"I got over it. This was only a minicrash. I think it must be very depressing to see your $6 million go to $2 million in a week's time, which I know happened to a lot of people. When you're succeeding as a public company, you feel like you're living the American dream. But if you can't learn to live with the swings, they will drive you nuts. "
-- Bruce Milliken, CEO, Random Access Inc. (#15), Denver
THE BAD NEWS
What's the downside to being public?
According to Inc. CEOs who answered the question, the most troubling consequences are:
Cost in time and money of dealing with Wall Street 42%and shareholders.
Emphasis on short-term results, plus ever-increasing 30expectations.
Everyone knows your business; you can't keep secrets 22from competitors.
Life in a fishbowl; constant outside criticism. 19
(Total is higher than 100% due to multiple answers.)
BELIEVE IN ME
"When I told people I planned to take my 37 pawnshops public, they told me I was crazy. They just kind of snickered.
"I know pawnshops have a bad reputation left over from the Depression, so we made sure our merchandise was well displayed, our stores departmentalized, brightly lit, and clean. We had nice signs and good locations. Our managers wore ties and were clean shaven. Until we got the company profitable, we didn't have time to work on polishing our image any more than that. Right before we went public, we started working on the image. We don't have a PR staff and we never needed one.
"I just told my story. I let people know we had nothing to hide. With the media, you get one person interested and it's like an avalanche. An investment banker who had seen our prospectus called and said, 'You've got a lot of nerve taking pawnshops public.' And Forbes ran a blurb expressing disbelief about our IPO and called it 'Profit from Misery.' Our chief financial officer, Clifton Morris, wrote to the magazine saying, 'Don't have contempt prior to investigation.' The magazine printed the letter and later wrote something very positive.
"Soon it seemed like every time I picked up the phone, someone would say, 'I never heard of a pawnshop going public before.' So I'd invite them to come take a look. In our first two years as a public company, we were written up in Fortune, Newsweek, Esquire, and Business Week, and we were on the three major networks and CNN. They come down here and they see we're not guys with garters around our arms and eyeshades. It's a contagious situation.
"Now, some newspaper or TV station calls us every quarter. The publicity has been distracting, but it has helped in our quest to overcome that negative image. We've taken the time to properly explain things and make our point. That's why I've taken the time to talk to you today. "
-- Jack Daugherty, CEO, Cash America Investments Inc.
(#79), Fort Worth
THE GOOD NEWS
What are the benefits of being public?
According to Inc. respondents:
Enhanced credibility with customers, suppliers, 54%banks, and so forth.
More visibility. 29
Increased options for future financing. 28
Better employee morale and productivity. 18
Improved attractiveness to recruits 18
(Total is higher than 100% due to multiple answers.)
AFTER THE SCORE
"We went public with 101 employees, and we made 11 millionaires. There are more than 30 now. The first few weeks, people ran around and looked at each other and said, 'He's a millionaire.' Then the whole thing passed. Every once in a while some new hire will come in thinking the founders are made of gold. Then they see that nobody here is driving a Rolls-Royce. We got back to work pretty quickly.
"Every year we motivate by layering in additional stock options for those who have taken on additional responsibilities and made larger contributions, but people are motivated by other things as well. They like hearing about the company in the press or at somebody's dinner table. Employees come up to me and say, 'My father-in-law read about us in the top 10 so-and-so.' And opportunity gets people excited. We move a lot of people around. Our vice-president of manufacturing recently became head of Asian operations. That opens up new things for him and new opportunities back here.
"Of course, we have lost some people. One of our early guys went off to become a college professor; one woman became ill and decided to leave work and enjoy the rest of her life. The thought of leaving and lying on the beach comes to my mind, but it doesn't stay long. I believed in this market when there was no market; keeping myself excited is the easiest thing in the world. "
-- William Gibson, CEO, Digital Microwave Corp.
(#2), San Jose, Calif.
LEARNING CURVE
Has the IPO and your experience as CEO of a public company made you a better manager?
Eighty percent of Inc. respondents think so for various reasons, the most common among them being:
