David Rosenthal: evaluation

Transcript context

…It really did seem like what would have happened otherwise. Like if they had stayed private, to their knowledge it wasn’t going to get passed and they shouldn’t count on it and they sort of were forced to IPO. If they had continued to wait longer, like actually we’re seeing a lot of companies do today, you run into these sort of issues where early investors need to get their money out and they’re going to, I don’t know, do big secondaries and you’re going to have the same sort of issues we’re having today with the super-unicorns which we should talk about in tech themes. But, another big one that I think is worth talking about is the fact that they went under a tremendous amount of scrutiny by going public. Like this really forced management to understand every facet of the business and understand where their huge key risk factors were. I really think that the most interesting part of that S-1 is where they identify risk to the business because truly, they probably were working on some of the mobile advertising stuff beforehand, but it is a huge slap in the face and like a huge wakeup call to realize our business has an existential crisis on its hands. So many other companies got destroyed in the wake of mobile. It was interesting that Facebook was able to kind of like keep their head above water until they really kind of came out and thrived. Yeah. I think it's such a testament to Mark and Sheryl leading this company to do that because it's kind of like a running joke in the industry that “risk factors” in S-1’s are like a joke. Like, “You have to put them in there so let’s make up some phony risk to our business that actually make us sound stronger.” But part of I think because of all this disaster that the IPO process became, they had to really answer to what this risk meant and they saw literally half of the value of the company evaporate before their eyes. And, what stronger wakeup call could there be to understanding that they had a big problem there to fix. Right. I guess they could have priced lower and gotten the pop that they were looking for, maybe they just got ahead of their skeez a little bit and could have weathered this first year by pricing at 70%, getting a little pop up to like 75% and then over the next 18 months, then really kind of turning the gas on.…

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