one of those investors is bill gurley joining us from stanford in california along with john for theas we know, is at microsoft's product launch event. jon, take it away. >> thanks, carl. bill, good morning we've been talking about this or writing about this back and forth. we had frank slootman, the ceo of snowflake on yesterday. big startup, $4 billion valuation. he's taken two enterprise companies public in the past he told me yesterday he's considering a direct listing for snowflake. is this a change >> i hope so i would disagree with one thing carl said, trying to tie this effort to two or three ipos that broke issue. this is a problem that silicon valley has been tilting at for over 25 years. i went back and studied some of the history. in '98, this ipo process was said to be undemocratic. bill hambrick, '99, 20 years ago said ipos are an insider's game. we have to try to fix them larry an auction. you read why they did it, you come back is the price and allocation market based and do we have open and equal access to all. those are two core tenants that everybody could get behi

among founders, investors and employees who would benefit from this >> part of this, deirdre, on bill gurley's just try to blow up the status quo trying of seeing things done the way they have been done and wanting to do something about it he has the capital political and financially to make a difference >> i think it's about two major things i mentioned it, leverage and flexibility. he's trying to tell startups you have more of a voice in this you don't need to do what the investment bankers -- take the traditional route that has been done for many years. i think the turning point this year was slack if it was just spotify that had done it, it might have been a one-off. the fact that slack did it and i would argue successfully -- yes, when you look at the share price up on the screen, it's tumbled since the direct listing, but remember, it's valuation right now is billions. it's 12$12.5 billion. its last private market valuation was $7 billion it has been an effective way to let their employees and early investors cash out while getting them public and saving on a lot of those fees. >> yeah.

bill gurley, highly respected.f respect for him one of the top vcs in the valley the way we look at it, we think a lot about this, talk about this with clients, i don't think there's one perfect solution for everybody. what i mean by that, for some, airbnb was reported to be looking at direct listing in 2020 maybe it works for them, don't need cash, they're well known. avoid delusion, that may be a great solution for them. there are others that maybe need primary capital or have a big sum of secondary capital to be sold they need to be cognizant. third part, i go back to jeff bezos and what he did which i thought was amazing, when i was going public, he hand selected investors. one of the biggest, bill miller. he made partners out of investors versus having speculators or traders he wanted key mutual funds to be there for the long haul in the good and bad that's part of the ipo process that's missed on direct listing. it can be valuable i don't think there's one solution fits all. >> i was talking to frank swif en,

one of the organizers for the event is bill gurley.e with us about key issues, starting with why companies are waiting so long to go public. direct obviously a result of their being enormous amounts of capital and the private market. it used to be, if you go back in time, one of the reasons to go public was to raise capital. now there's so much capital available, you don't have that as a reason to go public. i certainly think that's been part of the delay. if you view the process as unfair, that might also be something that slows down your path to get there. i don't think it's healthy for companies to stay private forever. i think it's super advantageous to companies to pass through and become public. and i'm hopeful that if we can fix this process, it will lead to more companies coming out. >> going public does come with a lot of responsibility. one of the criticisms that wall street and secondary investors have had is with these dual and multiple share structures out there, with the way that, i guess, the control that certain ceo's a

that is being led by bill gurley of benchmark.ed the trend in 2018 and, so far, airbnb has also indicated it is leaning toward a direct stock lifting next year. i caught up with the new york stock exchange president, stacy cunningham on monday. >> if you take a step back and think about why companies choose to go public, there are typically four reasons. one is access to capital. credibility ofhe a public listing and the visibility of that event. the third is liquidity for early investors and their employees, who often get paid in shares or auctions of stock and want to be able to use that to buy a house. four is currency so they can engage in mna. what we are seeing now is for many companies, because they are much larger companies, in the private market space, it is more than liquidity for their employees that is driving the public listings. that allows you to ask yourself, can we decouple capital raising from a public offering? that is what spotify started. barry mccarthy asked that question for you he said why do i need to go t

that is benchmark capitals filter like -- bill gurley.up, david westin will be monitoring the news conference between trump the president of finland. this is bloomberg. ♪ david: from bloomberg world headquarters in new york, i'm david westin. welcome to "balance of power," where the world of politics meets the world of business. let's start out with the big story of the day. the markets. the s&p having its worst day since august. here is abigail doolittle to telus about it. abigial: it is a risk off day for markets. your point, take a look at the major averages. more after bigor selling action yesterday. this is another risk asset. boil down to .3%. investors wanting out of risk assets. the source of pain as the disappointing ism print yesterday suggesting manufacturing is in contraction for a second month in a row. investors moving out of risk assets and for oil it is the seventh down day in a row. the selling on stocks is not surprising. it is foretold by this downward slope for oil. down 10.7% over the last seven days. you can also mak

