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I see lots of cheering which, to some degree, I understand given the public persona of Adam Neumann. I'm more interested in the ramifications, and I don't just

I see lots of cheering which, to some degree, I understand given the public persona of Adam Neumann. I'm more interested in the ramifications, and I don't just mean the obvious ones like "potential tech recession" (maybe, who knows) or "more due diligence" (unlikely, or if so likely to swing completely the other direction). Given that "private markets are the new public markets" I wonder if this will just encourage more companies to stay private either indefinitely (e.g. MailChimp though obviously I realize they are an exception) or for a period far beyond the norm (AirBnB) to wait for a more favorable time to IPO. Maybe we'll see companies switch to RSUs instead of ISOs as this becomes more common.

vasco 7y ago
One possible ramification is that the so called "window" is about to close and as such, most companies will have a bit of a higher bar to IPO. "Good" companies might raise money at worse terms than otherwise. Backpressure could mean a harder environment to raise capital all the way back to early rounds. Or this is just a one time shitty governance company and things will keep going. You know, past results yada yada.
ineedasername 7y ago
Staying private longer in the face of capital markets skeptical of money losing businesses isn't much of an option. Eventually, in order for the private investors to make money, they either need to get profitable or go public. AirBnB is a poor example of staying private longer in these circumstances because they are profitable. [0] [0] https://www.cnbc.com/2019/01/15/airbnb-sustains-profit-as-it-heads-toward-ipo.html https://www.cnbc.com/2019/01/15/airbnb-sustains-profit-as-it...
- j_shi 7y ago
  Could also go strategic exit or PE route, though former tricky to put together and latter tough on valuation
- wgerard 7y ago
  > Eventually, in order for the private investors to make money, they either need to get profitable or go public. Most (but not all, obviously) unicorns could easily be profitable if they chose to be. It would come at the expense of growth and R&D, but they would be profitable nonetheless. Growth is just valued much more heavily in the current market. If you look at S-1s or even recent public unicorn earning statements, most of their losses stem from outsized increases in R&D/etc. expenditures despite healthily increasing revenues. The most recent example I can think of off the top of my head is Dropbox.
  - ineedasername 7y ago
    Yes, the thing is that profitability in that way would cost them their IPO, whose value would plummet. And private investors that bought in at 10x or 20x revenue would not be happy with 0.2x profitability. More or less what happened with WeWork once they issued their offering & the CEO's behavior caused scrutiny on the whole thing.
countryqt30 7y ago
Adam Neumann and his wife Rebekah Neumann have repeatedly shown massive unethical behavior (see the plethora of Bloomberg articles about the many examples) without integrity on many levels, which are a "extremely interesting set of self-dealing priorities"-at best.

vasco 7y ago

One possible ramification is that the so called "window" is about to close and as such, most companies will have a bit of a higher bar to IPO. "Good" companies might raise money at worse terms than otherwise. Backpressure could mean a harder environment to raise capital all the way back to early rounds. Or this is just a one time shitty governance company and things will keep going. You know, past results yada yada.

ineedasername 7y ago

Staying private longer in the face of capital markets skeptical of money losing businesses isn't much of an option. Eventually, in order for the private investors to make money, they either need to get profitable or go public. AirBnB is a poor example of staying private longer in these circumstances because they are profitable. [0] [0] https://www.cnbc.com/2019/01/15/airbnb-sustains-profit-as-it-heads-toward-ipo.html https://www.cnbc.com/2019/01/15/airbnb-sustains-profit-as-it...

j_shi 7y ago
Could also go strategic exit or PE route, though former tricky to put together and latter tough on valuation
wgerard 7y ago
> Eventually, in order for the private investors to make money, they either need to get profitable or go public. Most (but not all, obviously) unicorns could easily be profitable if they chose to be. It would come at the expense of growth and R&D, but they would be profitable nonetheless. Growth is just valued much more heavily in the current market. If you look at S-1s or even recent public unicorn earning statements, most of their losses stem from outsized increases in R&D/etc. expenditures despite healthily increasing revenues. The most recent example I can think of off the top of my head is Dropbox.
- ineedasername 7y ago
  Yes, the thing is that profitability in that way would cost them their IPO, whose value would plummet. And private investors that bought in at 10x or 20x revenue would not be happy with 0.2x profitability. More or less what happened with WeWork once they issued their offering & the CEO's behavior caused scrutiny on the whole thing.

countryqt30 7y ago

Adam Neumann and his wife Rebekah Neumann have repeatedly shown massive unethical behavior (see the plethora of Bloomberg articles about the many examples) without integrity on many levels, which are a "extremely interesting set of self-dealing priorities"-at best.