Invest Like the Best with Patrick O'Shaughnessy Bill Gurley – Direct Listing vs. IPO - [Invest Like the Best, EP.144]
Sep 24, 2019
Join Bill Gurley, general partner at Benchmark Capital and expert on IPOs, as he delves into the heated debate between traditional IPOs and direct listings. He shares insights on the outdated complexities of the IPO process and how they lead to financial losses for companies. Gurley argues for the efficiency and transparency of direct listings, highlighting their benefits for retail investors. The discussion also touches on the courage needed for founders to choose direct listings and the changing landscape of capital raising.
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Outdated IPO Process
- The IPO process, designed decades ago, hasn't been updated for modern tools and technologies.
- This has led to systematic underpricing, benefiting Wall Street at the expense of Silicon Valley companies.
IPO Pop Analogies
- Daryl Morey compared celebrating IPO pops to celebrating ticket resales after initial sale.
- Henry Blodgett likened it to selling a house below market value, illustrating the wealth transfer.
Frequency Mismatch
- The frequency mismatch between companies doing one IPO and banks/investors doing many creates an asymmetry.
- This leads to anxiety for companies and a reliance on traditional, potentially suboptimal processes.