Is Social Capital trying to end run banks by creating IPO 2.0?
recode.net
recode.net
https://www.bloomberg.com/view/articles/2017-08-24/unicorn-s...
As such I'd disagree with Levine's suggestion that IPOs are merely annoying drudgery; I think they're a genuine point of concern for founders from a strategic perspective, and that in a lot of cases, the founders are much more worried about successfully executing the IPO than they are about the long-term hassles of running a compliant publicly traded company.
The interesting question in my mind is whether the SPAC organizers are doing this with a specific target already in mind, or whether they are actually going to run a real process to determine which company to buy into. I guess they would have to be transparent with investors with regards to their intentions, right?
This is similar to a reverse takeover [1]. (Replace "blank cheque company" with "public shell".)
Why do reverse takeover candidates merge into their public shells instead of getting acquired by a pre-capitalised blank cheque company? Because with the latter, the acquirer needs the capital up front. You can do some financial engineering whereby the acquirer "buys" some of the target's shares with the shell's shares, but at that point a reverse takeover is simpler, cheaper and less risky.
You'll notice a scaling problem with this method. If you need the capital up front, you need to convince investors to come in up front. Doing that replicates IPO bankers' jobs with extra steps and less transparency.
Too many Harvard grads being paid too much money to work too many hours to add too little societal value.
It's likely that the investment banking industry adds a lot more value than you think it does, else where does the money come from?
Accounting and law firms shouldn't be worried about automation just yet when frat stars are still being paid $140k/yr out of college to make powerpoint presentations.
Glass houses, stones and all that...
And you can recognise that a lot of people make a lot of money from doing things so abstracted from every day life, nobody would be the wiser if they just popped out of existence one day.
An imperfect fit.
This works nicely, in theory, in the absence of market distortions and coercive forces. In practice, both of those things do exist, and so markets don't work entirely like theory predicts. Classical economics doesn't adjust itself for things like regulatory capture, corruption, bundling of services, and a host of other factors that are likely at play in investment banking.
It shows far too much faith in the workings of the system to claim that society is deeming investment banking of high social value because it pays a lot.
The same place Mobutu and Ferdinand Marcos's billions come from. The logical leap you're attempting here is profoundly unsound.
I swear, I didn't consider myself that far left, but it's unreal how religious the concept of the market has become.
We are arguing that these people can, and should be replaced with something much cheaper and better.
Here's a harsh, but interesting, counterargument to why GSVC isn't performing well - https://seekingalpha.com/article/1692862-use-the-twitter-ipo...
I really like the idea of doing share buybacks of this public security, and does offer a different path to liquidity for a company and founder/employee (sell a part of your company for a publicly traded security, which you can sell at market prices for immediate cash)
The instrument is useful for speculative bets, so I guess the supply of it highly depends on the availability of speculative capital.
^ SPACs have been a thing for a long time. Chamath is trying to hype something that he has no experience doing as the new new thing.
https://www.recode.net/2016/2/9/11587720/social-capitals-cha...
Translation: Going public is a pain in the neck. And other tech bros are the answer to those annoying banker bros!