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A major portion of an S-1 is outlining every possible thing you think could possibly go wrong, so that someone can't sue you later for something going wrong you
by dbt00 6y ago
A major portion of an S-1 is outlining every possible thing you think could possibly go wrong, so that someone can't sue you later for something going wrong you didn't warn them about.
Given that, there's no incentive to calibrate these risks to real world probability (and sincerely, given the dual purpose of such a document, there shouldn't be), there's a lot of pretty wild possibilities included in S-1 filings. Although, just for fun, I just skimmed Uber's and they failed to acknowledge that an airborne illness resulting in a global pandemic could dramatically reduce their bookings and cause serious long term structural harm to their business. Maybe I should sue...
- twblalock 6y agoThe incentive to go into all these wild possibilities is pretty strong -- companies must list everything that might ever conceivably happen so that nobody can point a finger at them later and say that they forgot to include something so now they're gonna be sued for millions. This is the same reason corporate PR statements sound the way they do, and it's the same reason politicians speak the way they do. People say they want openness and honesty, but then they punish businesses and politicians for even the slightest offense. Because of those mixed and contradictory incentives, this is the kind of communication we end up with.