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Annie Bourne is VP of Business Development and General Counsel at Cambridge cloud start-up, Kinvey, Inc., and a Tech Stars Boston mentor. Previously, she was employee #119 at Akamai Technologies, from 1999-2005. She writes fiction as A.B. Bourne, author of The First Secret of Edwin Hoff, c. 2011 Watch Hill Books, and lives outside of Boston with her family. She is currently at work on the sequel.
4:25 PM Thursday May 17, 2012by Annie Bourne | Comments
Facebook "goes public" Friday, May 18th. Imagine what it might be like inside the company right now. Soon, paper stock option agreements tucked into employee compensation folders could erupt into cascades of real dollars. Maybe employees will soon barge through the doors and board shuttle busses to the BMW dealerships, software bugs be damned.
Or something like that.
What is it really like to work at a company when it "goes public?" And what happens afterward? How will Mark Zuckerberg hold on to the people who make the company what it is, now that many of them will be independently wealthy — perhaps intoxicatingly so? How will he hold them together to make the company what it can be next? How will he align the "haves" and the future "have not so much" hires to pull on the same oar?
That's what the new investors — the new owners — will depend upon. That's what users will depend upon. And fortunately, there is something a leader can do at this junction. I've seen it happen once, and I hope Facebook's incomparable visionary will make something like it happen again.
I had a front row seat to one of the most successful IPO's of the dot-com boom. In July 1999, I left a law firm for a business development role at a startup with a strange name — Akamai Technologies. On day one, because we did not yet have a general counsel, the company told me — the only ex-lawyer then on staff — to manage the IPO. Because of the phenomenal technology, timing and team, the Akamai IPO became one of the most successful IPOs of that era.
So what actually happens inside a company on IPO day? Here's what happened in my experience (which, granted, was over a decade ago). Several of the company leaders reappear, having spent the prior two weeks flying around Europe and the U.S. on private jets, spinning the company's prospects to potential investors. Before that, there's a lot of government-regulated preparation. Bankers and lawyers write a document that describes the business and the risks of investing in it to potential investors. They build a financial model of existing and expected revenues. They file it with regulators, wait for comments and respond to them. Then the company leaders start the roadshow, which hopefully creates enough excitement about the company among large investors that the bankers can line up buyers — if you're lucky, stacks of buyers — for a chunk of the "book" of available shares. Then, in a seemingly unscientific frenzy in a paneled room on Wall Street, the bankers decide what price to place on the opening shares, and when to start selling them.
For the employees, the actual day of "going public" is very strange. At Akamai, in the early afternoon, we left our desks and met in a conference room to watch. There was not much to see. A large TV monitor sat above eye-level on a tall rack. Plates of cheese cubes and crackers covered a table. We squeezed in, shoulder to shoulder, heads tilted up to the screen. Most of our faces were unfamiliar to one another; the company had hired a lot of top people leading up to the IPO with the lure of pre-IPO options.
The screen flickered. Then, green numbers appeared. We cheered! AKAM stock was then available for purchase on the NASDAQ. Just like that. We watched the green numbers change — just simple rows of green numbers. Someone explained that the numbers represented the "bid" and the "ask" — what someone would pay for a share, and the price at which someone else would sell it. The bankers priced the shares at $26. They opened for trading at $114.50, and buyers chased it higher and higher until it settled down and finally closed at $145.19 at the end of the trading day.
As those green numbers changed on the screen, we cheered more, and ate cheese, while some colleagues had just become immeasurably wealthy — at least on paper. By law, vested employees were "locked up" and could not trade their vested shares until several months later. (Several months later, the boom would bust and much of that paper wealth would flutter away, but no one wanted to see that coming). Akamai was so young, and the boom so frothy, that most employees had not yet vested any shares. Facebook employees will be locked up for months too, but many employees have worked there long enough to have fully-vested their employee stock options.
Our co-founder and CTO, Danny Lewin, had suddenly turned from a struggling graduate student to a staggeringly wealthy man. His share of the company was worth over a billion dollars at the end of the day. It would have turned anyone's head. But at 29, somehow Danny knew that the IPO — this moment of triumph — could also destroy his company. This was because, ironically, the collective efforts of his employees had created value that had made many of them independently wealthy. They did not need to be there anymore, even if the company still needed them.
That day, Danny did something remarkable. In the midst of the IPO celebration, Danny invited everyone to a conference room to discuss his grand vision of the company's future. While green numbers still rose on the monitor, the party room emptied. The conference room filled. Danny, another young red head who wore faded jeans and white T-shirts, covered whiteboards with his vision. He spun us all up on the immense and powerfully exciting challenges ahead. The same big idea that made investors buy the company would make employees stay to build it.
With his compelling vision, Danny raised us above the distractions of wealth. He knew — and I hope Mark Zuckerberg will recognize the same — that the chance to achieve a big goal, alongside a compelling leader, is stickier than any stock promise could ever be. It is the grand vision — and only the grand vision — that will bind people, through distractions and unsettling change, to work together to reach the other side of possible.
Congratulations, Facebook! Thank you for what you have built. Enjoy the rocket ride, and still keep your eyes fixed above the horizon.
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