From Planning to Execution: IPO Winning Strategies

January 18, 2024 Theresa Rex

CFO checking study materials about IPO strategies on laptop

An IPO is not just a financial milestone in the business growth, but a transformative journey demanding a complete, data-driven, and strategic reorientation of the entire business. CFOs are the architects of successful IPOs, crafting and implementing winning financial, regulatory, and strategic maneuvers that ensure long-term shareholder value. To unlock the secrets behind IPO winning strategies, we spoke with Jayson Noland, who revealed the key tactics CFOs use to navigate the complex IPO landscape and emerge victorious.

Jayson Noland is CFO at HackerOne, a company empowering the world to build a safer internet. He is also an Advisory Council Member at Forgepoint Capital. Previously, Jayson worked at Cloudflare as VP of Strategic Finance, Treasury, and Investor Relations.

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Megan - 00:00:18: Today, my guest is Jason Noland. Jason is currently the CFO of HackerOne, Prior to joining HackerOne, he was CloudFlare's VP of Strategic Finance, Treasury, and Investor Relations, where he helped steer the company through an IPO. Jason also worked in investment banking, covering infrastructure and cybersecurity companies. Jason, thank you very much for being my guest on today's episode of CFO Weekly.

Jayson - 00:01:16: Yeah, thanks, Megan. Thanks for having me.

Megan - 00:01:18: Yeah, we've got a lot to cover, including IPO readiness, data-driven decision-making, and capital market engagement. And I'm excited to learn about you and your thoughts and experiences with these topics. So let's get started.

Jayson - 00:01:31: Right?

Megan - 00:01:32: First, let's start with you. If you could just talk us through your career path and how IT is that you got to where you are today.

Jayson - 00:01:39: Yeah, thanks. Varied, for sure. I brought an engineering degree out to Northern California in the mid-90s. Worked in engineering and sales engineering and business dev roles, mostly FD for the dot-com boom and the bots. Got to know some equity analysts those days. I was a part of an industry nonprofit and Wall Street analysts would come in and speak. And I thought it was really cool and read their research. And when things slowed down out here and at the end of the dot-com boom, I took the opportunity to go back to business school and took my first finance, accounting, and econ classes. So I wanted to be an analyst on Wall Street and careful what you wish for. That's what I ended up doing for over a decade.

Megan - 00:02:25: How did you like that? I'm just curious.

Jayson - 00:02:27: Yeah, I really enjoy analyzing businesses, business models, markets, competitive dynamics. You get to be the kind of liaison between companies and professional investors. And your client is the investor, not the company. So you have to be critical when it makes sense and put ratings on stocks. And you embarrass yourself constantly, right? It's really hard to be right a lot in that world. But I enjoyed it. I covered telecom equipment, enterprise networking, different types of infrastructure companies, software companies, cybersecurity companies. It was a really great lesson and learning environment for me.

Megan - 00:03:07: So thinking back on your career, what have been the pivotal moments and who are the most influential people that have shaped your philosophy on finance leadership? Sure.

Jayson - 00:03:16: Yeah, going from the corporate engineering world to Wall Street was pivotal for sure. And then leaving that world and going to work at Cloudflare for Thomas Beichert. That was a big move for me. I learned a lot from Thomas. We were together five, six quarters before an IPO, 12 or 13 quarters after the IPO. So he's been super influential for me. But even back to the analyst days, you get to know and spend time with CFOs in public earnings forums and privately. But Michael Scarpelli, who's at Snowflake now, Justin Williams, Meton Chanix, Remo Kyburz, Dan Dees, Kelly with the CFO at Cisco Systems Inc.. You pick up in that role, you pick up a lot of lessons from CFOs across the industry.

Megan - 00:04:04: And as you think about the role of the CFO, how have you seen it evolve over the last 10 to 20 years? And talk to us about what the profile of a modern CFO looks like in your mind.

Jayson - 00:04:16: Yeah, I don't have perfect visibility to what the role would have looked like 20 years ago. But if it was ever backed off, it's not anymore. You're expected to be involved in strategic decision. You're expected to be involved in capital allocation. You need to have an opinion on TAM, total addressable market, on new product introduction, M&A, go-to-market strategy. You still need to know the numbers and the accounting behind the numbers, but you're commercial. You're right there with a CEO, COO, CRO as the front line and the push for growth and kind of excellence as a business. Specifically, with growth equity companies, they kind of lean into people with an FP&A and capital markets background.

