IPOs, Acquisitions, and The Long Term for Moz

Somehow, the company we started has become somewhat successful and reached some really interesting milestones. Honestly, what SEOmoz has achieved in the past 5 years is beyond what I could have hoped for. It’s exciting and it’s humbling, but it’s also a little bit scary. There are 94 incredible people at the company devoting their professional lives (and often a lot of personal time) to making the next phase 10X what we do today.

When I think about the track we’re on for the next few years, I’m optimistic and I can’t wait to get there. I can clearly see a lot of needs for the products, data, and services we want to build and I think we can make a lot of marketers really happy. But long term, I’m a little scared.

That fear stems from the amazing possibilities that come with growth (the chart above shows some very rough guesses about high vs. low end¬†possibilities over the next few years), and the consequences of the company’s options. Basically, it boils down to this – SEOmoz has taken institutional venture financing, meaning we’re on a course that demands a liquidity event. That event could come in one of three ways:

Beyond that, there’s not a whole lot of choices (there’s the secondary markets and the long-term private model adopted by Twitter, but these are outliers). And unfortunately, there’s a lot of risk and downside with any of these three (and a lot of good things, too, particularly from a financial perspective).

Acquisition by a Larger Company – the good part is that this means a lot of liquidity very quickly for much of the team, the founders, and management. The downside is the potential loss of ability to control our own destiny, to serve out the mission we want to achieve, and to maintain our culture and TAGFEE. That last one scares me the most, though the other two also suck. It’s always possible we could find that “perfect match” company where our culture and values are a rock solid fit. I feel like Zappos got that in their acquisition by Amazon, and Jeff Bezos even talked about wanting to bring more of Zappos’ culture to Amazon, rather than the other way around. They’ve been kept very independent, and Tony Hsieh continues to do remarkable things at the firm. I think the only way we’d consider this option is if we found an acquirer like that.

Acquisition by Private Equity – this one’s less common and less talked-about, because it rarely happens with high profile brands, but it’s an option to consider. There’s the same concerns that you’d have with a large company acquisition, but the ability to control destiny and maintain culture might be more likely. Again, it really depends on the buyer and whether they believe what we believe and would be an ally for TAGFEE and for our mission.

IPO – this is the one we’ve really set our sights on in the last year. There’s a strong desire to build a big, public company in Seattle, and we think the field of professional inbound marketers is a tremendous, long-term market that could support several public companies. We want to have the freedom to think very long term (10+ years) and the capital to pursue remarkable technologies, data, people, and software. We want to help spread the power of web marketing to the far corners on the planet and to bring TAGFEE with us wherever we go. But IPOs are really, really hard, and being a public company may be even harder.

There are a ton of rules around compliance and reporting that don’t fit with our culture at all. The things I like to talk about and tweet and discuss internally with our team wouldn’t be possible. There’d be no more of this or this or this. Public investors are short-term focused. They care about the next quarter and they can be brutal to a company’s culture and to a management team’s ability to focus. Discipline like what we see from Amazon is rare, and often, the long-term-focused CEOs lose out in the public markets because of the relentless demand for wins right now.

I don’t have the answers to these questions, but they’re big, interesting ones to ponder.

I do know that so long as we continue to work hard, work smart, stay humble, and stay true to TAGFEE, we’re going to have exciting opportunities that likely will result in incredible financial rewards. I won’t try to lie and say that doesn’t interest me – it does. I’ve often said at team meetings and in talks about Moz that I want to create a lot of new millionaires in Seattle who can give back to the startup and technology ecosystem and to their city in general. And I’m personally very interested in philanthropy (ala¬†Chuck Feeney). So, these are “high quality” problems and certainly “first world” problems, too. But when so many people’s futures are resting on it and the last dozen years of my life have already been put into this, it’s hard not to think about every now and then.

Plus, it’s in my job description to worry about the big picture. As always, suggestions welcome.