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Startups ‘are staying private way too long’ says Marc Benioff

62 points by hugs 7y ago

pyromine 7y ago
Admittedly I don't particularly follow Marc Benioff and / or Salesforce in the news much, but is his advocacy for privacy laws generally considered be an attempt towards regulatory capture? Relevant quote: “We need a national privacy law,” he said. “Otherwise you’re going to get a patchwork of privacy laws. We have to get our privacy and data locked down so we know where we’re going. [Regulators] need to be stepping in now and they should be working hard to make those changes.”
- teej 7y ago
  Yes, most of his recent rhetoric is.
- kube-system 7y ago
  If anyone, a large actor like Salesforce would be more equipped to handle a patchwork of laws than smaller competitors. A patchwork of laws is a pain in the ass for large companies, but it’s a barrier to entry for small ones.
zyang 7y ago
Let me rephrase this: private equity is extracting too much value out of early stage companies and left nothing for the public market.
- jwm4 7y ago
  Private equity funds do not invest in early stage companies; perhaps you mean venture capital funds? Otoh, VC's can't really "extract value" ; they can only sell share to the public or to other VC's.
  - scurvy 7y ago
    Private equity and VC are generally interchangeable terms in that context. There's a difference between a VC that privately invites certain investors to invest, versus a publicly open mutual fund that anyone can buy into. And to complicate matters even more, there are publicly traded private equity partnerships (Blackrock, etc). tldr, jargon sucks
  - CPLX 7y ago
    Venture capital is a form of private equity. We are, in fact, conversing on a website owned by a private equity firm.
  - t0mas88 7y ago
    VC can extract value by selling it on at an inflated valuation. That's what SoftBank tried to do with WeWork. The company is worth 10 billion (or less) and they tried to sell it to the public markets at 40 billion. Had the public markets not noticed the weird shit going on inside the company and actually bought it at 40+ billion then SoftBank would've made a lot of money. The stock would then most likely decrease over the following years costing those that bought it in the IPO money. This is why it's so important that public markets are strictly regulated and the SEC forces companies to publish all kinds of things before IPO.
rolltiide 7y ago
Overfitting at its finest
undefined3840 7y ago
Eh. I don’t think it’s a good idea for a startup still going through rapid change (whether releasing new product lines, entering new markets, testing new pricing) to go public, since as soon as you do it’s hard to be “experimental.” There are, however, private companies whose business models have largely stabilized like Airbnb and Stripe that I agree should’ve gone public already.
- mikeg8 7y ago
  Curious why you think they should have gone public? What advantages does an IPO offer these stable businesses? Is it a belief that all stable business at a certain scale have a obligation to enter public markets? Genuinely curious
  - undefined3840 7y ago
    You need to provide liquidity to your shareholders at some point, so yes. Investors and employees have been waiting 10 years to cash out. They helped build the business and deserve to be rewarded at a certain point. A decade is stretching it IMO.
    - kgwxd 7y ago
      Im a complete newb to this. Can someone not sell their shares freely, regardless of public staus, if they do their own marketing?
      - scurvy 7y ago
        Many companies have right of first refusal on any private share transfers. You need to offer the shares back to the company at whatever sales price you agreed to with a third party. Most times, the company can just sit on the offer and never actually respond. There are no timeliness clauses or guarantees when evaluating the offer. Notoriously, this happens with companies like Uber. If you were friends with Travis, you could sell. If not, you'll go pound sand. Investors also want to see the books and numbers. Not everyone can sell on hype alone. Even leaked numbers from Uber were taken with huge grains of salt. Over the counter arrangements and warrants are on dubious legal standings with regards to transfer-controlled private "stock units". Actual shares are a different story, but everyone gives out "stock units" and not shares. It might seem pedantic, but there's a gulf of difference while the company is still private.
jklm 7y ago
It'll be interesting to see how this'll affect startups down the line. If employees aren't cashing out in a reasonable amount of time (or at all), will the majority of startups suffer a brain drain of top talent? Will startups need to come up with a new way of compensation beyond just equity?
- koreth1 7y ago
  I think that's already happening to some degree, though it's not a "new way" exactly. Totally anecdotal, of course, but based on watching people move between jobs in my professional circle, it seems like experienced people are no longer willing to take nearly as much of a salary cut for the sake of equity as they used to. A startup that doesn't offer competitive salary and equity will have a pretty tough time hiring the most in-demand employees.
  - mdorazio 7y ago
    On the flip side, it seems there's still an endless pool of less-experienced people who are chomping at the bit to work at startups. There's a reason startups recruit primarily people in their 20s.
