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0 pointsgiancarlostoro1y ago0 comments

I don't get why every tech company wants to IPO especially profitable ones. I'd much rather stay private with my money factory, and if I need some loans to expand, then so be it. Microsoft did it for Azure, look how well that worked out. I feel like a lot of companies do worse after going on the Stock Market. The stock market is where long term companies go to be screwed on a whim.

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toomuchtodo1y ago

When you IPO, you’re getting wealthy off of Other People’s Money flowing in creating liquidity. When you have to buy out existing cap table folks (either through enterprise cashflow or financing), it becomes harder. An artifact of ZIRP evaporating after entire businesses were built on the VC IPO flip model (and profitability becoming king over growth at any cost).

Very similar to the PE crunch currently in progress for the same reason: interest rates that rose fast and will remain higher for longer.

It will take time for everyone’s expectations and actions to reach the new macro reality, with current participants attempting to "find a way out" that is most favorable for the circumstances.

lobsterthief1y ago

Because the employees at these companies don’t share in the “money factory” mentality. Personally I’d rather work somewhere and get paid well and have stability, but unfortunately most businesses just pay “market” which is on par with those who offer options.

ptero1y ago

Most employees expect an IPO exit if a business is successful. I suspect that "if we hit it, we will share profit with you" would be a lot less attractive for an employee.

toomuchtodo1y ago

Most of the world runs on engineering done by folks not expecting an IPO payday (and instead, base, bonus, work life balance, etc). >90% of startups fail and never have a payday [1]. Employees will find opportunities elsewhere and expectations will need to more closely align with reality for those holding out for the "before times" that are unlikely to exist again [2].

[1] https://danluu.com/startup-tradeoffs/ | https://news.ycombinator.com/item?id=40363262

[2] https://news.ycombinator.com/item?id=11112367

ptero1y ago

Of course, but a small portion of the employees, disproportionately concentrated at startups, are willing to take a bet on an eventual exit. They accept a 90+% chance of a company going belly up and a 7-digit payday if it becomes a roaring success.

But without an IPO it becomes a chance for a small royalty payment, and this is a lot less attractive success.

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lotsofpulp1y ago

>The stock market is where long term companies go to be screwed on a whim.

What data do you base this on? "Long term" companies that do not choose to become publicly listed go out of business all the time. Some of them even get obviated by competitors who do choose to go public, and as a result, have a ton more money to outcompete the non public ones.

softwaredoug1y ago

When you're a VC, you expect 9 out of 10 to utterly fail. So you need that 1 out of 10 to turn into a high-growth Unicorn.

pknomad1y ago

I guess if those tech companies are VC-funded... isn't the whole point to IPO?

I'm saying that's neither right nor wrong but there are examples of the good on both sides; Jetbrains and Crowdstrike seems to be doing fairly well despite staying private and going IPO, respectively.

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toomuchtodo1y ago

Very similar to the PE crunch currently in progress for the same reason: interest rates that rose fast and will remain higher for longer.

It will take time for everyone’s expectations and actions to reach the new macro reality, with current participants attempting to "find a way out" that is most favorable for the circumstances.

lobsterthief1y ago

ptero1y ago

Most employees expect an IPO exit if a business is successful. I suspect that "if we hit it, we will share profit with you" would be a lot less attractive for an employee.

toomuchtodo1y ago

[1] https://danluu.com/startup-tradeoffs/ | https://news.ycombinator.com/item?id=40363262

[2] https://news.ycombinator.com/item?id=11112367

ptero1y ago

But without an IPO it becomes a chance for a small royalty payment, and this is a lot less attractive success.

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lotsofpulp1y ago

>The stock market is where long term companies go to be screwed on a whim.

softwaredoug1y ago

When you're a VC, you expect 9 out of 10 to utterly fail. So you need that 1 out of 10 to turn into a high-growth Unicorn.

pknomad1y ago

I guess if those tech companies are VC-funded... isn't the whole point to IPO?

j / k navigate · click thread line to collapse