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Marc Andreessen

‘The IPO is dying’

26 Jun, 2014

In an interview on Vox, Andreessen claims that laws such as Sarbanes-Oxley and Regulation Fair Disclosure are placing such burdens on successful startups that they are wating longer to go public, depriving the public markets of growth.

The compliance and reporting requirements are extremely burdensome for a small company. It requires fleets of lawyers and accountants who come in and do years of work. It’s this idea that if you control everything down to the nth detail, nothing will go wrong

The loop we’re in now is that people are getting upset and disappointed by the stock market. There are no growth stocks, which means there’s no growth. Stock market returns have been flat for 15 years, which is exactly what you’d expect if you took all the growth out. Everyone is upset the stock market isn’t performing. The worse the results get, the more regulation you get. It’s in its own kind of doom loop. Unless something happens to shock the system a lot, our assumption is it gets worse, not better.

He also criticizes Tomas Piketty’s book, Capital, saying that the investment results that Piketty says drive inequality are exaggerated:

The funny thing about Piketty is that he has a lot more faith in returns on invested capital than any professional investor I’ve ever met. It’s actually very interesting about his book. This is exactly what you’d expect form a French socialist economist. He assumes it’s really easy to put money in the market for 40 years or 80 years or 100 years and have it compound at these amazing rates. He never explains how that’s supposed to happen.