The latest 20VC + SaaStr: The Figma IPO Breakdown: $3B Left on the Table, Broken CEO Comp, and Why VCs Are Worse Than Public Markets
This week, Brian Halligan (Co-Founder & Executive Chairman of HubSpot) joins the regular crew of Harry Stebbings, Rory O’Driscoll, and Jason Lemkin for an inside look at IPO dynamics, CEO compensation, and the current state of public markets.
The Bottom Line Up Front
On IPO Pricing Reality: “The people who said, ‘Oh, Figma left $3 billion on the table.’ The $98 price only happened because the IPO happened at $38. Had someone walked in and said, I know this IPO is going to price at $100 bucks a share to open tomorrow morning. Let’s raise at $80. They wouldn’t have had a book becayse no one has bid at that thing. So that money wasn’t accessible.” — Rory O’Driscoll
On Going Public vs. Staying Private: “I think VCs are a much bigger pain in the ass than public investors. VCs are a much bigger pain in the ass than the typical public investor and slightly less of a pain in the ass than the public activist investor.” — Brian Halligan, Co-Founder & Executive Chairman, HubSpot
On CEO Compensation: “CEO comp is pretty broken at the moment. Everyone really relies heavily on RSUs. When I grew up in the industry, it was mostly ISOs, it was options until 2006 and regulations changed. It just creates sort of a risk averse behavior in the CEO.” — Brian Halligan
The Figma IPO might be the most misunderstood public offering in tech history. With a 250% first-day pop — pricing at $38 and opening at $85 and trading up to a day 1 high of $124— everyone from X pundits to Bill Gurley called it catastrophic mispricing. But the real story, told by those who’ve been in the room where it happens, reveals a much more nuanced truth about how IPOs actually work.
The Night Before: When Exhaustion Meets High-Stakes Poker
Brian Halligan, who took HubSpot public in 2014, pulls back the curtain on what actually happens in those final 24 hours. “You’ve never been as tired in your entire life as you are when you’re making this decision,” he explains. “You’ve been on the road for the last two weeks. You hit 12 countries. You had six pitches a day. Your battery is on red.”
Then comes the moment that defines everything: the pricing committee meeting the night before trading begins. “The investment bankers sit you down and say you got two big decisions to make. One is who are the investors going to be… and then what’s the price.”
The founders and bankers, perfectly aligned throughout the entire road show, suddenly find themselves “across the table from each other” in that final hour.
The Fidelity Gambit: A $1 Decision Worth Billions
The most revealing part of Halligan’s account centers on what he calls “the Fidelity discussion.” At HubSpot, Morgan Stanley pushed for a $24 pricing because “Fidelity has told us that they’re in at 24, they’re out at 25.”
“You really want Fidelity because Fidelity has trillions of dollars and they could own, you know, they could be a massive banker,” Halligan explains. But HubSpot pushed back, pricing at $25. The result? A 32% first-day pop to around $33.
Rory O’Driscoll, who’s been through this multiple times, confirms this is standard operating procedure: “They clearly give the same speech every time… It’s always Fidelity or one of the other two. It’s like ‘you want Fidelity, it’s only another dollar,’ right?”
The Real Story Behind Figma’s “Mispricing”
So what actually happened with Figma? O’Driscoll delivers the most important insight: the astronomical pricing wasn’t accessible at IPO time.
“The $98 price only happened because the IPO happened at $38,” he explains. “The discussion they were having on the day was… do I go two bucks more and exclude Fidelity or two bucks less and take Fidelity… Had someone walked in and said, I know this IPO is going to price at $100 bucks a share to open tomorrow morning. Let’s raise at 80. They wouldn’t have had a book cuz no one has bid at that thing.”
This is crucial for understanding IPO dynamics. The massive first-day pop wasn’t money “left on the table” — it was euphoria-driven demand that materialized only after the stock started trading.
The Unintended Consequences of Mega-Pops
But here’s where it gets problematic. O’Driscoll reveals a counterintuitive truth: “All those big buyers who came in at Figma $38 before they buy they have an internal process with a price target to exit. None of those price targets are going to be more than $110 bucks a share.”
The result? “Most of them are selling those shares right now… If you’re running money as one of these institutions and you bought at 35 and you built a business case that says, ‘We think this will be worth 50 bucks a share in two years and suddenly it’s worth $100 a share in two days.’ At least half those mutual funds have to say should we lose our position.”
This creates the exact opposite of what founders want — instead of long-term institutional holders, you get a trading-oriented shareholder base.
The CEO Compensation Crisis Nobody’s Talking About
Perhaps the most underreported aspect of the Figma story is Dylan Field’s $2 billion compensation package — and what it reveals about broken CEO incentive structures across the industry.
Halligan is blunt: “CEO comp is pretty broken at the moment.” The core problem? The shift from stock options to RSUs (Restricted Stock Units) after 2006 regulatory changes.
