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The pre-IPO process often involves all kinds of fun short-term profit maximizing activities.
by gorbachev 3y ago
The pre-IPO process often involves all kinds of fun short-term profit maximizing activities.
- jeltz 3y agoYeah, I have personally seen companies inflicting hundreds of millions worth of damages to themselves of not billions as part of pre-IPO work. Extra hilarious and sad to watch when the IPO has to be aborted.
- bmitc 3y agoWhy is it so predictable? I know investors don't care about anything other than returns, but what returns do you get when you tank companies in such diametrically opposed ways from how they've operated before?
- gorbachev 3y agoThere are different kinds of investors involved in an IPO process. The investors that have pre-IPO stock and who are looking to sell as quickly as possible, gain from IPO pops, so it's in their best interest to maximize short-term profits. That group of investors include a lot of the existing investors, and in almost all cases the founders and C-suite of the company.
- prox 3y agoHonest question, does this include artificial inflation of costs? I have seen figures that Reddit used to run with 20 people, and inflated to 2000 in 10 years. Old reddit is also superlight in bandwidth. New reddit is not.
- jeltz 3y agoIn at least one real life example I have personal insight into: yes. They hired tons of devs to make the company look bigger and look like they were aiming for continued quick growth post IPO. Reality was that they did not have enough tasks for all people they had quickly hired.
- dotnet00 3y agoYeah, they're probably somewhat bloated like Twitter was, just like Twitter they don't deliver nearly as many new features to justify the large employee count, they don't do much of their own moderation either. A large portion of those might be for checking reports etc, since reddit at least does seem to do a slightly better job trying to keep humans in the loop there.
- prox 3y agoYeah some things I read in the Apollo thread was about their global advertising department that grew quite big.
- mordae 3y agoLooks like selling company you helped build because you believed in the idea to people who are only interested in profits often leads to worse service and dissatisfied customers. Who would have thunk.
- vsnf 3y agoIs it securities fraud if your pre-ipo profit maximization moves cause your user base to relocate, and you didn't disclose that your filings?
- vesinisa 3y agoYes, they will need to be completely transparent about their outlook at the time of the IPO, and disclosing the current and historical active user counts is a pivotal figure in that data. I wouldn't be surprised if this move actually damages Reddit enough that they can't IPO because the user engagement numbers will take such a sharp negative turn.
- seanhunter 3y agoHighly likely that one of the risk factors they disclose in their prospectus is that the revenues are highly correllated with active user numbers and traffic and if those things change, revenues will be impacted. Even without this latest drama it would be amazing if they didn't have something like that in there.
- bombcar 3y agoEvery IPO files paperwork that basically says "The SEC requires us to say we're completely full of shit, everything we do is a lie, and you will lose all your money." And then it's perfectly legal. And they continue to do that, go read any prospectus, it's all about how everything will die and the company is dead.