- ralusek 7y ago
  Can't private companies give out equity just fine?
  - mikeg8 7y ago
    Yes? But if there is no intention of an IPO, where an early employee has a reasonably easy path to liquidate their stock/options, what is the benefit of owning equity in a private company when there may be a limited/non-existent market for said equity?
    - ralusek 7y ago
      Potentially entitled to a percentage of quarterly profits, among other things. Draft whatever terms you'd like.
sib 7y ago
Or, rephrased, "They become really expensive for me to acquire and add to my crappy pile of product spaghetti in a monopolistic fashion! It would be much better if they went public when the were still cheap."
- dwoozle 7y ago
  Huh? It is much cheaper to buy a company before it IPOs. That’s why you see things like Cisco acquiring AppDynamics five days before its scheduled IPO.
  - deleted 7y ago
    [deleted]
  - sib 7y ago
    It's much easier to buy a public company than a private one (in a "hostile" or undesired situation), so if a company becomes public at a lower valuation, it's cheaper for Salesforce to acquire them and eliminate the competition.
charles_f 7y ago
> I think in a lot of private companies these days, we’re seeing governance issues all over the place,” But not with public companies? It's an opinion, I'd ask for some data. I personally don't think the public market cares much about things like privacy and governance. If it were, Facebook would have neither investors nor users. Same goes for so many others. He then goes into talking about salesforce going public as if it were an exampl. But definitely privacy and governance are not the same for b2b and b2c. I have been with two startups that got public way too quick, when half of what you're doing is for PR effects in preparing to bring new investors, you forget about the customer. One of them is dead, the other survived after being bought out by a private equity firm. Going public is such a burden for the representation aspect of it that expecting _this_ to br a regulatory practice is delusional. (imo)
- traek 7y ago
  > I personally don't think the public market cares much about things like privacy and governance. If it were, Facebook would have neither investors nor users. Same goes for so many others. This is a silly take. Data privacy is a completely separate issue from corporate governance, and by most analysts who cover it Facebook is considered a particularly well-governed company.
  - jwm4 7y ago
    A company whose founder/CEO is the only person who can remove him(self) is well governed?
    - vmurthy 7y ago
      The way analysts are probably looking at it: Governance in the letter of laws/regulations : We'll give it a B- , invest and make $$ They are probably smart/cynical enough to know that governance in the spirit of laws/regulations is an F
yumraj 7y ago
I remember the YC startup school at De Anza many years ago, when Andrew Mason, of Groupon, was one of the guest speakers and he basically said that the worst mistake he made was going public.[0] And basically what had happened was that post IPO Groupon's accounting irregularities, which were earlier hidden, became public and the company fell from grace. Same thing happened recently with WeWork and there have been numerous other companies. Basically, while private, startups are able to engage in practices that don't survive under public scrutiny. No wonder startups, especially ones on shaky foundation, are remaining private longer. [0] https://genius.com/Andrew-mason-andrew-mason-at-startup-school-sv-2014-annotated https://genius.com/Andrew-mason-andrew-mason-at-startup-scho...
- cmroanirgo 7y ago
  Then there's the continual pressure of trying to serve two masters: your original customers vs shareholders. Often it's the latter that takes precedence when they go public. What would FB or Goog be like if they were still private?
  - halflings 7y ago
    Larry and Sergey still have >50% of the voting power. Zuckerberg has >60% of the voting power. Do you really think these companies are just following what shareholders are telling them?
    - arcturus17 7y ago
      Also they’re special cases where the founders’ visions have created so much shareholder value that there hasn’t been much for the shareholder to say anyway...
    - joncrane 7y ago
      They ARE following the shareholder. The founders are the shareholders. The minority shareholders are just along for the ride.
- zwkrt 7y ago
powerslacker 7y ago
> “And if your orientation is just about making money, I don’t think you’re going to hang out very long as a CEO or a founder of a company.” If you're a competent CEO, don't expect to be a CEO for very long...what a time to be alive.
- malandrew 7y ago
  Yup. Plus, that's an easy prognostication for him to make because he's already on top. If you aren't just about making money in the early days, you're not going to be CEO very long either. The key is figuring out when your company is big enough that you need to pay attention to things other than making money, or at least good enough as signaling/feigning that you care about things other than making money.
- jwm4 7y ago
  Says a man with billions in the bank...
- rchaud 7y ago
