
US startups don’t want to go public anymore - zwieback
https://qz.com/1192972/us-startups-are-shunning-ipos-thats-bad-news-for-americans/
======
rotskoff
I consider this a symptom of the massive wealth inequities in contemporary
America. As other comments have pointed out, this phenomenon is not unique
start-ups. The most direct cause of the IPO decline is a lack of necessity.
Public markets used to provide crucial injections of capital for investment
and growth. Currently venture capitalists control enough wealth to provide
those investments directly.

This point is made most dramatically by looking at the growth of private
equity investment through the early naughts. Some relevant plots can be found
in [1] which uses the data to advocate for deregulation, which I do not
believe gets at the underlying issue.

[1] [https://www.cato.org/cato-handbook-policymakers/cato-
handboo...](https://www.cato.org/cato-handbook-policymakers/cato-handbook-
policy-makers-8th-edition-2017/securities-regulation)

~~~
tptacek
The last serious study of VC performance I read suggested that, as an asset
class, venture capital underperforms the S&P 500. Pension funds invest in VC
not to get access to sweet sweet unicorn dollars, but because their portfolio
strategies require them to have decorellated investments.

I've been in the industry long enough to remember working in it when it was
very easy for tech companies to go public. It did not work out well for retail
investors.

~~~
aianus
Why would VC investments be decorrelated with the stock market? Big exits are
usually IPOs, no?

~~~
azernik
Decorrelation is a matter of degree, not a binary. VC funds are less tightly
correlated with, say, the oil industry than the chemical industry is.

~~~
manishsharan
(I am not a finance guy so pardon my dumb question ) How do do startups serve
decorrelation of fund portfolio? Startups valuation has to have some degree of
correlation to the industry they serve. By this I am supposing that if you
have a healthcare startup, its valuation would be strongly related to the
performance of the healthcare sector. So if you have say healthcare stocks in
your funds' portfolio, would investing in a healthcare startup serve
decorrelation ?

~~~
georgeecollins
Startups often don't correlate very well with the industry they are in because
they usually don't have the same business model. So I don't think Uber
correlates with to transportation stocks, or Air BnB correlates to resorts, or
23 me correlates to Pharma etc. There is a cycle to start ups, but it is
related to the broader economic outlook and the price of capital.

------
privateSFacct
Posting anonymously. Some quick factors not discussed.

1) Massive compliance overhead. Going public and maintaining public status can
be a real nightmare.

For example staff generally "get" what a financial statement audit is about -
are the numbers correct. And when they aren't everyone gets that a system
should be improved. And the auditor makes some notes about areas to improve
based on their work, and the difficulty and errors noted in checking the
actual numbers. This is the audit most private companies go through - and it
actually works pretty well.

A public company under SOX - now you have an audit of the numbers (great) and
you have a kind of meta audit of the system (internal control) that got to
those numbers (ugh). The cost / benefit of this second part is not clear to
most staff. It's huge checklists, everyone get's checklist fatigue, and no one
dares change a system after the auditors have been through etc. You literally
can ask, why in the world do we do crazy procedures X/Y/Z? Because the
auditors accepted it and we are too scared to change it. All critical thinking
goes out the window. And folks start driving workarounds to the systems to get
stuff done (double ugh and big actual risks).

Read some PCAOB reports for "audit failures". These aren't actual "audit
failures" \- no numbers were wrong. But it'll be things like - the auditor
read over the calculations, checked underlying documents, recalculated numbers
sat in on some meetings, but STILL didn't do enough to assess internal control
over some calculation.

OK - I'll save the rest for later, but the idea that the private markets are
the new public markets rings true to me. These are folks who can weigh actual
cost / benefit of compliance cost vs losing money on an investment. Most are
going to stick to something like a regular audit. Multiply by 100x in every
dimension?

~~~
tabtab
Most such rules are in place because slimebags abused the system, and in some
cases taking the world economy with it. I'm all for making more efficient
auditing rules, but one has to be careful not the throw the baby out with the
bathwater.

Perhaps have compliance tiers such that smaller co's can optionally be in a
riskier and less audited stock system or level. However, we probably don't
want too much of the economy in that pool.

