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Comment by evrydayhustling | Hacker News Reader

Put another way, you're suggesting that "public investors shouldn't have access to loss making companies, regardless of growth". That would eliminate not just tech IPOs, but a majority of publicly traded companies period. Only 2700 (out of about 7500) currently make the cut: https://finviz.com/screener.ashx?v=111&f=fa_netmargin_pos&ft...

Like it or not, tolerating losses (preferably to accomplish growth!) has become a critical part of the capital landscape across industries. At least the tech sector is developing better metrics for comparing healthy and unhealthy growth, and generates enough growth (and later margins) to justify the risk in the first place. You'd be really disadvantaging small investors to not let them make the choice to participate at this stage.

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One could argue the entire purpose of investment capital is to spend it.

>you're suggesting that "public investors shouldn't have access to loss making companies, regardless of growth".

No that’s not what I’m saying...there is a difference between a company that is registering for an IPO and an existing publicly traded company.

And let’s not pretend Tech companies IPOing at losses is somehow protection to small investors...I don’t see anyone clamoring to allow these small investor be allowed to get in on unicorns pre IPO.

>I don’t see anyone clamoring to allow these small investor be allowed to get in on unicorns pre IPO

Really? This sentiment is blanketed all over HN and other investment forums. One of the major macro changes to the investment landscape is rapidly growing companies staying private longer such that the gains benefit a much smaller pool of investors.

Doesn't everyone want the option to get in on these deals before they've been pumped and dumped?

WE know the truth. The ipo buyers don't.

Not sure why you're being downvoted. Most of the major IPOs of the last few years seem to follow that hump-into-oblivion pattern after public markets get in on it

I get down voted a lot. It's fine. People here don't like what I have to say. Little debate. Just down votes. I speak the true tho.

See!

Ok, then why is loss-making more acceptable (safer for small investors) in a formerly profitable company than it is for a not-yet-profitable company?

And as others have pointed out you are exactly wrong about efforts to make public investment available earlier. Besides founders who would love to have more fundraising options, there is plenty of evidence and outcry that small investors are not getting access to economic growth: https://www.theatlantic.com/magazine/archive/2018/11/private...

> Ok, then why is loss-making more acceptable (safer for small investors) in a formerly profitable company than it is for a not-yet-profitable company?

One has demonstrated the ability to turn a profit and the other has not. This seems a bit like asking "Why is radiation considered a valid cancer treatment and rhino horn isn't when both have failed to help people before?"

People have a lot better info than total profitability to answer "can this make money" or not. Financial statements (like this S-1) do their best to separate out how much is being spent to keep customers from how much is spent to acquire them. In lots of cases (including this one) the company has proved that they have a profitable relationship with existing customers, and that they have tolerable-and-dropping costs in acquiring new customers (in this case it looks like they are breaking even on new customers in around 9 months).

There are exceptions and sleight of hand (like when Uber doesn't reveal costs to get drivers, but this is 100% true for formerly-profitable companies too. You could make a much better argument for skipping on those, or by forcing more disclosure in S-1s. But painting broadly based on total profitability is just too simplistic.

Dude, why don't you just not invest and leave the rest of us to lose our money? If I want to capitalize someone I should be allowed to. The accredited investor thing is already bad enough.

Because there is large a social cost with allowing regular people and retirement investment funds to waste money in scams. I'm not saying that Slack IPO is a scam. I'm saying that if a majority of public companies cannot turn a profit ever then nobody will ever be able to retire, except the Madoffs that we didn't catch.

The Madoff scam has nothing to do with public companies being unable to turn a profit though.

The answer is “yes, all industries where investors dont care about that”

and luckily for investors there is nothing else to invest in

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