- Steve Cumberland, who served as CFO at Salesforce when the company went public in 2004, said companies would benefit from interacting with a wider range of investors, and encouraged startups to go public "sooner rather than later."
- Companies are doing a "disservice" by allowing only elite investors — such as venture capitalists, hedge funds, and private equity — to invest in them when they are growing the fastest and their valuations are increasing the most, Cumberland said at an industry conference Thursday.
- Stacey Cunningham, president of the New York Stock Exchange, said private companies avoiding the public markets is helping to widen the gap between the rich and the poor.
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WASHINGTON, DC — The former chief financial officer of Salesforce has some simple advice for startups eyeing the public market: Don't wait.
Steve Cumberland helped steer the software company through an IPO in 2004. He's also spent time as Pandora Music's CFO and currently serves in that role for publicly-listed branding company Yext.
And so as private companies continue to skirt the public markets, Cumberland has some pointed advice.
"I am a big advocate of go out sooner rather than later," said Cumberland while speaking at an industry conference Thursday in Washington DC.
Cumberland said companies decision to remain private longer is a "disservice." Instead, they would be better suited to deal with a more diverse group of investors early on as opposed to just a small, subset of elite investors such as venture capitalists, hedge funds and private equity.
"Create the volume and opportunity for a wide range of investors, whether they are retail or institutions," Cumberland said. "Not participating in that growth puts a company in a whole another realm of investors. I am not sure that is beneficial to everybody right now."
Several high-profile companies that finally choose to list this year have had brutal introductions to the public markets. Uber, Lyft and Peloton have all underperformed since their IPOs. WeWork, meanwhile, shelved its public float after facing major backlash following the release of its S-1 filing, seeing its valuation crumble.
"The bigger you get the growth starts to slow down," Cumberland said. "If you dont have the growth you have these different valuations in the public market."
At the same conference, Stacey Cunningham, president of the New York Stock Exchange, said the trend of companies forgoing the public markets to continue to raise money privately is one that is "problematic to society more broadly."
Cunningham, who spoke on a panel with Cumberland, said a company's decision to remain private is actually widening the wealth gap.
"I really do believe that the fact that companies are staying private during the most rapid growth cycles of their lives is contributing to the bifurcation of wealth," Cunningham said.
As the head of the world's largest stock exchange, Cunningham no doubt is motivated to see more companies go public. Persuading companies to publicly list on an exchange is big business for trading venues. The cost to list on NYSE can be as high as $500,000.
But Cunningham said there is real harm being done to mom and pop investors.
She cited Salesforce and the opportunity it provided retail investors. Since hitting the public markets in 2004 the stock has increased 5,500% in comparison to the S&P 500, which has only risen 163%.
The company, Cunningham said, is an example of having created real value for Main Street investors.
"My position on a lot of the topics always comes down to one principle: Investors should have the right to choose," Cunningham said. "Let the market determine what they want to reward and what they dont want to reward."