Valley Elites Come Out in Defense of IPOs

By Sarah Lacy , written on March 1, 2012

From The News Desk

Silicon Valley has increasingly become a polarized world of two outcomes: The sub-$100 million flip or the multi-billion home run IPO.

The several-hundred-million-dollar exits that were long the backbone of Valley returns have largely gone by the wayside, as the idea of being a public company has lost much of its late 1990s luster.

There are plenty of people in the Valley who love the rise of the flip and the return of the "acquihire." These are people who seek to double their money, arguing that each flip has a meaningful impact on entrepreneurs' fortune in a quick period of time. What's wrong with taking advantage of the low costs of doing business and the prevalence of huge Web companies, which constantly need new talent to mint millionaires in quick succession?

Andy Rachleff is not one of those believers in the flip. He and I agree that while the human desire to cash out is understandable, if everyone does it, the Valley craters over the long term.

A former founding general partner at Benchmark, Rachleff is a co-founder of Wealthfront. The first time we had lunch, I told him it would take some brave companies going very long to disrupt the financial services industry. I asked if Wealthfront was going to be one of those companies. Rachleff emphasized that he had a cushy life as a semi-retired Stanford professor, and he wouldn't have joined Wealthfront if he wasn't serious about doing just that.

Rachleff is putting together a conference to help change the stigma against going public and encourage more entrepreneurs to go long. I'm speaking at it, along with many far more qualified people like Bill Gurley from Benchmark, Sameer Gandhi from Accel, Doug Leone from Sequoia, Frank Quattrone from Qatalyst Partners, Dan Benton, who is a well-known public tech investor from Andor, and many more.

On one level, Rachleff's initiative is self-serving, as Wealthfront hopes to sell very modern wealth management tools to this generation of profit seekers. But for Rachleff, this is about much more. He wants entrepreneurs to dream big and create the next Googles and Facebooks. His philosophy is not only for the good of Wealthfront and the Valley, but really for the good of the world.

For a preview of the kinds of issues the conference will center on, Wealthfront has released this video with Google's Eric Schmidt, Gurley, Andreessen Horowitz Partners' Ben Horowitz and Quattrone talking about the state of IPOs in the Valley.

If you want to attend, go here and enter your email address. Seating is extremely limited and Wealthfront wants to make sure the tickets go to founders and CEOs who are serious about going long.