Exit != IPO.
One of the most common forms of exit is to be acquired by another company.
One of the most common forms of exit is to be acquired by another company.
You can listen to him explaining this point specifically here[2], on "Decoupling Exits from Liquidity"
[1] http://ecorner.stanford.edu/authorMaterialInfo.html?mid=2799
[2] http://ecorner.stanford.edu/authorMaterialInfo.html?mid=2805
[Source] http://vimeo.com/47271938
If you look at the headaches Zuckerberg is running into now, even with, ostensibly, "total control" over a public company, it just seems like an extraordinary distraction from keeping your users and employees happy.
Speaking of Facebook, there is also the issue they ran into with having over 500 shareholders and staying private. I'm assuming that there is some way to guarantee revenue sharing to employees without making them actual shareholders, so that you wouldn't step over the 500 employee threshold and trigger the SEC's required IPO - assuming you were lucky enough to get that big.
Although they were not necessarily obligated to go public, they were effectively forced to anyway.
It's a small but significant distinction. Essentially, once forced to report like a public company, you might as well become one; even if you had no prior incentive to.
[1] At least as early as January 2011, when Goldman Sachs made $450 million investment in Facebook on behalf of itself and other private investors. [2] This rule has since been revised under one portion of the JOBS act which raises the bar to 2000 shareholders (or 500 non-accredited investors.)