—what metrics did you concentrate on that were the key ones that became part of the sales presentation if you will?

Kevin Spurway: That’s a good question. I think every company is different in terms of what they want to emphasize as part of the key measurables that they want to talk about it as part of an investor pitch. Thinking about how we positioned, a big part of our strategy has been attracting people at the top of the funnel with really interesting, free offerings in terms of measurement data and insight into activity that’s happening in the digital world.

So, we presented some data around the usage that those capabilities were getting on our website. That’s one of the things that we looked at. Basically, the monthly users that were returning to our website to use those free tools over and over again.

Then we talked about the typical metrics, the typical funnel metrics. The lead conversion, the value that we’re driving into pipeline. You’re always a little bit cautious about how much detail you’re giving the investor community about these things in particular because you don’t want to get into a situation where, on an ongoing basis, you have to continue to position these things.

For us, it was about describing the strength of this demand generation engine and the efficiency of it and how it operated and the relatively low marginal cost of pipeline creation that it enabled for us. But we were careful not to get into a situation where we needed to kind of update the street on an ongoing basis as to how that whole engine is performing. In particular because, like anything, it evolves over time.

Drew Neisser: Right—that’s interesting, and I didn’t realize it was a freemium model. Really then marketing is: How many people can we get to the free product and then X percentage of those, we’re going to convert and we’re going to convert them in a consistent manner. It feels like you can create somewhat of a predictable thing because from past data how many of these free customers become paid customers, right?

Kevin Spurway: Absolutely.

Drew Neisser: Okay. So, as long as you keep getting free customers, and as long as you keep converting them at the same rate, you’re gonna grow. That’s a relatively easy thing to wrap your mind around. Noreen, I don’t think that your model is the same is it?

Noreen Allen: No, it’s not. It’s more of an enterprise level sale.

Drew Neisser: Let’s talk about the metrics that you were focused on that could get you to a predictable revenue stream, at least in the minds of investors.

Noreen Allen: Sure. So, we put it on a variety of metrics, things ranging from CAC—customer acquisition cost—your CAC payback period. We measured a sales and marketing efficiency ratio that shows the fully loaded sales and marketing expense, including headcount, and measures that against increase in revenue.

We also look a lot at DBNER—dollar based net retention rate—that measures how your existing customer accounts are growing, which is really big for our business. We also looked at things like the percent of revenue that was spent on sales and marketing and put all of these things together to tell a story to show that, at the time, our percent of revenue spent on sales and marketing, when you compared us to…

We looked at the last 50 companies to IPO before us and compared our numbers to theirs. On a relative basis, we were not spending nearly as much on sales marketing, but we were showing, “Hey, we’re not spending on sales and marketing, but here’s what we’ve been able to do from a revenue growth perspective and an efficiency perspective.”

To paint the picture that if we add dollars to this and fund the sales and marketing engine, you can expect that because we’re operating so efficiently, we’re going to continue to really scale this. Those were some of the numbers that we used.

But I’ll tell you again, to really figure out what numbers were most meaningful, this is also where pulling the information from all the companies that went public previously… It’s funny because Kevin’s company Appian went public just a couple of months before Bandwidth. That’s one of the companies I studied most carefully. Watching the roadshow video, watching the deck, pulling all the information.

Kevin Spurway: I hope you think we did a good job.

Noreen Allen: You did. You did. Yeah, right away when I was that I was like, “Oh, how cool. We’re talking about IPOs and I studied your IPO.”

I’d encourage folks that are thinking about this—the important thing too is, no matter where you are in your lifecycle with a company, if you’re not public yet—and most tech companies have their eye on some an event, fundraise, M&A activity—you should be acting as if you’re on the way to get there.

So, working on the strategic positioning, working on getting that predictable revenue engine in good shape and really cranking, getting all the metrics dialed in and making sure you have a really strong analyst on your team that can report on all of that, looking at how other companies report the numbers and how you match up.

The earlier you start really getting rigor around all of that, the better position you’re going to be so that if, like in Kevin’s situation with his new company, if it’s, “Hey, we went IPO in nine months,” you’re ready. You’ve got the foundation in place; you’ve got the team in place.

Drew Neisser: What I love about that is, even if you don’t do an IPO or have some other thing, why wouldn’t you want to have a business that had a predictable flow? Why wouldn’t you always want to have those metrics in place that you have agreement on, right? That we can look at our business, and we can share.

It’s just so funny that often it takes an IPO or something to kind of, in many ways, do the right thing, right? Another thing as I’m thinking about it, and you’re dealing with the fact that you were under-investing in marketing, but still getting really good results, so give us this IPO an extra $80 million. And look, if we spent some of that marketing, imagine how much more we could grow. That’s a great story.

