VC blogger Bill Gurley (Benchmark Capital) has written this week’s must-read blog post, Silicon Valley’s IPO Anxiety.
It’s an incredible piece (at his site Above the Crowd) that addresses the State of the Tech IPO. We’re living in a cynical age in which the idea of going public generates anxiety and distrust in the startup community. Facebook, on its way toward a billion dollars in annual revenues this year, outwardly displays virtually zero interest in subjecting itself to the travails of public company life.
Bill illuminates us as to how we got here and why things may one day turn around. Take the time to dig into this diatribe, it’s fantastic…
If you could travel back in time to the early 1990’s and ask Silicon Valley’s top entrepreneurs and private company executives about their long-term career ambitions, you would hear a constant theme – they all wanted to be part of an Initial Public Offering (IPO). Back then, taking a company public, either as a CEO, CFO, or founder, held an allure similar to that of a young athlete dreaming of making it in the major leagues. Clearly, not everyone was able to go public, but that of course added to appeal. Everyone still wanted to go public. They all dreamed of playing on the business world’s biggest business stage.
A great deal has changed since then. First, we lived through the peculiar time now known as the Dot-com bubble, where the elite requirements for going public were greatly reduced. This was followed by a period of heavy regulation where many aspiring startups felt as if they were absorbing the burden of sins committed by the likes of Enron and WorldCom, two companies that are far away from Silicon Valley. If you believe what you read, we now live in a world where young entrepreneurs have a more cynical view of the IPO and being public in general. It is common today to read a phrase like “You don’t have to go public early to provide liquidity to early investors or employees.” It is critical to consider just how far away “don’t have to” is from “want to” or “dream of”.