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It’s sad. Public companies allow the rest of us to participate in a success story like this. Until IPO it’s only a selected group of affluent people who have
by baxtr 8mo ago
It’s sad.
Public companies allow the rest of us to participate in a success story like this.
Until IPO it’s only a selected group of affluent people who have access to these private companies.
- cwbrandsma 8mo agoIPOs also kill a lot of companies. Now you have a new list of investors you are obligated to attend to, and what those investors what is not always to make your company more successful, if it can make more money now.
- kibwen 8mo agoNot just the IPO. Being public at all subjects you to the perverse and destructive incentive of needing to maximize shareholder value. Just because some private companies take VC funding (and subject themselves to analogous forces) doesn't mean that's required or expected.
- gmd63 8mo agoNeeding to maximize shareholder value is a myth. There is no law that requires you to do that - people like to use the idea as an excuse to do scummy business.
- malfist 8mo agoSure, it's a dubious legal requirement at best. But you try telling people that on an earnings call and watch your valuation plummet because you took a long position and the market wanted a next quarter position. And even if you don't care about selling your stock personally, it does impact your ability to raise funds.
- elictronic 8mo agoShort term investors don’t matter. They are going to pull out and move to the next thing.
- arcticbull 8mo agoDepends. In Michigan it is binding precedent, see Dodge v. Ford (1919). Delaware corporations must act in the interests of shareholders.
- elictronic 8mo agoThis case was specifically about dividends and long term shareholder value, not quarterly results.
- rurp 8mo agoThat's an incredibly vague standard and courts have repeatedly declined to get involved in second guessing management decisions. Aside from outright fraud or negligence executives can claim almost any business related decision is in the interest of shareholders because they have a reasonable expectation that the future benefits outweigh the costs. Judges aren't going to be delving into financial projections and expense reports to override the leaders of a business. A widget company could sponsor a soccer team or whatever and say the costs are worth it. Or that same company could not do that and say it's not worth it. Two opposite decisions that both would count as acting in the interest of shareholders.
- arcticbull 8mo ago> That's an incredibly vague standard and courts have repeatedly declined to get involved Which courts? Corporate law is state-level. Delaware generally has some affordances for long-term strategic decisions.
- bryanlarsen 8mo agoThe reverse is much more true. When private equity takes a public company private, there's a 50% chance they'll kill the company. Also, private companies fail at a much higher rate than public ones do.
- tptacek 8mo agoI don't think PE buyouts are the right comparison here; we're talking about companies that never go public versus the ones that do. And, of course private companies fail at a much higher rate. The set of private companies includes every company that doesn't succeed to the point where it has the realistic choice to go public. Again: wrong comparison.
- bryanlarsen 8mo agoA general IPO is also not the right comparison. The events that kill companies are changes in control whether they happen from going public or going private. If Stripe IPO's, the Collison's will stay firmly in control, and approximately nothing will change at Stripe.
- tptacek 8mo agoI'm not coming down on either side of the public/private thing, just saying that take-privates and failed small private companies aren't meaningful comparisons to make.
- antiford2049 8mo agowhen companies go public usually the easy money has been made, and for the growth to come back a lot of time might pass. frankly i dont know why would one go public today unless money is needed badly. Quarterly calls, filings, are one thing, dealing with vest bros asking "so how should we think about" questions on round tables or "whats an incrimental margin" musings as they clack away at their mini keyboards filling out their model no body can make sense of.. and then someone will publish a blog saying their company is gonna be extinct because of AI ... this is not for everybody thats for sure...
- baxtr 8mo agoSo keep the profits only for the rich then? I rather see more IPOs for the rest of us.
- OGEnthusiast 8mo ago[dead]
- kdheiwns 8mo agoIPOs result in companies cutting corners and offering worse service so they can offer more benefits to rich stockholders this quarter, so they can cash out and burn the company to move on to the next one. Private companies plan for their existence 10 years down the road. Why should anyone be entitled to stocks of a company?
- WarcrimeActual 8mo agoI see it differently, and not in a particularly popular manner. Public companies allow those that are already pretty well off to rocket past those who can't afford shares, therefore adding to the disparity. I despise sudden or inherited wealth though so I'm not the best barometer for how things should work when it comes to this. I can't count how many times I've been made almost physically ill hearing about the next meme stock that made some nobody a millionaire overnight.
- RobRivera 8mo agoHigh risk high reward - I think if I ponied up capital, I'd rather not feel obliged to 'share the success' unless it were part of a needed capital raising.
- thinkingtoilet 8mo agoIPOs really only benefit already wealthy people as well. It's not like poor people can dump tens or hundreds of thousands of dollars in stock.
- derektank 8mo agoWorking class people have 401ks and pension plans
- paxys 8mo agoWe usually hear about the success stories, but public markets have killed wayyyy more companies than they have helped. Unless they really need the money it's always in a company's own best interests to stay private for as long as possible.
- j45 8mo agoPrivate companies have the right to be private until if or when they decide not to be private. Navigating the risk and growth allows them to navigate their growth and rewards while maybe in the drivers seat a bit more.
- baxtr 8mo agoNo one said they don’t have the right. But for the good of all of society, it would be better if they did.
- j45 8mo agoHow would becoming a public company be better for all of society? Stock markets are not entirely logical from my understanding.
- true_religion 8mo agoI agree. The large equity investment groups that hunt on public markets don’t represent the public interest.