The article basically posits that going public causes companies to stay conventional, risk less, and thus miss out on continuing innovation. Interesting given the current technological climate, obviously.
Can't say I'm surprised. Google took a ton of heat from shareholders when they announced their self driving car project. It was widely considered to be a frivolous waste of money that would end in failure, was initiated because the engineers thought it would be fun, AND didn't have a "solid" business plan. Look at it now. Their prototypes work. They will only get better. And they opened up a potentially billion dollar market. Can you imagine a world where congestion and collisions no longer exist? Yea, that'll be fucking awesome, and due to some healthy risk taking that is completely uncharacteristic of a publicly traded company, it's in our immediate future.
Definitely. The options are limited. However, as silly as this sounds, crowdfunding is becoming more viable. While at the moment it accounts for next to nothing in terms of how much capital is being injected into companies, it's growing. Maybe in the distant future, or maybe it'll always be a niche.
I know we're all quick to jump down the throats of these companies and demand innovation, but staying static might be for really good reasons. When you go public, that's generally not a sign of weakness. Going public is a huge, excellent thing for a company, which tends to mean "hot damn, people wanna get in on this idea!" It means you've made it as a business. If your public offering goes well, you are successful and that is awesome. So, now you're a successful company. Great! You should definitely innovate and change and seek new opportunities, right? Wrong! Well, not necessarily wrong, but it makes a lot more sense to move slowly when you're successful than you might think. Let's talk about Magic: The Gathering for a second. In competitive Magic, there is a skill to determining "who is the aggro." This means figuring out which player you are- the control or the aggro. Many beginning/amateur players think that if you're playing a burn deck which deals direct damage to your opponent then you must be the aggressive deck and if you're playing a lot of control spells which prevent your opponent from doing anything you must be the control deck. But in fact, figuring out who is the aggro and who is the control is about finding out which player wins if the game keeps going the way it is. If I'm playing my burn deck, but I have a creature that can attack for 3 damage a turn and my opponent can't do much about it, then even though I seem like an aggressive deck, I am the control, because I can just wait and win. The aggressor has to be the one to create the change in the game, to upset things in order to gain the advantage. But if the aggressor does gain the advantage, they do not have to push it- if they become the control, then they should play it safe and let their opponent scrabble to try to get back into it, to make strikes only when they are guaranteed to either preserve the game state or secure victory. In effect, when you go from being a wiley startup which needs to compete with the old money companies to being a publicly traded company you transition from being the aggro- who seeks change in order to profit- to the control -who is already ahead and will continue to profit if nothing changes. Is this a naive way of seeing things? Yes. I just related MNCs to a trading card game. But I think you'll find that if your options are
1) Do nothing to make money
or
2) Do something to make money
The strategic bet is on #2. Money for nothing is always a good deal! Anyways, something to think about.
Interesting, although I don't know enough about MTG to get the nuances of your analogy. (Certainly know enough to be entertained.) Two things, though. 1) I'm certainly not trying to cast a negative light on going public, and I don't think the author of the article is either. He's just presenting a correlation. It's generally a good idea. 2) Trading publicly isn't money for nothing, exactly (though I know what you mean) -- and more importantly those two options at the end of your post aren't the only options for an up-and-coming company. Slight oversimplification there.
Yeah, it definitely is an oversimplification. But! The oversimplification, minus the Magic analogy, comes down to this: if you are doing something now that makes you money, and you can change to doing something which might make you money, you should be very wary of changing. If your goal is to make more money.