There are a number of reasons why going public profoundly changes companies, often for the worse, but I would rank the influence of "outside stockholders" as fairly low among them. In fact, in the case of many privately-held startups, it's pressure from a handful of outside stockholders that keeps management on its toes.
I think the most common problem for any growing company, public or private, is size. Once you get to about 100 employees, the management structure has to change in a big way. When that happens, the entrepreneurial spirit, everybody-knows-everybody camaraderie, focus on quality, focus on the customer, and can-do attitude tend to give way to approval hierarchies, competition for position within the hierarchy, focus on compensation versus job satisfaction, focus on numbers instead of quality, petty personal agendas, and so forth. Maintaining the positive aspects of the previous culture and hiring people who fit in with it become much more problematic. One reason this is a characteristic of public companies is that a company has to be relatively large to go public these days. This is not to say that there aren't other negative aspects to being a public company. First among them is the market's relentless focus on short-term results. Management is expected to generate ever-increasing returns and never miss their quarterly projections. This results in sacrificing long-term goals to please the market, and sometimes "financial engineering" or even cooking-the-books to make the numbers. This attitude filters down the org chart and infects the employees such that many of them are focused on the wrong things. I'll admit this is a somewhat exaggerated description, and some public companies have managed to figure out how to avoid these pitfalls to some extent. Some do it through brilliant management, some by hiring only the best and brightest, some by insisting that the long-term is more important than the short term. But even in those companies, something precious that smaller entrepreneurial enterprises have is lost. Having been through a complete startup-to-exit cycle with my own software company back in the '90s, and having spent 15 years coaching, managing and investing in other teams doing the same, I have to say that I much prefer the small company environment. The real trick is figuring out how grow while preserving the good things that made you successful. From my observations of the way Wayne and Eric conduct themselves and run Elecraft, I have great hopes that they will be among the few who figure it out. 73, Dick WC1M -----Original Message----- From: [email protected] [mailto:[email protected]] Sent: Thursday, April 21, 2011 9:06 AM To: [email protected] Subject: Re: [Elecraft] Odd Question [Elecraft history] Not being public may be one of the reasons they are so successfull. Outside stockholders can make life miserable for companies like Elecraft. Many privatly held businesses award uotstanding employees stock as rewards for their service. Tom, N5GE On Wed, 20 Apr 2011 21:08:45 -0500, "Bill (K9YEQ)" <[email protected]> wrote: >Alan, >I am still waiting on them to go public so I can get a few shares. :-) > >73, >Bill >K9YEQ > > >-----Original Message----- >From: [email protected] >[mailto:[email protected]] On Behalf Of Alan Bloom >Sent: Wednesday, April 20, 2011 7:14 PM >To: [email protected] >Cc: [email protected] >Subject: Re: [Elecraft] Odd Question [Elecraft history] > >Elecraft reminds me of what Hewlett Packard company must have been like in >the early days. Two engineering buddies start a company in their garage. >One (Dave Packard in the case of HP, Eric in the case of >Elecraft) gravitates toward the business end of the enterprise while the >other (Bill Hewlett, Wayne) concentrates on the engineering. > >I wasn't around in the early days of HP, but maybe someday when Elecraft is >a multi-billion-dollar corporation I'll be able to say that I knew Eric and >Wayne way back when. :=) > >Alan N1AL > > >On Wed, 2011-04-20 at 15:51 -0700, Jim Brown wrote: >> On 4/20/2011 2:44 PM, Wayne Burdick wrote: >> > Here's my account. >> >> VERY interesting, Wayne. That fills in an important gap for me -- I >> had not realized that Eric had the serious EE background that he does. >> But that also makes another point that I've long felt about being a >> good chief executive -- to do it really well, you need not only a >> solid biz background, but also a solid technical understanding of >> every aspect of the business you're trying to run. Clearly, he has >> all of that -- one of the things that has impressed me the most about >> Elecraft is a near complete absence of dumb business or marketing >decisions! >> >> 73, Jim K9YC >> ______________________________________________________________ >> Elecraft mailing list >> Home: http://mailman.qth.net/mailman/listinfo/elecraft >> Help: http://mailman.qth.net/mmfaq.htm >> Post: mailto:[email protected] >> >> This list hosted by: http://www.qsl.net Please help support this email >> list: http://www.qsl.net/donate.html >> > > >______________________________________________________________ >Elecraft mailing list >Home: http://mailman.qth.net/mailman/listinfo/elecraft >Help: http://mailman.qth.net/mmfaq.htm >Post: mailto:[email protected] > >This list hosted by: http://www.qsl.net >Please help support this email list: http://www.qsl.net/donate.html > >______________________________________________________________ >Elecraft mailing list >Home: http://mailman.qth.net/mailman/listinfo/elecraft >Help: http://mailman.qth.net/mmfaq.htm >Post: mailto:[email protected] > >This list hosted by: http://www.qsl.net >Please help support this email list: http://www.qsl.net/donate.html ______________________________________________________________ Elecraft mailing list Home: http://mailman.qth.net/mailman/listinfo/elecraft Help: http://mailman.qth.net/mmfaq.htm Post: mailto:[email protected] This list hosted by: http://www.qsl.net Please help support this email list: http://www.qsl.net/donate.html
