Hi thanks for doing this. I've been very curious how the roadshow process is in the "covid era"? Any Golfstreams? (I also saw you did a direct listing, I'm not sure how that process differs from an underwritten IPO either.)
The roadshow is all virtual now. We talked to 32 different investors in 4.5 days. I tried to push for in person but almost everyone preferred Zoom and it was probably for the best because we could meet more people. The downside is it feels more transactional vs building a relationship. We still had to pay the bankers the same amount even though there was no private jet provided. What a rip off!
RE traditional IPO vs Direct Listing, you hit my rant!
The traditional IPO process sets you up to massively underprice your stock. Instead of selling your stock directly on the open market, investment bankers sell it for you. They're incentivized to give public market investors a "good deal" by advising you to price your stock low (because they do repeat business with them even though we're the ones paying for their services!). As a result, on average in 2020, companies that went through the traditional IPO process underpriced their stock by 50%.
As a CEO I could never sell a dollar for 50 cents. It's against my fiduciary responsibility to my shareholders. I once heard one public company CFO call it "the largest arbitrage opportunity in all of finance". Why would I want to be on the other side of that?
I strongly encourage all other CEOs at taking their companies public to go through this path.
What a rip off!!!! I'd demand a free jet ride regardless.
re: TIPO vs DL, points taken - the advantage in theory is that they're also basically incentivised towards market stability for your stock, and a return over time for their retail investors? (Not saying I agree, just, in theory)
> the advantage in theory is that they're also basically incentivised towards market stability for your stock, and a return over time for their retail investors? (Not saying I agree, just, in theory)
Post hoc justification garbage IMO. It's not like the market isn't littered with the remains of tech stocks that went through a traditional IPO and still crashed.
Yes, exactly. I always joke that once you're out they won't even pick up your call as they're onto the next IPO. (I know that Morgan Stanley still has our back though!)
