An 18-month-old startup with $2 million in sales went public rather than go bankrupt

Ben Horowitz, then the chief executive of a software startup, was staring at numbers that made no sense together. His company was 18 months old, with $2 million in sales over the prior 12 months. The plan for selling shares to the public said that $2 million would grow to $75 million.

He called it what it was. That was clearly a bad idea.

He had talked to "literally every investor in the private markets," Horowitz said, and no one would put in more money. That left him with two choices. He could file to go public, which meant selling shares to stock market investors to raise cash to keep operating, or he could file for bankruptcy and wind down. Bankruptcy was obviously the worse choice.

This is the kind of decision Horowitz says he is proudest of as a chief executive. The choices were not difficult to understand. They were "just difficult to make," Horowitz said, "and that was like a psychological thing." His test was simple. "It's like, is that the best choice I have? If that's it, I'm doing it."

So he went public. He said what made that decision work was the willingness to do such a bad-looking thing and not hesitate, but to "just do the thing you can do" and "trust your eyes," even if it looked horrible.

Many companies in that spot went bankrupt because they could not bring themselves to act. "I can't tell you how many companies went bankrupt at that point because they didn't go do that," Horowitz said.

Going public did not make the pain go away. Horowitz said all the things he thought would happen to him when he went public did happen to him. He joked that thinking about what would happen to him would have made him want to shoot himself in the head.

He called that approach "running at the problem," and that is what he did. He did not hesitate, and the $2 million company went public. He added that there is no training for being the boss who has to make that call.