As it is, private investors may be willing to take on riskier and even dodgier
companies who don't want auditors snooping around. That's fine: if the rich
want to gamble with dodgy companies via private investment, go for it.

~~~
dcosson
But how long ago did these slimebags abuse the system, and are we sure it's
still a problem in the modern era?

It seems a lot like the Uber/taxi fight - I imagine at some point somebody
painted a car like a taxi and kidnapped some riders, and we needed a way for
riders to be able to trust that the driver is safe to ride with so
licenses/medallions came about. Now with the internet and verified identity of
drivers, turns out we don't need it anymore and Uber has built a safe way to
get into a stranger's car.

~~~
pdonis
_> how long ago did these slimebags abuse the system_

How long ago is 2008?

 _> are we sure it's still a problem in the modern era?_

Sure seems like it to me.

~~~
ekianjo
2008 could not have happened without Freddy and Fanny. Government shares a
huge amount of responsibility.

~~~
JamesBarney
The housing bubbles happened outside the U.S., they lost market share as the
bubble ramped up, and they did not own the riskiest loans.

Why do you think 2008 could not have happened without Fanny and Freddy?

------
somberi
A related read (1):

A big trend in American business is the collapse in the number of listed
companies. There were 7,322 in 1996; today there are 3,671.

The number of companies doing initial public offerings (IPOs), meanwhile, has
fallen from 300 a year on average in the two decades to 2000 to about 100 a
year since.

(1) - [https://www.economist.com/news/business/21721153-company-
fou...](https://www.economist.com/news/business/21721153-company-founders-are-
reluctant-go-public-and-takeovers-are-soaring-why-decline)

~~~
ad_hominem
I wasn't aware of that number, but I was just thinking recently about how many
fewer banks there are today than there used to be. In 1995 there were 10K; as
of last year there are less than 5K.[1] So a 50% drop in that timespan,
mirroring your numbers.

And the first article I came across looking for the latest 2017 number is
about Amazon's interest in becoming a bank. Guess the trend validates the
dystopian sci-fi trope of multinational conglomerates ruling everything in the
future.

[1]:
[https://www.bloomberg.com/gadfly/articles/2017-10-06/amazon-...](https://www.bloomberg.com/gadfly/articles/2017-10-06/amazon-
could-be-your-lender-and-upend-wall-street)

~~~
icebraining
The reason the US had so many banks was due to regulations that tried to
prevent interstate banks, and which were abolished in 1994:

[https://en.wikipedia.org/wiki/McFadden_Act](https://en.wikipedia.org/wiki/McFadden_Act)

[https://en.wikipedia.org/wiki/Bank_Holding_Company_Act](https://en.wikipedia.org/wiki/Bank_Holding_Company_Act)

[https://en.wikipedia.org/wiki/Riegle-
Neal_Interstate_Banking...](https://en.wikipedia.org/wiki/Riegle-
Neal_Interstate_Banking_and_Branching_Efficiency_Act_of_1994)

~~~
ad_hominem
Interesting, but if you look at the graph banks were already well on a
downward trend before 1994 - there were 14.4K banks in 1984, 13.4K in 1988,
12.5K in 1990, 11.7K in 1992.

------
tvural
I would also point out that short sellers and "activist investors" are a
significant downside to being public. Essentially you give investors focused
on these strategies a financial incentive to destroy the company's long-term
value. Activism has been a big problem for drug companies where investors will
try to fire all the scientists so that profits will go up for a few years.

~~~
wlll
> Activism has been a big problem for drug companies

Forgive me if I'm wrong, but isn't it kinda up to the shareholders?

If shareholders value something other than the "long term value" you speak of
(I guess share price and dividends) then that's their prerogative surely? If I
want to buy a controlling stake in a company but my idea of value is, say,
sacrificing profit at the expense of employee perks and charitable efforts,
then this is my "shareholder value" and isn't it then the responsibility of
the company to provide that?

Likewise, if I buy shares in a company and then want that company fire all the
highly paid people so profits go up to enable me to flip my shares for more
money, that's my value and isn't it therefore up to the company to do that?

