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Sure, and I don't think that with this plan, there's anything stopping investment banks from agreeing to purchase direct listed shares at IPO in an arms-length

Sure, and I don't think that with this plan, there's anything stopping investment banks from agreeing to purchase direct listed shares at IPO in an arms-length transaction. Given the need to file audited financials, among other components of the regulatory burden to go public, is the investment bank charging a fee to act as a fiduciary really adding much protection?

colechristensen 6y ago
There can be a sizable gap between complying with regulations to ensure X and trying to do X. lock picking lawyer had a great video on that topic recently https://youtu.be/DykUXXcJGIw https://youtu.be/DykUXXcJGIw Writing regulations is hard to achieve the intended effect. Complying with regulators frequently involves a mindset of checking boxes instead of trying to accomplish something. If, however, an investment bank essentially buys a large chunk of your company, if only temporarily, they have a real motivation to figure out if it is legitimate, and there are real consequences if you screw up, not just legislated consequences but real financial bag holding ones. You have to think of the everything-is-a-game mindset to help you evaluate situations. The game of being a regulator is different than the game of being an investor. There is value in both.
- SmellTheGlove 6y ago
  > If, however, an investment bank essentially buys a large chunk of your company, if only temporarily, they have a real motivation to figure out if it is legitimate, and there are real consequences if you screw up, not just legislated consequences but real financial bag holding ones. Right, but what I'm saying here is, a bank can still choose to be an arms-length investor. My hypothesis is the market gets as much positive signal from that as it would a traditional underwriting syndicate, without the upside bleed-off. > You have to think of the everything-is-a-game mindset to help you evaluate situations. The game of being a regulator is different than the game of being an investor. There is value in both. I'm not conflating the two. I'm suggesting the investor signal doesn't require a traditional underwriting syndicate. Phrased another way, how many IPOs have canceled due to a failure to form an underwriting syndicate, or because of the due diligence performed by the same? WeWork comes to mind, but I don't think we needed the bank to tell us it was problematic - reading the S-1 would have been sufficient.

colechristensen 6y ago

There can be a sizable gap between complying with regulations to ensure X and trying to do X. lock picking lawyer had a great video on that topic recently https://youtu.be/DykUXXcJGIw https://youtu.be/DykUXXcJGIw Writing regulations is hard to achieve the intended effect. Complying with regulators frequently involves a mindset of checking boxes instead of trying to accomplish something. If, however, an investment bank essentially buys a large chunk of your company, if only temporarily, they have a real motivation to figure out if it is legitimate, and there are real consequences if you screw up, not just legislated consequences but real financial bag holding ones. You have to think of the everything-is-a-game mindset to help you evaluate situations. The game of being a regulator is different than the game of being an investor. There is value in both.

SmellTheGlove 6y ago
> If, however, an investment bank essentially buys a large chunk of your company, if only temporarily, they have a real motivation to figure out if it is legitimate, and there are real consequences if you screw up, not just legislated consequences but real financial bag holding ones. Right, but what I'm saying here is, a bank can still choose to be an arms-length investor. My hypothesis is the market gets as much positive signal from that as it would a traditional underwriting syndicate, without the upside bleed-off. > You have to think of the everything-is-a-game mindset to help you evaluate situations. The game of being a regulator is different than the game of being an investor. There is value in both. I'm not conflating the two. I'm suggesting the investor signal doesn't require a traditional underwriting syndicate. Phrased another way, how many IPOs have canceled due to a failure to form an underwriting syndicate, or because of the due diligence performed by the same? WeWork comes to mind, but I don't think we needed the bank to tell us it was problematic - reading the S-1 would have been sufficient.