Bill Gurley talks about his drive to persuade more tech startups to choose direct listings, instead of traditional bank-led IPOs, to enter public markets
33.5% and 29.2%, respectively..” “..incentive to give buyers — mutual fund companies and big hedge funds — a deal..” https://www.cnbc.com/... Investors In Vests / @investrsinvests : “Number one rule of Venture Capital. Nobody, I don't care if you're Bill Gurley or if you're Todd Gurley, nobody knows if a company's valuation is gonna go up, down, sideways or in fucking circles, least of all Venture Capitalists” pic.twitter.com/GNqromWFpU @cnbc : “The IPO process has devolved,” tech investor Bill Gurley said. Here's how the venture capitalist is leading the movement to direct listings. https://cnb.cx/2ovvvYK Finanz.dk / @finanzdk : Bill Gurley Encourages Companies to Go Public, Says Staying Private Isn't Healthy - https://finanz.dk/... pic.twitter.com/9wpuGUgcjX Frank Quattrone / @frankquattrone : Great to see @bgurley galvanizing the tech industry towards direct listings vs traditional hand-allocated IPOs that favor the banks' most active trading accounts at the expense of the issuer's shareholders https://www.cnbc.com/... upFront / @upfrontezine : “Benchmark Capital partner Bill Gurley warned of investment banks, like Goldman Sachs and JPMorgan, who have been “fleecing” companies by intentionally underpricing shares on IPO day, then pop the new issuance so the banks' clients to make a quick gain.” https://www.zerohedge.com/... @shitfund : Hi I am a VC. I aggressively take minority and marketability discounts on my shares for to avoid taxes for estate planning but demand to sell a large slug of shares at a premium. Market impact costs are a myth. https://www.cnbc.com/... @cnbc : Inside Bill Gurley's mission to upend the tech IPO market in favor of direct listings https://cnb.cx/31OCTNK Craig Mallitz / @mallitzcraig40 : Agree. Watching Bill Gurley. Completely respect his work, but it seems very odd that he is so focused on the first day price (via IPO or direct listing) and not the value that private investors are paying in these early rounds Brad Slingerlend / @bradsling : Calling for a group of investors with a potential asymmetric information advantage to buy at a discount and then be allowed to flip right away on an IPO..."workaround" or insider trading? https://www.cnbc.com/... https://twitter.com/... Matt Rosoff / @mattrosoff : So @levynews talked to @bgurley about what inspired his sudden push to get companies to consider direct listings in place of traditional IPOs. Other VCs are on board, and founders are getting wise. https://www.cnbc.com/... Sar Haribhakti / @sarthakgh : “Most people are afraid of backlash from the banks so they don't speak out. I'm at a point in my career where I can handle the heat” “I don't think being short term oriented is the right way to think about financial markets.” - Bill Gurley https://www.cnbc.com/...
Context & Ripple Effects
This piece sits at the hinge of a decade-long arc in how venture-backed companies reach public markets. Back in 2015, Gurley was warning that FOMO-driven 'private IPO' rounds were inflating startup valuations behind closed doors (his FOMO critique), which made the eventual public debut — and its first-day pop — the moment those private marks got repriced.
By 2019 his argument had sharpened into an attack on the intermediary: he says the traditional bank-led IPO process has 'devolved' because underwriters have an incentive to give buy-side clients like mutual funds and hedge funds a deal on pricing. His own firm has seen both sides of it — Benchmark's big wins from Snap and Stitch Fix showed what a hot listing can do for a holder, while the same system left issuers' shareholders selling at a discount.
First-order effects
- Startups that take Gurley's route enter public markets with no underwriter setting the price, so existing shareholders capture value that would otherwise flow to institutional buyers getting a discounted allocation — and they skip underwriting fees entirely.
- Investment banks such as Goldman Sachs and JPMorgan, whom Gurley explicitly calls out for favoring bank clients over issuers, face a live threat to one of their most lucrative equity-capital-markets franchises if founders start treating the direct listing as the default.
Second-order effects
- Exchanges moved to close the mechanism's biggest gap — no new capital raised — with the SEC approving the NYSE's plan to let companies issue new shares via direct listings, a change pitched directly at helping startups save on bank fees (SEC approval of the NYSE plan).
- Banks are pushed to compete on the services around a listing rather than the underwrite itself — pricing counsel, liquidity support, and analyst coverage become the pitch, since the guaranteed-fee syndicate role is what founders are being taught to skip.
Third-order effects
- If the pattern holds, the gatekeeping power of the underwriting syndicate erodes structurally: going public becomes something a founder schedules rather than negotiates, and the private-to-public valuation correction Gurley flagged in 2015 gets priced continuously by the market instead of negotiated by banks.
- A wider set of late-stage companies could stay liquid longer on secondary markets and list when ready, compressing the private valuation–liquidity gap that made pre-IPO rounds feel like a different asset class.
The trend: Tech companies are steadily disintermediating Wall Street from the path to public markets, with exchanges and regulators adapting the direct-listing structure faster than the underwriting business can reprice itself.