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My take is that this is a reaction to companies staying private longer, and its not very surprising that GS is taking the lead in wall street as they are usuall

My take is that this is a reaction to companies staying private longer, and its not very surprising that GS is taking the lead in wall street as they are usually on the ball. Having said that, all they are doing is providing the same Investment banking services to companies that they always have, just now, they are offering it to private companies. Think of it as a cover your ass approach, if companies decide not to go public, GS still gets a piece of the action, and if they do go public then its an easy pick for GS to lead their public IPO's as both sides already know each other. They are also trying to lead the charge in allowing people to invest in private companies through investment vehicles that look similar to funds( ie pooled capital that they raise and invest for share holders). With companies staying private for so long some people, and I'm starting to become one, now think that the day of the publicly traded growth company are coming to an end and that companies will go public once they have matured into value stocks. This is evidenced by the markets are loosing patience with companies like Groupon, Zinga, Yelp and my personal whipping boy Twitter. Come on twitter, get your act together, you wont' be around much longer if you continue on like this.

deleted 11y ago
[deleted]
roymurdock 11y ago
I'm interested to hear your rationale for investing in Twitter (fundamentals, userbase numbers, good feeling?), and your overall strategy. Clearly you're long on the company, but why?
- chollida1 11y ago
  Sorry, didn't mean to give the feeling I like the company, as I have the opposite feeling towards them. It's like the company had a huge push to go public and then everyone was so tired that they just stopped working once they got public. I understand that it's a company full of great people and I don't want to shit on someone's hard work but when they went public the deal they struck was - the markets gave them a huge valuation and in return the market expected big things from them. So what great new things has twitter done since going public to earn their huge valuation? I think even the most ardent twitter supporters would have to agree that they have disappointed as a company since going public. As an aside, I don't think this post IPO lull is limited to twitter, with longer cycles before going public I expect alot of companies to show this type of burnout after going public. Good companies will get this and give their employee's a way of getting liquidity from their options before IPO. I think this will become a new recruiting tool for the best companies. Something along the lines of if we don't go public in 7 years from the companies founding then we'll provide a liquidity event for employee's who have been here longer than 4 years. GS will play a roll in this I'm imagining.
  - roymurdock 11y ago
    Ah I see, I thought you were urging Twitter on because you hold a portion of your portfolio in TWTR. I'm baffled as to how the market valued Twitter at $45 per share up from an IPO price of $26, implying $3bn in yearly revenue. I'd also love to figure out who "the market" is behind Twitter - institutional vs. casual. On your last point - a private liquidity event, AKA raising an investment round and offering employees the option to sell back equity? Or, could the company step out of the way completely and let banks buy equity directly from employees? (I've never worked for a company in this situation so I have no idea what the laws would allow)
    - ececconi 11y ago
      According to google finance 60% of twitter is owned by institutional investors. Compare that to 67% for Facebook. https://www.google.com/finance?q=NYSE%3ATWTR&ei=z5q3VdHiDon3jAGdhIL4Cg https://www.google.com/finance?q=NYSE%3ATWTR&ei=z5q3VdHiDon3...
  - nerfhammer 11y ago
    sama has suggested letting options stay valid for 10 years http://blog.samaltman.com/employee-equity http://blog.samaltman.com/employee-equity
Osmium 11y ago
> They are also trying to lead the charge in allowing people to invest in private companies through investment vehicles that look similar to funds( ie pooled capital that they raise and invest for share holders). I was just reading in another thread about how a new hypothetical tech crash wouldn't be as bad as the dot com crash for precisely the reason that all these new, 'over-valued' companies are private rather than public. In this context, isn't this kind of investment vehicle dangerous? (I don't pretend to understand this kind of thing and would be glad to be made a little wiser.)
- sulam 11y ago
  The customers for this from the GS side are what are referred to as high net worth individuals and family trusts. They aren't your friend across the street taking out a second mortgage on his home so he can play the private markets. There is an assumption that you're an accredited investor, and while I don't know the GS requirements for getting in on deals like this, I can only imagine it's far in excess of the accreditation requirements (which is relatively straightforward to achieve -- $1M in liquid assets or 2 years of income over $200K / $300K if filing jointly). There may be some reason to be concerned otherwise -- pensions and endowments are often customers for this sort of thing -- but they have risk managers that hopefully know what they're doing. Which may not give you warm fuzzies, given recent history, but in general these are not the people losing their shirts and affecting the economy as a whole.
- sarwechshar 11y ago
  Almost! People are worried about another tech bubble bursting because of things like overvaluation of companies and the frequency of unicorns (private companies valued over $1bn) appearing on the scene (which gives perhaps an illusion that VCs are funding left, right and center). But you could say that the huge growth we're seeing in investment in tech now is different to 15 years ago because: - most VCs are funding significant amounts of their capital in later-stage startups and companies that have shown a lot of promise ("private IPOs"), rather than the other way around - there are more startups now than 15 years ago but the same (or lower) amount of total capital invested, whereas before a smaller number of startups were funded from a huge pot - generally tech companies nowadays, even those unicorns a few years old, have solid financials and managed to turn a profit. This wasn't entirely the case 15 years ago. There was a Andreessen Horowitz presentation on this very topic going around a few weeks back - it's worth a read if I can dig it up (or you could be relentlessly resourceful ;)).
theseatoms 11y ago
> They are also trying to lead the charge in allowing people to invest in private companies through investment vehicles that look similar to funds( ie pooled capital that they raise and invest for share holders). Is there a term for this type of fund? "Private equity mutual fund" maybe?
- deleted 11y ago
  [deleted]
- SeoxyS 11y ago
  SPVs. Special Purpose Vehicle is what they're called.

