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Comment by SilverElfin | Hacker News Reader

Seems undemocratic. Everyday folks can’t buy even though they would want to

Capital and Finance was never democratic. And I doubt it ever will. It’s literally those with more money have more power.

It’s just a bulk discount: everyday folks simply can’t be relied upon to buy hundreds of millions of dollars the stuff and that’s what the company is selling. Little fish can buy in, but only if the big fish provide liquidity in the first place! In other words: someone needs to be paid to sell it and big buyers need to be incentivized to buy it.

Ultimately the IPO price is driven by supply and demand with a limited supply: price will go down (a bit) when the lockout period ends and more supply comes online.

Saying "big buyers need to be incentivized to buy it" is just another way of saying it's undemocratic. The democratic version would be that there are no big buyers and your IPO gets however much money it gets from small investors and that's it. There don't need to be any companies with a $45 billion IPO.

I feel like complaining about things being "undemocratic" is like complaining about a software system's architecture that "it's not microservices". Not everything needs to be - and some things would be actively harmed by making them "democratic". I wouldn't want drug approval to be a democratic process.

Raising capital can be done "democratically" if the founders want to. They can use direct listing. IPO is an option, not an obligation.

> Not everything needs to be

Not everything, sure. But this one more than most, needs to be democratic. If you don't see the wealth inequality today in which the 1% own 50% of the worlds wealth, and you don't see where this is inevitably going to lead, then I don't know what to say.

Stay woke at r/latestagecapitalism

I'm pretty critical of how late capitalism is shaping up (I pretty routinely get called a leftist radical here on Hacker News which is increasingly Thiel-Aligned Psycho News).

With that said, lots of options exist for a company like Figma doing a public listing: when you're the belle of the ball you can list how you want. Google did a pretty unconventional Dutch Auction thing IIRC.

In this instance the Figma folks decided they wanted an IPO pop and had the underwriters set it up that way. They were paying some premium (to institutional investors) to get one of many intangibles that are attached to that (like a bunch of press about how hot the stock is).

In a world where it was a no-brainer that this was going to be another mediocre Adobe product line rent seeking from here to the horizon, I'm pretty OK with how this turned out.

And when Google did it, it was considered a disaster

Because when Google did it, it was a disaster?

https://www.cnbc.com/2014/08/18/pisani-googles-ipo-was-a-dis...

And “rent seeking” isn’t “The company is selling a product or service they make in a manner I don’t agree with”

> democratic version would be that there are no big buyers and your IPO gets however much money it gets from small investors and that's it

…you need money to be a small investor.

Why can't a bunch of little fish provide the liquidity? Especially since they can provide more without the bulk discount?

It makes no sense in the digital age. It costs almost nothing to solicit demand curves. And you can still do wasteful roadshows and presentations for special buyers.

It is, it is yet another of the constructions that increases inequality and makes rich people richer.

Yes, an ipo is volatile, it should be! You are literally pricing a company.

Sigh, regardless, Thisnis again one of these ways where free markets are being smashed by monopolistic behavior - you can only be a part of the game if you already have enough.

I thought IPOs don‘t generally pop though this one has?

You can buy VTI which takes about 7% allocation in every IPO, but I heard there is research by some folks at Harvard and practiced by dimensional fund advisors‘ funds that buying IPOs ~two years later is slightly better?

It is undemocratic, but it is capitalistic.

Even Adam Smith would argue that monopolies are bad - the fact that you are deacriminated upon to buy capital is the direct opposite of capitalism.

Adam Smith meant free from rentiers (unearned income) when talking about "free markets". The term was appropriated by the neoliberals to mean free from government and ignored the original meaning.

I don't know why you're getting downvoted. You clearly read Smith and the downvoters clearly didn't. An Inquiry Into the Nature and Causes of The Wealth of Nations is like an anti-rentier pamphlet in most places.

Ignore the haters, keep being right about books.

Not all IPOs pop

What makes it undemocratic?

What do you propose? A speculative free-for-all like with crypto meme coins?

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