  "Competent CEO" and "making money" aren't the same thing. Hewlett Packard has had numerous CEOs that just slashed jobs en masse to make the bottom line look better. Nokia's CEO slashed jobs as well, took up with Microsoft, and now the company exists as a burned out shell of its former self, selling boring telecom and software IP like Blackberry and Ericsson. The then-CEO Stephen Elop is long gone with a nice golden parachute. CEOs are supposed to be there for the long haul and drive real vision for the product. They're not supposed to be emergency stopgaps parachuted in to calm everyone's tempers because the last guy screwed up one too many times.
draw_down 7y ago
The founders have no reason to care, they can pull out cash whenever they want. All the incentives are to stay private as long as possible.
mikhailfranco 7y ago
Palantir, 16 years and counting ... https://en.wikipedia.org/wiki/Palantir_Technologies https://en.wikipedia.org/wiki/Palantir_Technologies What is the life expectancy of a unicorn anyway?
- siruncledrew 7y ago
  Valve (maker of Steam) is another company that has been private since 1996.
  - realslimjd 7y ago
    Most people wouldn't consider Valve a startup because they haven't taken outside investment. They're just a private company.
  - brmgb 7y ago
    But Valve never was a startup. It was entierely self-funded by Newell and Harrington who had become rich after working from Microsoft. Benioff remarks about governance don't really apply to Valve because even if Valve was poorly managed it would pretty much be Newell misusing its own money.
    - iamasoftwaredev 7y ago
      > because even if Valve was poorly managed based on their culture deck it doesn't seem great. Purely from the standpoint of maximizing value I mean.
- Bootwizard 7y ago
  That's because it was founded by billionaires and funded by the DoD...if you have infinite money, you can stay private for as long as you'd like. Palantir isn't a startup, it's a defense company.
- deleted 7y ago
  [deleted]
jedberg 7y ago
There are a lot of disadvantages to going public and very few advantages. Most companies these days don't need the money because private money is willing to pour billions in, and it's pretty cheap to run a company now if you're just software. That's pretty much the only advantage, other than liquidity for early employees, which most companies don't really seem to care about, since many of the early employees have left by the IPO, and the ones that are sticking around for their payout are probably just coasting anyway. But the disadvantages are numerous. You have to tell your competitors about your profit and loss. You have to hire a bunch of auditors to make sure you follow all the SEC regulations. You can't do any long term bets because the market will skewer you and make it hard to hire. Your every action is up for public scrutiny. Your valuation is no longer flexible when you want to make acquisitions with stock.
- scurvy 7y ago
  > You have to hire a bunch of auditors to make sure you follow all the SEC regulations Following the law is just so onerous and painful. Sunlight is a wonderful antiseptic.
  - reilly3000 7y ago
    It IS painful. Today's laws reflect the misdeeds of the last 100 years. Compliance is incredibly expensive and slows down everything. I don't think its a bad thing at all, but most people don't understand the scope of the legal burden of being a public company. As a private citizen, I have a legal obligation to not murder people. As a public company, analogously, one would have to file a report every few months detailing how many people you didn't murder. Please indulge my terrible analogy. I'm with Mr. Benioff on the point that private companies can harbor a lot of decay, while over-concentrating wealth. However, data shows that small-firm IPOs are simply not very profitable, and acquisition can be much more attractive: https://www.sec.gov/info/smallbus/acsec/acsec-090712-ritter-slides.pdf https://www.sec.gov/info/smallbus/acsec/acsec-090712-ritter-...
    - scurvy 7y ago
      I work at a publicly traded company and deal with compliance and audit teams on a regular basis. It's not the end of the world. It's not overly costly. It's a good check and balance to ensure things are on the up and up. As companies get larger, the risk for fraud and misdeeds increases. Kickbacks, payoffs, etc. Compliance and auditors are a good thing. Trust but verify.
rdlecler1 7y ago
Startups stay private because the regulatory burden of being public is so great. Want to change behavior? Change incentives. It’s simple math.
rdlecler1 7y ago
>“I really strongly believe that capitalism as we know it is dead… that we’re going to see a new kind of capitalism and that new kind of capitalism that’s going to emerge is not the Milton Friedman capitalism that’s just about making money,” said Benioff. “And if your orientation is just about making money, I don’t think you’re going to hang out very long as a CEO or a founder of a company.” This is like simple minded Darwinism where nature is red in tooth and claw. That perspective was not very good at explaining more complex behavior like altruism. All compatible in a neo Darwinian model. Simple minded capitalism is no different but who really believes in simple minded capitalism? This is a strawman.
iamasoftwaredev 7y ago
Well when you have - Founders getting to take cash out earlier - employees with golden handcuffs that could last forever - Questionable to outright illegal behavior being completely okay in the private market - Insane levels of founder control - massive VC firms willing to pump in enough late money to take pressure off earlier VCs Then why go public? Especially if a lot of companies seemingly can't survive the IPO completely intact. Just look at WeWork

