Silicon Valley Insider co-founder Henry Blodget is blaming the cost of Sarbanes Oxley compliance for the lack of IPOs in the US stock market. Ahem.
Blodget is notorious for having been run out of Wall Street and barred from ever giving investment advice. For those that don’t know, at one time Blodget was pimping stocks like they were gold dust yet privately bad mouthing at least some of them. What followed was a much needed shake out on Wall Street that now sees a much clearer separation between analysts and market makers.
While SOX has some part to play, it isn’t the be all and end all of the reason why there have been relatively few IPOs in the last year. But what makes Blodget’s post all the more dangerous is his implied assertion in comments that IPO companies don’t have to make a profit.
The ‘rules’ have changed a lot since Blodget’s day and companies don’t necessarily need to go public to build wealth. Similarly, the days when you could simply monetize ‘eyeballs’ in some magical way are over. Despite that some still believe business models will emerge from some sort of primordial consumer market soup. They are fools. You can count the number of companies able to make a home run on those economics on less than one hand – think Google and then…? And please don’t say Facebook, that’s far from proven.
What is interesting to me is that the IPOs and big funding rounds I’ve analyzed are companies that have little to do with the Silicon Valley consumer craze but are much more aligned to the infrastructure that will see the next shift in Internet technologies take hold.
Tags: investment