. >> right, there is -- bill gurley has been on our air, venture capitalist, talking about the studiese in terms of direct listings and the getting out the friction, the transaction costs and so many other things. that said, what they were talking about is probably going public earlier in their growth curve. it is late for that now. it is late for that now. but you could make that argument, jim, that a number of these companies, because of the access to private capital for such a long period of time, did not hit the public markets at an opportune time, the growth curve had changed. >> we made the same argument about facebook, but then they had a reacceleration >> went from 18 to 100 to 200 and change i continue to think that facebook is doing many things right. and that there are no more -- than any of the others, there is some guys backin lib libra, it is not here yet. they got to do more to empower people, not to create a currency but, look at slack, slack is a really great company and really bad stock. it never found any institutional home look at that >> you think that's -- you sai

that tune is being largely led by venture capitalist bill gurley of benchmark. said to have planted the idea with slack's ceo, stewart butterfield, which listed in june. spotify led the trend in 2018. and so far, airbnb has also indicated it is leaning towards a direct stock listing next year. i caught up with the new york stock exchange president, stacey cunningham, on monday. stacey: if you take a step back and think about why companies choose to go public, there are typically four reasons. one is access to capital. two is having the credibility of a public listing and the visibility of that event. the third is liquidity for early investors and their employees, who very often have been getting paid in shares or options of stock and want to be able to use that and go buy a house. four is currency, so they can engage in m&a. traditionally, access to capital has been the primary driver in raising money. what we are seeing now is, for many companies, because they are much larger, companies in the private market space, it is really the liquidity for their employees

you yourself saw when you guys went public in '98 or '99 the huge one-day pop, which bill gurley is sayingquote, investment banks have been fleecing company by pricing shares low so they pop on their first trading day and benefits institutional clients who buy at the popping price and flip when it soars is this wall street's fault? >> i would say it takes two to tango. when you have been in this business certainly in the tech sector and living in the ipo era for 25, 30 years, you start to see these cycles and repeating patterns that are rhyming. yes, i stated ever since the globe ipo, the globe.com ipo, i think public markets, gamification of how to gpublic and how to play the game every single quarter is a very broken system, it's very my optic and short-term driven. wall street and investors in general all want to get rich quick. so there's a lot to unpack here in terms of reforming the process of going public, what it's like to be a public company, gamification of it. but also everyone is looking to make a quick buck and we're now seeing a repeated cycle of taking the most cycle and ove

that isn't being led by venture -- that is being led by venture capitalist bill gurley of the benchmarklanted the idea with stewart butterfield which listed in june. spotify led the direct listing trend in 2018 and so far, airbnb has indicated it is also leaning toward a direct stock listing next year. i caught up with new york stock exchange president, stacy cunningham, earlier monday on these topics. stacy: if you think about why companies choose to go public, there are four reasons. one, access to capital so they can raise money. two, having the credibility of a public listing. and the visibility of that event. third, liquidity for early investors and their employees who often have been getting paid in shares or options of stock and want to be able to use that and buy a house. four, currencies so they can engage in m&a. traditionally, access to capital has been the primary driver in raising money. what we are seeing now is for many companies, because they are larger companies in the private market space, it is more the liquidity for their employees that is driving the public listing.

direct listings, a simpler and superior alternative to the ipo well-known vcs like benchmark's bill gurley about the benefits of that route and the drawbacks of underpriced ipos, which provide less capital for those companies. now, they're holding this meeting on a day that recent ipo names are getting crushed. you named a few of them. lyft, uber, smiledirectclub, peloton, all trading well below their debuts slack, though, we should note, one of two direct listings ever not immune to that sell-off. guys, back to you. >> d., thanks so much for that for more, let's bring in mercy victoria grace, partner at light speed venture partners what is your take as to where we stand in the broad ipo market and whether direct listings are a way out for some of the companies planning to list given the negative headlines of some recent ipos. >> yeah, you know, direct listings are something that work for companies that have a strong consumer brand and critically don't need to raise money from the public markets and they can be good options for companies that fit both of those things and they can also be g

they have to, until investors -- >> now do they have to >> -- push them on what's interesting, bill gurleynot talking about capturing a lot of value that said, he captured plenty of value out of uber. he is incredibly smart guy, but he wants more valuation, the money the companies get to put to capital put to use to be higher, and has a good point why line pockets of the bankers. why, good question. >> i wonder if there's an actual reckoning in the private market based on reaction, the public market investors had to so many ipos now, or whether it means we see more companies stay private longer >> that's a problem staying private longer, problems in terms of being rigorous, in terms of control, they are used to control problems of not understanding scrutiny a lot of them are like what? you have questions of me how dare you it is just me out there asking me >> some of the things now we're learning about wework's initial filings, omitting certain things about number of desks, omitting who's on the comp. committee next round of s 1s will get scrutiny. >> yes s-1, best law passed ever. they gi