Megan - 00:05:03: And how do you think the rapid evolution of technology and cybersecurity is impacting businesses? And how is it that CFOs can ensure that the finance function is agile and adaptable to the impact of these rapid changes and increasing threats?

Jayson - 00:05:20: Yeah, the changes in tech are creating enormous opportunities for innovative companies. They also create challenges from a cybersecurity standpoint. But if you think back through internet, cloud computing, mobile computing, now AI, these are iconic shifts that not just create enormous opportunities, but increase your attack surface. And exposure to cybersecurity threats. So a business will spend five to 10% of its revenue on it. They'll spend 10% or more of that IT on cybersecurity. And you still have A number of unknown unknowns. I heard a Chief Information Security Officer (CISO) at a big bank speak about this last week. That's the type of thing that keeps him up at night. The unknown unknowns. The company I work at, HackerOne, crowd-sourced ethical hackers to identify vulnerabilities in your tech stack. But I think CFOs know this is a board-level discussion and know they need to take cybersecurity risks seriously.

Megan - 00:06:21: So talk to us a little bit about HackerOne and what it is they do and who your clients are.

Jayson - 00:06:27: Yeah, we're a software platform sitting between almost 2 million ethical hackers and over a thousand customers. And these are customers that range from some of the biggest banks In the world, huge industrial companies, automotive companies, lots of tech companies, of course, and also digital-first, high-growth companies. Think about some of these recent AI firms. But we, using a crowdsource model, help companies identify risk in their tech stack. And it's an incredibly cool offering. My old company used it quite extensively. And you'd be amazed at some of the firms that you wouldn't think that would be customers, even, like, think about a GM or a John Deere or a Caterpillar,

Megan - 00:07:13: So I'm just curious, do these firms come to you, like, do they hire you for a project to take a look at their tech stack or how does it work exactly? Yeah.

Jayson - 00:07:23: Yeah, you can do it in a time-based project like penetration tech. There are challenges where there's a certain amount of time that an ethical hacker is going to come in to review an asset. The most prominent approach is something called bug bounty where it's continuous. So you put dollars up for grabs or bounties from low criticality to high criticality and ethical hackers review your tech stacks, those software and even hardware to identify potential threats. And so we find the threat, create the threat and help the company identify the challenge and remediation.

Megan - 00:08:00: Wow, that's really cool.So can we talk a little bit about IPO?

Jayson - 00:08:04: That's why I joined.

Megan - 00:08:05: Yeah, I mean, yeah, that's really, really cool. How long has the company been around?

Jayson - 00:08:11: About 10 years, the founders are still involved in the company. A couple of guys from the Netherlands, and they joined forces with a leader in the security department from Facebook when they founded the company.

Megan - 00:08:23: Just one more thing I'm curious about, but how can you tell the difference between an ethical hacker and an unethical hacker?

Jayson - 00:08:30: Yeah, if you were a bad actor, the last thing you'd want to do is join our platform. You're expected to go through extensive verification process that includes know who you are and where you are including tax and bank account information so we have different levels of i guess potentialing so you can narrow the scope as a customer i only want to use ethical hackers that have achieved a certain level of expertise or only reside in a certain country you could so you can narrow or expand the scope as you want but there's an extensive process you go to during the platform

Megan - 00:09:05: And can we talk a little bit about IPO readiness and strategies that businesses might employ to ensure that they are indeed ready to go public via an IPO?

Jayson - 00:09:16: I think you want to make sure that you want to go public. That's kind of the first step. It does bring credibility benefits. It brings liquidity, of course. I don't think it's for every company, but there's, along with the things that you discover throughout an assessment that need to be addressed. We used PricewaterhouseCoopers (PwC) at my last company to go through an ITO, a growth readiness assessment, and that includes public company reporting, your financial close, corporate governance. Legal, compliance, treasury, your capital structure. You need to think through an equity story, financial disclosures, work toward a single source of truth that you can rely on. There's a lot, a lot of work that goes into it. I would describe it as 50% exciting and 50% scary when you first go through that assessment process.

