Interesting what causes a successful company to file an IPO?
I understand why some do it, they've reached a point where they need funding to scale and already have many private investors. Maybe thats not even right.
When I start a company one day I dont think I will ever want to take in public. It seems like you loose too much control over where you are going. Maybe its because I am a build what our customer want type person and not a lets return value to our shareholder by delivering a cheaper product type. Maybe that doesnt make sense.
If you want to stay private forever and always have full founder control, then you should never offer stock based compensation (maybe profit sharing instead) or have plan to cash out that stock based compensation in the future, that you communicate when you hire people.
It depends how you structure the plan. Publix is an example of a privately controlled* company that has wide employee stock ownership.
*the stock is held by a small group of owners and many employees. Transfers are limited by contract and by securities laws. Because of the large number of shareholders, the company does have to file periodic reports with the SEC but the shares are not listed on an exchange and not available to the public. See http://en.wikipedia.org/wiki/Publix#Publix_stock
"then you should never offer stock based compensation"
unfortunately most of your funding will be from VC companies, and it's unlikely they will give you money under a profit sharing arrangement b/c it does follow their IPO->cash out workflow.
The current system is flawed and self perpetuating
Good question. Part of the answer is probably selection bias: bad companies don't get to that stage (although I suppose that is quite debatable when they are in an arena where people can't tell the difference between good and bad).
I understand why some do it, they've reached a point where they need funding to scale and already have many private investors. Maybe thats not even right.
When I start a company one day I dont think I will ever want to take in public. It seems like you loose too much control over where you are going. Maybe its because I am a build what our customer want type person and not a lets return value to our shareholder by delivering a cheaper product type. Maybe that doesnt make sense.