> Founded in 2010, Stripe is middle-aged by Silicon Valley standards, but Mr. Gaybrick and Stripe president John Collison said it had no plans to go public.
Why doesn't Stripe want to become a public company?
The point of an IPO is to A) create liquidity, and B) divest some of the risk to a bigger pool of investors. If you are cash flow positive, and have only long term investors, there’s no real monetary benefit. You’re giving away your dividends to other people.
It’s a question of whether you want to discount your own risk or hold it. IPOing allows you to price your risk and sell some of it off. But if you’re a long term investor there’s a good chance you value your risk higher than the market, which means you’ll lose money in the long term by selling it.
It also depends on your other investment opportunities. If you have other places to invest, then your money has a high time value and you’re paying more “interest”, so-to-speak, on the risk. If you don’t have anywhere better to park your money then the time value is very low and holding that risk is cheap.
There are other factors as well, like government limits on buying other assets, that could make a private investor want to hold.
While those are the "theoretical" reason for IPOs, let's not ignore a primary reason for an IPO, which is to let early investors and employees cash out (though these days many companies, e.g. Slack, are just doing a direct listing instead).
> Slack Technologies Inc. is set to go public on Thursday using a nontraditional process called a direct listing. Only one other big company, Spotify Technology SA, has gone public in this way.
It's a carefully worded answer. No plans != doesn't want to. And also, I'd read "no plans" as "no plans that we're gonna tell you about right this minute".
... which has absolutely nothing to do with going IPO, since they would cash out/in and get access to stockholders money at the exact day of their IPO, not "next year or two".
If you do not need to raise money there are limited reasons to go public, however you have much stricter reporting requirements, and general things you cannot do anymore since you are publicly traded, not to mention hostile takeovers, etc. Dell's story is a great example why you want to go public / go back private.
Visa makes a ton of money just off of necessary debit card transactions. As far as I know Stripe doesn't have a whole lot of groceries/gas stations/drug stores/doctors offices/etc as customers.
From what I've seen Stripe mostly has customers that are selling non-essential services and luxury goods. They'd be far more likely to suffer during a recession than Visa. I mean, Visa does around 1,700 transactions per second on average [1] and handled over 2 trillion dollars in a single quarter last year [2]
Why would you want to become a public company? Being public means more complex accounting, transparency, extra legal fees, focus on quarter-to-quarter profits, etc. Other than liquidity (especially for founders/VCs), I don't see much of a reason to and a lot of reasons not to.
Stripe is trying to capitalize for a capital intensive endeavor: Stripe Capital.
An IPO would have been one way to fund it, but likely would have involved a lot of financial scrutiny along the way, which would probably distract them from the main point of raising the funds.
A bold move which will hopefully work out for them and not overvalue the company before they attempt to go public later on.
Why doesn't Stripe want to become a public company?