Venture Capitalist Bill Gurley took to Twitter the other day for an IPO takedown. You can read the thread here.
The gist…Bankers (Goldman, Morgan and JP Morgan) are underpricing IPO’s. Bill says:
The banks with the strongest brands actually provide the worst corporate execution. The top two firms (by IPO count) have underpriced on average by around 30% for the entire past 10 years over 100 IPOs each. The top 3 banks accounted for 81.3% of all underpricing.
Here is the chart of the money companies have left on the table for the joy of going public with the help of the banks:
There is ‘slippage’ and there is ‘slipppppppppppppage’.
I wrote about this back in 2014 as I saw this happen first hand with TubeMogul.
Bill is calling for change.
I’m not sure I trust large Venture Capitalists any more than the banks in 2019, but change is coming.
Spotify and Slack did direct listings and Spotify’s CEO is saying that it is moronic that the old system of IPO’s has not evolved. You can read his thoughts here.
PS – People are excited about journalists peeling back the onion layers of WeWork to which I say this onion is peeling itself.
This video of Ashton Kutcher and Wework founder back in January is rather cringeworthy. In hindsight this video was a sign of the top as you listen to all the philosophical mumbo jumbo and back slapping going on. Every MBA class should study this one.
It is a good reminder to stay humble and be respectful of the system and the freedoms we have.