Friday Letter: WeWork, unicorns, direct listings, it was the year of IPO talk

Besides IPO talk, the running theme from VCs lately has been about too much money, particularly at the late-stage, chasing companies. No one wants their portfolio to mimic WeWork.

Whether it was the excitement of so many unicorn IPOs, or Bill Gurley holding a symposium on direct listings, or the saga of WeWork pulling its public debut, it was a whirlwind of a year for IPOs.

In 2019, many companies, including the high-flying unicorns Uber, Lyft, Pinterest and others held highly anticipated public offerings. But by the final quarter, a lot of the stocks began trading below their initial prices, as private valuations don’t always equate to public market factors.

Sure, Beyond Meat stock, as of late November, was still up about three times its $25 IPO price. But even at about $80, shares are a long way down from their peak of about $234. Many other newly public companies are also seeing their stock drop as the year winds down.

Some unicorns, such as Poshmark, are now postponing their IPO plans until 2020. Airbnb, Postmates and Robinhood are all rumored to go out in the next year, too

But don’t hold your breath for a WeWork IPO. It’s been a hectic fourth quarter for the battered company as its CEO was ousted, its valuation dropped to less than $10 billion (down from $47 billion) and it has delayed indefinitely its IPO.

Without a doubt, IPOs and WeWork have been the most talked about matters among VCs I’ve met or spoken to in the last several weeks. When I asked one early-stage VC if he or his portfolio companies were worried about all that is happening with WeWork and other IPOs, he said no. But he added that any company out there that is perhaps over-valued and took more money than it needed should be worried.

And that’s been the running theme from VCs. Too much money, particularly at the late-stage, has chased companies. Another VC told me that entrepreneurs can’t so no to funding, just like a horse can’t say no to eating oats.

Which brings me to our cover story this month, the last of 2019. Venture Capital Journal reporter Marina Temkin talked to Gurley, bankers, VCs and others in the industry about direct listings.

I’m not saying direct listings are a panacea to what ails the industry. Slack and Spotify, which used the novel direct listing approach to go public, have seen their stock drop, too. But Gurley’s argument is worth exploring, especially considering how in a direct listing all the proceeds from the stock’s sale to the public go to founders, employees and investors, rather than the buyside community.

In fact, DoorDash was said to be considering a direct listing a couple of weeks ago.

After all, direct listings are better suited for companies that don’t need the capital. You know, like all the unicorns filled up with oats.

Maybe it’s too soon, but direct listings could be the hot topic of 2020.

I would love to hear your feedback about IPOs and anything else venture-related. You can contact me via my email at I’m based in the San Francisco Bay Area and happy to meet folks in person.

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