I get the question often: When is Edmunds.com going public?
It’s rare in 2014 that you see privately held, family-owned household-name companies, and it’s even less common here in the “Silicon Beach” tech area of Los Angeles.
But we are committed to staying privately held. We know that we’re better off that way, and we think it could be the better path for many other companies.
Like many thriving and confident business owners, we believe that we launched a terrific long-term business. To invest in long-term success, we don’t worry about what other people say on a short-term basis.
We simply aren’t interested in being bogged down by the opinions of onlookers with no vested interest in our long-term success. Wall Street is forever looking for impressive quarterly milestones, and responds with rewards or punitive reactions. Wall Street’s timetable simply doesn’t match our value system.
If we went public in one of the waves of promised prosperity that tempted — and ultimately drowned — so many, we certainly wouldn’t be as strong as we are today.
The value of independence
Had we been forced to meet investor expectations during the recession, we would likely have gutted our organization to slash costs. Instead, we were able to keep our 400-plus staff intact. We value our people.
We appreciate that finding the right personnel is difficult and expensive. We knew that the financial crisis would be temporary, and so would be the financial pain of our decision. With no one dictating our moves, we weathered the storm, and bounced back rapidly when the economy turned.
Thanks to our independence, we are also able to be nimble when we see opportunities to advance. Sure, public companies shift their thinking, but we can do it without scrutiny and distracting conversations with outsiders. We’ve exercised this ability many times, all for the long-term benefit of the company.
We swiftly made a $15 million investment in personnel and tools to support a new sales initiative whose success depends on a multi-year view. Most recently, we launched our first-ever national television advertising campaign, ramping up from no traditional marketing budget to an eight-figure spend. Maybe we would have taken these steps as a public company, but surely we would have gone in more gingerly, worried about what effects they would have on earnings.
Think before you act
Sure, there are benefits to being a publicly held company. We value the structure in which they must be run, and we choose to operate like one, employing a Big Four auditor and hiring a board of directors that includes esteemed outsiders.
But we are not bogged down by Sarbanes-Oxley standards, nor are we spending personnel resources and other costs associated with compliance. We instead plow those saved resources back into our own business, and we share them with our employees to the extent that we are consistently voted one of the best workplaces in Southern California.
Think twice before you think that going public is an inevitability for a successful company. There’s a lot to be said for a thoughtful decision to stay privately held.