deleted 11y ago

[deleted]

roymurdock 11y ago

I'm interested to hear your rationale for investing in Twitter (fundamentals, userbase numbers, good feeling?), and your overall strategy. Clearly you're long on the company, but why?

chollida1 11y ago
Sorry, didn't mean to give the feeling I like the company, as I have the opposite feeling towards them. It's like the company had a huge push to go public and then everyone was so tired that they just stopped working once they got public. I understand that it's a company full of great people and I don't want to shit on someone's hard work but when they went public the deal they struck was - the markets gave them a huge valuation and in return the market expected big things from them. So what great new things has twitter done since going public to earn their huge valuation? I think even the most ardent twitter supporters would have to agree that they have disappointed as a company since going public. As an aside, I don't think this post IPO lull is limited to twitter, with longer cycles before going public I expect alot of companies to show this type of burnout after going public. Good companies will get this and give their employee's a way of getting liquidity from their options before IPO. I think this will become a new recruiting tool for the best companies. Something along the lines of if we don't go public in 7 years from the companies founding then we'll provide a liquidity event for employee's who have been here longer than 4 years. GS will play a roll in this I'm imagining.
- roymurdock 11y ago
  Ah I see, I thought you were urging Twitter on because you hold a portion of your portfolio in TWTR. I'm baffled as to how the market valued Twitter at $45 per share up from an IPO price of $26, implying $3bn in yearly revenue. I'd also love to figure out who "the market" is behind Twitter - institutional vs. casual. On your last point - a private liquidity event, AKA raising an investment round and offering employees the option to sell back equity? Or, could the company step out of the way completely and let banks buy equity directly from employees? (I've never worked for a company in this situation so I have no idea what the laws would allow)
  - ececconi 11y ago
    According to google finance 60% of twitter is owned by institutional investors. Compare that to 67% for Facebook. https://www.google.com/finance?q=NYSE%3ATWTR&ei=z5q3VdHiDon3jAGdhIL4Cg https://www.google.com/finance?q=NYSE%3ATWTR&ei=z5q3VdHiDon3...
- nerfhammer 11y ago
  sama has suggested letting options stay valid for 10 years http://blog.samaltman.com/employee-equity http://blog.samaltman.com/employee-equity

Osmium 11y ago

> They are also trying to lead the charge in allowing people to invest in private companies through investment vehicles that look similar to funds( ie pooled capital that they raise and invest for share holders). I was just reading in another thread about how a new hypothetical tech crash wouldn't be as bad as the dot com crash for precisely the reason that all these new, 'over-valued' companies are private rather than public. In this context, isn't this kind of investment vehicle dangerous? (I don't pretend to understand this kind of thing and would be glad to be made a little wiser.)

sulam 11y ago
The customers for this from the GS side are what are referred to as high net worth individuals and family trusts. They aren't your friend across the street taking out a second mortgage on his home so he can play the private markets. There is an assumption that you're an accredited investor, and while I don't know the GS requirements for getting in on deals like this, I can only imagine it's far in excess of the accreditation requirements (which is relatively straightforward to achieve -- $1M in liquid assets or 2 years of income over $200K / $300K if filing jointly). There may be some reason to be concerned otherwise -- pensions and endowments are often customers for this sort of thing -- but they have risk managers that hopefully know what they're doing. Which may not give you warm fuzzies, given recent history, but in general these are not the people losing their shirts and affecting the economy as a whole.
sarwechshar 11y ago
Almost! People are worried about another tech bubble bursting because of things like overvaluation of companies and the frequency of unicorns (private companies valued over $1bn) appearing on the scene (which gives perhaps an illusion that VCs are funding left, right and center). But you could say that the huge growth we're seeing in investment in tech now is different to 15 years ago because: - most VCs are funding significant amounts of their capital in later-stage startups and companies that have shown a lot of promise ("private IPOs"), rather than the other way around - there are more startups now than 15 years ago but the same (or lower) amount of total capital invested, whereas before a smaller number of startups were funded from a huge pot - generally tech companies nowadays, even those unicorns a few years old, have solid financials and managed to turn a profit. This wasn't entirely the case 15 years ago. There was a Andreessen Horowitz presentation on this very topic going around a few weeks back - it's worth a read if I can dig it up (or you could be relentlessly resourceful ;)).

theseatoms 11y ago

deleted 11y ago
[deleted]
SeoxyS 11y ago
SPVs. Special Purpose Vehicle is what they're called.