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Washington Is Killing Silicon Valley

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Re: Washington Is Killing Silicon Valley

#41

Post by [deleted] »

ryanwaggoner wrote: post #15
wavesplash wrote: post #3

Pure subterfuge. A thinly veiled attempt to justify tax cuts and deregulation. AIG was killed by accounting? Try again. SOX hasn't killed the IPO, it's just made the hurdle higher and that's ok. IPOs are about consistent revenue generation - most of the firms of Web 1.0 didn't have it and didn't deserve to IPO. The WSJ has truly been compromised by Murdoch. NYTimes editorial on the death of the WSJ: http://tinyurl.co…

SOX hasn't killed the IPO, it's just made the hurdle higher and that's ok. IPOs are about consistent revenue generation - most of the firms of Web 1.0 didn't have it and didn't deserve to IPO. Wrong, wrong, and wrong. 1. SOX has killed the IPO; IPOs have plummeted since SOX, due to the ridiculously draconian laws that make compliance expensive and time-consuming. Startups and small companies just can't afford the cos…

[deleted]

Re: Washington Is Killing Silicon Valley

#42

Post by Raphael »

helveticaman wrote: post #7
Raphael wrote: post #6

Yeah! That's my evergreen state. Watch out, Houston; you're next.

This is argues the federal government, not Washington State, is killing Silicon Valley and all tech centers like it.

I know. It was a joke. Plus, it irks me that people omit the "D.C.", because it always confuses me for a few seconds.

Re: Washington Is Killing Silicon Valley

#43

Post by puzzle-out »

ohhmaagawd wrote: post #4
tokenadult wrote: post #2

Voted up because the premise of the article is interesting. But I disagree with the statement that Sarbanes-Oxley is killing entrepreneurship, so I'd like to hear comments about that from the entrepreneurs here. I'm also not sure that it is a sign of failure that many start-ups sell themselves to an existing big company rather than doing an IPO. It seems to me (again I would like to hear from the entrepreneurs here a…

I know a CEO of an Internet company that planned on doing an IPO in 2008. Of course the economy tanked so it's not happening. He told me that SOX required the company to have auditing/traceability and controls for everything. This meant they quit using any software as a service applications, they shut down IM, they have to keep track of everything on every machine, banned a whole list of applications that would inter…

This is one of Malone's more polemical pieces, and I imagine here he is willing to sacrifice some local nuances to appeal to a wider, non-SV audience. I think his overall argument is correct - we would see more IPOs if SOX were abolished, or at least reformed. From an editorial perspective, I think he should have included the comments of a CEO ala ohhmaagawd - Malone is certainly networked enough to do so.

Re: Washington Is Killing Silicon Valley

#44

Post by fallentimes »

ryanwaggoner wrote: post #15
wavesplash wrote: post #3

Pure subterfuge. A thinly veiled attempt to justify tax cuts and deregulation. AIG was killed by accounting? Try again. SOX hasn't killed the IPO, it's just made the hurdle higher and that's ok. IPOs are about consistent revenue generation - most of the firms of Web 1.0 didn't have it and didn't deserve to IPO. The WSJ has truly been compromised by Murdoch. NYTimes editorial on the death of the WSJ: http://tinyurl.co…

SOX hasn't killed the IPO, it's just made the hurdle higher and that's ok. IPOs are about consistent revenue generation - most of the firms of Web 1.0 didn't have it and didn't deserve to IPO. Wrong, wrong, and wrong. 1. SOX has killed the IPO; IPOs have plummeted since SOX, due to the ridiculously draconian laws that make compliance expensive and time-consuming. Startups and small companies just can't afford the cos…

This is fun because before doing a startup I was an auditor at Deloitte and then worked in transactions services. It's good to be out. :)

Great points Ryan...just wanted to add a few things:

1. This is mostly true. Going public can add 5 MM - 20 MM in overhead easy...let alone all the additional TPS reports and devoted man hours to bureaucracy. Also, it's significantly harder for companies that are bleeding money to go public; it didn't used to be, which is good and bad.

2. Agreed. Seriously, fuck going public. Going public is for companies who are not profitable, desperately need liquidity (e.g. Google) or capital. You can issue dividends, institute profit sharing programs and even have internal company stock exchanges without being a public company.

3. Just wanted to add that raising capital includes making the company liquid so people can cash out. Private equity firms and some tech shops that went public are a good example.

Re: Washington Is Killing Silicon Valley

#45

Post by fallentimes »

[deleted] wrote: post #41
ryanwaggoner wrote: post #15

Earlier quoted context omitted.

SOX hasn't killed the IPO, it's just made the hurdle higher and that's ok. IPOs are about consistent revenue generation - most of the firms of Web 1.0 didn't have it and didn't deserve to IPO. Wrong, wrong, and wrong. 1. SOX has killed the IPO; IPOs have plummeted since SOX, due to the ridiculously draconian laws that make compliance expensive and time-consuming. Startups and small companies just can't afford the cos…

[deleted]

Do you have a source of the pre-SOX company IPOs vs post-SOX company IPOs? I'm more curious than anything. SOX didn't just eliminate fluff it eliminated many profitable companies who don't have the earnings and market size to justify going public. This is fine by me - going public is overrated anyway.

