Some encouragement to comment on $SNOW IPO. While it would be easy to do normal post wrt mispricing, it is important to understand what is different here from other IPOs. The most important data is broad (40 years of underpricing, 2020 worst year yet), vs. 1 company. [cont]
First, its important to acknowledge that @SnowflakeDB is an amazing outlier, & proof of the innovation that develops from this great place we call Silicon Valley. Hats off to the employees, Frank Slootman, @laserlikemike, @altcap, @carl_eschenbach, & all those involved. [cont]
Outside of if the company/shareholders "gave up" anything, the hand allocated investors received $4.3B is one day wealth transfer. That's an insane amount of REAL money. That, along with watching the theatre and drama today, it is HARD to say - this is exactly how it should work!
In many ways, $SNOW is the final proof of just how broken process is. Frank Slootman is a HIGHLY experienced IPO CEO. He knows the game, & pushed hard to make sure he wasn't short-changing the company. But it didn't matter, because the process is set up to deliver this silliness.
Two other thoughts. One of the main arguments for hand-allocation is "you want to choose long term shareholders." $SNOW sold 32.2mm shares last night. Today, 35.7mm shares traded; how does that work? And no one checks to see who held, who sold, etc. Never measured/disclosed.
One company I worked with went to do a secondary 4 months after IPO, and only 10% of the IPO shares were still held. It's ludicrous to think you can "control" who owns your stock. IPO allocators aren't locked up, and once your public, your investors choose you. And that's OK.
The last point is about fairness. One well-known individual said to me "I tried so hard, for weeks, to get into the SNOW IPO. They said it was the hottest IPO since FB...I could not get allocation." This $4.3B of 1-day free money is reserved for those "closest" to banks.
In world where we are all decrying inequity/unfairness, is this really how we want our capital markets to work? Is this not the epitome of the rich getting richer as a direct result of being rich? The attached email shows exactly who receives said rewards.

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More from @bgurley

14 Aug
For those of you on the AB5 beat, important to know that the #1 driver behind this legislation is organized labor. "However, the reality is that AB5 was drafted by a union organizer, and this bill was designed as a way to grow union membership." latimes.com/socal/daily-pi…
Today no drivers are unionized, but the SEIU and others want them to be. Vox has a deeper dive here, outlining decades of history behind this push. vox.com/2019/9/11/2085… Important to know that its not actually coming from a large % of the actual drivers themselves.
Here's even more proof. When musicians (who are unionized) wanted out of AB5, they were quickly let out. ocregister.com/2020/04/17/mus… Love the title, "Music industry, lawmakers, unions agree on revamp to AB5." At least it shows you clearly who writes legislation in Sacramento.
Read 4 tweets
10 Aug
Are those that are evaluating AB5 aware of all the carve outs? Is this an attack on ride-sharing & food delivery specifically? The list is so long it's comical. Tweet storm needed (due to length of list). nfib.com/content/legal-… [next tweet]
We will start with "Occupational Exemptions"

AB-5 exempts the following industries:

Doctors, surgeons, dentists, podiatrists, psychologists, or veterinarians performing professional or medical services provided to or by a health care entity;
Lawyers, insurance brokers...
...architects, engineers, private investigators, or accountants; Securities brokers/dealers or investment advisers and their agents and representatives that are registered with the Securities and Exchange Commission, the Financial Industry Regulatory Authority or the State of ...
Read 12 tweets
8 Jul
On 4/12 I tweeted regarding my disfavor for large public companies negotiating bailouts directly with our government without putting the government dollars above other shareholders. For me, this damages the way public markets work - "too big to fail."
I've since been asked whether any of our portfolio had applied for the PPP - the implication being if they had, that I'd been caught in an intellectual trap/inconsistency.
For the vast majority of our investments, we encouraged them NOT to apply. For a handful, say 5%, whose businesses were devastated by COVID/SIP, we supported them in their efforts to avoid laying off even another 5-10 people – the exact intent of the potentially forgivable loan.
Read 5 tweets
11 Jun
Quick commentary on IPOs past 2 weeks. Jay "Mr IPO" Ritter, says in best: "I’m glad that the IPO market is back, but it is as inefficient as ever." With just four hand-allocated, non market-priced, underpriced IPOs, approx. $1.9B in unnecessary 1-day wealth transfer. (thread)
Everyone needs to realize this unneeded wealth transfer comes straight out of the pockets of employees, founders, & investors. That "pop" you hear is money going out of your pocket and into the hands of the bank's best brokerage clients. Market pricing & open access solve this.
With these 4 IPOs ($VRM, , , ), the average underpricing cost $483mm per company. For most SV companies, employees own 25% of the company. Underpricing this way robs your own employees of $120mm. This choice of Direct Listing vs IPO matters for all employees.
Read 5 tweets
7 Jun
Looking for answers to the problems of police brutality/systematic racism? Make sure to read this profile of a key player in Minneapolis police system, Bob Kroll. Why is Derek Chauvin was still on the beat? Here is your answer (includes Kroll/Trump ties): theguardian.com/us-news/2020/j…
If Trump part triggered you, please read on. Kroll is "a problem" but he isn't the KEY problem; there are plenty of Police Union heads form other side of politically aisle. Kroll is the "player," the systematic problem lies in the Police Union. See next tweet for links to read:
Tons of recent press as this issue gains national attention: NYTimes nytimes.com/2020/05/30/us/…, & nytimes.com/2020/06/06/us/… Wash. Post washingtonpost.com/opinions/2020/… "The Daily Podcast" nytimes.com/2020/06/02/pod… And a great thread from @kanyi backed up with stats -
Read 4 tweets
10 May
Thinking about emerging from SIP, I have two predictions about travel market. 1) Airbnb will rebound much quicker than traditional lodging, & 2) Camping will explode as an alternative to both. Should be hugely beneficial for hipcamp.com (@benchmark investment).
Here is logic. The "riskiest" travel will be a dense, tall hotel that requires long elevator rides, has an intimidating HVAC system, and shared eating facility. An Airbnb makes those problems go away, and an individualized campsite is the exact opposite end of the spectrum.
People want out (more than ever). And they want experiences that are counter to living in one house or one room for 8 weeks. Busting out to a boutique camping experience will be the safest way top go. But even an individualized home will feel much better than a high-rise.
Read 4 tweets

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