62 points by hugs 7y ago

Admittedly I don't particularly follow Marc Benioff and / or Salesforce in the news much, but is his advocacy for privacy laws generally considered be an attempt towards regulatory capture? Relevant quote: “We need a national privacy law,” he said. “Otherwise you’re going to get a patchwork of privacy laws. We have to get our privacy and data locked down so we know where we’re going. [Regulators] need to be stepping in now and they should be working hard to make those changes.”

teej 7y ago
Yes, most of his recent rhetoric is.
kube-system 7y ago
If anyone, a large actor like Salesforce would be more equipped to handle a patchwork of laws than smaller competitors. A patchwork of laws is a pain in the ass for large companies, but it’s a barrier to entry for small ones.

zyang 7y ago

Let me rephrase this: private equity is extracting too much value out of early stage companies and left nothing for the public market.

jwm4 7y ago
Private equity funds do not invest in early stage companies; perhaps you mean venture capital funds? Otoh, VC's can't really "extract value" ; they can only sell share to the public or to other VC's.
- scurvy 7y ago
  Private equity and VC are generally interchangeable terms in that context. There's a difference between a VC that privately invites certain investors to invest, versus a publicly open mutual fund that anyone can buy into. And to complicate matters even more, there are publicly traded private equity partnerships (Blackrock, etc). tldr, jargon sucks
- CPLX 7y ago
  Venture capital is a form of private equity. We are, in fact, conversing on a website owned by a private equity firm.
- t0mas88 7y ago
  VC can extract value by selling it on at an inflated valuation. That's what SoftBank tried to do with WeWork. The company is worth 10 billion (or less) and they tried to sell it to the public markets at 40 billion. Had the public markets not noticed the weird shit going on inside the company and actually bought it at 40+ billion then SoftBank would've made a lot of money. The stock would then most likely decrease over the following years costing those that bought it in the IPO money. This is why it's so important that public markets are strictly regulated and the SEC forces companies to publish all kinds of things before IPO.

