Hambrecht & Quist is arguably Silicon Valley's premier high-tech investment house, but Yeh still threw the underwriting job open to four other candidates, all big New York banks with Goliath leverage in public markets. By midsummer Hambrecht & Quist had won what underwriters call the "bake-off" -- the marketing tussle to see who ends up as lead underwriter. Yeh awarded the comanager job to Donaldson, Lufkin & Jenrette Securities Corp. Most companies going public for the first time take from 60 to 90 days to go from filing registration statements with the Securities and Exchange Commission to closing an IPO, but Yeh decided that SST was to do it in less than 45 days.
The schedule looked doubly intimidating against the backdrop of SST's phenomenal growth. Revenues were notching up by the day. At the start of 1994 there had been about 40 employees on the payroll; by 1996 that number was to top 100. The pressure on SST's flimsy organization worried the underwriters. "Bing was wearing 10 hats instead of the 7 a person normally wears in that situation," says Davidson. Hambrecht & Quist had also spotted SST's dependency on one very narrow revenue source: one part of one kind of motherboard. The underwriter had noticed, too, that there were no big brand-name customers, such as Hewlett-Packard Co. or AT&T Corp. None of that could be fixed quickly, of course. But Hambrecht & Quist did hand Yeh a laundry list of requirements for going public. Among the most pressing: SST had to show plump operating margins, hire a full-time chief financial officer, and find new applications for the Superflash chip.
When Yeh brought his lawyers and accountants in on his IPO plans, early in August 1995, they were stunned -- to say the least. Mark Tanoury, counsel at local law firm Cooley Godward Castro Huddleson & Tatum, remembers the meeting he attended with Yeh and Charles Noreen Jr., a Coopers & Lybrand partner. "Yeah, but what's the real schedule?" he recalls asking Yeh. This is the real schedule, the CEO replied. From then on, any talk of schedule slippage got dark looks from Yeh. As the makeover took shape, "the question always was, What's that going to do to the day we go effective?" says Tanoury.
The answer, as far as Yeh was concerned, was always the same: nothing at all. There was no time for surprises.
* * *
Jan Praisner and Bing Yeh had met only the day before, but when Praisner arrived on September 6, 1995, she was giving orders as if she owned the company. She started off by giving Yeh a clear warning: If you disappoint the Street, she told him, and if your stock price drops, you will get sued by shareholders. And when that happens, she said, you walk over to your desk, get out your checkbook, and write a check for $7 million. "It got his attention," she recalls.
Praisner was one of those surprises that Yeh hadn't counted on in the makeover process. Acceding to Hambrecht & Quist's wishes, he had gone out and taken on makeover job number one: hiring a chief financial officer. The one he eventually chose -- the CFO of Micromodule Systems Inc. and a veteran of the IPO process -- was indeed named Praisner. Michael Praisner, to be precise. But he couldn't start right away, and his concern over SST's drum-tight schedule led him to suggest an unorthodox solution: why not let his wife, Jan, an experienced CFO who had just left her company, step in until he could join the team?
Yeh agreed; not that he had much choice if he wanted to stay on schedule. The so-called all-hands meeting -- when the whole IPO team, including Yeh, the company counsel, the underwriters, and the accountants, assembles to plot the process and assign duties -- was scheduled for September 1. If Yeh couldn't at that time present reasonable prospects for a CFO, the underwriters could bail or at least pull the plug on an IPO in 1995.
Having joined the effort, Jan Praisner pronounced SST's record keeping chaotic. "The accounting records were not in what I'd call a management-reporting format," she says. Line items like cost of sales were segmented by department. Some financials were on disk, some were on spreadsheets, and others had gone AWOL.
But Jan Praisner's most immediate task was to prep executives for a pivotal presentation to the underwriters on September 11, as well as scare up due-diligence documentation for Hambrecht & Quist's law firm, Wilson Sonsini Goodrich & Rosati. Her dramatic declaration to Yeh was her way of saying that if she needed to get her hands on, for example, a lease agreement, everyone had best cooperate. Her basic MO was to lay siege. "I was camping outside Bing's door," she says. "I probably drove him crazy. I'd say, 'I've got to have this by noon.' At 12:01, I'd show up. He'd say, 'I need three more hours.' I'd tell him, 'I'll be back in 2 hours, 59 minutes.' " Yeh cooperated, pushing back with questions about things he didn't understand. "We had no experience in this, so we just followed her," he says.
That approach served SST's managers particularly well at the meeting with the underwriters. Hambrecht & Quist needs to feel confident in the management team, Jan Praisner had warned the engineers, outlining points they would need to make -- succinctly -- in their presentations. Yeh was to explain SST's competitive advantage. Yah-Wen Hu, vice-president of technology development, and Isao Nojima, vice-president of memory design, had to describe the products in detail: their evolution, their future, exactly how they were manufactured. "It went very well," recalls Praisner, now CFO at OnStream Networks Inc., in Santa Clara, Calif.
