Steve Case: Startups That Go Public Create Jobs, Those That Get Sold Don't en-us Wed, 31 Dec 1969 19:00:00 -0500 Sun, 16 Mar 2014 10:27:48 -0400 Robert Libetti steveconsilvio Mon, 17 Dec 2012 22:56:09 -0500 Hi Tim, Actually I have been self-employed a long time. I'm not sure we disagree that much. Your comments have me confused a little, too. These guys who play with other people's money claim to know how to run a business, but all they really know is how to play with other peoples money. Tim Woods Mon, 17 Dec 2012 20:43:50 -0500 I take it you never ran a business before. Here are your answers: 1. If a company goes public, it usually means the company is doing very well and wants to expand. Ergo, more jobs. On the other hand, if a company is sold, it's done mostly out of fear that the company will go under, be sold or the like. In any case, when a company IS sold, most companies tend to shed as much "dead weight" as possible to look appealing to their suitor. I worked at a number of companies like that - we had a bunch of people who were doing an okay job but management didn't like them. Therefore right before the company was acquired, management did a 15% cut letting go all the undesirables and some execs with some enormous golden parachutes. 2. I fail to understand what you are saying here. What is good about acquiring a half-baked company that offers a meh product at some obscene price when you can build it yourself for less money? Our problem nowadays is that we tend to glorify young people with inane concepts. This site is full of those. I rarely see them lauding companies solving serious problems and the like. It's pretty sad if you think about it. DavidS Mon, 17 Dec 2012 18:16:16 -0500 You nailed it. Modern capital markets are a joke - nearly Soviet-quality resource allocation. Tim Woods Mon, 17 Dec 2012 17:38:54 -0500 Case of course is right. When a company buys a pre-IPO company, all you are doing is spending a huge amount of money frequently on a half baked idea, giving its core team an absurd amount of money to play with. Those companies hardly hire large numbers of people. Instagram had 11 when they were sold to Facebook and Google often acqui-hires the people from the companies they absorb. It's really sad because there are a lot of really good people out there who could take those jobs but these companies are too stupid - they would rather hire some dropout studying Philosophy than a seasoned programmer... Sad. steveconsilvio Mon, 17 Dec 2012 16:59:11 -0500 Great examples of circular logic there. 1. if goes public, jobs are added, if sold, jobs are lost. How is this remotely possible, assuming the business did the same sales, etc. A funded company spends more, because they have more money to spend, until the money runs out, and then more people have no job. He should know, but I guess not. 2. You don't want to stop the good things from happening by preventing the bad things. It is still not obvious to him that the bad things are what stop the good things, and how he has defined good things is suspect, especially given his line of 'work' these days. He is right that it is hard to scale a business up from 100 employees to 1000, but it is also questionable if the product has any enduring value, too., which might have a lot to do with the bubble and bust cycle, eh? The speculators create the bubble, because it benefits themselves, but a lie cannot long endure. Dean Wormer Mon, 17 Dec 2012 16:57:10 -0500 Sometime before 1996, before AOL, the capital markets actually had some standards of performance. Some standards that required a few modest quarters of real earnings, of real revenue, before you could sell shares to non-qualified investors, i.e mom and pop. So quaint. Greg Mon, 17 Dec 2012 16:46:15 -0500 That's patent BS. Every start-up I have seen sold (several) hired people who then mostly stayed on after the acquisition and were replaced when they left by new hires at the acquirer. In fact in many cases where the idea of the acquisition was to scale the business the acquirer hired lots of new people to augment the start-ups acquired team.