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I wouldn't automatically jump on the conspiracy-theory bus: SOX and other regs for public companies are a great deal of work (while they provide some assurance

I wouldn't automatically jump on the conspiracy-theory bus: SOX and other regs for public companies are a great deal of work (while they provide some assurance to investors). Private companies get to keep more things secret, choose what/whom to reveal certain details and don't have to do as much reporting/audit, although it's still a good idea.

jonathankoren 10y ago
SOX compliance is overblown. If it was that arduous no one would go public, and that's clearly not the case.
- Anderkent 10y ago
  Going public does mean that your company is obliged to maximise shareholder profit, rather than achieve whatever goals the founders envisioned.
  - jonathankoren 10y ago
    This old canard. No. They have to act kb the interests of shareholders, whatever interest that is.
    - Anderkent 10y ago
      And what exactly is the interest of the shareholders, rather than maximasing share value / dividend payout?
      - manigandham 10y ago
        This is a good article with much more detail: https://www.nytimes.com/roomfordebate/2015/04/16/what-are-corporations-obligations-to-shareholders/corporations-dont-have-to-maximize-profits https://www.nytimes.com/roomfordebate/2015/04/16/what-are-co... >> Serving shareholders’ “best interests” is not the same thing as either maximizing profits, or maximizing shareholder value. "Shareholder value," for one thing, is a vague objective: No single “shareholder value” can exist, because different shareholders have different values. Some are long-term investors planning to hold stock for years or decades; others are short-term speculators.
        Anderkent 10y ago
        Sure, but all of those are still focused on the profits, revenues and growth of the company; rather than any externalities it might bring about.
        manigandham 10y ago
        Did you read the article? >> Also, most investors care not only about their portfolios, but also about their jobs, their tax burdens, the products they buy and the air they breathe. Which is to say, companies that maximize profits by firing employees, avoiding taxes, selling shoddy products or polluting the environment can harm their shareholders more than helping them.
      - jonathankoren 10y ago
        >Going public does mean that your company is obliged to maximise shareholder profit, rather than achieve whatever goals the founders envisioned. and > And what exactly is the interest of the shareholders, rather than maximising share value / dividend payout? Wait. By your own logic why would anyone invest in anything that wasn't public if you were just throwing money at some dude that wanted to do something that wasn't in your interest? Your logic makes no sense. It sounds like you're saying, it's sad that founders don't get to spend money anyway they want without carrying about the wishes of who gave them the money.
        Anderkent 9y ago
        > By your own logic why would anyone invest in anything that wasn't public if you were just throwing money at some dude that wanted to do something that wasn't in your interest? Because usually you get preferred stock, that means that all the 'crazy' non-profit-oriented things that the founders might be doing are still done with their money, rather than yours. There's just a difference in both incentives and philosophy, isn't there? If the company is controlled by a private person, they're not obliged to make decisions that are 'best for the company'; and anyone choosing to go along for the ride is expressing trust into that persons ideas and goals. (And any contractual terms they set in their shareholder agreement; but the owners can refuse terms that misalign with their vision) >It sounds like you're saying, it's sad that founders don't get to spend money anyway they want without carrying about the wishes of who gave them the money. No; I'm saying that if as a founder you want to be able to spend money any way you want, you do not want to go public.
  - manigandham 10y ago
    This is repeated everywhere but not true. The company officers are to act in the best interests of the shareholders. That may or may not be profit.
- adventured 10y ago
  It's not overblown. We're averaging ~125 IPOs per year since the act was passed. That's not even equal to the worst IPO years in the 1980s during recessions. Meanwhile the US economy is at least twice as large as it was in 1985 on an inflation adjusted basis. 2016 saw 106 IPOs. That's below horrible recession years in the early 1980s. And that was with the stock market at very high levels. The stock market has hit new all-time highs, the Nasdaq is on the moon, and very few companies want to go public. The entire vast shift to the private market occurred solely due to Sarbanes Oxley. The simultaneous extreme growth of the private capital market for ventures, the drastic reduction in IPOs vs the prior 30 years (while there has been an explosion of billion dollar start-ups), and the fact that the best companies are choosing to wait a lot longer to IPO vs the prior 30 years, makes it overwhelmingly obvious what has happened.
  - burntrelish1273 9y ago
    IPOs are businesses last-ditch, later-round financing after sovereign wealth, institutional investors, investment bankers, superangels and everyone else says "no." They're becoming rarer, except for ventures which require an enormous amount of working capital, because angels and other investors typically have more cash than pre-Sequoia times to lend out to ventures which are smart about their cash & business models.
- burntrelish1273 9y ago
  Tell that to people like my mom whom were in finance, experienced SOX first-hand and had to put BS title pages on every spreadsheet.

jonathankoren 10y ago

SOX compliance is overblown. If it was that arduous no one would go public, and that's clearly not the case.