rolltiide 7y ago

Overfitting at its finest

undefined3840 7y ago

Eh. I don’t think it’s a good idea for a startup still going through rapid change (whether releasing new product lines, entering new markets, testing new pricing) to go public, since as soon as you do it’s hard to be “experimental.” There are, however, private companies whose business models have largely stabilized like Airbnb and Stripe that I agree should’ve gone public already.

mikeg8 7y ago
Curious why you think they should have gone public? What advantages does an IPO offer these stable businesses? Is it a belief that all stable business at a certain scale have a obligation to enter public markets? Genuinely curious
- undefined3840 7y ago
  You need to provide liquidity to your shareholders at some point, so yes. Investors and employees have been waiting 10 years to cash out. They helped build the business and deserve to be rewarded at a certain point. A decade is stretching it IMO.
  - kgwxd 7y ago
    Im a complete newb to this. Can someone not sell their shares freely, regardless of public staus, if they do their own marketing?
    - scurvy 7y ago
      Many companies have right of first refusal on any private share transfers. You need to offer the shares back to the company at whatever sales price you agreed to with a third party. Most times, the company can just sit on the offer and never actually respond. There are no timeliness clauses or guarantees when evaluating the offer. Notoriously, this happens with companies like Uber. If you were friends with Travis, you could sell. If not, you'll go pound sand. Investors also want to see the books and numbers. Not everyone can sell on hype alone. Even leaked numbers from Uber were taken with huge grains of salt. Over the counter arrangements and warrants are on dubious legal standings with regards to transfer-controlled private "stock units". Actual shares are a different story, but everyone gives out "stock units" and not shares. It might seem pedantic, but there's a gulf of difference while the company is still private.

jklm 7y ago

It'll be interesting to see how this'll affect startups down the line. If employees aren't cashing out in a reasonable amount of time (or at all), will the majority of startups suffer a brain drain of top talent? Will startups need to come up with a new way of compensation beyond just equity?

koreth1 7y ago
I think that's already happening to some degree, though it's not a "new way" exactly. Totally anecdotal, of course, but based on watching people move between jobs in my professional circle, it seems like experienced people are no longer willing to take nearly as much of a salary cut for the sake of equity as they used to. A startup that doesn't offer competitive salary and equity will have a pretty tough time hiring the most in-demand employees.
- mdorazio 7y ago
  On the flip side, it seems there's still an endless pool of less-experienced people who are chomping at the bit to work at startups. There's a reason startups recruit primarily people in their 20s.
ralusek 7y ago
Can't private companies give out equity just fine?
- mikeg8 7y ago
  Yes? But if there is no intention of an IPO, where an early employee has a reasonably easy path to liquidate their stock/options, what is the benefit of owning equity in a private company when there may be a limited/non-existent market for said equity?
  - ralusek 7y ago
    Potentially entitled to a percentage of quarterly profits, among other things. Draft whatever terms you'd like.

sib 7y ago

Or, rephrased, "They become really expensive for me to acquire and add to my crappy pile of product spaghetti in a monopolistic fashion! It would be much better if they went public when the were still cheap."

dwoozle 7y ago
Huh? It is much cheaper to buy a company before it IPOs. That’s why you see things like Cisco acquiring AppDynamics five days before its scheduled IPO.
- deleted 7y ago
  [deleted]
- sib 7y ago
  It's much easier to buy a public company than a private one (in a "hostile" or undesired situation), so if a company becomes public at a lower valuation, it's cheaper for Salesforce to acquire them and eliminate the competition.

