Facebook's handling of its offering is taking the slowly shifting power dynamic in favour of Silicon Valley to a new level in its historically tense relationship with Wall Street; a tension that stems from bankers' success in the 1990s "bullying" often young management into deals benefiting investors more than the companies, according to Silicon Valley veterans.CNN: Facebook IPO puts bankers on back foot
Google's co-founders Sergey Brin and Larry Page are credited by these industry insiders as being the first technology entrepreneurs to wrest significant control of the IPO process away from their bankers back in 2004, though they also earned a reputation among investors of being arrogant. Since then, according to one long-time technology investor, Silicon Valley IPO advisers have become more savvy, and bankers, in turn, have become less aggressive.
One banker involved says his biggest worry is whether the power that Facebook wrests from Wall Street will set a precedent for future tech IPOs.
Thursday, May 03, 2012
Silicon Valley Learns To Deal With Bankers
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2 comments:
Good - they need to be treated like the middlemen they are. They're not the ones coming up with the new ideas and the new value propositions - it's the innovators who are.
san,
No idea what you are talking about. Goldman Sachs has invested heavily in Facebook. Silicon Valley plays dirty in the IPO game. They create hype and then go IPO and quit the scene leaving the buyers of the stock holding the bag.
The traditional reason for going IPO was to raise capital and enter the business. For Silicon Valley firms, it is an "exit strategy." Facebook does not really need the money. They just want to enrich themselves by giving hope to whoever buys the stock that there will be a future buyer at a higher price. In that sense it is a Ponzi scheme which is why the dot com bubble burst.
The latest trend in Silicon Valley is to feed off the system by investing in so-called "green" technologies. This is a way of making money by collecting government handouts. Even Vinod Khosla seems to play this game. The Solyndra scam was a bailout of the Silicon Valley VCs who made bad investments.
The days of the VC backing a promising technology that will revolutionize the world are long gone. Now, you have a number of crooks in the VC firms. e.g.: Al Gore in Kleiner Perkins.
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