Yext CFO on IPOs, SPACs, and New Book

to Acquisition vehicles. Uh, those blank champ companies, they have raised over sixty billion dollars this year. If that's more than the previous decade combined. So let's look at both of those markets and see what that tells us. Excuse me? Joining us is Steve excuse me, Steve cake Bread. He's CFO of the publicly held digital media technology company Yest. He's former CFO of Pandora, former president in chief Strategy

off At, the chief strategy at Salesforce. Excuse me. Also author of the IPL playbook and Insider's Guide and Taking your Company Public and how to do it right? And Steve, that's what I get for stuffing my mouth with a cookie just before we go on air. So my apologies. Um. Steve joins us out on the phone from Wyoming. Nice to have you here with us. Steve. It has been a crazy year when you look at the markets, and we talked about great year for the market's not so

great for humans earlier on air. What do you make the IPO market? Let's start there. Yeah, Carol, thank you very much for having me on today. Yet I PEO market, as you said, starts to return to early days where I pos are important, and I think it's exciting because it's a big part of how wealth is created in this country, and particularly for individuals, but also for institutions. So I'm excited to see the market come back, and hopefully we'll get others and I know is long enough

to be strong as well. Yeah. Did it like surprise you though? In a year that was just you know, off the charts on so many levels, and you know, the personal impact, the health impact of course of COVID, the economic impact, but yet to see such a strong

I p O market. Yeah, that's a great observation. You would have thought with macroeconomics and all the issues that we had, we had elections, too, But I also think it talks to the strength of the capital markets and where companies that are growing and aspiring to get bigger and continue to grow, the access to capital in the public markets is the easiest and most efficient way to

get there. And you also have different ways to get capital through debt operings, convertible operings, and the I p o s and SPACs and direct listing as you mentioned. So I think what businesses started to see is it's time to get into the market and get access to the capital because it's always there despite the heavy lift or load on pandemics and macro economics. Well what do you make the Yeah, God, I have so many questions

for you. Um, is it at all akin to the I p O market that we saw back in two thousand to me, having you know, covered business news in the markets at that point, I think it's very different in terms of the companies that we're seeing come to market versus today. I also feel like we have a market that kind of smacks you down pretty quickly if you're not legit. Are there's problems? Yeah? No, I agree

with that. I don't think this is the thousand entries here where companies were coming to market a little too early, or people didn't understand the business model. I think one of the big things about this market is you're right, people are bringing real businesses. People do understand business models, and the investors can look into those and look beyond just what the macroeconomics are of a company, as long as they understand the long term business model. So yeah,

I feel this is very different. I think the market is also looking for growth opportunities, as you guys discussed on your show numerous times, and there is a change in innovation going on, so that's how new businesses get into the market with I d O s. Well, what do you make of door dash and Airbnb this year? And we've had a lot of analysis about who ultimately is the longer play here. Something gets door Dash because they're so established in the marketplace when it comes to

all the online ordering. Airbnb will see whether people cantinue to use it once life gets back to normal. How do you see it? Yeah, that's a great question. I think some of the larger I p o s like geor Dash and Airbnb one is they probably should have gone out earlier because people didn't get to participate in some of their growth. But now that they're out, people are saying, hey, I use these every day, I want

to invest in them. I think there's a little bit of prop than the retail or individual investor side, as people are learning, particularly individuals that haven't been in the market for all that long. Remember they exhbit for a while it was mostly institutional, So I think you're seeing a lot of individual investors learning how to invest in companies. And clearly one of the ways to do that is

invest in the company that you use. And certainly all of us have used some type of food delivery service, and a lot of people were using Airbnb and the similar companies or companies to get out of the city. So I think it's investors investing in what they do and use. I'm a big stand of Starbucks, so I invest in Starbucks right right, It's like the old Peter Lynch model going way back when, right, just you know, invest in things you really really understand or that you use.

It's why you know, it's interesting And maybe I'm going in a little bit of a different direction. But all of the fan stocks and we constantly have conversations about overvaluation, and I'm not trying to pump them up anymore than they have. But I use Amazon a lot, and when I go to buy something, it's usually the first place

I look. Yeah, exactly. I think you you know, one of the investment strategies is to go where you go, and like you said, you use Amazon, you investor if you use some other service, you go there because you're supporting the company. You know what the company is doing. You also know what how good or how bad their service might be. So I think that's individual investors. I think that's really important to invest in where you spend

your money day to day. Well, And in terms of transparency, I do think like we Work was a bit of a lesson, right and as much as there was so much excitement over it and so much talk about it, and ultimately, you know, the emperor has no clothes on, like we we got to see kind of what was

really going on. And there is something about I feel like in this marketplace that there is a certain level of transparency that comes to light fairly quickly, quickly with quotations marks on it because because we know a lot of money when in do we Work before it all came out right, well, I think That's one of the

reasons why. And you know I talk a lot about to venture capital and entrepreneurs, get your company out public earlier because that discipline, that governance, the transparencies that come for being public also help your company to be more operationally efficient inside. And I think race is the value line of the company inside, so people understand what they have to do in that transparency does so large degree

show up earlier if you go public earlier. Well that's interesting, Steve, that you say that because there's so much money out there, and we do see whether it's an Airbnb or Jordish, they are able to stay private for a lot longer because they are able to do multiple funding rounds. Um is that a good or bad thing? Got about thirty seconds, and then we'll take a break and we'll come back

and talk some more. Well, it's a good thing that I also think it's a bad thing because I think you leave individual investors behind because the prices that go out are too high. Stop think getting in. I do wonder is there a point when it comes to SPACs that we're all of a sudden saying, Okay, we've hit a peak here. How do you see it's Steve. Yeah, well that's a good question, Carol. You know what old

is new, right, because you've been around one time. Yeah, And there's been a ton of money raised into SPACs and the blank check companies this past year, so and you know, it really gets down to how you want to take or what you need in your company to get a public because at the end of the day, SPACs, correct luciens and other things do end up being public.

