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IPOs are expensive and cumbersome – Try a direct listing, like we did at Spotify

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Re: IPOs are expensive and cumbersome – Try a direct listing, like we did at Spotify

#61

Post by tim333 »

tehlike wrote: post #38
rayhano wrote: post #20

I posted this article because we’re planning to do the same and wanted to gather thoughts from the tech community (the financial community has commented on this sufficiently to help inform our process). I thought it might help to share our motivations for eventually listing our company vs taking more VC: a. The public markets force transparency. This aligns with our values. b. Governance enforced by VCs (especially i…

Is quarterly updates a mandate or just norm? Edit: yes, sec requires quarterly updates.

I'm not sure but the poster seems to be UK based where half yearly is normal.

Re: IPOs are expensive and cumbersome – Try a direct listing, like we did at Spotify

#62

Post by gwbas1c »

zaksoup wrote: post #18
wildmusings wrote: post #16

Earlier quoted context omitted.

The whole point of owning part of a company is to collect dividends and/or sell your shares for more than you bought them for. But without going public, it can be difficult to do the latter.

This doesn't seem true. What about having voting rights on board members/company direction? How do worker-owned co-ops even function if this is the 'whole point of owning part of a company'. Why do we take 'maximize shareholder value' as though it's some rule handed down by god and the only possible way to operate a company, public or otherwise? It just isn't the case.

Worker-owned co-ops exist to provide employment (and profit) for their employees.

Re: IPOs are expensive and cumbersome – Try a direct listing, like we did at Spotify

#63

Post by btilly »

chollida1 wrote: post #12
btilly wrote: post #10

Earlier quoted context omitted.

This was listed as, I think, a positive but I see it as an extreme negative. Why invest in your company if you don't have the conviction that it will be worth more 3-6 months from now. You are thinking as a potential new investor, and your interests are not aligned with employees and early investors. Employees and early investors have had what is likely to be a large fraction of their net worth tied up in one company…

Maybe I wasn't clear but I don't think I ever setup the straw man you knocked down saying an employee shouldn't ever be able to sell. All I said was its very reasonable, as evidenced by the fact that every IPO over the past 40 years has had a lockup, to have a 3-6 month hold period for existing share holders when you go public. That's it. I( and GOOG, FB, AMZN, SNAP, and the rest of the entire tech community that wen…

You did not fully set it up. However you did say, in so many words, that having insiders wanting to sell is a very negative sign about the company. And said it criticizing the lack of a period where insiders were locked out of the market.

It is normal for banks conducting an IPO to want one set of things, and for early employees and early investors to want another. Both lockup periods and a chance to have an IPO pop are things that banks conducting an IPO want to have. The company itself has no desire for either, but are pushed into them.

It is normal to hand over as much as a quarter of a company's value to rich people who are lucky enough to get into an IPO. It is normal to force early employees to stay out of the market for an extended period of time. I personally know a number of people who during the dot com crash wound up with a tax bill that exceeded their salary and no way to pay it. (Their company IPOed, thereby locking them in under AMT rules. By the time they could sell, the dot com crash had happened and they didn't make enough to pay their taxes.)

The fact that these things are normal does not mean that they are fair and reasonable. Just that they are business as usual.

It is no surprise that a company which bucked Wall St on one issue would challenge both of them.

Re: IPOs are expensive and cumbersome – Try a direct listing, like we did at Spotify

#64

Post by patrickg_zill »

erispoe wrote: post #30
rayhano wrote: post #20

I posted this article because we’re planning to do the same and wanted to gather thoughts from the tech community (the financial community has commented on this sufficiently to help inform our process). I thought it might help to share our motivations for eventually listing our company vs taking more VC: a. The public markets force transparency. This aligns with our values. b. Governance enforced by VCs (especially i…

> e. Friends and family and supporters can participate - especially from their retirement accounts. This is really important - the wealth creation being broad has a real good-news feel. Sharing the wealth. It's a really bad idea to do stock picking, or any other risky investment strategy, with your retirement account, and a really bad idea to promote it. One company goes bust and suddenly you lost your retirement sav…

I think that it depends on how close to retirement you are. Having a bad time with a stock at 35 is a different thing than if you are 64.

