4 ms·

> If I was on the company side, I'd be pissed at the initial pricing and the money that was left on the table. Eh, would you really though? I suppose maybe a m

by cactus2093 6y ago

> If I was on the company side, I'd be pissed at the initial pricing and the money that was left on the table. Eh, would you really though? I suppose maybe a maniacally focused founder or CEO might. But anyone in a position to be involved in these decisions has a huge personal stake in the situation. If I thought I was going to make $100M and instead I made $200M, it's hard to imagine being mad at the bankers for leaving the company's money on the table. But maybe that's why I'm not a big company executive. But anyway, the flip side of a transaction that is incredibly important and you do only once, is that if you go against the norm and it goes badly, it could go very badly and you might not get a redo. If you go along with the experts, you are genuinely probably taking less risk.

fossuser 6y ago
Which is how it ends up structured to benefit the bankers. People who only do something once or twice are more likely to defer to the 'experts', the only problem is the experts have their own incentives that are not directly aligned. The experts are also really good at selling since that's mostly their job so it makes it even harder to go against the grain. I get why founders do it, but I think it's a mistake. Founders are also usually pretty good at first principles thinking and risk taking. DPO is also pretty solid ground now that a few companies have done it. > "Eh, would you really though?" Impossible to know, but I think so? After you're worth 5+ Billion it's more about money you can leverage via your company to grow and build. I think personal wealth has diminishing returns a bit before that point. Losing out on that much money for the company would irritate me. There's a funny story (I searched briefly, but couldn't find) that when Elon took Tesla public via an IPO and the bankers told him the initial price he just said "no, at least $XX or no deal". I think the bank price was $17 and he said at least $19, but I could be off on the numbers. They did his price and that price was still too low.

fossuser 6y ago

Which is how it ends up structured to benefit the bankers. People who only do something once or twice are more likely to defer to the 'experts', the only problem is the experts have their own incentives that are not directly aligned. The experts are also really good at selling since that's mostly their job so it makes it even harder to go against the grain. I get why founders do it, but I think it's a mistake. Founders are also usually pretty good at first principles thinking and risk taking. DPO is also pretty solid ground now that a few companies have done it. > "Eh, would you really though?" Impossible to know, but I think so? After you're worth 5+ Billion it's more about money you can leverage via your company to grow and build. I think personal wealth has diminishing returns a bit before that point. Losing out on that much money for the company would irritate me. There's a funny story (I searched briefly, but couldn't find) that when Elon took Tesla public via an IPO and the bankers told him the initial price he just said "no, at least $XX or no deal". I think the bank price was $17 and he said at least $19, but I could be off on the numbers. They did his price and that price was still too low.