In summary, if the value of a company is measured by what the shareholders
want, then it can't be a problem if the company does the thing that the
shareholders want, even if that's destroying what you see as the "long term
value" of the company.

It might not be what you want as a founder or CEO when you IPO, but those are
the rules, those are the risks and you have to take them if you want to play
the system?

~~~
jungturk
I think your points highlights the contrast between how the US thinks of
corporate stewardship (shareholders get complete discretion) with how many
German companies do (stakeholders all contribute to board-level decision-
making).

In the US it seems entirely reasonable that an owner should be able to
undermine the long-term viability of something they own, but in Germany other
stakeholders - the larger community the company exists in, the employees of
the company -- get a seat at the table to determine the company's course.

I'm not advocating for either, just an interesting distinction.

~~~
wlll
For what it's worth this is my limited understanding of the way the US stock
market works from my observations over 17 years in the UK :)

Personally I'm a big fan of the "middle ground" European model that seems to
be, "capitalism with boundaries", as far as I can tell unfettered capitalism
is incredibly destructive and unfair.

------
mychael
Startup mergers and acquisitions are also trending downward. Translation for
tech employees:

\- If you accepted a lower salary in exchange for equity, you most likely got
a bad deal.

\- If you worked somewhere long enough to vest 100% of your options, you're
probably underpaid (because people who hop around tend to earn more).

[https://techcrunch.com/2017/08/05/markets-are-strong-but-
big...](https://techcrunch.com/2017/08/05/markets-are-strong-but-big-startup-
ma-deals-just-arent-happening/)

~~~
vadimberman
> Startup mergers and acquisitions are also trending downward.

That's not what the TechCrunch article actually says.

The article says that the __big __mergers and acquisitions are down. But the
big M &A are the economic equivalent of luxury real estate deals. Do you
really care that a Hollywood celebrity can't sell his or her mansion at a nice
price?

Most people are interested in their segment. In fact, smaller M&A deals are on
the rise: [http://www.successfulacquisitions.net/ma-today-smaller-
deals...](http://www.successfulacquisitions.net/ma-today-smaller-deals-are-on-
the-rise/), and the chances are, your startup, if it does not go belly up,
will end up in this category.

Huge M&A are difficult to pull properly. The fact that there are fewer is a
good thing. It will also make the evaluations more reality-based and not based
on "but mommy, I wanna be a unicorn too".

~~~
mychael
Interesting. Thanks for sharing!

------
flyinghamster
I can't help but think that some of this is a direct result of Wall Street
f\ckery. When your prime directive becomes "engage in financial shenanigans to
make this quarter's results look good, to prop up the stock price because
shareholder value," your actual business becomes irrelevant.

Contrast Family Video (privately held and still going strong) vs. Blockbuster
Video (no longer a thing). Sure, video rental may not have enough money in it
to satisfy the Wall Street vampires, but there's still enough life in it to
make money. If you don't have to keep vampires happy, you can invest your
profits into your business, or even into new ventures.

Hilariously, there's a Family Video in my neck of the woods that moved across
the street into the former Blockbuster location. They retained ownership of
their original building* and are using that for a new business venture (a
24-hour fitness center). EDIT: In their new location, and many others, they
have a Marco's Pizza attached.

* There's another whole issue: owning your real estate rather than being beholden to a landlord.

~~~
ams6110
Family Video carries porn, which Blockbuster never did.

~~~
zasz
Might that not be only possible because it is privately held?

~~~
olliej
Blockbuster was controlled by a fairly conservative group that deliberately
chose not to carry porn.

They even made that awful stripper movie (versayth anyone?) “sfw ” by using
cutting edge CGI to add little triangle bras, apparently costing more than the
original movie. Which I think they had to pull because that made it copyright
infringement :)

~~~
curun1r
It wasn't just porn they didn't like, Blockbuster edited any movie they
considered unsavory before the transition to DVD. The last movie I rented from
Blockbuster was "Bad Lieutenant." The normal, R-rated cut is 91 minutes. The
Blockbuster cut was under an hour. They cut so much of the movie that the plot
no longer made sense.

