How do you get to the public markets? Practice, practice, practice

Editor’s Note: Each week Maynard Webb, former CEO of LiveOps and the former COO of eBay, will offer candid, practical, and sometimes surprising advice to entrepreneurs and founders. To submit a question, write to Webb at dearfounder@fastcompany.com.

Q, We are doing well, and it feels like the next step is to go public. What are the pros and cons? How do you prepare?

—Founder of a unicorn

Dear Founder,

Congrats!

You are in an excellent position. If you are expecting to go public, it means that you’ve built a successful, predictable business—it’s very difficult to achieve this.

There are lots of options to raise capital and get liquidity besides going public. These include raising another round from private investors or a growth round from private equity.

You should only go public when you have strong confidence that you will execute well for quite a while.  The biggest thing you need is confidence in your business model. You need to have good visibility into the next few years.

My perspective is that you should start soon on building the processes, metrics, and capabilities to go public, so that you are prepared should you want to go that route. Do not hold your company back from what it is intended to do because you haven’t put the processes in place to be ready. This means:

Practice acting like a public company several quarters in advance. Build a board. Build committees within the board. Prepare your quarterly results as though you were filing them with the SEC. Hold mock quarterly earnings calls with the team and your board. Do formal board meetings, even though you don’t have to.

You must also consider the team’s readiness and willingness to live with all the overhead that comes with being a public company. You have to be ready to deal with regulatory overhead and public scrutiny that comes with having public shareholders.

Consider obtaining dual classes of stock (if you’ve built a strong enough company and have the leverage to do so). In what can be a volatile, short-term oriented public market, preferred stockholders maintain more control over their company’s destiny. For this reason, dual classes are hard to obtain, but if you plan to stay with the business a long time, they are worth strongly considering.

Once you’ve had an IPO you’ve made it from the minor leagues to the major leagues, and now the whole world is watching (and has an incredible level of transparency into your business). The challenges you’ll face as you build the enduring company will be unlike anything you’ve faced to date.

While going public is a huge achievement it is also has to be your “worst” day in that every day after you need to grow bigger. Successful companies are those like Salesforce or Okta that get better every day after the IPO and generate growth and profit for the long haul. That is what the shareholders care about and that’s who you will be answering to.