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Almost none of these private companies are worth $35bn. I saw this in raise after raise...same VC funds that invested in previous rounds and needed to mark thei

Almost none of these private companies are worth $35bn. I saw this in raise after raise...same VC funds that invested in previous rounds and needed to mark their book higher so they could get juicy bonuses. It is amazing anyone buys this nonsense. The reason you need public markets is because if you are actually worth $35bn, you can't get liquidity anywhere else...$35bn is an oddly specific number but it is far larger than most people in tech understand (just for scale, Koch Industries is probably the most valuable private company in the US...it is valued at what ~$75bn, Mars is another one...that is is around ~$50bn...if you have a tech company at $35bn, some VC somewhere has just lost a fuck ton of money). The reason a private company that is "worth $35bn" doesn't come to market is obvious...it isn't worth $35bn. Amazon, Google, Microsoft, Salesforce, Oracle...need I go on?

Grimm1 6y ago
If I navigated a business correctly and maintained control of my company through bootstrapping and not otherwise taking VC money with the good faith intent of a liquidity event (though there have been a few that did VC funding and then told their investors to piss off and stayed private, YMMV), why would I ever want to take a company public? If I'm more interested in running a business in the direction I see fit and don't need the liquidity or the payout then that seems like a pretty big hurdle. Understandably though maybe you need the liquidity public markets can provide for a giant undertaking, thinking of Tesla here, then look at all the hoops Elon has had to jump through to maintain some semblance of his control. My point is, I'm sure there are private tech companies worth some multitude of billions but the powers that run them value their control and don't need the liquidity of the public market and so taking the company public would just complicate their interests. A super quick search shows me there are at least 26 private tech companies valued at greater than 1bn not sure how many of those don't ever intend to go public but I'd guess a few.
- nickv 6y ago
  That's a good question, it's why, for example, Bloomberg Media is still private. The only two reasons I can think of are: It gives your employees a cash out plan if you used RSUs/Options/Ownership in the company as an incentive for hiring. Some businesses benefit from going public by it adding credibility (and open financial books). Some very large enterprises (Fortune 100, major governments) tend to look more preferably to publicly traded companies so it makes sense for the business to go public to go after these customers. There are also ways to defend against "public involvement" in publicly traded companies that have been around forever. Look at Facebook and the NYT's stock class structure, for example. It's also finally easier to get liquidity when you aren't desperate for it, and the public markets position you for it in a good way.
- hogFeast 6y ago
  Ah, that is the old CCP argument. We are accountable to the people, we are a meritocracy that makes great decisions...but we won't let you vote. When people start talking a lot about control (it is kind of a tech bro meme at this point), you can be sure that they are the kind of person who shouldn't be in control. And btw, the cost of screwing minority shareholders has been basically zero in the US (you usually only see this kind of emerging markets) but it never stays zero. And typically, these companies will trade at a discount. In reality, you have to give up control. When you take outside money, which you will have to do, then you give up control. I have no idea why people view this as particularly problematic (again, this is the CCP approach)...if you don't like oversight or accountability, don't start a company. Simple. (Tech CEOs seem to write about this endlessly...you will notice that there isn't a particularly consistent position. They like juicing the stock market so they can bump their pay package but they don't like the oversight. These two things are connected. The reason public markets can produce bad outcomes is because they become linked to CEO pay...in tech, there is a CEO celebrity culture which always sees people side with executives...but most of these people are incompetent...Facebook's executives seem to have legendary status, despite them managing to literally destroy a monopoly...so when you see someone saying they want to retain "control", I would ask why. It usually indicates incompetence).
stu2b50 6y ago
There's no reason to be vague about groups, there's exactly two private tech companies at around 35 billion valuation: Stripe and SpaceX. Do you have any specific thoughts on them?

Grimm1 6y ago

If I navigated a business correctly and maintained control of my company through bootstrapping and not otherwise taking VC money with the good faith intent of a liquidity event (though there have been a few that did VC funding and then told their investors to piss off and stayed private, YMMV), why would I ever want to take a company public? If I'm more interested in running a business in the direction I see fit and don't need the liquidity or the payout then that seems like a pretty big hurdle. Understandably though maybe you need the liquidity public markets can provide for a giant undertaking, thinking of Tesla here, then look at all the hoops Elon has had to jump through to maintain some semblance of his control. My point is, I'm sure there are private tech companies worth some multitude of billions but the powers that run them value their control and don't need the liquidity of the public market and so taking the company public would just complicate their interests. A super quick search shows me there are at least 26 private tech companies valued at greater than 1bn not sure how many of those don't ever intend to go public but I'd guess a few.

nickv 6y ago
That's a good question, it's why, for example, Bloomberg Media is still private. The only two reasons I can think of are: It gives your employees a cash out plan if you used RSUs/Options/Ownership in the company as an incentive for hiring. Some businesses benefit from going public by it adding credibility (and open financial books). Some very large enterprises (Fortune 100, major governments) tend to look more preferably to publicly traded companies so it makes sense for the business to go public to go after these customers. There are also ways to defend against "public involvement" in publicly traded companies that have been around forever. Look at Facebook and the NYT's stock class structure, for example. It's also finally easier to get liquidity when you aren't desperate for it, and the public markets position you for it in a good way.
hogFeast 6y ago
Ah, that is the old CCP argument. We are accountable to the people, we are a meritocracy that makes great decisions...but we won't let you vote. When people start talking a lot about control (it is kind of a tech bro meme at this point), you can be sure that they are the kind of person who shouldn't be in control. And btw, the cost of screwing minority shareholders has been basically zero in the US (you usually only see this kind of emerging markets) but it never stays zero. And typically, these companies will trade at a discount. In reality, you have to give up control. When you take outside money, which you will have to do, then you give up control. I have no idea why people view this as particularly problematic (again, this is the CCP approach)...if you don't like oversight or accountability, don't start a company. Simple. (Tech CEOs seem to write about this endlessly...you will notice that there isn't a particularly consistent position. They like juicing the stock market so they can bump their pay package but they don't like the oversight. These two things are connected. The reason public markets can produce bad outcomes is because they become linked to CEO pay...in tech, there is a CEO celebrity culture which always sees people side with executives...but most of these people are incompetent...Facebook's executives seem to have legendary status, despite them managing to literally destroy a monopoly...so when you see someone saying they want to retain "control", I would ask why. It usually indicates incompetence).

stu2b50 6y ago

There's no reason to be vague about groups, there's exactly two private tech companies at around 35 billion valuation: Stripe and SpaceX. Do you have any specific thoughts on them?