I was so annoyed I vowed never to rent from them again.

~~~
olliej
I believe they solved the problem of never renting from them again :D

(too soon? :D )

------
jawns
One other problem this creates, which the article doesn't touch on, is that
many employees in the R&D economy are offered stock options in lieu of 401(k)s
or a more liquid equivalent compensation. And an IPO is the most
straightforward way to cash out. Yes, it's possible to cash out during an
acquisition, but anecdotally, it seems as if more people holding stock options
have gotten screwed during an acquisition than during an IPO.

~~~
olliej
Yeah if I ever went to a non public “paid in stock” I would pay a lawyer to
ensure my contract let me cash out whenever I wanted, and couldn’t be diluted,
and didn’t have lower payout priority.

~~~
jacquesm
Your lawyer can write that contract but the other side needs to sign it. And
unless you are a resident magician somewhere I really don't see how you would
get that done, I have never seen a company agree to terms that would begin to
approach that. Even management and early investors regularly get diluted and
if they don't want to dilute in later rounds they have to pay up. As for the
'payout priority' (you probably mean 'liquidation preferences'): later
investors tend to have a pretty powerful hand to play when it comes to
establishing their priority: if they don't get their liquidation priority over
and above the bulk of those already in the company they simply won't do the
deal. And your 0.01% of the stock certainly isn't going to be allowed to block
future rounds. So I really don't see any of this happening in a realistic
setting.

~~~
olliej
You mistake what I'm saying -- I'm not saying "my lawyer writes the contract"

I'm saying that for a non-public startup I would want to have a lawyer ensure
that my contract allowed me to exercise the stock grants the company claims to
be offering.

I am following that with the simple "if they aren't willing to sign such a
contract, neither am I". I have no expectation of forcing a company into a
contract they disagree with, I'm saying that if I sign a contract with such a
startup it's going to give me a reasonably predictable income. That means
either a real and competitive salary, or an ability to exercise the "stock
compensation". I'm not going to subsidize someone else.

~~~
jacquesm
Well, then you won't be working for any startups unless it is as a founder,
and then that particular startup will have a hard time finding funding.

------
fbonetti
They don’t want to go public because they have insane valuations yet aren’t
profitable. Going public would mean losing a significant amount of paper
wealth. The stock market doesn’t value “world changing technology” (flimsy
startups) as highly as investors in Silicon Valley.

~~~
varjag
The uncomfortable on point answer buried in the discussion.

VCs learned their dotcom bust lesson well. The cycle can drag much longer if
you don't go public. The exit target now is a sale to an existing public
buyer, skipping the market validation stage altogether.

------
chadwilken
Equity aside I don’t see any good reason to go public other than raising some
capital. You no longer are free to operate as you wish and instead have to
focus on dividends and pleasing the holders.

~~~
twinkletwinkle
That has been Matt Levine's thesis for a while, "Private markets are the new
public markets". The public markets used to be the biggest source of capital,
subject to stringent rules and regulations. Now you can get just as much money
from the private capital markets, and it doesn't come with all the pesky rules
around reporting.

~~~
drawkbox
> _Now you can get just as much money from the private capital markets, and it
> doesn 't come with all the pesky rules around reporting._

This is true but having lots of small public investors sometimes makes it
easier to maneuver than a handful of big fish / massive investors akin to many
small customers compared to 1-2 big clients that dictate your fate.

Public markets are similar to product development that targets many small
customers compared to private markets that are like services / contracting
that have a few or one big client, the latter is more risky and sometimes you
are directed by the big fish rather than not being worried about having to
please everyone.

Public markets are directly tied to everything now, the stocks, bonds, wages,
jobs, retirement, funding, etc. Equities were created to give everyone a
chance to invest and ride the tide up with the big boats, if companies are
already tapped by the time they go public, public markets, retirement and
market based wealth will not be as robust.

