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| Twitter's secret IPO undermines its mission of transparency | Twitter's secret IPO undermines its mission of transparency |
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| Twitter is not a company that you would normally identify with stealth. | Twitter is not a company that you would normally identify with stealth. |
| Its CEO, Dick Costolo, calls the site "the global town square", and 400m tweets a day cover everything from revolutions to twerking controversies to personal feuds. If you want to make sure something goes public, you take it to Twitter. | Its CEO, Dick Costolo, calls the site "the global town square", and 400m tweets a day cover everything from revolutions to twerking controversies to personal feuds. If you want to make sure something goes public, you take it to Twitter. |
| But when Twitter itself goes public, the company makes the strange choice to go undercover. Twitter has chosen to file a "confidential" initial public offering, a privilege offered by the Jobs Act to any company with less than $1bn in revenues. | But when Twitter itself goes public, the company makes the strange choice to go undercover. Twitter has chosen to file a "confidential" initial public offering, a privilege offered by the Jobs Act to any company with less than $1bn in revenues. |
| Because the IPO is confidential, we don't actually know when Twitter filed to go public. We don't know anything, in fact, about the company's IPO timing – it could be ready for the public markets in three months or it could be seven months or even longer. Not exactly a great choice for a company that has made its fortune, in part, by putting timestamps on instant communication. | Because the IPO is confidential, we don't actually know when Twitter filed to go public. We don't know anything, in fact, about the company's IPO timing – it could be ready for the public markets in three months or it could be seven months or even longer. Not exactly a great choice for a company that has made its fortune, in part, by putting timestamps on instant communication. |
| The Jobs Act secrecy – while perfectly legal – is not exactly in the spirit in which Twitter conducts the rest of its business: openly, chirpily transparently, with an eye for open public discourse. A secret IPO for one of the world's most prominent communications companies is a major fail whale. | The Jobs Act secrecy – while perfectly legal – is not exactly in the spirit in which Twitter conducts the rest of its business: openly, chirpily transparently, with an eye for open public discourse. A secret IPO for one of the world's most prominent communications companies is a major fail whale. |
| The Jobs Act was designed to keep small startups from being intimidated by the public markets. It was not, perhaps, intended to keep world-straddling international companies like Twitter – already used to considerable scrutiny – from the discomfort of having to face up to their finances. | The Jobs Act was designed to keep small startups from being intimidated by the public markets. It was not, perhaps, intended to keep world-straddling international companies like Twitter – already used to considerable scrutiny – from the discomfort of having to face up to their finances. |
| A confidential IPO, though a perfectly legal choice, is a bad choice for Twitter. It means that Twitter's rich trove of offering documents – describing its business plans, its history, and most importantly, its finances – are off-limits to the public until the company is ready to start peddling shares to large institutional investors, who command billions of dollars. | A confidential IPO, though a perfectly legal choice, is a bad choice for Twitter. It means that Twitter's rich trove of offering documents – describing its business plans, its history, and most importantly, its finances – are off-limits to the public until the company is ready to start peddling shares to large institutional investors, who command billions of dollars. |
| This process, called the "roadshow", is open only to elite investors; no moms-and-pops are at the roadshow, even though the manager of their mutual fund may be. It is also often the last part of the IPO process. Banks conduct the roadshow to privately find out how much those big, rich investors are willing to pay for Twitter's shares. Later, that research will inform the price offered to the public. | This process, called the "roadshow", is open only to elite investors; no moms-and-pops are at the roadshow, even though the manager of their mutual fund may be. It is also often the last part of the IPO process. Banks conduct the roadshow to privately find out how much those big, rich investors are willing to pay for Twitter's shares. Later, that research will inform the price offered to the public. |
| By the time the roadshow rolls around, information about Twitter will be rife within the halls of Wall Street banks and the big mutual-fund houses. It won't, however, be available to the public or to the press, unless there's a leak. A company that is among the pride of the Silicon Valley tech community and a leader in innovation may ask the public for billions of dollars but won't provide an iota of information to get it. | By the time the roadshow rolls around, information about Twitter will be rife within the halls of Wall Street banks and the big mutual-fund houses. It won't, however, be available to the public or to the press, unless there's a leak. A company that is among the pride of the Silicon Valley tech community and a leader in innovation may ask the public for billions of dollars but won't provide an iota of information to get it. |
| Instead, what will dominate the public discourse about Twitter's IPO will be rumor and speculation. This undermines the whole purpose of going public. To go public is to invite the public to examine your company, talk about it, debate it, knock on the windows and kick the tires. Twitter is going to ask people to give it the respect of a public company, as well as the rich valuation commanded by internet stocks right now, but the company is also saying that it's not ready to reciprocate that respect; it won't tell people what exactly they're buying. It's like asking for an introduction while wearing a mask. | Instead, what will dominate the public discourse about Twitter's IPO will be rumor and speculation. This undermines the whole purpose of going public. To go public is to invite the public to examine your company, talk about it, debate it, knock on the windows and kick the tires. Twitter is going to ask people to give it the respect of a public company, as well as the rich valuation commanded by internet stocks right now, but the company is also saying that it's not ready to reciprocate that respect; it won't tell people what exactly they're buying. It's like asking for an introduction while wearing a mask. |
| True, you can't blame Twitter for wanting to avoid the circus-like debacle of Facebook's IPO, which caused that company's CEO, Mark Zuckerberg, to demur when asked for advice to Twitter. "I'm the last person you want to ask how to make a smooth IPO," Zuckerberg cracked at a conference this week. | True, you can't blame Twitter for wanting to avoid the circus-like debacle of Facebook's IPO, which caused that company's CEO, Mark Zuckerberg, to demur when asked for advice to Twitter. "I'm the last person you want to ask how to make a smooth IPO," Zuckerberg cracked at a conference this week. |
| Twitter's finances are also bound to be disappointing, even to its fans. The company is a cultural stalwart without the revenues to show for it. That may be uncomfortable, but it's the truth. Being a public company means being able to confront the truth. | Twitter's finances are also bound to be disappointing, even to its fans. The company is a cultural stalwart without the revenues to show for it. That may be uncomfortable, but it's the truth. Being a public company means being able to confront the truth. |
| Twitter is not a startup any more. It doesn't need to hide behind the skirts of its investors, or plead that it's too new to understand how being a prominent company works. It has been in the trenches of every major world event for the past seven years. It could even be argued that Twitter is not really a tech company – because Twitter's future is tied with the future of news itself, it's a media company now. And as a media company, it should know that words matter. And the lack of words – a strange, uncustomary silence – says more than Twitter's executives may think. | Twitter is not a startup any more. It doesn't need to hide behind the skirts of its investors, or plead that it's too new to understand how being a prominent company works. It has been in the trenches of every major world event for the past seven years. It could even be argued that Twitter is not really a tech company – because Twitter's future is tied with the future of news itself, it's a media company now. And as a media company, it should know that words matter. And the lack of words – a strange, uncustomary silence – says more than Twitter's executives may think. |
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