Mike Moritz is the Chairman of Sequoia Capital. His investments include Google, Yahoo, Paypal, YouTube, and Zappos.
Yesterday, Mike wrote a piece highlighting the advantages and disadvantages of being a private company with concrete examples. The piece is especially relevant in light of the growing trend for large tech companies to stay private.
Basically, it boils down to this. “Life in the shadows of the private market has many benefits for emerging companies. It allows them to experiment, work out kinks in a product, lure talented people with attractively priced stock options, shield themselves from the scrutiny of predatory competitors and stutter in private until they can speak fluently in public”. Staying private lets companies stay in control.
However in recent times, many companies are staying private not for these reasons, but to “conceal weaknesses, present an aura of invincibility and confound investors …”. They’re staying private not to avoid losing control, but because their performance wouldn’t live up to the discipline required by public markets.