GOING PUBLIC

The chief finance correspondent for Business Insider explores the ways in which Silicon Valley venture capitalism altered the game of corporate stock sales.

Selling stock to raise money for operations or expansion has been a common corporate strategy for centuries. In 1980, writes Campbell, the strategy boiled down to a formula: An investment bank brokered a stock-offering deal, serving both the company and its new investors and shoveling in money from both sides, whether the deal was successful or not. The bank set the price. Steve Jobs broke that mold, asking when negotiating Apple’s IPO on behalf of the shareholders, “Won’t they be terribly happy that they bought stock at eighteen that’s now selling at twenty-eight? And won’t they give you a lot more brokerage business?” As Campbell writes, it was the first crack in the dam. After that moment, many other innovations followed, including IPO deals brokered by venture capitalist funds that both engineered the sale and backed client companies with their own money, putting skin in the game and greater concern for outcomes. An early experimenter was Google, offered through a firm of seasoned tech investors; other case studies include Netflix, Spotify, and Airnbnb. “IPOs are risky,” Campbell writes meaningfully. “They are stock issues from companies that haven’t faced the rigor of the public markets or are less proven than established firms. Many technology firms are trying to create entirely new industries. Most aren’t making money when they come to market.” It doesn’t take a business degree to follow along, but Campbell’s narrative sometimes journeys into the weeds of finance. Regardless, he ably outlines how current practices and players (including the “blank check” firms recently in the news for floating Donald Trump) became part of the game.

Tech and business geeks alike will enjoy Campbell’s deep dive into the murky waters of corporate finance.