https://news.ycombinator.com/item?id=13672675
You made the same comment on the Mulesoft IPO announcement. :)
https://news.ycombinator.com/item?id=13620748
Wall Street calls bullshit when they see it, and smart people short these types of companies. Silicon Valley doesn't provide a way to short these propped-up companies, they just continue to self-promote themselves on private equity and foreign investment.
I happend to be looking at that 17 day old thread earlier to see what people said about the Mulesoft IPO to see if it was worth participating in.
1.) Raise substantial additional capital for R&D, growth, new products, pay down debt, etc.
2.) Exit event. Allows founders, employees and pre-IPO investors to "cash out". Typically at nice fat returns since they get heavily discounted shares.
3.) Increased public awareness since IPO's usually have media coverage and a general frenzy.
This is both Voodoo economics (how is $1 million a year profit worth $4 mil in one scenario, and $17.94 in another?) as well as somewhat logical, as public companies have more rules and transparency (in theory, if not always in practice) that make a profitable more public company more stable.
That being said, one of the most frustrating parts of being a public company is SoX compliance. This is not just for the CEO but for any executive/VP dealing with finances and sales. Every large sale takes a bit longer because now you have to have this additional layer of scrutiny. When you are used to silicon valley pace, these delays can frustrate you, but you eventually get used to it I guess.
I imagine that going public, simply by creating a lot of new shares, is also an effective way to raise additional capital, which could be used to grow the company more, similar to a private fundraising round but larger in scale.
This statement is boggling. Only in Silicon Valley can a "billion dollar business" be worthless except for the price of its shares. Anywhere else, "billion dollar business" implies some kind of actual revenue.
Growth is necessary for all companies, public or private. If you're not growing, you're dying. That's not always true, but it's true enough -- not just in economics, but for all organisms, literal and metaphorical. It's less about absolute growth than relative growth. If your competitor is growing faster, eventually they will crowd you out of the market.
Well, no. Only public ones have that pressure. If the owners of a private company agree, they can sit at any size and make a steady profit.
Google went public when it did because it was effectively already public.
I don't think that's true. Do you have some source that confirms this?
If you go e.g. to Cargill's website (a $100 billion private company), you won't find any detailed financial information. There are some high level numbers and their yearly report is some marketing fluff. Same thing for e.g. Ikea.
As a public company there is relentless pressure to deliver ever increasing quarterly profits above anything else. Trying to focus on anything else (e.g. sustainability or long term plans), opens you up to criticism and lawsuits from your stock holders.
Regardless, the 500 shareholder thing specifically applies to American companies as far as I know. [2]
[1] http://www.ikea.com/ms/en_US/pdf/yearly_summary/IKEA_Group_Y...
[2] http://www.investopedia.com/terms/5/500-shareholder-threshol...
This is such a tired meme. Public companies do all kinds of long term planning.
I love the fact that Silicon Valley thinks there's nothing better for the company than a young, maverick CEO, and that an experienced board and accountability are useless.
As far as I can tell, the companies themselves owe it to no one other than their investors and employees to consider going public. If going public doesn't further their position, and private funding is available, the responsible thing (as perverse as that is) is to pursue private funding, no? So who's the one ultimately responsible for the current situation, the companies or the investors enabling them?
That's not really how shorting works. You'd have to find someone willing to let you sell their shares, you'd have to incentivize them to do so, you'd have to find a willing buyer, and you'd have almost unlimited loss potential.
To short a stock you generally borrow that stock(on margin) from a broker. How do you do that with a pre-IPO company?
I feel like Snapchat is what all the younger kids are using, at least so I've noticed. I'm 30 but old school. I don't see them using it past a certain age (say.. college most likely). Everyone who uses Snapchat will probably gravitate to or concurrently use Instagram and Facebook. Facebook will persist into old age, perhaps Instagram as well.
There's a notion of active vs. passive engagement in each of these. Snapchat requires more active engagement to be interesting. There's the story aspect but not sure it's compelling enough. Facebook is nice because as soon as you turn it on you have this sort of mini magazine like feed that tells you what all your 'friends' are doing, you don't really need to do much to get involved, and it becomes easy to boop the like button to engage / like things.
What I think snap does have, that could be quite cool from a technology standpoint is its ability to create these "masks/goggles" that react when you say stick out your tongue or raise your eyebrows. I think that sort of what I would term reactive AI is something that carries a lot of potential. I don't know how much I see it becoming an ad-revenue generator, like FB/Insta/Twit that have more of this passive magazine like structure that still somehow fosters engagement.
Also curious to see what happens when rates go up
Too often today large (well past series C) tech companies (I won't name any names) refuse to go public and instead continue to take private equity and foreign investment and prop themselves up on absurd valuations with no-checks and balances. Some of these companies are absolute dog shit, yet they continue to receive unlimited funding and insane valuations in a vacuum with no market to short them. Wall Street calls bullshit when they see it, and smart people short bad companies when they find them. Silicon Valley doesn't provide a way to short these propped-up companies, they just continue to self-promote themselves on private equity and foreign investment.