Stacey Cunningham sits at the intersection of several historical moments in the business world.
She is the first-ever female president of the New York Stock Exchange. And during the beginning of her time at the helm — she has only been on the job for a year — Cunningham has overseen one of the busiest years for companies going public in recent history, including one of the biggest IPOs yet.
Uber completed what Cunningham called one of the top-10 largest IPOs last week, but the ride-hailing giant’s public debut was somewhat disappointing. Its stock opened below its IPO price range and dropped further Friday, before bouncing back Monday. Cunningham warned not to focus too closely on Uber’s debut on the public market and instead look at its market value and future.
“The first couple of days of trading should not be reflective of what the company has built and can deliver to their investors over time,” Cunningham said. “Uber didn’t exist 10 years ago. Today, it’s got a platform with almost 100 million users that it can end up leveraging in a variety of different ways. So I think investors should be focused on what’s to come next.”
Cunningham sat down with GeekWire at a Smartsheet event for women tech leaders to chat about this year’s IPO, why it is happening now, and how it compares to the past. She also touched on what its like to be the first ever woman leader of the New York Stock Exchange and how organizations can foster better representation of women at the top. The conversation has been edited for style and clarity.
GeekWire: Is this the hottest IPO market you’ve seen? How would you compare to past boom periods?
Stacey Cunningham: I think things are a little bit different today than they have been through historical cycles of IPO booms. One of the things that I think strikes a lot of people when they look at the companies that are going public is many of them are much bigger than IPOs in past cycles.
There are always periods when the market conditions really line up well and companies tend to go public in pockets at times. So you see periods of increased activity. But when you look at this time, many of the tech unicorns that have been out there and waiting to be public companies are finally getting around to doing that now. And so that changes things a little bit. They have a different dynamic, and in many ways they’re viewed by many almost as public companies already.
GW: Why is this happening now?
SC: The stock market has been on a tremendous 10-year bull market run. When we saw volatility pick up at the end of the fourth quarter, that got noticed by companies. Typically when volatility picks up companies say, ‘we’re not going to go public right now, and we’ll wait and see if the market conditions quiet down a little bit’ because there’s an inverse correlation between volatility and the IPO market.
Because volatility was so strong and because the market has been on such a strong run for so long, we did see a number of companies increase their readiness for the IPO market because I think they were wondering, well what if the market conditions aren’t good indefinitely? So I think that 10 years with a really strong market gave companies confidence that they could always wait and push that off. And then as things got a little choppier at the end of the year last year, some of them thought, ‘well, it might not be an indefinite period of time where I can go public in good market conditions.’ They want to be ready, so that when they feel like the time is right, not just for the market for but for them as a company that they don’t have the work to do at that point in time.
GW: What do you make of the disappointing debuts of Uber and Lyft?
SC: I think it’s important to understand that no two companies are the same. Even if they’re in similar businesses, they have very different profiles. So Uber and Lyft are often discussed in tandem, but even the two of them are very different companies with different businesses.
Uber raised over $8 billion in its IPO, which is one of the top 10 largest IPOs of all time, so that’s pretty significant right there. Broadly across the board, most of the tech companies that have come public over the past year have performed very, very well. When you think about the market conditions over the past few days and we only have a history of two days of Uber’s public trading, it’s really hard to draw conclusions.
I think it’s important to recognize that these companies have built businesses for the long term, and they’re focused on delivering value to their investors and stakeholders over the long-term. It’s a marathon; it’s not a sprint. The first couple of days of trading should not be reflective of what the company has built and can deliver to their investors over time. Uber didn’t exist 10 years ago. Today, it’s got a platform with almost 100 million users that it can end up leveraging in a variety of different ways. So I think investors should be focused on what’s to come next.
GW: So nothing to worry about with Uber and Lyft stocks long term?
SC: I think we really should just focus on a longer period of time. Everyone has their own vision of what a perfect IPO looks like, but it’s really hard to predict all of the different factors that go into the debut.
GW: How would you compare this IPO market today with the dot-com era?
SC: They were much smaller companies back then in a very, very different environment. So when I’m out talking to CEOs and companies, it feels to me like it’s a very different environment from where it was 10 years ago.
GW: Do investors care about profitability? Should they?
SC: I think what we’ve seen is investors are OK if companies aren’t profitable. In fact, when we look at the New York Stock Exchange and our own presence in the tech sector, our listing standards used to require companies to be profitable. And so many of the tech companies that were coming to market in the 1980s and 1990s and later didn’t qualify to list on the New York Stock Exchange. But what we were seeing was that the modern companies and modern tech companies of the day very often were not profitable at the time that they wanted to become public companies. So we modernized our listing standards, and just looking back over the past five years, 75 percent of tech proceeds have been listed on the New York Stock Exchange.
So that trend is certainly is different. Many of those companies are not profitable when they’re coming to market initially, but they need a path to profitability. And I think that’s what investors are looking at, can I see the vision of how you’re going to one day become a profitable company? And that’s where they’re focused. There are plenty of examples of very well known household names that that are from the Pacific Northwest that were not profitable for a really long time and found their way there.
GW: You are the first woman president of the New York Stock Exchange. What’s it been like to carry this distinction and what would you say to other women trying to break through?
SC: I haven’t focused much on the fact that I’m a woman. I never really have throughout my career. I focused on what we can do as a team and what we want to achieve and the fact that I’m a woman is just a fact, right? It’s just a list of attributes.
But when I see the impact it has on other women, it’s certainly important for women and girls and people to see role models in different industries. And I think it’s really important to have a diverse viewpoint around your management team regardless of gender. Very often those viewpoints come from diverse backgrounds and diverse genders. And you’re more likely to get a diverse point of view when you have a diverse team. That is needed in all environments. And certainly both tech and finance have some work to do there.
My dad always said, “your only as good as the people you surround yourself with.” I am surrounded by a brilliant, big-hearted, committed and crazy team @pagerduty #Dutonians #PagerDutyIPO pic.twitter.com/cu0VOoh2p6
— Jennifer Tejada (@jenntejada) April 11, 2019
GW: PagerDuty is a rare example of a recent IPO company with a woman CEO. What needs to be done to change that?
SC: It needs to be a conscious effort to build a team that reflects the world. Jennifer Tejada, the CEO of PagerDuty, wanted to make sure she had a team that reflected her customer base and user base and the world at large, and she has built a great company. They came out to the public markets and their stock performs really well and they’ve continued to advance. And that’s a great message for people to see us as leaders.
GW: Anything else?
SC: I think one thing that is important to understand is when companies go public, they’re making their growth accessible to the everyday investor. And that’s an important concept because this country has really in large part been built on that concept: That investors get to share in the success of companies that are, growing. When they wait a long time to become public and that growth trajectory at its steepest has already happened, we’re taking some of those opportunities away from the public investors. And so I’d love to see that trend reverse and have companies come out a little bit sooner when they are the size of a PagerDuty.
