I'll Embarrass Myself on the Road Show
Here were his two choices, as Jeffrey Sudikoff saw them: come across as bland, or completely confuse everyone.
Either way, he wasn't likely to build much anticipation for IDB Communications Group Inc.'s (#83) offering in 1986. Like any chairman and CEO, Sudikoff wanted to price IDB's shares as high as possible. But he was having a hard time imagining how he could turn satellite-transmission services into a real spine tingler. "The Wall Street community wants to feel good about what it invests in. It wants to be hyped," says Sudikoff, 34. "But ours was a company that was very difficult to explain. Our technology is normally invisible."
Eager for ideas on livening up his road show, Sudikoff could think of only one way to help himself: watch other road shows. He asked his banker to inform him when companies were coming through town. He sat through three or four. "It was valuable to sit in the audience and listen to the way the buy-side people reacted," he says. "They perked up only at certain things. They really weren't interested in a lot of detail."
Sudikoff, on the other hand, didn't miss a nuance. Listen, he told his managers after sitting through one presentation, we've got to get some slides showing figures on the total market for data communications. Not that there was a reliable number -- nor one that was even relevant to IDB's particular segment. "But overall market size was a buzzword, and they wanted to see a number," says Sudikoff. "Especially, they wanted to see a big number."
Sudikoff also learned the value of a gimmick that folksingers have exploited for eternity: audience participation. "I noticed you could sort of lead your audience to do some mathematics," he says. Tell them, for instance, the unit price, the number of units you could sell, and the price growth; then sit back and watch as they reach for their calculators to figure out the upside. "It was better than doing the math for them," he says. "Invariably, one would stand up and say, 'Well, according to those figures, the potential market would be such and such.' Then you say, 'Well, I haven't done the math, but I suppose it would work out that way.' It keeps them interested and entertained."
When he talked about IDB's relationship with The Chicago Tribune -- "I only mentioned identifiable customers," he says -- Sudikoff would trace all the work IDB has done; then let his audience take it a step further. "In the future," he'd say, "we hope to be involved in their other newspapers -- what's the one they own in New York?" Came the reply, " The Daily News." Sound manipulative? "Rapport matters," says Sudikoff.
The more Sudikoff watched, the more he became convinced that the potential investors really wanted the old soft shoe. "Going in, I might have thought I was going to meet a bunch of rich experts on everything," he says. "What you learn is that they know very little about a lot of things. To some extent, you have to be able to reduce what you do to the lowest common denominator."
To do that, Sudikoff's own presentation focused less on the technology and more on its applications. He talks about how the company provided for the transmission of "Monday Night Football" and thousands of baseball games -- "people in the Wall Street community are also the people who pay attention to professional sports," he says. And he never forgot to mention that IDB circuits transmitted former President Ronald Reagan's radio speeches from his ranch. It was an IDB technician, in fact, who cued Reagan to test his microphone, only to have the president make that now-infamous jest about bombing the Russians.
Not that Sudikoff shied away from serious questions. Along with his banker, who is a former trial attorney, Sudikoff reviewed more than 100 questions likely to be asked while he was on the road. The only surprise came overseas, in Edinburgh, when a potential investor, during a discussion of tax reform's effects on IDB, asked whether evangelist Pat Robertson would get the Republican nomination for president.
Hitting Europe first was part of his strategy. Outside the United States it's permissible for companies making IPOs to offer projections -- and who's to stop those numbers from floating back? "I saw it happen. I'd be with the buy siders, and they'd say, 'We talked to people in London who said your market projections are such and such. Can you confirm?' " Of course not. "All you can imply is, Well, if they said it, it must be true."
Sudikoff contends that this is neither cagey nor superficial, but rather in keeping with the atmosphere on Wall Street. "The decision to pitch with bits and bytes instead of Fred and Ginger will hurt your valuation," he says. "Maybe that's sad. But it shouldn't be surprising." The company's stock, he adds, came out and rose uninterruptedly for six months after the road show, and subsequent presentations have buoyed it further. Even as the market was plummeting on the Friday before 1987's Black Monday, IDB's stock rose more than a point, thanks to an appearance Sudikoff made in San Francisco, he claims. "Most investors don't have the time to listen to all the Jeffrey Sudikoffs in great detail," he says. "They watch you; then they go on to the next deal. Mostly, they are betting on jockeys."
I'll Be Forced to Live Quarter-to-Quarter
George Archuleta didn't think of his plan for an off-site executive strategy session as risky or grandiose. It was just the kind of exercise that managers of growing companies needed to engage in from time to time. We'll get away for a few days, he figured, and toss around ideas about Vitalink Communications Corp.'s (#78) future.