------
agorabinary
Don't go public. Look at major companies like Facebook that have become
massive user data and time exploiting machines for the sake of increasing
share price. Stay private and recognize what place your product has in the
world - many ideas CAN be billion dollar ideas if they pervert their original
vision, but many ideas ought to remain much smaller and focused to stay true
to themselves, not investors.

And is this article really arguing that Americans are underinvested in the
stock market and not grossly overinvested?

~~~
doomlaser
SpaceX, Valve, Dell (for now?) — what are other good US technology examples?

~~~
jjcm
Valve is great when things are interesting to work on, but I wouldn't consider
them a company that are role models. The downside to Valve is since everyone
is their own boss, maintenance becomes something no one does. They need to
solve that problem before I'd consider them a good company role model.

~~~
quickthrower2
Could they pay a higher salary for maintenance to compensate? Like a reverse
auction. Then it becomes something that the people who are most desperate for
money will do.

------
aaavl2821
I'm sure many private company employees wish they would go public so they can
enjoy the liquid stock appreciation that google / apple / fb / amazon /
netflix etc employees have

liquid stock in a growing company is one of the most powerful currencies for
attracting and maintaining talent. private company stock is generally valued
at at least a 30% discount to public stock, and for an early-stage startup it
is hard to place any value on private stock at all

------
aaavl2821
some of these reasons are quite spurious. the amount of detail you need to
disclose about your r&d is nowhere near a level of detail that would help
competitors, and is probably less than would be disclosed through the press
anyway. alphabet discloses almost nothing about many of its subsidiaries, and
big public pharma companies generally dont even list any drugs earlier than
phase 2 in public filings

the whole GAAP thing is also a weak argument. investors know that tech
startups arent going to have tons of tangible assets and pp&e and actually
like capital-light models. investors are smart enough to figure out when gaap
is useful for valuation and when it isnt

~~~
kelnos
I don't think the issue is really any confusion around whether or not GAAP is
appropriate for many companies, it's just that there's no alternate standard,
and _that_ can be confusing. My understanding is that "non-GAAP" can encompass
a variety of different methods of calculating performance, and it's harder for
an investor to evaluate if the chosen method actually represents the business
well, or if it was just chosen because it yielded the best numbers.

~~~
monocasa
There's IFRS.

------
idlewords
One obvious reason that's never mentioned is that staying private gives
capital more leverage over labor. It's easy to lock in a workforce for round
after round of startup funding as they wait for an IPO that will convert their
paper wealth into something tangible.

------
RestlessMind
There are a few comments here about how private investors are able to provide
sufficient funding that startups don't have to go to public markets anymore.

If that is the case, then the self-correcting market mechanism should be :
startups don't go public sooner -> employee options are worthless -> employees
realize this and start asking for salaries in line with public companies ->
private investors don't have enough capital to compete on "liquid
compensation" with public companies -> startups are forced to go public

Though I think there is still fair bit of time before this happens; too many
people still cling to their beliefs in the lottery tickets aka "perpetually
illiquid startup options"

------
ChuckMcM
_" One issue is the narrowing of investment opportunities for working
Americans."_ \-- really? Only 54% of American's hold any form of stock at all,
and most of those _only_ have stock in the form of a mutual fund.

 _" Another source of disquiet is intensifying industry concentration."_ \--
concentration or horizontal scaling? One of the things I disliked about
working at Google was their claim they owned all my work at all times because
they were literally in every single business associated with technology[1].

 _" Finally, there’s the societal benefit that stems from the institution of
public capital markets."_ \-- again what societal benefit is that?

Startups, and by that I mean venture based ones, not the local pizza
restaurant or nail salon, absolutely would love to "go public" and have some
nice liquid event. But they screwed a lot of people at the turn of the century
out of their money and as a result that route was closed down. There are at
least hundreds of companies that start, grow a bit, and get acquihired or
otherwise consumed by big companies. The people then do their time (18 - 24
months typically) at BigCo and then roll out to do it again. If they could go
public and take your money without consequence I'm sure they would :-).

[1] No, this probably would not hold up in court, but it was what legal told
me when I asked them for a definitive statement.

~~~
keenerd
> _their claim they owned all my work at all times_

How do they respond if you attempt to negotiate salary based on the
expectation of putting in 8760 hours per year?

