When I was in my twenties I had this secret (not so secret) dream of being the CEO of a publicly traded company.  I imagined standing on the floor of the NASDAQ ringing the opening bell as I took my idea from paper to reality.  I almost did, but that is a story for another time.  That was before Sarbanes-Oxley (SOX) freed me from that fantasy.

James Freeman from the WSJ asks, “Who’s Going to Fund the Next Steve Jobs?”  He bemoans the fact that not a single venture backed company went public last quarter (or this quarter).  He explains why:

Some have ascribed the broken venture model to the “cheap revolution,” meaning that, thanks to earlier innovations, the tools to create new tech products are so cheap that entrepreneurs don’t even need funding from venture capitalists. That’s great, but we’re not seeing a flood of IPOs of young companies built without venture money, nor the creation of lots of privately held global powerhouses. By and large, founders of Internet startups are not creating companies with the dream of conquering the world, but rather with the intention of selling to Google, eBay, Yahoo or Microsoft.

In my opinion going public isn’t really an option anymore given the risks SOX brings.  Why take the risk associated with the public markets, not to mention JAIL when you can sell to Google, Yahoo or Microsoft instead?  The costs of complying with SOX are between $3-5MM per year - or you could simply stay private and buy yourself that fractional jet you have been dreaming about.  I can honestly say I wouldn’t accept the job I once dreamed of (not that anyone in their right mind would offer it to me).  I would prefer to stay safely in the background cashing my dividend checks.  James, don’t worry about the next Steve Jobs, it is likely he won’t be running a public company (at least a U.S. one) until we make it a lot easier, cheaper and safer to take a company public.


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