Cliff and Lisa Sharples

The road show, the friends and family list, the big day, and the aftermath: The inside story of garden.com’s IPO.

In October 1995 Cliff Sharples, his wife, Lisa, and their business school buddy Jamie O’Neill pitched Austin Ventures on a start-up idea involving gardening and an untested concept known as e-commerce. They left with a check for $20,000 and instructions to investigate the idea further. More than four years later, having pocketed nearly $50 million in five rounds of financing, the three founders of garden.com presided over an initial public offering—the holy grail of high tech here and everywhere.

Three months after the big day, during the week of the last Christmas of the millennium, the Sharpleses talked to Texas Monthly Biz about their IPO: what came before, what it was like during, and what has happened since. Their story is their own, but it will resonate for their counterparts at many companies in Texas today—and for a few counterparts-to-be who are still rooting around for seed money.

Texas Monthly Biz: When did you first start thinking seriously about an IPO?
Lisa: At the beginning of 1999, once we understood that this was really working, we decided to do a private placement round of financing. We wanted to raise $12 million to $15 million—later that became $20 million—and we understood that when you’re raising that much, you need an investment bank to help you. So we hired Hambrecht & Quist, out of San Francisco. And it was right after this round that we really started to talk with our board about going public.

TMB: What were the timing considerations?
Lisa: A public offering is a very involved process for the management team. Our business is seasonal, and the busiest time is the spring. We didn’t want to take our eyes off the ball to do a road show. Whereas in the summer, everyone is done gardening—there’s a lull. Summer was one of the only times we could actually go out and do an IPO.

TMB: What do you mean by “involved process”?
Lisa: Well, you have to prepare the prospectus that will be distributed to people who want to buy shares. That takes about a month. In it is the history of the company, how much money has been put in, who the owners are, and the risk factors of the business. Most of the information is financial, but there’s also some about the way the business is run. Once you prepare that document, you have to submit it to the Securities and Exchange Commission for review. There are lots of lawyers and banks involved at this point, because everybody wants to make sure that the document is as good as it can possibly be before it goes to the SEC. The SEC has a review process that it goes through to make sure the security can be traded in public markets, and they come back with comments; the whole process can take a good number of days. When we were doing it, there were so many people filing to go public that there was a backlog.
Cliff: And while all this was going on, we decided to

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