Super detailed post by Bill Gurley about IPOs followed by a riff from Fred with more good reasons why could and should see more IPOs from Internet companies. So I am piling on with an IPO post as well, but one about how (at least some) Internet companies should be doing IPOs. And since yesterday I used 3.0 (with regard to photo sharing), I figured I’d throw in another version number today.
The 2.0 reference here is not gratuitous though. The term “Web 2.0” has gone out of vogue some time back and may never have been super useful, but for me it still connotes the idea of a web of people not just pages. That’s why I believe it relates to IPOs. IPOs are still 1.0 in that they are about numbers and dominated by a few very large underwriters and buyers on the demand side. Everywhere else the web has been pushing power out to the people, yet IPOs of those very web companies seem stuck in the old mold.
I very much hope that Google’s IPO will not be remembered as a failed experiment (money left on the table) but rather as a clear indication of what Internet companies with an avid user base can and should do: make sure that the people who love the site can buy in the IPO. I believe that services such as Skype and Twitter or marketplaces such as Etsy could do this successfully and in doing so align the interests of investors and the company much better than by simply selling to a bunch of institutional holders with no affinity for the company or its service. Once the first company does this, I believe many will follow. The question is who will have the courage to go first.
