There’s been quite a bit of talk in the blogosphere over the last few weeks about the death of the IPO. Most notably here and here. Most are blaming the paralyzing regulation that came along with Sarbanes Oxley following the financial crisis. They're pointing to the fact that Uber, Airbnb and Dropbox recently raised private financing at $10 billion plus valuations. And that Twitter waited until they were worth $25 billion before going public. And that Facebook waited until they were worth $100 billion before public. The problem with this is that most of the uptick in these valuations was missed by the average investor (U.S. law prohibits non-accredited investors from investing in private companies).
There’s definitely a problem here. And it's terrifying to think about what Washington might try to do to fix it.
But rather than focus on the unfortunate aspects of the growth of these companies, I thought I’d focus on the good. Seeing these companies lumped together made me realize that these companies are all adding significant value to the economy, regardless of how they're funded.
As the global economy continues to transform and push out jobs that can be automated or sent offshore, these companies are doing the opposite -- they're creating massive numbers of new jobs that can't.
AirBnB has turned close to a million homeowners into part-time landlords (many of them in the U.S.). Uber has turned every street corner into a cab stand and in the process has created hundreds of thousands of near six-figure jobs.
Some might argue that these companies are just transferring hotel jobs and cab driving jobs to someone else. Not true at all. In industry after industry we've seen that as it becomes easier and more convenient to transact, more people get in the game. More people are traveling thanks to AirBnB and more people are hitching a ride thanks to Uber. These companies are growing the pie and helping the economy in the process.
There are lots of other marketplaces that are creating freelance sources of income (Clarity, Angie's List and Google Hangouts to name a few). And I wrote about the enormous number of jobs that the iOS and Android marketplaces created a while back.
There's no doubt that most Americans are missing out on the big equity gains coming from these hyper-growth startups, but the jobs that these companies are creating is potentially far more impactful. And seeing new technologies create net new jobs in the short-term instead of wiping them out is a trend that shouldn't go unnoticed.