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 interfere with SOX (iTunes, file sharing, and music app), etc.
They had to hire lawyers, more accountants, consulting firms. He told me they were looking at > 10m to comply. And that doesn't count lost productivity of having to act like a draconian big ass company where they had to have design docs for everything they do, detailed project plans, get rid of the tools they use (as listed above), etc.
In other words to go IPO now you give up agility, spend more money, and become less productive.
PS: There are IM clients that large companies can use so clearly some of what he said was BS.
Or to prevent them from investing in private companies without giving a piece to NY bankers? (Not implying you necessarily disagree)
Cray started illegally with small investors who all ended up making a lot of money. In the Midwest too! Good thing Washington isn't allowing that to happen again.
The failure of IPOs isn't going to affect entrepreneurship, but it could well affect VC funding because it eliminates their primary exit strategy.
Malone does have a point about the FSAB. Treating options as an expense does make them less attractive to public companies, but it was an attempt to correct some egregious excesses. As usual, slap the big guys and hurt the little guys. Mark to market is an attempt to keep companies from hiding their investment losses in bookkeeping. The downside is that it makes their net worth much more volatile. AIG was a blivet in any case.
Cutting capital gains was good. Giving Reagan credit for the boom of the 90s is pure BS.
Cut the WSJ some slack. This was an op ed piece from an outsider. Malone used to be a San Jose Mercury News Reporter. He usually has something useful to say and he has the interests of the developer/entrepreneurial community at heart.
I do think its interesting that, even when Obama was talking about the potential for large cap. gains tax increases, he made a point to exempt "small businesses and startups." I'm not sure how we could draw that line, but it indicates to me that Obama has exactly Malone's general argument in mind.
"According to the National Venture Capital Association, in all of 2008 there have been just six companies that have gone public. Compare that with 269 IPOs in 1999, 272 in 1996, and 365 in 1986."
It's probably more complex than that, or he'd have hammered the point a lot more. I'd love to see a graph, for instance.
Tufte in The Visual Display of Quantitative Information points out that the Wall Street Journal is one of the least likely newspapers to display anything in a graph. Indeed, it would be a lot easier for visually minded people like me to check the Journal's arguments if they were displayed in bivariate plots more often.
http://lawprofessors.typepad.com/securities/2008/02/januarys... : "January  was a slow month for IPOs, with only five that raised a total of $892 million. This compares with ten in January 2007 that raised a total of $2.25 billion." I quickly googled, and there's probably more to look at here, since either 5 of the 6 IPOs did it in January, or there's different counting methodology in action here. Still, it's down even in months that weren't bad. It's not just statistical gaming, even if that's in play. Asking what changed is still fair.