IPO

Bill Gurley: Silicon Valley Has Warmed To IPOs

With tech IPOs on the rise, Benchmark partner Bill Gurley has declared that “it’s cool to go public again.”

“For a good three or four years, there was this meme in Silicon Valley that putting off your IPO was somehow cool, and it appears we’ve moved past that,” Gurley told CNBC.

Of course, Gurley has seen some of his own investments go public in recent months. Personal shopping site Stitch Fix went public in November, while Benchmark-backed cloud companies Dropbox and Zuora each started trading within the last month.

And Spotify has been one of 2018’s most anticipated offerings. When the company wanted to start trading on the New York Stock Exchange (NYSE), the company filed for a direct listing of its shares. But instead of entering the market through an IPO, Spotify decided to simply list its shares on the NYSE, trading as SPOT.

That meant investors and employees could sell shares without the company raising new capital or hiring anyone to underwrite the offering, saving Spotify an estimated $300 million.

“It’s like saying, ‘I got the coolest house on the block. Everyone will want to buy it, so why give a cut to a broker?’” said George G.C. Parker, a finance professor at Stanford Graduate School of Business. “Spotify, by doing this, is very confident that the public already understands Spotify’s value, and that it does not need others to tell the story.”

Gurley agrees: “The Spotify thing has done better than I think anyone would have expected. I think one of the reasons the Spotify valuation is holding up so much is because voice [command] is so strategic, because one of the best apps for using voice as a command prop is music. I think it would be extremely strategic for someone who wanted to be in voice to own that asset.”

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