In fact, a strong argument can be made that Facebook’s shaky start as a public company demonstrates that the entire I.P.O. process, which is supposed to spread the rewards to innovation, is broken.
John Cassidy in The New Yorker. He sort of addresses the big and questionable assumption at the heart of this sentence — that IPOs are about rewarding innovators and early investors — later in the piece, but this still rubbed me the wrong way. IPOs are now about extracting wealth out of a company instead of putting wealth in. This is the problem here, right?
Somehow, in all the media hype surround this stupid fucking IPO everyone forgot that Facebook didn’t need the capital for expansion, but had been sort of forced into the public offering due to SEC regulations (amended now by the JOBS Act). And after forgetting that, everyone was so stoked on the $38 price tag that they forgot that anyone not stuffed to the gills with social media kool-aid thought its market valuation was insanely high.
This IPO could be about nothing other than extracting wealth out of the company for early investors, because that’s what tech IPOs are like — but that’s not what capital markets are supposed to be for. I mean, right?