When Alibaba went public in the fall of 2014, investors were gaga over tech companies, ready to pour millions into several big-name IPOs. But as a relatively unknown company in the United States, Alibaba had a problem—it was labeled China’s version of another, more familiar digital retailer: Amazon.
That couldn’t have been more wrong. Amazon is primarily a marketplace that sells products to consumers and takes a cut. Alibaba brands set up and operate their own stores. That created quite a challenge for Jim Wilkinson, who as Alibaba’s senior vice president and head of international corporate affairs led communications efforts around the company’s IPO: How do you get reporters and investors to understand the nuances of its business model and brand position?
“IPOs are not just purely financial events. They are major reputational events as well,” says Wilkinson. “Some part of every company’s valuation is tied to reputation, which means communications is central to its P&L.”
Flash forward to the year 2019—which may well be the year of the IPO in an unprecedented way. If all goes as those on Wall Street expect, more than 150 companies will launch IPOs, including household names such as Uber, Lyft, Airbnb, WeWork, and Slack. In all, the IPOs could raise by some estimates the staggering sum of $100 billion— practically the gross national product of New Zealand. All of which raises the stakes and pressure enormously for these firms’ communications and investor relations departments. The mission: get as much buy-in as possible from an investor community that has become more demanding and critical of deals.
According to Richard Marshall, global managing director of Korn Ferry’s Corporate Affairs and Investor Relations practice, “An IPO in today’s market is very different than it was a few years ago.” Investors scrutinize a wider range of things like culture, diversity and inclusion, and environmental and social sustainability. “Numbers are only part of the story now,” he says.
What’s more, swings in the markets are both huge and frequent, with investor patience and sentiment seemingly changing from week to week lately, creating whiplash for firms going public. And, as many early start- ups have discovered, going public is only the first key step in building an all-too-critical relationship with Wall Street, especially its analysts. “You need to have a more thoughtful communications strategy,” says Marshall.
All of which sends us back to take a closer look at how some of the highest profile and most successful companies pulled off their IPOs and have managed them beyond just the IPO event. For this, we heard from two of the biggest names—Alibaba and Pandora—and the listings director at the New York Stock Exchange.