The companies that are too immature to do SOX just simply don't deserve to IPO.

It has very little to do with maturity. Just like the Patriot Act, SOX was an overreaction. It adds layers & layers of red tape & costs (even if it has "worked", which I don't know one way or the other). While it has certainly weeded out some bad companies, it's discouraged some good companies from going public as well.

Re: Washington Is Killing Silicon Valley

#46

Post by fallentimes »

pg wrote: post #27
wavesplash wrote: post #3

Pure subterfuge. A thinly veiled attempt to justify tax cuts and deregulation. AIG was killed by accounting? Try again. SOX hasn't killed the IPO, it's just made the hurdle higher and that's ok. IPOs are about consistent revenue generation - most of the firms of Web 1.0 didn't have it and didn't deserve to IPO. The WSJ has truly been compromised by Murdoch. NYTimes editorial on the death of the WSJ: http://tinyurl.co…

SOX hasn't killed the IPO, it's just made the hurdle higher and that's ok. Actually it has. It introduced a qualitative change in liability for corporate executives. Selling now has way, way less downside. The reason that's not "ok" is that a higher hurdle doesn't merely cause companies to wait before IPOing. They get bought instead. Result: no new public companies.

Or they issue dividends :).

What's wrong with having fewer public companies?

Re: Washington Is Killing Silicon Valley

#47

Post by jmatt »

indiejade wrote: post #26
indiejade wrote: post #14

It's actually the deregulation of Washington that's suffocated entrepreneurship. Because there were/are no checks and balances on the large monoliths' ability to kill or absorb rivals, a lot of little entities have suffered. Washington always says it wants to do what is best for "business," but it rarely distinguishes big business from small. . . it doesn't get the correlation between size and efficiency. The hum-haw…

Please don't downmod me without telling me why you've done so. Do you disagree with my points? Which ones? Are you pro-deregulation? If so, please provide some example about why you think big companies getting bigger by absorbing their competitors is good for entrepreneurship. Perhaps you have something against me personally? For that, I have no remedy, but to tweet for help: http://twitter.com/indiejade/status/10725…

Are you pro-deregulation?

yes.

"We hold that all individuals have the right to exercise sole dominion over their own lives, and have the right to live in whatever manner they choose, so long as they do not forcibly interfere with the equal right of others to live in whatever manner they choose.

Governments throughout history have regularly operated on the opposite principle, that the State has the right to dispose of the lives of individuals and the fruits of their labor. Even within the United States, all political parties other than our own grant to government the right to regulate the lives of individuals and seize the fruits of their labor without their consent."

from http://www.lp.org/platform

Re: Washington Is Killing Silicon Valley

#48

Post by fallentimes »

davidw wrote: post #24
ryanwaggoner wrote: post #15

Earlier quoted context omitted.

SOX hasn't killed the IPO, it's just made the hurdle higher and that's ok. IPOs are about consistent revenue generation - most of the firms of Web 1.0 didn't have it and didn't deserve to IPO. Wrong, wrong, and wrong. 1. SOX has killed the IPO; IPOs have plummeted since SOX, due to the ridiculously draconian laws that make compliance expensive and time-consuming. Startups and small companies just can't afford the cos…

I'm willing to buy the argument that SOX is bad for startups. It's easy to knock things, though, and harder to suggest something better. His only suggestion is to lower capital gains taxes. I think there's also an argument that if you can't trust companies' books at all, that creates problems as well. Wikipedia has some useful information, as useful, see the 'Criticism' and 'Praise' sections: http://en.wikipedia.org/…

It was conceived at the worst possible time (after Enron, Worldcom, etc); it was bound to be a failure. There's a reason why it's not wise to go shopping hungry. I agree, though, the answer is probably somewhere in the middle.

Re: Washington Is Killing Silicon Valley

#49

Post by fallentimes »

nostrademons wrote: post #21
coliveira wrote: post #17

Earlier quoted context omitted.

I think it is appalling that entrepreneurs agree with SOX regulations. Nowadays, only companies making at least $500M annually can afford an IPO. Very few companies will ever be this big. This is destroying the incentive for capital investment.

Entrepreneurs don't care about it because they're still getting rich. They either sell out to a large public company and take their millions, or they keep the company private and cash their dividend checks for millions. The people really hurt by SOX are: 1.) Early startup employees. These people don't get rich unless the company gets really big - like, public-company big. Acquisitions tend to cut their growth potenti…

Keep the company private and cash their dividend checks for millions.

Yes! I wish more people talked about this. Especially with the tax benefits, issuing dividends is the way to go.

Re: Washington Is Killing Silicon Valley

#50

Post by fallentimes »

wavesplash wrote: post #3

Pure subterfuge. A thinly veiled attempt to justify tax cuts and deregulation. AIG was killed by accounting? Try again. SOX hasn't killed the IPO, it's just made the hurdle higher and that's ok. IPOs are about consistent revenue generation - most of the firms of Web 1.0 didn't have it and didn't deserve to IPO. The WSJ has truly been compromised by Murdoch. NYTimes editorial on the death of the WSJ: http://tinyurl.co…

AIG was killed because they were run by amateurs who didn't know what they were doing. See also: Ford, GM, Chrysler, Lehman Brothers, etc.

It's very unfortunate that they brought down a lot of other people along with them.

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