a16z Podcast

Direct Listings, Myths and Facts

Stacey Cunningham, Barry McCarthy, and Sonal Chokshi

Posted December 10, 2019

We’ve covered a lot of the strategic financing milestones for startups seeking to build a sustainable and enduring business — from mindsets for startup fundraising to when and how to build a finance function with a CFO to what it takes to do an initial public offering (IPO) and stories from the inside out. There’s also a lot that goes on behind the scenes en route to IPO, including how they’re priced and even what the “pop” means.

Yet another route to the public markets is the direct listing, recently reinvented for tech companies (with Spotify and Slack so far). We explained the process and tradeoffs in this primer earlier this year by Jamie McGurk, now, this episode of the a16z Podcast brings together two experts from the frontlines: the architect of the direct listings in their current form, Barry McCarthy, current CFO of Spotify (and former CFO of Netflix); and Stacey Cunningham, president of the NYSE where they were listed — in conversation with Sonal Chokshi to share more about the what, the how, and the why from an insider perspective.

What’s the bigger picture here, including secular shifts in the public and private markets? Zooming in closer, what are all the details and nuances involved in true pricing, investor days, forward guidance, and other market mechanisms for “radical transparency”? What did it take behind the scenes to make this all happen, and what’s still happening? And finally, what are some of the common myths and misconceptions around direct listings (and IPOs) as methods for going public? Turns out, there’s a lot that goes into making markets… and market making.