Gurley says Katrina Lake may be the youngest female founder ever to take a company public.
“I found out this morning she may be the youngest female founder to actually take their company public ever.”
Gurley says Stitch Fix created $60 million in free cash flow, raising only $40 million before IPO.
“The company had only raised $40,000,000. Hence, we had created $60,000,000 in free cash flow, something that's extremely rare in Silicon Valley these days.”
Gurley notes Katrina Lake may be the youngest female founder to take a company public ever.
“I found out this morning she may be the youngest female founder to actually take their company public ever. And so these success points and data points create role models that help bring everything forward.”
“Over 60% of the management team's female. Over 60% of the board is female. And I found out this morning she may be the youngest female founder to actually take their company public ever.”
Gurley argues IPO process has devolved from wide marketing to hand allocation among 10 to 15 firms.
“I think there that it used to be that the IPO process was about disseminating and marketing and selling far and wide, and it's become a game of just hand allocating shares to the same 10 or 15 firms.”
Gurley argues direct listings remove steps since IPOs use equivalent opening process the next day anyway.
“And so in the direct listing process, you're actually removing steps because once you do an IPO, you actually do with the exact equivalent of direct listing opening the next morning.”
Gurley argues founders who stay private longer fail their duty to maximize shareholder value for all constituents.
“Like the minute you started giving stock to your employees, you're in the game And your job is to maximize shareholder value for all your constituents, your investors, your employees, everything else.”
Gurley argues IPO allocations transferred $4.5 billion in wealth from Snowflake to allocation recipients overnight.
“And so the day after the IPO, the people that were allocated the stock the night before have 4,500,000,000 in wealth they didn't have before. And that money didn't just come out of nowhere.”
Gurley notes hyper-competition removed liquidation preference protection on IPOs, enabling founders to convert preferences below value.
“There was a term removed from most term sheets that gave investors the right to protect their LICPREF on an IPO, that's gone in most of these cases.”
Gurley explains compounding IPO ratchets create misalignment by making late investors want lower IPO prices.
“The the later stage investors that wrote this compounding ratchet term actually want the IPO to be as low as possible because they'll they'll get more shares.”
Gurley says private companies with low growth rates are no better off than public ones with same metrics.
“But guess what? If you're private at a 100,000,000 revenue with a 10% growth rate, it's not like you're better off.”
Gurley says IPO bankers hand-pick price and allocations, creating expected pops as one-day giveaways to clients.
“And for the past twenty five, thirty years, you have these pops that have become expected, I would say. And it's a one day giveaway to their clients.”
Gurley argues the IPO process is broken due to regulatory capture and most people don't understand how it actually works.
“I think the IPO process almost certainly also because of regulatory capture is remarkably broken. I don't actually think the average citizen even knows.”
Gurley argues freshman students would design IPO process as anonymous auction matching supply and demand.
“They would craft a direct listing. It's obvious that you should match supply and demand and be indifferent to who the It should be an anonymous auction.”
Gurley argues IPO bankers handpick both price and allocation, creating expected first-day pops for decades.
“So it's a handpicked price and it's hand allocated. And for the past twenty five, thirty years, you have these pops that have become expected,”
Gurley argues citizens mistakenly believe IPOs work like direct listings with price-based allocation.
“I think they think a bunch of people put orders in, you sort them based on who's willing to pay the highest price”