The Water Cooler: The future of the tech IPO

Evan will be filling in as The Water Cooler contributor while Bryan continues his plot to take over the world, for the next few weeks, across the pond in London .

After the positive results of Google’s initial public offering to this point, some technology companies are looking to take advantage of the IPO market for money to grow their companies, but is this the right choice? My infinite wisdom says no.

Once in a generation there is a Google or a Microsoft that will be successful but they are not the typical technology firm that might look to go public. I think the major problem with technology firms going public, is a conflict of minds on one side you have the technology brain trust that has great ideas, but for most companies to be successful long term, the financing needs to be there.

The sensitivity of newly public company doesn’t offer the stability of cash for companies to be successful, even though the idea itself is genius. It’s a shame but as we know money controls most every thing and many great ideas will take longer to come out if not managed correctly. Pretty much technology firms need to be guaranteed to be the best in their market for an IPO to even be considered, the idea needs to be so great, money wont be an issue and that happens about as often as the Mets winning the World Series (its been a tough 20 years for me).

So what do I think the best idea for a great new technology firm is to harvest its company if going public is only a great idea if the company will be the market leader? Sell to the big kahunas, the Googles, the Oracles and Microsofts of the world. Well I’m not some visionary thinker because the best companies have been doing it for a while. These companies are known for the freedom they allow their employees and have been purchasing smaller companies for years to allow them to benefit from their cash and technology expertise. These companies have turned into incubators much like the venture capital firms who provide early stage funds for these companies. This set up allows for the leaders of small companies with new ideas to focus on the technology and use the larger company’s resources for the boring stuff like accounting, marketing etc. In other words I don’t think you’ll see another IPO that is as successful initially as Google any time soon, you are more likely to see Google or Microsoft buy the next company and brand it under their name.