On the same hand, you wonder why you couldn’t just go to your CEO and say, “Hey, we could spend more money and grow faster.” I’m just wondering, but anyway, as you’re listening to this and you’re thinking about planning for this, I’m thinking this show is so relevant to any CMO who wants to be in a position to show value.

Noreen Allen: Absolutely.

Drew Neisser: What am I missing here? You guys have both done it. Your next job, you go in and they’re not planning an IPO, why wouldn’t you want to have all the things that you just talked about in place?

Kevin Spurway: Yeah, I think it goes back to what Noreen was saying earlier. She’s been with companies and brought them through this phase of growth. I think that’s really what it’s all about in terms of taking a product that has a good fit to the market and has customer value and helping to create the marketing engine around that to enable you to get to that level of predictability.

When I say engine, I really mean engine in the sense that it operates, it’s a machine. When you add more input to it, it performs at a higher level in a predictable way. I think that’s really the phase of growth that we’re talking about in this around $100 million ARR type of company where you’re thinking about the very earliest stage to become a public company. That’s the motion that you want to get into, where you have that predictability of incremental input delivers predictable output.

Drew Neisser: Yeah, I mean, I could even go further back to that where Noreen started with this, which is, you need a clear point of difference to define the brand in a marketplace so that analysts and then investors will, in fact, reinforce the fact that you are a distinct brand in the marketplace. Which to me is what all CMOs need to do, anyways.

So, it’s just, again, interesting that these are steps that are must-do in an IPO, but I would argue, maybe you want to all-do.

[37:55] IPOs: Are They Worth It?

“You get to build connection and relationships with people at the next level in terms of who you're working with.” —@KevinSpurway @Similarweb Click To Tweet

Drew Neisser: So, the good news is, and I think there’s a certain amount of folks that are salivating and looking at this and saying, “Oh, my gosh the personal wealth creation that an IPO might add to that.” Is the payout good here as the CMO? I’m not asking you to put—I’m sure there’s probably a public record—but is this worth the extra work in double time and two jobs over the course of a two-year period or nine-month period?

Noreen Allen: Yeah, I’d say it is. It’s gonna depend on when you join the company, right? The equity you get really depends on the value of when you join the company, what the cap table looks like when you’re coming in. But if you come in at the right time, and if you get the right equity on the way in, yeah, it’s definitely worth it.

Then I think there’s getting across the line with the IPO, so now all of a sudden your options have value, but then it’s companies will typically then do grants of RSUs—restricted stock units—to keep you insensitive and motivated. It just becomes another vehicle compensation-wise.

So, yeah, I think it’s definitely worth the hard work, all the extra effort, and just super motivating and fulfilling, I think, to get to that point. To help to get to that point as a company.

Kevin Spurway: Yeah, I would add, like, any liquidity event, right? It’s potentially financially rewarding. I think with an IPO, it’s a little bit different than an M&A event and acquisition, because you should keep in mind that there are ongoing restrictions on how you can actually take advantage of the value of your equity.

You have restrictions as a company executive, as an insider in terms of what you can actually do and when you can trade and things like that, and you should keep that in mind. Because from a liquidity event perspective, an IPO is just very different than other types of transactions.

But I would agree even from an experiential standpoint, going through the IPO process, it’s an amazing process. It’s super intense, but you get to build connection and relationships with people at the next level in terms of who you’re working with. Because it is so intense and you’re working so closely with them to get through the process.

Then you have this amazing experience at the end, which is kind of like the exclamation point where you’re standing on the floor of the New York Stock Exchange or you’re pushing the buzzer to open up NASDAQ, and it’s just an amazing day.

Drew Neisser: It sounds like it. Well on this show, of course, we always have to ask the question, what would Ben Franklin say? And that’s just a quirk of this show—but he does have one. After you’ve gone through this, he would say, “Wealth is not his that has it, but his that enjoys it.” I think what Kevin was saying is, you don’t necessarily get to enjoy it right away, but it’s there.

[40:50] What Changes After an IPO

“The best IPO is the one that's the least disruptive.” —@KevinSpurway @Similarweb Click To Tweet

Drew Neisser: So, what changes now? You’re public. What changes from a marketing perspective in terms of what you’re doing? One, you’d think, “Okay, we have more budget,” but is there more scrutiny? Do you have restrictions? What changes?

