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Comment by eloff | Hacker News Reader

Its not pedantic at all, it's the most interesting part of this IPO, because this is a new way to do IPOs.

Spotify and Slack went public through direct listings as well.

Yeah, I wonder if this will become a trend. I always thought the underwriting agency in an IPO was a form institutional gate keeping / toll booth on the road to going public.

It will be a trend for heavy VC funded companies that are not really profitable (not speaking about Coinbase specifically). DPO's allow VC to recoup investments at around the 10 year mark for company's that do not make financial sense on paper.

Why does that matter here? Profitability is not a prerequisite for an IPO, and any IPO let's investors recoup their money.

It used to be that you could not IPO unless you were profitable, and furthermore the point of an IPO was to raise money needed to fund growth. But today these companies have raised enough money from VC's that they don't need any more from the public markets. By listing shares and letting these insiders sell, there is more limited supply and great demand, so they can sell tiny stakes for inflated prices. It's really great for VC's and other insiders.

> It used to be that you could not IPO unless you were profitable

Citation please. Lots of companies IPO while losing money.

If this was a thing, it's ancient history and not relevant to IPO vs DPO discussion.

I don't think it matters. I think the main difference is an IPO is typically used to raise money to grow, where as a DPO is mainly used to shift risk from VC to the main street and allow VC to recoup money from a non profitable entity. A magic trick really. IPO's do that too, but with a DPO there isn't the expense and the risk dog and pony show. Similar but different.

Also Palantir and Roblox - I think it's the way forward for most companies. Spotify was the first and the others have had slight variation to terms, but the core idea is good.

1. Keep valuable growth companies private for as long as possible where only accredited investors (rich people) can invest in them.

2. Open up to the public market only once you've reached the max theoretical valuation. The company is still hugely overvalued on hype and future growth is unlikely. Ideally, you quickly make it into the S&P 500 so you can hand off the bag to passive index holders who have very predictable buy rate (mostly retirement savings).

3...

4. The rich profit of the plebs like always.

Let's start having companies mint fungible tokens so anyone can invest in them early on. It's like ICO's but hopefully it goes better this time

Yeah, capital > labor as Thomas Piketty pointed out quite nicely.

Just FYI, that's just a theory, and in the decade since his book was published, there have been several rebuttals and refutations pointing out that this theoretical mechanism doesn't match the empirical data.

https://www.imf.org/external/pubs/ft/wp/2016/wp16160.pdf

> Using a sample of 19 advanced economies spanning over 30 years, I find no empirical evidence that dynamics move in the way Piketty suggests. Results are robust to several alternative estimates of r-g.

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3546668

> Recent influential work finds large increases in inequality in the U.S. based on measures of wealth concentration that notably exclude the value of social insurance programs. This paper revisits this conclusion by incorporating Social Security retirement benefits into measures of wealth inequality. We find that top wealth shares have not increased in the last three decades when Social Security is properly accounted for. This finding is robust to assumptions about how taxes and benefits may change in response to system financing concerns.

Auten & Splinter came out with the most widely accepted[1] rebuttal, which showed that Piketty's theoretical model was based on a reality that ignored major taxes and transfers, and once you account for those, the effect goes away completely.

http://davidsplinter.com/AutenSplinter-Tax_Data_and_Inequali...

> Top income share estimates based only on individual tax returns, such as Piketty and Saez (2003), are biased by tax-base changes, major social changes, and missing income sources. Addressing these issues requires numerous assumptions, especially for broadening income beyond that reported on tax returns. This paper shows the effects of adjusting for technical tax issues and the sensitivity to alternative assumptions for distributing missing income sources. Our results suggest that top income shares are lower than other tax-based estimates, and since the early 1960s, increasing government transfers and tax progressivity resulted in little change in after-tax top income shares.

[1] https://www.economist.com/briefing/2019/11/28/economists-are...

Thanks for sharing, I was unaware of that.

Capital > labor, still. But I guess not as badly as I thought.

It's actually debatable if capital is even > labor.

https://taxfoundation.org/labor-share-net-income-within-hist...

Also interesting. Although I mean in this case that I'd much rather be capital than labor if I had the choice.

its not interesting this is just another way stock markets are more about gambling instead of a way to raise capital. Previously you had startups doing their best to get sold to big companies instead of becoming profitable companies. Now they are going this route.

I don't know what your argument actually is, or what it has to do with what I said. You're just complaining under my comment because you objected to the word interesting.

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