How the decimation of the IPO market has hurt the economy and worse

Is it really business sense or just being lucky to IPO in a huge bubble?

Did Broadcast.com really create value for the economy that the employees were rewarded for, or were they just on the lucky end of a huge unsustainable wealth transfer from retail investors to startup founders?

Regardless of revenue, they were purchased for "over $10,000 per".

I call horse shit.

I agree with this statement, though, "It is undeniably destructive to our economy and future when many of our most innovative and exciting companies are bought by their competition."

Perhaps we're not building monopolies but huge diversified holding companies. My bet is on there actually being huge monopolistic effects of owning all the data.

> The reliance on the stock markets is mostly a phenomena of the English speaking countries

That should be corrected to say: the massive benefit of stock markets was mostly first realized in English speaking countries, and then was increasingly adopted by everyone else (recently Myanmar) because it was so blatantly beneficial.

That weakness on the part of France (probably the most stagnate major economy of the last 50 years), Japan (25 years of backward progress) and Germany (no growth in eight years) has resulted in immense stagnation when it comes to entrepreneurial business activity and innovation. It's why so much of the German, French and Japanese economies are dominated by old family controlled businesses, that pass down their ownership through the generations instead of giving their wealth to charity, while the opposite is overwhelmingly true of America. Very few of the biggest companies in the US are extremely old, and very few are still controlled by stagnate clans (Walmart for example is merely 53 years old). The US approach has resulted in far greater turn-over among the giant companies. Amazon.com exists courtesy of the IPO and very receptive public market, which funded Amazon's build-out and has enabled them to begin destroying Walmart.

It's why those nations are so behind the US when it comes to venture capital and technology companies (which need to move especially fast). Slow moving, risk averse banks are a terrible choice compared to a properly functioning IPO market (the sort that the US had prior to recent regulations).

> and also in Japan, it is common for businesses to rely on close relationships with banks to get the financing they need.

This works if you're a megacorp (or maybe an "established" company). Japanese banks are really stingy when it comes to making loans* and it might be neigh impossible if you're a tech startup. Actually, even opening a business bank account might be tricky.

* Apparently that's why government is threatening them with negative interest rates (more than threatening: they're here and without limits on how negative is the latest comment!); i.e lend the money to someone or pay!

I would say part of this can be chalked up to a cultural difference. Germans and Japanese are risk-averse (as a generalization) and don't like risky entrepreneurial ventures. You want to take a nice business plan to a bank for debt financing, instead. Think of all the big public German companies like SAP, Bayer, Siemens: they're all in boring, bog-standard industries.

In contrast, other cultures with a greater threshold for risk have more of an appetite for the stock market. This goes hand-in-hand with innovation/startup culture.

> The reliance on the stock markets is mostly a phenomena of the English speaking countries

I know more about how it works in the US than in other English-speaking countries.

That listed US non-financial corporations attain capital via stock issuances, initial or subsequent, is a kind of mythology. From a century back until now, less than 5% of US non-financial corporate capital expenditures are from capital raised by stock issuances.

If you look at the numbers, it mostly works in the US in the same manner as Germany, France, Japan etc. To raise capital, corporations reinvest profits, they go to the banks, they sell bonds. The idea that stock exchanges are heavily involved with companies raising capital is a widespread one, but that has more to do with the aptitude of stock exchange PR departments than reality.

There's this notion going around that money is stored in some "rich person warehouse" never to be seen again when it isn't invested in a clean tech / end income equality social venture

Can you elaborate? How might this resolve the issues mentioned in the article?

Of course they can. This has nowhere near the wealth spreading effects of an IPO though. First of all, most employees do not own shares but rather options. Option-holders do not receive dividends. You must exercise options to become a shareholder and most rank and file people cannot do this without selling the stock at the same time because it requires them to put cash in. The kind of middle class folks Mr. Cuban wants to enrich do not typically have thousands to invest in their employer.

I did this once prior to an acquisition of a company I worked for and lost the money. It's pretty much a stupid move unless you are already wealthy and a founder or controlling exec with better insight and control over the outcome.

Also, when an employee exercises options and then sells the resulting share in a public company, they receive a multiple of earnings. Earnings != dividends but suppose all the earnings in a period were paid out as a dividend (they wont be of course) -- the shareholder will get only that amount whereas if they sell the share, they will receive a multiple often 10-15x or more of earnings. Most people benefit more from an exciting lump sum payout than an unpredictable drip at a time.