Revenue Operations Sales Execution Chief Revenue Officer

The Post-IPO Revenue Transformation

Headshot photograph of Enrique Salem, Partner at Bain Capital

Enrique Salem
Partner, Bain Capital



Ready to take your revenue to new heights?

Photograph of Wall Street sign in New York City
Photograph of Wall Street sign in New York City

Achieving IPO is a major milestone that requires a huge effort, but the process doesn’t end when the closing bell rings. In fact, the bar for expectations and deliverables rises significantly when companies become public. Especially when it comes to revenue operations. 

Predictability is the measuring stick of Wall Street—a lesson that I learned as the President and CEO of Symantec and in my many years as a late-stage investor. Revenue operations leaders need to have a system in which they can confidently and accurately call their quarterly forecast by week four or five. And the time to build this system is not just as IPO paperwork is filed. 

Transitioning from pre- to post-IPO operations can be made much easier by simplifying your revenue processes before the public launch—because as your company grows, it’ll become harder and harder for you to streamline processes if you don’t anticipate your future needs.

I expand on this more in my interview on The Forecast.

Here’s a transformational framework to follow as you head to the public market.

Simplify the revenue-generating process 

Imagine your company is twice the size of what it is today, in terms of employees and revenue. Let's say you're trying to run a forecast call and you don't have the right process set up. When you're twice as big, it's not twice as hard. It's three, four, five times as hard. So you need to consider reducing complexity as you scale, not after you scale. 

The first step in simplifying your process is structuring your review meetings with the Chief Revenue Officer. Focus on creating a forum with clearly-defined expectations and readouts, so everyone knows what’s needed of them. You need to define:

  1. Structure. Make sure there’s consistency to this meeting and you’re not addressing challenges ad hoc. 
  2. Cadence. You have to make your sales meeting structure a repeatable and predictable process, in which you get the most out of each session. And always be consistent. 
  3. Goals. Set the expectations of what happens in that meeting so that every week,  everyone knows what to prepare for. 

Ramping to IPO

Predictability is paramount for an IPO, so you want to test your business before launching publically. 

You need to consider how well-trained your teams are to: 

  • Manage pipeline
  • Sign deals that are in commit
  • Ensure a high degree of confidence in their final number for the quarter

Say you’re going public in six quarters. Think about your forecast. At week four or five, what's the number you're calling? What are the expected bookings, revenue, and ARR—and how accurately do you hit that number by the end of the quarter? 

Then, determine the variance--the difference between what you said at week four or five, and the final number. You cannot have big degrees of variability.

Coming in too low and missing your number, or over-delivering by too much, leads to Wall Street into thinking you don't have control of your business, and don’t understand it. At week five or six, if your call is too wide a deviation from the end-of-quarter forecast, you have a very big problem. 

You’ve IPO’d. Now what?

After you’ve gone public, the scale of the company is much larger. Maybe when you started, you were trying to generate $10 million of ARR a year. After IPO, you're probably weighing $150 million to $200 million in ARR. These are big, substantive numbers. You can’t underperform at that point. 

You need to deliver, but you also need to consider how your team makes the next quarter and the one after that. In addition to the CRO, this goes for the CEO, the head of marketing, and the whole executive team. Your homework is to start looking a little further out. How are you going to be successful in delivering on the growth expectations you have for yourselves -- and that Wall Street expects?

The future of going public

There are two areas that will continue to matter most in the coming years, as more SaaS firms seek public support:

  1. The Scale of the Business. Pay close attention to how efficient you are at bringing on new customers and shortening their time to value. Remember that when customers receive incredible value from your product early and often, they are most likely to become repeat customers and advocates. 
  2. Annual Recurring Revenue. Are you keeping your existing customers, and are they buying more from you? At this point 119%, 120% net revenue retention is a very good number. If you think about what's inside of that number, if you're doing 120% net revenue retention, that means you've got 20% growth built into next year's plan before you start the year, because 120% means you're going to do 120% on the next year over what you've previously done. 

Revenue, the growth rate, customer acquisition or sales efficiency, and net revenue retention are all areas you must continually nurture before and after IPO. 

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