Anderkent 10y ago
Going public does mean that your company is obliged to maximise shareholder profit, rather than achieve whatever goals the founders envisioned.
- jonathankoren 10y ago
  This old canard. No. They have to act kb the interests of shareholders, whatever interest that is.
  - Anderkent 10y ago
    And what exactly is the interest of the shareholders, rather than maximasing share value / dividend payout?
    - manigandham 10y ago
      This is a good article with much more detail: https://www.nytimes.com/roomfordebate/2015/04/16/what-are-corporations-obligations-to-shareholders/corporations-dont-have-to-maximize-profits https://www.nytimes.com/roomfordebate/2015/04/16/what-are-co... >> Serving shareholders’ “best interests” is not the same thing as either maximizing profits, or maximizing shareholder value. "Shareholder value," for one thing, is a vague objective: No single “shareholder value” can exist, because different shareholders have different values. Some are long-term investors planning to hold stock for years or decades; others are short-term speculators.
      - Anderkent 10y ago
        Sure, but all of those are still focused on the profits, revenues and growth of the company; rather than any externalities it might bring about.
        manigandham 10y ago
        Did you read the article? >> Also, most investors care not only about their portfolios, but also about their jobs, their tax burdens, the products they buy and the air they breathe. Which is to say, companies that maximize profits by firing employees, avoiding taxes, selling shoddy products or polluting the environment can harm their shareholders more than helping them.
    - jonathankoren 10y ago
      >Going public does mean that your company is obliged to maximise shareholder profit, rather than achieve whatever goals the founders envisioned. and > And what exactly is the interest of the shareholders, rather than maximising share value / dividend payout? Wait. By your own logic why would anyone invest in anything that wasn't public if you were just throwing money at some dude that wanted to do something that wasn't in your interest? Your logic makes no sense. It sounds like you're saying, it's sad that founders don't get to spend money anyway they want without carrying about the wishes of who gave them the money.
      - Anderkent 9y ago
        > By your own logic why would anyone invest in anything that wasn't public if you were just throwing money at some dude that wanted to do something that wasn't in your interest? Because usually you get preferred stock, that means that all the 'crazy' non-profit-oriented things that the founders might be doing are still done with their money, rather than yours. There's just a difference in both incentives and philosophy, isn't there? If the company is controlled by a private person, they're not obliged to make decisions that are 'best for the company'; and anyone choosing to go along for the ride is expressing trust into that persons ideas and goals. (And any contractual terms they set in their shareholder agreement; but the owners can refuse terms that misalign with their vision) >It sounds like you're saying, it's sad that founders don't get to spend money anyway they want without carrying about the wishes of who gave them the money. No; I'm saying that if as a founder you want to be able to spend money any way you want, you do not want to go public.
- manigandham 10y ago
  This is repeated everywhere but not true. The company officers are to act in the best interests of the shareholders. That may or may not be profit.
adventured 10y ago
It's not overblown. We're averaging ~125 IPOs per year since the act was passed. That's not even equal to the worst IPO years in the 1980s during recessions. Meanwhile the US economy is at least twice as large as it was in 1985 on an inflation adjusted basis. 2016 saw 106 IPOs. That's below horrible recession years in the early 1980s. And that was with the stock market at very high levels. The stock market has hit new all-time highs, the Nasdaq is on the moon, and very few companies want to go public. The entire vast shift to the private market occurred solely due to Sarbanes Oxley. The simultaneous extreme growth of the private capital market for ventures, the drastic reduction in IPOs vs the prior 30 years (while there has been an explosion of billion dollar start-ups), and the fact that the best companies are choosing to wait a lot longer to IPO vs the prior 30 years, makes it overwhelmingly obvious what has happened.
- burntrelish1273 9y ago
  IPOs are businesses last-ditch, later-round financing after sovereign wealth, institutional investors, investment bankers, superangels and everyone else says "no." They're becoming rarer, except for ventures which require an enormous amount of working capital, because angels and other investors typically have more cash than pre-Sequoia times to lend out to ventures which are smart about their cash & business models.
burntrelish1273 9y ago
Tell that to people like my mom whom were in finance, experienced SOX first-hand and had to put BS title pages on every spreadsheet.