charles_f 7y ago

> I think in a lot of private companies these days, we’re seeing governance issues all over the place,” But not with public companies? It's an opinion, I'd ask for some data. I personally don't think the public market cares much about things like privacy and governance. If it were, Facebook would have neither investors nor users. Same goes for so many others. He then goes into talking about salesforce going public as if it were an exampl. But definitely privacy and governance are not the same for b2b and b2c. I have been with two startups that got public way too quick, when half of what you're doing is for PR effects in preparing to bring new investors, you forget about the customer. One of them is dead, the other survived after being bought out by a private equity firm. Going public is such a burden for the representation aspect of it that expecting _this_ to br a regulatory practice is delusional. (imo)

traek 7y ago
> I personally don't think the public market cares much about things like privacy and governance. If it were, Facebook would have neither investors nor users. Same goes for so many others. This is a silly take. Data privacy is a completely separate issue from corporate governance, and by most analysts who cover it Facebook is considered a particularly well-governed company.
- jwm4 7y ago
  A company whose founder/CEO is the only person who can remove him(self) is well governed?
  - vmurthy 7y ago
    The way analysts are probably looking at it: Governance in the letter of laws/regulations : We'll give it a B- , invest and make $$ They are probably smart/cynical enough to know that governance in the spirit of laws/regulations is an F

yumraj 7y ago

I remember the YC startup school at De Anza many years ago, when Andrew Mason, of Groupon, was one of the guest speakers and he basically said that the worst mistake he made was going public.[0] And basically what had happened was that post IPO Groupon's accounting irregularities, which were earlier hidden, became public and the company fell from grace. Same thing happened recently with WeWork and there have been numerous other companies. Basically, while private, startups are able to engage in practices that don't survive under public scrutiny. No wonder startups, especially ones on shaky foundation, are remaining private longer. [0] https://genius.com/Andrew-mason-andrew-mason-at-startup-school-sv-2014-annotated https://genius.com/Andrew-mason-andrew-mason-at-startup-scho...

cmroanirgo 7y ago
Then there's the continual pressure of trying to serve two masters: your original customers vs shareholders. Often it's the latter that takes precedence when they go public. What would FB or Goog be like if they were still private?
- halflings 7y ago
  Larry and Sergey still have >50% of the voting power. Zuckerberg has >60% of the voting power. Do you really think these companies are just following what shareholders are telling them?
  - arcturus17 7y ago
    Also they’re special cases where the founders’ visions have created so much shareholder value that there hasn’t been much for the shareholder to say anyway...
  - joncrane 7y ago
    They ARE following the shareholder. The founders are the shareholders. The minority shareholders are just along for the ride.
zwkrt 7y ago

powerslacker 7y ago

> “And if your orientation is just about making money, I don’t think you’re going to hang out very long as a CEO or a founder of a company.” If you're a competent CEO, don't expect to be a CEO for very long...what a time to be alive.

malandrew 7y ago
Yup. Plus, that's an easy prognostication for him to make because he's already on top. If you aren't just about making money in the early days, you're not going to be CEO very long either. The key is figuring out when your company is big enough that you need to pay attention to things other than making money, or at least good enough as signaling/feigning that you care about things other than making money.
jwm4 7y ago
Says a man with billions in the bank...
rchaud 7y ago
"Competent CEO" and "making money" aren't the same thing. Hewlett Packard has had numerous CEOs that just slashed jobs en masse to make the bottom line look better. Nokia's CEO slashed jobs as well, took up with Microsoft, and now the company exists as a burned out shell of its former self, selling boring telecom and software IP like Blackberry and Ericsson. The then-CEO Stephen Elop is long gone with a nice golden parachute. CEOs are supposed to be there for the long haul and drive real vision for the product. They're not supposed to be emergency stopgaps parachuted in to calm everyone's tempers because the last guy screwed up one too many times.

draw_down 7y ago

The founders have no reason to care, they can pull out cash whenever they want. All the incentives are to stay private as long as possible.

mikhailfranco 7y ago

Palantir, 16 years and counting ... https://en.wikipedia.org/wiki/Palantir_Technologies https://en.wikipedia.org/wiki/Palantir_Technologies What is the life expectancy of a unicorn anyway?

