Entrepreneurs in High Technology: Lessons from MIT and Beyond

By Edward B. Roberts | Go to book overview

CHAPTER 8
Going Public

On the day Tyco Laboratories (see Chapter 1) went public, Arthur Rosenberg was ecstatic. Now he had a company to run. In his unusual case, going public provided the funds to buy his research laboratory from its parent corporation. On the day SofTech went public, Doug Ross was also ecstatic, but for the more usual set of reasons. Now his growing firm had the funds to help finance its efforts to build its microcomputer software product line. But in addition Doug had also realized about $600,000 in cash from the offering and had remaining shares valued at the public market offering price at $4 million.

For many technological firms going public is a logical step in their continuing growth. The capital made available from the public offering helps fund accelerated product development programs, enables the broadening of their distribution channels, and generates financial strengthening through debt retirement. Yet success is a many-colored fabric. To some technological entrepreneurs "going public" is success, not just part of further "growing up". As one entrepreneur philosophized, "I built this company up from scratch, made it profitable and growing, and brought it public. Now it's time for me to step aside and let these other fellows run the company." Especially from the perspective of personal fulfillment, bringing the firm from being privately held into public ownership, with the company's stock traded and reported daily (more-or-less), engenders strong feelings of pride of accomplishment. For those entrepreneurs with high n-Ach, going public creates new tangible measures of attainment.

Whether another part of corporate growth or a first measure of company success, personal financial success of the entrepreneur is also usually solidified, and even somewhat enhanced, by going public. Some of the entrepreneurs sell a portion of their ownership as part of the initial public offering and transform paper wealth into cash. These and other entrepreneurs, as well as the early investors in the company and the usually many stockholding employees, soon begin to sell portions of their stock into the public market, as allowed by the Securities and Exchange Commission (SEC) regulations. The realized liquidity of their previously illiquid assets generates for many of them thousands and even millions of dollars. For all entrepreneurs and their stockholding associates, going public makes the paper assets they still hold much more real, valued tangibly by an existing

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Entrepreneurs in High Technology: Lessons from MIT and Beyond
Table of contents

Table of contents

  • Title Page iii
  • Preface vii
  • Acknowledgments ix
  • Contents xi
  • Chapter 1 High-Technology Entrepreneurs 3
  • References 30
  • Chapter 2 an Environment for Entrepreneurs 31
  • References 45
  • Chapter 3 the Makings of an Entrepreneur 47
  • Summary and Implications 94
  • Notes 96
  • References 97
  • Chapter 4 the Technological Base of the New Enterprise 100
  • Summary and Implications 121
  • References 123
  • Chapter 5 the Financial Base of the New Enterprise 124
  • Summary and Implications 156
  • Chapter 6 Evolving Toward Product and Market-Orientation 160
  • Notes 186
  • References 186
  • Chapter 7 Finding Additional Financing 188
  • References 215
  • Chapter 8 Going Public 217
  • Summary and Implications: Sizzle or Steak 242
  • References 244
  • Chapter 9 Survival Versus Success 245
  • Chapter 10 Product Strategy and Corporate Success 281
  • Notes 306
  • References 308
  • Chapter 11 Super-Success 309
  • Notes 336
  • References 338
  • Chapter 12 Technological Entrepreneurship: Birth, Growth, and Success 339
  • References 358
  • Appendix a Quarter Century of Research 359
  • References 375
  • Index of Founders and Firms 377
  • Subject Index 381
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