Fixing the ‘Brain Damage’ Caused by the I.P.O. Process<br />The idea, at its core, is to change the dynamic between the stock exchange and whom it serves, Mr. Ries explained, suggesting<br />that traditional stock exchanges focus more on investors — and all associated trading revenue — than on the companies listed.<br />But if his company acquires a business five to 20 times its size through a reverse merger, he said, the fee is the same as or smaller than a banker’s fee —<br />and it is all in stock, so unlike the banks, Mr. Palihapitiya’s interests are aligned with the company’s.<br />At the same time, Spotify, the streaming music company worth some $13 billion, has been exploring a plan to list<br />its shares on the New York Stock Exchange directly, without raising any new money from public investors.<br />It seems like a way of living in hell without dying.”<br />That was the way James Freeman, the founder of Blue Bottle Coffee, described the process of taking a company public in the modern era —<br />and the way he explained why he sold his company instead to Nestlé last week.<br />Mr. Ries, who wrote a book titled “The Lean Startup,” is hoping to create an exchange<br />that is focused on the needs of companies with a long-term vision and investors who are similarly aligned.<br />process but also “the lived experience of being a public company.”<br />Perhaps the most unusual part of his exchange’s approach — which is still working to get approval from the Securities<br />and Exchange Commission — is how much influence and voting power investors would have over companies