siruncledrew 7y ago
Valve (maker of Steam) is another company that has been private since 1996.
- realslimjd 7y ago
  Most people wouldn't consider Valve a startup because they haven't taken outside investment. They're just a private company.
- brmgb 7y ago
  But Valve never was a startup. It was entierely self-funded by Newell and Harrington who had become rich after working from Microsoft. Benioff remarks about governance don't really apply to Valve because even if Valve was poorly managed it would pretty much be Newell misusing its own money.
  - iamasoftwaredev 7y ago
    > because even if Valve was poorly managed based on their culture deck it doesn't seem great. Purely from the standpoint of maximizing value I mean.
Bootwizard 7y ago
That's because it was founded by billionaires and funded by the DoD...if you have infinite money, you can stay private for as long as you'd like. Palantir isn't a startup, it's a defense company.
deleted 7y ago
[deleted]

jedberg 7y ago

There are a lot of disadvantages to going public and very few advantages. Most companies these days don't need the money because private money is willing to pour billions in, and it's pretty cheap to run a company now if you're just software. That's pretty much the only advantage, other than liquidity for early employees, which most companies don't really seem to care about, since many of the early employees have left by the IPO, and the ones that are sticking around for their payout are probably just coasting anyway. But the disadvantages are numerous. You have to tell your competitors about your profit and loss. You have to hire a bunch of auditors to make sure you follow all the SEC regulations. You can't do any long term bets because the market will skewer you and make it hard to hire. Your every action is up for public scrutiny. Your valuation is no longer flexible when you want to make acquisitions with stock.

scurvy 7y ago
> You have to hire a bunch of auditors to make sure you follow all the SEC regulations Following the law is just so onerous and painful. Sunlight is a wonderful antiseptic.
- reilly3000 7y ago
  It IS painful. Today's laws reflect the misdeeds of the last 100 years. Compliance is incredibly expensive and slows down everything. I don't think its a bad thing at all, but most people don't understand the scope of the legal burden of being a public company. As a private citizen, I have a legal obligation to not murder people. As a public company, analogously, one would have to file a report every few months detailing how many people you didn't murder. Please indulge my terrible analogy. I'm with Mr. Benioff on the point that private companies can harbor a lot of decay, while over-concentrating wealth. However, data shows that small-firm IPOs are simply not very profitable, and acquisition can be much more attractive: https://www.sec.gov/info/smallbus/acsec/acsec-090712-ritter-slides.pdf https://www.sec.gov/info/smallbus/acsec/acsec-090712-ritter-...
  - scurvy 7y ago
    I work at a publicly traded company and deal with compliance and audit teams on a regular basis. It's not the end of the world. It's not overly costly. It's a good check and balance to ensure things are on the up and up. As companies get larger, the risk for fraud and misdeeds increases. Kickbacks, payoffs, etc. Compliance and auditors are a good thing. Trust but verify.

rdlecler1 7y ago

Startups stay private because the regulatory burden of being public is so great. Want to change behavior? Change incentives. It’s simple math.

rdlecler1 7y ago

>“I really strongly believe that capitalism as we know it is dead… that we’re going to see a new kind of capitalism and that new kind of capitalism that’s going to emerge is not the Milton Friedman capitalism that’s just about making money,” said Benioff. “And if your orientation is just about making money, I don’t think you’re going to hang out very long as a CEO or a founder of a company.” This is like simple minded Darwinism where nature is red in tooth and claw. That perspective was not very good at explaining more complex behavior like altruism. All compatible in a neo Darwinian model. Simple minded capitalism is no different but who really believes in simple minded capitalism? This is a strawman.

iamasoftwaredev 7y ago

Well when you have - Founders getting to take cash out earlier - employees with golden handcuffs that could last forever - Questionable to outright illegal behavior being completely okay in the private market - Insane levels of founder control - massive VC firms willing to pump in enough late money to take pressure off earlier VCs Then why go public? Especially if a lot of companies seemingly can't survive the IPO completely intact. Just look at WeWork