The case for staying private following Google's corporate backlash after earnings blowout

So let’s talk more about this. Google is facing heat for allegedly sharing cash with shareholders, but not with the workers, as we just mentioned. So what message does that send to smaller private companies? Deirdre Bosa joins us now for today’s tech check on another angle to this big tech story and the buybacks and dividends that Alphabet has just put in place. Saddam, I love that anecdote that Janja shared where Sundar said that maybe he needs to teach a course on Finance 101. Because when you think about it, if you’re public company, you have more stakeholders, right? You have the employees, you have the outside investors, shareholders, big and small. So there’s a lot of scrutiny that goes along with being a public company. And that’s exactly what some startups and founders are wanting to avoid. And they can’t avoid it because billions of dollars they remain available in the private markets for the right kind of startup. Of course in Google’s case, being public, what Jen was just telling us that can sometimes feel lose, lose right. Your shares underperform. Employees worry about the value of their options, shares outperform and as Jen just said, other employees take issue with buybacks and dividends. They say hey why isn’t that being put towards our compensation increases now at private companies valuations, they aren’t shifting. They’re not mark to market every day or even on a weekly basis. It typically only happens or changes when a start up needs to raise more money or increasingly do second dairy sales that allow some employees to cash out on some of their shares. So there’s ways around and increasing ways around being public. I was at a lunch here in San Francisco yesterday with the soft Rapaport. He’s the Co founder of cloud cybersecurity startup Wiz. He just raised a billion dollars billion with AB in the private markets. He told me that he considers an IPO key milestone, but the bar for getting there is hired these days. He’s targeting a billion dollars in ARR. That’s annual requiring revenue. That’s more than what Rubric had when it went public successfully a few weeks ago. So the reasons are kind of mounting and especially when you see stories like this from Google to build in private, when you have more longer term investors like venture capitalists that aren’t marking to market on a daily basis, D this feels like a pendulum that swings in perpetuity, right. That’s the definition of that these things go back. That’s a great way of putting it. I mean it is because at some points in in in market history there has been this desire for companies and their founders and and executives to stay private because it keeps them a little bit more in line with their vision. They don’t necessarily need to raise public money. They can get it done on their own and not have the public scrutiny or oversight about it. Then there’s other times when, yes, they just want to cash out. This feels like it’s just going to keep swinging back and forth, but at what point, at what stage does that conversation change for employees, the lifeblood, the talent that go into these private companies? Well, employees want liquidity events, right? They don’t want to just be sitting on paper cash. It’s hard to buy houses to increase their quality of living with that. So you know, there’s a bit of a push and a pull, but like I said, those those secondary transactions is helping, that’s letting companies stay private for longer. But the other part of this Dom, which you know, you well know is that an IPO can be a marketing event, right, for companies that need to win over Fortune 500 or Fortune 50 companies. It helps to be public to report your results every quarter and have that kind of level of transparency. You know, in terms of that pendulum swimming you, we saw a downturn in the private markets over the last few years with interest rates going higher. But like I said, for the right kind of company, particularly generative AI ones, there’s still billions and billions of dollars available to them, not just from VCs but from strategics as well, right, the mega caps and we’ll see how much hiring they can do as well as the other companies trim back. Deirdre, thanks very much. We appreciate it, Deirdre Bosa.