Re: IPOs are expensive and cumbersome – Try a direct listing, like we did at Spotify

#65

Post by hndl »

tehlike wrote: post #37
rayhano wrote: post #20

I posted this article because we’re planning to do the same and wanted to gather thoughts from the tech community (the financial community has commented on this sufficiently to help inform our process). I thought it might help to share our motivations for eventually listing our company vs taking more VC: a. The public markets force transparency. This aligns with our values. b. Governance enforced by VCs (especially i…

Having shares of a private company is still possible with retirement accounts. It is a bit more work. You can roll an ira to an self-directed ira and invest in all sorts of financial instruments including real estate.

Can you share some resources here (e.g., services you've used)?

Re: IPOs are expensive and cumbersome – Try a direct listing, like we did at Spotify

#66

Post by harryh »

krelian wrote: post #35
wildmusings wrote: post #16

Earlier quoted context omitted.

The whole point of owning part of a company is to collect dividends and/or sell your shares for more than you bought them for. But without going public, it can be difficult to do the latter.

Isn't the whole point of owning a company is have a share of its profits? That's why the stock market never made sense to me. The price and price gains or losses on stocks are not related at all to the profits.

The price and price gains or losses on stocks are not related at all to the profits.

Perhaps not in the short term, but they definitely are in the long term.

Re: IPOs are expensive and cumbersome – Try a direct listing, like we did at Spotify

#67

Post by unignorant »

will_brown wrote: post #28
chollida1 wrote: post #3

The banks backing spotify made about as much from their "non IPO" compared to what they would have made from a traditional IPO so I don't think too many bulge bracket banks are worried about this trend. https://www.bloomberg.com/news/articles/2018-03-26/spotify-l... > Avoiding the lock-up period was a very important part of our decision to list Spotify directly, but there were also clear financial benefits. This was…

Interesting article you posted. I’d never stopped to wonder the investment bank fees for underwriting an IPO and I expected millions but ~$50M was unexpected. Not to be that guy on HN but it would seem this is the area should leverage blockchain to do a public offering (ICO for equity) and show how blockchain/tokens could be used to cut out the investment banks and save a company $50M on a public offering.

Yeah, this is something many people are excited about. We are doing a public security offering along those lines at NEX.

Re: IPOs are expensive and cumbersome – Try a direct listing, like we did at Spotify

#68

Post by CPLX »

erispoe wrote: post #30
rayhano wrote: post #20

I posted this article because we’re planning to do the same and wanted to gather thoughts from the tech community (the financial community has commented on this sufficiently to help inform our process). I thought it might help to share our motivations for eventually listing our company vs taking more VC: a. The public markets force transparency. This aligns with our values. b. Governance enforced by VCs (especially i…

> e. Friends and family and supporters can participate - especially from their retirement accounts. This is really important - the wealth creation being broad has a real good-news feel. Sharing the wealth. It's a really bad idea to do stock picking, or any other risky investment strategy, with your retirement account, and a really bad idea to promote it. One company goes bust and suddenly you lost your retirement sav…

That doesn’t make sense. If you start with the premise that you are going to make said investment, and want to determine where, a retirement account can make a lot more sense given that the tax deferred status can eliminate problems with short term capital gains, buying and selling in the account, and so on.

Re: IPOs are expensive and cumbersome – Try a direct listing, like we did at Spotify

#70

Post by JamesBarney »

eldavido wrote: post #56
erispoe wrote: post #30

Earlier quoted context omitted.

> e. Friends and family and supporters can participate - especially from their retirement accounts. This is really important - the wealth creation being broad has a real good-news feel. Sharing the wealth. It's a really bad idea to do stock picking, or any other risky investment strategy, with your retirement account, and a really bad idea to promote it. One company goes bust and suddenly you lost your retirement sav…

Yes and no. I read in Brealey-Myers [1] that you can get 80-90% of the way to pure beta (market risk) by picking 15-20 stocks. You just have to pick ones that aren't super correlated, e.g. 10 pharmaceutical companies. Whether it's worth your time messing about with this is a separate matter entirely. [1] https://www.amazon.com/Principles-Corporate-Finance-Richard-...

>Whether it's worth your time messing about with this is a separate matter entirely.

Yeah, transaction fees can really eat into your gains unless you're a very good picked or are interesting millions.

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