“When I grew up in the industry… it was mostly ISOs, it was options until 2006 and regulations changed and the expensing of that changed. So the world kind of moved to RSUs. It just creates sort of a risk averse behavior in the CEO.”
The Performance Stock Unit Solution (And Its Problems)
Figma tried to solve this with Performance Stock Units (PSUs) — essentially recreating options by tying stock grants to performance triggers. The problem? “They put this in place before the IPO. And if you read the triggers, they’ve already achieved the triggers.”
Because of the IPO pop, Field hit all his performance milestones immediately. “He’s made all the triggers already… the performance element vanished very quickly.”
O’Driscoll advocates for revenue and operational income targets instead of stock price triggers, but acknowledges the disclosure problem: “If we put that on the table and then circumstance change, we have to disclose it. So then all the analysts will start saying, ‘Oh my god, they think they can make 35%.'”
HubSpot solved this by tying CEO compensation to “net new ARR” and “earnings number” — much more controllable metrics than stock price.
The Case for Going Public: Why VCs Are Worse Than Public Markets
The most surprising revelation from Halligan: public markets are actually easier to deal with than VCs.
“When we were a private company, we had a bunch of quirky, slightly misaligned venture capital investors who were definitely in our shorts. Then we flipped to public and then we got rid of those VCs. Now we had a bunch of quirky slightly misaligned public investors who are less in our shorts.”
He continues: “I think VCs are a much bigger pain in the ass than the typical public investor and slightly less of a pain in the ass than the public activist investor.”
Why Timing Matters More Than You Think
Both Halligan and O’Driscoll emphasize the seasonal nature of IPO success. HubSpot went public three months after Zendesk, which “didn’t get the big long onlies and they never really got them. They always had a lot of hedge funds in there.”
The result years later? “When they hit an issue and they had activist pressure… you had a stronger investor base the whole way through.”
For companies considering going public now, O’Driscoll’s advice is clear: “Run forest run. The market’s wide open. The valuations are good. There’s a lot of demand. It’s very seasonal… If I were Canva, it’s amazing company. I’d be lining everything up to go public.”
The AI Revolution’s Impact on SMB Software
The conversation also touched on a critical question for B2B software: can AI work for SMBs? Lemkin and Halligan, who built a $30B company serving small businesses, is skeptical of many current approaches.
“80% of folks have an AI team to do this. Even with what they call SMB and VC, 80% have a team. SMBs don’t have a team, right? The owner of one restaurant… doesn’t have an AI team.”
The key insight: successful SMB AI products will need to be “pre-baked” and self-training, not requiring company-by-company customization that works for enterprise.
Meta’s AI Spending: Sustainable Strategy or Bubble?
The group also analyzed Meta’s monster Q3 results: 38% year-over-year EPS growth, 22% revenue growth, but a 22% drop in free cash flow due to AI infrastructure spending.
O’Driscoll’s take: “This isn’t an AI-enabled success. This is I have an awesome existing business, and it kicks off so much money that I’m allowed spend that money on building this great AI vision.”
The key insight: hyperscalers can sustain massive AI capex because their existing businesses generate enormous cash flows. “Real men with $70 billion in free cash flow get to spend $40 billion of that on servers.”
Key Takeaways for B2B Leaders
- IPO Timing Is Everything: Market conditions and investor appetite matter more than perfect fundamentals. The difference between getting marquee institutional investors versus hedge funds can define your public company experience for years.
- Rethink CEO Compensation: Move away from RSUs toward performance-based structures tied to operational metrics (revenue, profitability) rather than stock price. Stock price triggers often get hit accidentally or become impossible to achieve.
- Public Markets Aren’t the Enemy: Properly managed, public investors are often less intrusive than growth-stage VCs. The key is conservative guidance and clear long-term vision.
- SMB AI Requires Different Architecture: Traditional enterprise AI deployment models won’t work for small businesses. Success requires pre-trained, self-configuring solutions.
- The Best Time to Go Public Is When You Don’t Need To: Companies with strong cash generation and optionality should consider public markets during favorable windows, not when forced by cash needs.
- Long-term Shareholder Base Matters More Than Valuation: A 20% pop with the right institutional investors beats a 200% pop with day traders and hedge funds.
The Most Quotable Moments
On Founder Exhaustion: “You’ve never been as tired in your entire life as you are when you’re making this decision. You’ve been on the road for the last two weeks… your battery is on red tired and then the investment bankers sit you down.” — Brian Halligan
On Going Public Now: “Run forest run. The market’s wide open. The valuations are good. There’s a lot of demand. It’s very seasonal. Timing really matters.” — Rory O’Driscoll
On CEO Compensation: “If you paid Elon Musk like Mary [Barra] makes $29 million a year. Do you think Elon cares about $29 million? So you have to kind of comp it to the CEO’s net worth as opposed to just the peers.” — Brian Halligan
On AI and SMBs: “How do you solve the fact that it can take six months to roll out a Palantir grade deployment? How do you do that in 60 seconds? And any founders that crack that code, I want to invest this hour, this second.” — Jason Lemkin
