Friday Letter: More thoughts on direct listings and AI’s impact on jobs

A banker tells me direct listings may be hot to talk about, but don't expect many this year.

I ran into a banker I know at an after-hours event in San Francisco this week who, after we exchanged greetings, wanted to talk about direct listings.

We had two direct listings last year of VC-backed companies Spotify and Slack, and there’s certainly a lot of chatter about companies exploring the option in 2020. This was hyped up by Bill Gurley holding a semi-secret symposium last fall.

I’ve said the over-under bet of how many direct listings we see in 2020 is five, and that guess may be too high, the banker said. She also said the first will probably be Asana, a San Francisco company that provides a platform to help teams organize small projects. The venture-funded company was co-founded by Facebook co-founder Dustin Moskovitz and is reportedly valued as a unicorn and has been the subject since last year of IPO rumors, particularly a direct listing.

So I asked my banker source at the party how many direct listings she anticipates this year. Her answer is two. Asana and one other.

I pointed out that two does not seem like much, considering how much they’re talked about. She says companies like to discuss direct listings since there’s no lockup. A company shares directly to the public without the help of any intermediaries and no underwriters and there is no lockup period. That can be attractive to investors.

But she says it’s probably better suited for a consumer-facing company and ultimately not many will choose the option. That’s not to say they won’t gain favor down the road. But, again, her vote is two this year.

AI’s impact on jobs

I’ve had several conversations in recent weeks with investors and entrepreneurs about jobs and AI’s impact on the workforce.

This included a great face-to-face chat in San Francisco with Gordon Ritter from Emergence Capital, who’s given the topic a lot of thought and whose notion of coaching networks, or helping the workers with their tasks, is compelling.

Then, CB Insights this week reported that 2019 was a record year for AI and 61 percent were non-US startups. In step with what Ritter told me, I wonder if there is something else there, as in do China and non-US companies have less concern about “coaching” humans than US AI startups?

I would love to hear from you about direct listings and your thoughts on AI and jobs. You can reach us on our contact page.

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I’m based in the San Francisco Bay Area and happy to meet folks in person.