The two new guys running the slowly sinking ship known as once hot tech startup WeWork should give SoFi CEO Anthony Noto a holla on his Apple iPhone. Trust me, Noto has some good, timely advice for Artie Minson and Sebastian Gunningham.
Because the former Goldman Sachs banker and Twitter chief financial officer, now SoFi chief clearly gets how to rebuild a promising tech startup after a high-profile challenge or two. And then possibly, take it down the path of a successful initial public offering.
“The number one thing we were focused on when I got to the company was building a great management team and establishing the foundation of a great culture. We have established 11 core values. They are embedded into how we think about hiring people, how we evaluate people’s performance and most critically, how we work day to day together. It’s not just the what we do, but the how we do it. We want to have the world’s best culture — that’s very ambitious, it doesn’t take capital or technology. It’s takes leadership, alignment and accountability,” Noto said on Yahoo Finance’s The First Trade.
The former U.S. Army captain was brought in to run SoFi in January 2018 following the ouster of founder Mike Cagney in summer 2017 amid claims of widespread internal harassment of female workers. Through a series of interviews with Yahoo Finance since taking over SoFi, Noto’s turnaround plan has become that much clearer and appears to be working well.
Not only has Noto launched new services such as one allowing cryptocurrency trading on the platform, he has rebuilt the management team and cleaned up bad loans on the online lender’s books. Noto also raised more than $500 million from the Qatar Investment Authority in May, valuing the company at $4.3 billion.
Above all else, Noto has worked to strengthen SoFi’s culture.
Keys to a successful IPO
While Noto continues to stay mum on when SoFi may go public, he still has his ears to all the happenings in IPO land. The IPO market continued to slow in the third quarter amid global political uncertainty. Meanwhile, much hyped tech startups such as WeWork have seen sizable valuation haircuts due to concerns about profitability.
Noto explained, “I think the noise and volatility you are seeing is based more on the individual companies and its circumstances. I always go back to there being three critical things for there to be a successful IPO. Number one, what story are you telling over the next three to five years not over the next three quarters. Second, what investors buy into that argument. And third, how do you balance valuation today with valuation long-term. Unfortunately some of the private companies have gotten valuations ahead of the company and they now have to grow into them. For whatever reason, their growth has slowed and there are cultural concerns and that makes it really hard to do an IPO.”
Following the ouster this week of WeWork founder and CEO Adam Neumann, the job to take the company public will fall on the aforementioned Minson and Gunningham. Start with fixing the culture guys, just like Noto did at SoFi.
Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow him on Twitter @BrianSozzi
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