------
indubitable
I'm surprised to see so few mention a more direct ostensible 'fiduciary duty.'
Going public, especially without share tiering aimed at letting the owners
keep control, involves yielding control of your company to shareholders. And
this often creates a conflict of interest. Shareholders, generally, are not
holding shares because of any affinity for a company. They're holding shares
because they think those shares will appreciate and give them more capital.

SpaceX is a great example. They don't want to go public simply because their
longterm goal is not something that has an immediately apparent path to
monetization. And on top of that it's also very high risk. Elon is driven by
ideology which is, in my opinion, a great thing. But it's not something that
would work well at a public company.

As another example take something like Steam - the primary PC gaming platform.
In spite an effective platform monopoly, they've chosen to never 'squeeze'
their position. And they're doing better than ever for it. On the other hand
they could likely multiply their short to mid term revenue in exchange for
killing themselves in the long run. When the owners of a company are more
interested in increasing their net worth, than in creating a solid long term
company - it creates a major conflict of interest.

In theory my argument should fall flat because of market efficiency. If making
decisions so obviously hurts a company's longterm outlook, then that should
theoretically be factored into the price of a stock. But in reality
quarterlies seem to drive the market.

~~~
TeMPOraL
> _In theory my argument should fall flat because of market efficiency. If
> making decisions so obviously hurts a company 's longterm outlook, then that
> should theoretically be factored into the price of a stock. But in reality
> quarterlies seem to drive the market._

It shouldn't. Market efficiency is precisely why we'd "lose" SpaceX if it went
public now. The market does not optimize for the best future of mankind. It
optimizes for short-term profits (those who don't get outcompeted by those who
do). It's a powerful solution to _some_ problems, not _all_ problems.

------
pmoriarty
If a startup that hires you is not interested in ever going public does that
mean that the stock options they give you are not likely to ever be worth
anything?

~~~
PhilipA
If the company sells privately to another company it still counts. The article
is talking about IPO's. There are other means to exercise your stocks.

------
turc1656
This was something I never considered as part of the model of the US market. I
have long considered US equities to be overbought based on P/E ratios and
other fundamentals when viewed on a historical perspective. However, I never
took into consideration (even though I was acutely aware of it) that there are
thousands less public companies now than 20 years ago.

When you view it as a supply/demand, it becomes more obvious. There was ~27
trillion that people had in the US market in 2016, from the numbers I am
looking at. And that's with roughly 3,800 companies, giving us an average
market cap of about 7.1 billion. If that number were to go back up to ~7,500,
all else being equal we would very likely see those market caps cut in half as
the funds dispersed across the rest of the market. Yes, this is a vast
simplification and there are many factors at play like fundamental ratios and
proper valuations to determine what companies are worth. But I think this is
something that is certainly a factor and not something I had considered
before.

------
sjg007
I guess the model has changed. This is bad for your average unicorn startup
employee though, liquidity for any real purpose is limited. There's no price
transparency and there's no upside. Maybe this is a strategy to push for
deregulation. But it is fleecing the public in another way by restricting
assets for purchase even if the goal was to prevent outright fraud originally.
All of that money has gone into housing, the stocks that we can buy... But
there is also massive consolidation being driven by technology. So there will
only be a few winners by definition. This is why China and Russia closed their
tech markets to US companies.

------
segmondy
Perhaps US startups can't go public because they will get exposed like Snap?
How many private startups/unicorns today are truly crushing it? Very few.

Going public was a great way to extract money from the public, but not so much
these days. The money is being extracted before hand. VCs are getting paid
irrespective of how the companies perform. The money being risked is not their
money, but money raised indirectly from the public. Your 401k or pension might
be part of the billion+ that Uber raised. :D

Acquisition is a great way to exit for those with skin in the game, angels and
series A investors who are more likely to risk their own capital.

------
thisisit
And the reason is because there is lot of money to be had in private markets,
especially with companies like Softbank raising and giving out tons of money.

If we dig further, this is an after-effect of keeping the interest rates low
for a long time. That means access to credit is much easier. So, there is no
rush to profitability and going public.