. >> is a bill gurley?e's from benchmark capitol and it's a profile of him in this book that he's trying to make his mark so from a venture capitalist perspective they want to be the one that finds the next unicorn, the next facebook, the next snapchat. he is actually egging him on in the beginning and later on it's like oh no what if i created. he also is the one that starts leaving the syndicate to oust her travis because he's afraid this thing is going to blow up and it's all going to look bad on me. >> that's right and the d.c. culture and trying to pick the winners in the next, the whole thing about venture capitalist is you have to find the small companies that are going to grow into a huge thing and you don't just want to double esmond you want to 10 times or 20 times. once you get that and uber used to be a very sure bet and enormous fully lucrative for a lot of people it's hard to suddenly come in and intervene in the like wow stop what you are doing but i 2015 and internal letter by jim fowler tha

. >> is a bill gurley?e's from benchmark capitol and it's a profile of him in this book that he's trying to make his mark so from a venture capitalist perspective they want to be the one that finds the next unicorn, the next facebook, the next snapchat. he is actually egging him on in the beginning and later on it's like oh no what if i created. he also is the one that starts leaving the syndicate to oust her travis because he's afraid this thing is going to blow up and it's all going to look bad on me. >> that's right and the d.c. culture and trying to pick the winners in the next, the whole thing about venture capitalist is you have to find the small companies that are going to grow into a huge thing and you don't just want to double esmond you want to 10 times or 20 times. once you get that and uber used to be a very sure bet and enormous fully lucrative for a lot of people it's hard to suddenly come in and intervene in the like wow stop what you are doing but i 2015 and internal letter by jim fowler tha

up pressuring stocks like analysts say it will, it could add to argument for direct litzing that bill gurleygued for cfos was delay an ipo, say maybe direct listing is the way to go, you get volatility up front, don't have to wait six or three months to deal with it. >> what about chain reactions, sentiment that could shift if you see selling of the ipos because of the lock-up, vcs taking in less money than expected does that effect what gets funded or doesn't get funded next >> it could effect private markets. i think public market investors may see that selling and think the smart money is selling why am i here holding uber that's another dynamic that could happen the reason they're selling isn't necessarily because the stock isn't doing well or don't see long term value in uber, their job is not to be public market investors, their job is to bring the company to ipo, then go on and look for the next new high flying idea in silicon valley. >> that's what we are looking forward to too good thing we're keeping viewers aware of what's coming down the line >>> meantime, european markets are cl

bill gurley, who told me he is not anti-banker, he's pro algorithm.] sonali: i encourage everyone to read our story today. alix: let's go to our third story, which is a really fun one. basically, this guy and a dorm room started a hedge fund which totallyis saying is fake. sonali: he was running about 400 million dollars here. he started with friends and family. the sec is now saying he inflated the value of his assets and deceived investors. the investigation is aggressive and extreme. how, ifjust don't know you're looking at securities, you can be too extreme or not. sonali: this never looks great. i encourage everyone to go back and look at the 2015 interview bloomberg tv did with him. he's a very quirky person, actually. he was running the hedge fund while doing his phd on the side. he was using all of these very wonky metrics for economic forecasts, one of them being pet adoption rates. the more people would adopt pets, the better the economy seems to be. alix: i don't totally disagree with that. [laughter] alix: thanks a lot, bloomberg's sonali

gurley would have some benchmark, bill gurley, the proselytizin listings >> other than elizabeth warrening? bernie sanders was -- he -- >> back to bernie. >> bernie is, like, i was waiting for him to say, listen, stocks must fall 25% in my regime just raise the capital gains and you'll accomplish what you want. he really, again, we don't want show trials of executives. it is too darkness, arthur kosler, stalin -- >> let's go back to something discussed during the debates talk about the stock market ramifications for all of the different news about potential opioid litigation settlement. >> i'm all over that. >> that we're hearing about. the drug distributors, here i'm talking about mckesson, cardinal health, the three big distributors in talks to settle for 18 billion according to a number of reports. don't have this confirmed. this is relying on the journal i think in this story. you got teva as well, potentially trying to settle you got the ohio trial about to begin jury selection, i think today, nice start as soon as early next week. and that's where you got a lot of these cases cons