Kevin Spurway: I can speak from my perspective. I would say, in some ways, not much changes in terms of your role. I think, in a lot of ways the best IPO is the one that’s the least disruptive, where the vast majority of your employees don’t really feel it, they just stay focused on the normal execution. Then when the day comes, they get to experience it and then they go off and they continue to execute in the normal way again.

There are some changes that happen a little bit more overhead and quarterly earnings. You have to take care about how you put certain types of information out there. You probably spend more time with lawyers after the IPO than before. Well, with the exception of the run up. Through the IPO process and after the IPO than you did before the IPO process. But for the most part, your day-to-day, my perspective is it’s pretty much the same.

Drew Neisser: Noreen?

Noreen Allen: Yeah, so there’s definitely some things that stayed the same, which is nice. But I’d say a lot more rigor on the legal side of things, just having to be very careful about anything we put out. We were in a good rhythm of having everything reviewed by our legal department ahead of time, but a lot more rigor around that.

Then being mindful, of course of quiet periods. Continuing to evolve the positioning and messaging of the company as the market changes and staying on top of that. Marketing plays such a big role in that and just shaping the perceptions of the investor community. Really staying on top of that in a dynamic market is big. Then forecast accuracy is really big, of course, when you’re having to guide the street.

So, partnering closely with sales on that and trying to build pipeline and making sure that we’re in a good position from a forecast perspective. The stakes are higher. You have to be a little more careful with what you share internally with employees—like we were always so open and transparent about everything, and we still try to be, but we’ve got to be more careful now as a public company.

Those are some of the things. More rigor, more checks and balances, and just competing in an environment where the stakes are higher, right? Whereas before you could make big swings and think, “Yeah, we’re gonna get here forecast wise,” and now we’ve got to be a lot more careful and diligent on things.

Drew Neisser: Yeah, unless somehow or other you work for a company that just decides you’re not going to put projections out there, which I imagine is really hard to get to.

[43:23] CMO Tips for Taking a Company Public

“In your role as head of marketing, you can be in the driver's seat here. You can absolutely shape the outcome and the direction for your business.” —@noreena @bandwidth Click To Tweet

Drew Neisser: So, we have CMOs who are at companies that are thinking about this, or are there, what are your final words of wisdom, in terms of, for CMOs who want to go through this? Kevin, let’s start with you.

Kevin Spurway: Yeah, so I think I would just go back to probably what I was saying a little earlier, it’s an intense process, but it’s a lot of fun. The day of IPO itself is a unique experience. It’s a once-in-a-lifetime kind of experience.

It also gives you these opportunities to build these amazing relationships with your executive team, especially the CFO and the CEO who you work with very closely throughout. I found it to be both times around a lot of work, but totally worth it. I encourage everybody to go for it.

Drew Neisser: Noreen.

Noreen Allen: What I’d say is, if you’re CMO, you’re with a company, and you’re hoping that IPO might happen at some point, don’t just sit back and wait or expect it to happen. Understand that in your role as head of marketing, you can be in the driver’s seat here. You can absolutely shape the outcome and the direction for your business.

I’d advise everybody to act as if an IPO is coming. Get your revenue engine in place, get your metrics dialed in, and have all of that together. Get in the rhythm of putting slides together that show all of your progress, pull comps from other companies in the industry, really focus in on your positioning.

Carve out a unique differentiated position for your company, show that you’re connected to a growing market, really get that pitch deck, maybe like an 8, 10-slide pitch deck together, and continue to work on refining it so that your company is in the position for an exciting outcome, whether it’s raising money, whether it’s M&A, or IPO.

But we’re in the driver’s seat in marketing. We can influence so much of this and we’re just in a position of such influence in the organization throughout the whole org. It’s, I think, embracing the power of our role and making it happen.

Drew Neisser: I love that advice. I can’t think of anything better because what could go bad as a result of that? You are forcing your company to think about being distinct. You are putting in metrics in place to monitor the success. You’re trying to create a predictable outcome from marketing. You’re working with your executive committee to shape the story of the company and how you would be measured. I mean, where’s the downside in this approach?

This has been so enlightening for me and I know the audience watching live and when they join us on the podcast will get so much value out of that and probably a lot more than they might have expected because we just heard your new approach to your job. Prepare for an IPO whether you’re going to have one or not. Noreen, Kevin, thank you so much for joining us. It’s really a pleasure having you both.

Show Credits

Renegade Marketers Live is produced by Melissa Caffrey. Our intern is Alex Smith. Our botanical expert is Nicole Hernandez. For show notes and past episodes, please visit renegade.com, home of quite possibly the savviest B2B marketing boutique in New York City. I’m your host Drew Neisser And until next time, keep those Renegade Thinking Caps on and strong.

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