Megan - 00:10:06: And what advice can you share about the importance of data-driven decisions when it comes to planning for an IPO?

Jayson - 00:10:13: Yeah, a lot of young growth companies end up with data that's very departmental and fails or in marketing or in CS or in finance. You really need to consolidate to a single source of truth with the head of data, getting all your data engineers, data analysts, data scientists on the same page, working on a common set of KPIs that touch the company holistically and not just by vertical. So understanding the driver, the things you're going to disclose publicly, you'll get questions on why a metric is up or down and understanding what the driver is, how to forecast that driver and do it in a way that you're confident in the data and something that's reproducible to you. You could face a situation where you have to reproduce the number you shared multiple quarters ago.

Megan - 00:11:01: And how did you prepare yourself for those first two or three earnings calls? Is there any way to do it? Is there any way to prepare yourself for those?

Jayson - 00:11:11: Yeah, we did kind of both earnings calls where we had members of the board call in and apply analysts. We wrote scripts for a CEO, CFO. We had questions prepared for the press release. So you can go through the motions internally. I think that's helpful. it makes it, it's not the real thing, but it gives you a sense of what it's like, right? The questions you're going to get from the analyst community are going to be tougher than you get from your board or a banker. But I would do that again and would recommend that other companies do.

Megan - 00:11:43: So going back to data-driven decisions, can you share your experience on how the use of data-driven decisions has impacted financial planning, strategy, and overall financial performance for the companies you've been with?

Jayson - 00:11:56: Yeah, there's lots and lots of metrics that get tracked internally. I think you want to share a very small subset of those externally. But some of the key ones, especially for a death model around expansion and retention, are really critical. So not only do they tell you how the business is performing, they tell you how the business is performing by customer band, by geo, by product family. And so using that information to not just understand where the business is, but understand how to allocate capital. And for a lot of these companies, capital is headcount. So we've not taken a spread of peanut butter evenly across this like the bread approach at companies I've worked at. You really do end up over allocating and under allocating based on what the data tells you.

Megan - 00:12:47: And can you talk to us about the strategic role of managing investor relations and capital market engagement?

Jayson - 00:12:55: Yeah, there's bankers and analysts and investors. Sometimes they get lumped into one bucket, but they're all very different. And relationships matter in that community. So I would recommend an IR person for a publicly traded company to come on pre-IPO. But the CEO and CFO should be involved and public facing too. From callbacks with analysts and investors, going out to conferences and doing small group meetings with large investors or larger group meetings with smaller investors. But being consistent and predictable and prudent in the near term is a big deal to build trust. But the mistake I think some companies have made is to only spend time with bankers pre-IPO and not spend enough time with the analyst and investor community. Once you price, a lot of your bankers are going to disappear and you're stuck with that analyst. You need to get to know the investor. So getting to know them before you get on the road for your roadshow or do a testing of waters, getting to know them in advance of those important meetings is a big deal.

Megan - 00:14:01: You might have just answered this, but based on your experience, can you give any practical advice on how to leverage investor relations and analysts to maximize access to capital markets?

Jayson - 00:14:13: Yeah, I think you've seen a lot of people come from the capital market into that IR role. That makes a lot of sense, again, because relationships matter so much. Bringing somebody in that knows the space, possibly, if it's technical, that's been around investors in the space for a long time can be really beneficial. You almost act as a relay between what the capital markets think is going well or not going well and the management team. And you really need to be able to filter out what's noise and what's material to the equity story. You don't want to take every piece of feedback we get at spin out of spin seriousness levels. So it's important to understand what's most meaningful to share with the C-suite.

Megan - 00:14:56: And can you talk to us about any challenges that you faced in engaging with capital markets and how it was that you were able to overcome them?

