5 ms·

Banks do compete but it's not really an iterated game - a company only goes public once.

andy_ppp 6y ago
This is a good idea, why do you have to sell the whole company, why not trade 10% on the market every year. This would allow the market to actually function to set the price of a company... you could also instead of dumping the company at some made up price let the market decide weeks before the IPO in some sort of pre-purchase trading. Why we allow banking institutions to steal in broad daylight like this is beyond me.
- mschuster91 6y ago
  > Why we allow banking institutions to steal in broad daylight like this is beyond me. Because in almost all countries politicians have been bought off one way or the other by banks.
- dmurray 6y ago
  Almost all companies do not "sell the whole company" in their IPO. 10% is closer to the average than 100%.
  - andy_ppp 6y ago
    Interesting, do you have some examples of this, I was under the impression that you wouldn’t be allowed to keep some of the company private and some of it public at the same time. I’ve tried Google and it’s difficult to find information about this, the Wikipedia for IPO doesn’t mention this either.
    - Closi 6y ago
      The full company goes public, however existing shareholders keep their shares and don't have to sell them - they now just have shares in the public company. This is why dilution happens too - new shares are created so that they can be sold.
    - dmurray 6y ago
      You can look at individual IPOs. The most high profile one recently was Airbnb. According to the NYT [0], they sold $3.5 billion worth of shares, at a valuation of $47b, so only 6%. For another example, Mark Zuckerberg still owns 30% of Facebook, 8 years on from the IPO. You're correct that the whole company "goes public" at the same time. But that just means it becomes legal to sell shares to small investors, and the company becomes subject to the reporting requirements, etc. The previous owners still typically own most of the shares, and (almost always) are forbidden to sell them for around 6 months after the IPO. [0] https://www.nytimes.com/2020/12/09/business/airbnb-ipo-price.html https://www.nytimes.com/2020/12/09/business/airbnb-ipo-price...
      - andy_ppp 6y ago
        Interesting, I wonder how much of AirBnb YC still own, I guess they get diluted too?
gnicholas 6y ago
Doesn't the presence of repeat players on the company side (VCs, advisors, attorneys) mitigate this? Any company that is on the cusp of going public — especially these days, where that happens so much later — would have a lot of repeat players on their side.

This is a good idea, why do you have to sell the whole company, why not trade 10% on the market every year. This would allow the market to actually function to set the price of a company... you could also instead of dumping the company at some made up price let the market decide weeks before the IPO in some sort of pre-purchase trading. Why we allow banking institutions to steal in broad daylight like this is beyond me.

mschuster91 6y ago
> Why we allow banking institutions to steal in broad daylight like this is beyond me. Because in almost all countries politicians have been bought off one way or the other by banks.
dmurray 6y ago
Almost all companies do not "sell the whole company" in their IPO. 10% is closer to the average than 100%.
- andy_ppp 6y ago
  Interesting, do you have some examples of this, I was under the impression that you wouldn’t be allowed to keep some of the company private and some of it public at the same time. I’ve tried Google and it’s difficult to find information about this, the Wikipedia for IPO doesn’t mention this either.
  - Closi 6y ago
    The full company goes public, however existing shareholders keep their shares and don't have to sell them - they now just have shares in the public company. This is why dilution happens too - new shares are created so that they can be sold.
  - dmurray 6y ago
    You can look at individual IPOs. The most high profile one recently was Airbnb. According to the NYT [0], they sold $3.5 billion worth of shares, at a valuation of $47b, so only 6%. For another example, Mark Zuckerberg still owns 30% of Facebook, 8 years on from the IPO. You're correct that the whole company "goes public" at the same time. But that just means it becomes legal to sell shares to small investors, and the company becomes subject to the reporting requirements, etc. The previous owners still typically own most of the shares, and (almost always) are forbidden to sell them for around 6 months after the IPO. [0] https://www.nytimes.com/2020/12/09/business/airbnb-ipo-price.html https://www.nytimes.com/2020/12/09/business/airbnb-ipo-price...
    - andy_ppp 6y ago
      Interesting, I wonder how much of AirBnb YC still own, I guess they get diluted too?

gnicholas 6y ago

Doesn't the presence of repeat players on the company side (VCs, advisors, attorneys) mitigate this? Any company that is on the cusp of going public — especially these days, where that happens so much later — would have a lot of repeat players on their side.