I do think that one has to be careful because there's a lot of different people that lead these spacts and you have to make sure their investment uh, if you will, standards are high enough to meet your investor needs. And then also it's really question are there really enough companies out there to be bought with that type of money at this point. So we'll see how that plays out. Everybody has a two year window and the clock's chicken

when you go raise that money, so we'll see what happened. Well, this is what I wonder, Steve. I mean, there is so much money out there. And we talked about this a little bit more, you know earlier about these I p O company companies that ultimately I p O They've been around for a few years, so we've gotten used to them, we've heard about them, we've gotten to see kind of them grow their business and and understand their

financials better. But I do wonder when there's so much money chasing, maybe when they're you know, too few deals, you know, ultimately what kind of instability or you know, a skewed equation that we ultimately get in the marketplace. Yeah, no, that's a great question. We've seen the run ups in the companies we talked about, you know, do Arab, NB and others, and I think that's where investors have to

be a little bit cautious. You can pay too much for something and you can wait for the vision because you're investing in the longer term vision. So the question is how much you're paying today for that longer to vision and how long is it going to take to

achieve that result. So, yeah, there's a lot of money chasing this, and I think individual investors just need to be cautious about what they're doing with their money they invest in these I mean, why does someone like soft Bank that has a lot of money do a spack And I should point out that the head of the Vision Fund originally revealed plans for the spack uh in an interview they did with Bloomberg News at the Milken Institute Virtual Conference back in October. So we knew this

was coming. But why do they need to do this? I mean, same thing with hedge fund investor. I mean, is it just because it's a great vehicle to make some fast money. I don't know. Well, it's a great vehicle to make money potentially, but I do think it's because there's an open market or open window here for boats like soft Bank and other hedge funds to go raise money. Because remember raising money as job one here and right now, it's easy to raise money, low interest rates,

a lot of confusion in the marketplace. So I view the SPACs and the hedge funds and STP Bank doing this is just another vehicle for them to raise money as opposed to go out and look for limited partners or other individual investors to get into their funds. Hey, one thing I want to ask you a big picture. You were get a lot of different well known companies look at this market of seeing the ups and downs

in terms of cycles. You know, I mentioned at the kick at the beginning of our interview about a story that's running on Bloomberg about the animal spirits running, you know, wild across the streets. So we've got great market for financial markets, but it's not been a great year for humans. I mean, we have just incredible inequities and just the gaps. What will potentially be the consequences of all of that. Yeah,

you know, that's a great question. And when I talk to people and in institution and investors, I think there's a disconnect between what the markets doing and quite frankly, what our neighbors are suffering through here. And you know, my families in a in a business that depends on the restaurant business, and boy, when you don't have that

type of markets, it's tough to run these businesses. You say, So, I think we need to be cautious because although there's euphoria around the vaccine, there's a lot of unknowns coming from that. And I think I kind of look at this as it's gonna be a tough market for the next couple of years, simply because there's so many people out of work and we need to get those people back to jobs and back to work to have a

really robust economy. Yeah, exactly, And there needs to be you know, more of that wealth distribution that we've talked about. All right, last note, a little bit of a lighter note, but I hope it's lighter because I don't know how it's been going. But you are also the co owner and founder of Cake Bread Sellers in Napa Valley. How has that been going? Well? I'm going to give my credit to my parents. They sounded it. I just got to work there and enjoy the experience and obviously taste

of wine. But um, yeah, the wineries, you know, like I said, in Napa Valley with the openings and closings that the state has put on them. Most of usselves of restaurants, and the restaurant business obviously is in difficult shape right now. But I think everybody is trying to keep their workforce employed because that's job one, and you change how you do business. We do a lot more internet sales. I will say that. You know, online purchases of wines of all ilk are probably doing pretty well

these days. I know I'm always online trying to buy more wine. Yeah, you know, just to get you through the day. But you know it's a struggle. I mean, if you have a family business, a small business, something that depends on walking people. It's really tough right now. We're very cognisant of that, and like I said, our number one goal is to keep our workforce employed because we know that when things come back, it's going to

be really hard to hire good people back. Yeah, exactly. Well, I wish you well with your team and certainly personally throughout the holiday. Steve, Thank you so much. Really enjoyed this conversation. Steve kate Bred he's a CEO of y X, joining us on the phone from Wyoming. As I mentioned, he's also the author of the IPO Playbook and Insider's Guide on taking your company public and how to do

it right. Uh. He knows how to do it because he was with these companies, whether it's Pandora, also Salesforce, a bunch of these companies where he was with them before they went public. So really knows all of this firsthand. So great to talk about the IPO market, to talk about SPACs,