Jayson - 00:15:04: This is a little bit of a generalization, but there's a certain set of investors that are focused on more near-term dynamics in the long-short community. There's other investors that really do take a look at that on a one-year or even decade perspective. They really are making long-term decisions. So trying to bridge the gap between those two worlds is tricky. But you want to be as, again, near-term prudent and thoughtful in your disclosures as possible. You don't want to bite into the temptation of giving overly aggressive guidance because your valuation multiple is currently high. You want to be as conservative as possible in the near term, but still talk about the long-term potential of the company. That's the thesis that you need to sell and work toward and get buy-in from investors.

Megan - 00:15:53: And with a growing list of global challenges, what advice would you give to companies looking to access capital markets right now?

Jayson - 00:16:01: Yeah, it's tough for growth equity companies in that theory B, theory Z world. I put putting up, even if you're not profitable yet, showing good unit economics around that expansion and growth retention is a big deal. That tells you what a company could look like at scale, even if you're not at scale yet. Feels like things are getting a little better out there. Talking to friends around the industry, we've certainly seen some upside in capital markets of late with rates expected to come down next year. But again, getting to know investors and building a relationship with investors is the path toward long term success.

Megan - 00:16:38: And lastly, as we're looking to enter the new year here, what is keeping you up at night?

Jayson - 00:16:44: Yeah, I sleep well most of the time, but I understand the nature of the question. Bus containment this past year has been a big deal if I had to take a specific topic. You know, it's important to invest in the future. It's also been incrementally important to control cash flow. The last 12 to 18 months were not in a great adult bus world. And protecting your balance sheet right now really is protecting the future of your business, raising money in this environment is arduous at best. You're going to face very unfavorable terms, even if you're lucky enough to raise capital. So protecting what you have is something that's on my mind every day I go to work.

Megan - 00:17:24: Jason, thank you so much for being my guest today.

Jayson - 00:17:27: Thanks for having me, Megan.

Megan - 00:17:29: Yeah, I really enjoyed speaking with you. And thanks for finding the time to be here with us today to share all of your experience and knowledge. I wish you and HackerOne all the best. And to our listeners, please tune in next week. And until then, take care.

In this episode, we discuss:

  • IPO readiness strategies

  • Data-driven decision-making in IPO planning

  • Steps to transform your business for the stock market

  • How to effectively manage capital market engagement

Key Takeaways:

The New Frontier of CFO Leadership: IPO Winning Strategies

The CFO role has surpassed traditional boundaries, demanding a mix of financial expertise and strategic acumen. Gone are the days when CFOs were confined to back-office tasks; today, they are important in shaping business strategies, overseeing capital allocation, and navigating complex market dynamics.

In the face of revolutionary technological advancements and rising cybersecurity threats, CFOs must ensure financial agility and strong risk management. They are expected to allocate significant resources to IT and cybersecurity, understanding that these aren't just cost centers but critical investments in the company's resilience and future growth.

Strategic CFO leadership Quote

“The changes in tech are creating enormous opportunities for innovative companies. They also create challenges from a cybersecurity standpoint.” Noland said. - 04:04 - 06:20

Mastering the IPO Challenge

Embarking on an IPO journey is a tightrope walk between fear and excitement, combining the appeal of public credibility and liquidity with complex preparations. A successful IPO strategy depends on transitioning from fragmented departmental data to a unified, company-wide data ecosystem. This approach ensures accuracy in financial disclosures and equips companies to confidently navigate the careful examination of public markets.

Jayson Noland CFO at HackerOne Quote

“I would describe it as 50% exciting and 50% scary when you first go through that adjustment process.” Noland said. - 09:05 - 11:02

The Art of Investor Relations

Managing investor relations and capital markets engagement goes down to differentiating between bankers, analysts, and investors and building solid relationships with each, particularly pre-IPO. CEOs and CFOs must engage directly and not just rely on an IR specialist. Leveraging investor relations requires a strategic role, often best filled by someone with capital market experience who acts as a line between market perceptions and the company's management.

IPO winning strategies Quote

“I would recommend an IR person for a publicly traded company to come on pre-IPO, but the CEO and CFO should be involved in public-facing too.” Noland said. - 12:47 - 14:56

For more interviews from the CFO Weekly podcast, check us out on Apple Podcasts, Spotify, and our RSS or your favorite podcast player!

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Navigate your IPO journey with confidence. Schedule a free consultation with Personiv today and discover how we can empower your financial leadership team.

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