But, given that interest rates are now slowly rising I predict we might see
more and more companies going public and IPO to raise money.

------
abtinf
That is a lot of words without once mentioning Sarbanes-Oxley.

------
gwbas1c
I remember listening to a radio broadcast in 2002 explaining the Internet
stock bubble. One thing it pointed out is that, in the late 1990s, startups
went public much faster than they normally did.

It seems the broadcast implied that an average startup, prior to the 1990s
bubble, took about 10-15 years to go public. According to the broadcast, a
company would go public once the business model was proven. Going public
wasn't an "exit" as we consider it now.

Maybe we're just seeing a return to normal?

------
glangdale
It's interesting that a bunch of startups in Australia have just gone public,
some of which seem amazingly early-stage. I worked for a startup (ultimately
exited to Intel) and recognise the stage that these guys are at as "pretty
damn early" (the bit where you're almost living or dying based on B2B customer
prepayments, etc) and am amazed that you can now apparently do this while
public.

Ouch. Would hate to have had to file a quarterly public report showing our
wounds to the public...

------
tanilama
Maybe their valuation is too high that they can't fulfill ROI?

------
Annatar
People have had it with stock market manipulations where a few Wall Street
crooks make off with all the money and the rest are left holding the bag, plus
nobody wants the overhead of GAAP. Surprise surprise. Poor Wall Street crooks,
where is the new yacht going to come from now, and what’s even scarier, who is
going to pay for it now that noone trusts them any more?

------
maherbeg
Would it help to change the rules such that whatever "shares" (RSUs or
otherwise) are granted to private company employees count towards the private
company shareholder limit?

You would either have to go public or compensate employees at public company
salaries.

------
xivzgrev
It's not all gloom and doom. Who are buying these companies? Google, facebook,
amazon, Microsoft, etc. All public companies. If it's a good buy, stock
appreciates immediately and in longer term.

~~~
s2g
The endless stream of small companies to the conglomerates is doom and gloom.

Buy you or crush you. If you get really lucky you end up at Snap and are
fighting for your life against a company an order of magnitude larger.

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jalcazar
_For the most part, only rich people can hand their cash over to venture
capitalists and private equity groups to invest in young firms. That means
small-time investors have no way of investing in most of the new, fast-growing
startups, according to the authors._

Seems like authors aren't considering ICOs as a new form of IPOs for startups.
Any computer and finance literate person can invest, not only small American
residents. Volatility is higher in ICOs and there are practically no
regulations, so investors should be more careful. Nonetheless, the underlying
basic concepts are the same

~~~
sethammons
> so investors should be careful.

How? For companies that have gone through an IPO, there is GAAP, SOX, SOC2
controls, etc. These were all designed to help investors be informed so they
can manage risk. With ICOs, what have you got? "Trust us, we've not written a
bug into our system that will give us unlimited coin to offload after the
price reaches a certain point."

~~~
jalcazar
Understanding finance, risk, time valuation, researching the team behind the
startup, understanding the white paper, not investing more than what they can
afford to lose, reading reviews and comments online, automating orders to sell
before the tokens reached a certain price.

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known
Unlike Capitalism, Globalization is Zero-sum

~~~
sjg007
Would you please explain why?

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vuln
It's easier to break the law when no one can check your books. ;)

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m3kw9
Because they think they can ICO? Lol

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BuisnessGrowth1
The road to hell is paved with good intentions... The government has paved
most of the road when it comes to small businesses (including startups) being
stifled by regulations and either going offshore, remaining private, and so
on... Basically the government sucks at almost anything. Why do people
advocate for their growth and increasing power?

~~~
CryptoPunk
>>Basically the government sucks at almost anything. Why do people advocate
for their growth and increasing power?

Because people don't know what and who to trust. There is so much information
out there, and so many conflicting claims about it all means, that there's no
easy way to tease out what's true. Anyone advocating for a particular policy
comes across as an ideologue, because they cannot possibly convey the body of
facts that informs their position, meaning what they mostly present is fervent
belief and insistence that they are right.

