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The future of direct listings

Stock charts

Good morning! This Thursday, what Palantir and Asana tell us about the future of direct listings, Google launched some COVID-suited gadgets, and what to expect from today's antitrust hearing.

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The Big Story

A tale of two listings

Yesterday was a big day for IPO critics: Both Asana and Palantir went public via direct listings, joining Slack and Spotify as the only large companies to have done so. IPO haters hoped that the companies could help prove that the traditional way of going public was broken.

But in the end, the outcome was rather mixed.

Asana did pretty well: It opened above its reported private market valuation of $5 billion and climbed steadily from there, closing the day up 7%. "I feel great with where we landed," CFO Tim Wan told Protocol. "Our new investors are happy," he said, adding that "the stock has traded in a pretty tight band."

Palantir's listing went less well. Though it opened at $10 per share, the valuation investors had reportedly been aiming for, they slumped, closing down 5% (although things did recover a little after hours).

  • That's all the more grim considering just how tight liquidity was: Many employees were reportedly unable to sell shares, thanks to a glitch on Morgan Stanley's trading platform. (The bank is expected to make it up to employees who had to sell at a lower price.)
  • That, combined with Palantir's unusual lockup period on 80% of insiders' shares, should have driven the price higher, but seemingly wasn't enough.
  • When informed of the stock slip by Protocol, COO Shyam Sankar felt nostalgic: "I'm trying to realize how much of a luxury it really was [being private], of not looking at the stock price on a daily basis."

The direct listings did show that their pricing mechanism works. Though the stocks did move, both companies' share prices closed relatively near where they opened — a far cry from the triple digit pops we've seen in recent IPOs. That suggests that if this had been a traditional IPO, the companies wouldn't have "left money on the table." And there was none of the volatility that some people suggest direct listings suffer from.

But the performance does raise questions about the future of direct listings. The next big development on the horizon is the NYSE's "Primary Direct Floor Listing" proposal, which will allow companies to raise money via a direct listing, rather than just enabling existing investors to cash out.

  • If Palantir and Asana had raised money in their listings, their investors wouldn't have seen particularly big returns — Palantir's investors would actually have made a loss.
  • Part of the thing that attracts investors to take a gamble on IPOs is the prospect of first-day gains. Without those built in, would enough people still be interested for a company to raise significant money.

But perhaps the whole point is that the NYSE's new approach could be a middle way, one that leaves less money on the table but only provides modest opportunities for raising funds. Whenever someone braves it, we'll find out.


Google's COVID lineup

Google's product launch yesterday felt like a masterclass in launching products suited to the times. And I don't mean the slick virtual show: The actual products, and the way Google's rolling them out, might be a perfect fit for the giant mess we all find ourselves in.

That's most obvious with the new Pixel. Google's new flagship, the Pixel 5, is $699 — a full $100 cheaper than last year's Pixel 4. Between that and the $499 Pixel 4a, Google is clearly abandoning the high-end and instead concentrating on making a solid, mass-market product. In a recession, that might prove to be a smart bet: A lot of people that would have spent $1,000 on a phone may simply not be able to do so this year.

  • Even at the lower price point, Google is exercising caution. Nikkei reports that the company is planning to produce just 800,000 to 1 million Pixel 5 units this year, after sales failed to meet its target last year. Given the pandemic, slow and steady could be a sensible move — though it comes with the risk of supply shortages.

Google's also hoping to cash in on this winter's inevitable stay-at-home trend. The $99.99 Nest Audio is supposedly designed to actually sound good, while the $49.99 Chromecast with Google TV offers a much more user-friendly interface than past devices. Crucially, both are also priced keenly, going up against equivalent products from Amazon.

The new hardware might not have the highest specs or the flashiest designs — but with decent prices and good-enough specs, financially pressed consumers might not find themselves too bothered. There's probably a lesson in that for many companies right now.

Big Tech

The day of the antitrust academics

Emily Birnbaum writes: Today, the House Judiciary Committee will hear from a slate of experts and academics about how to go about reforming antitrust laws and regulations to better take on the tech giants. The committee has been chatting with many of these (mostly progressive) experts behind the scenes for months, including Zephyr Teachout from Fordham Law School and Sally Hubbard from the Open Markets Institute.

The hearing is certain to rile up Mark, Tim, Jeff and Sundar, as well as free market Republicans and some middle-of-the-road Democrats. Why? Because the farthest-left researchers will lay out expansive, detailed policy proposals that would put the tech industry under a whole new regime of regulation.

  • Ideas we could hear? Calls for a new tech regulator, changes to the consumer welfare standard, regulating tech companies as public utilities and, yes, breaking them up, among others.

This will likely be the last hearing before the committee releases its final report, the culmination of its year-long investigation into the market power of Facebook, Google, Apple and Amazon. The report is expected next week — and we're sure it is going to be long.

You can watch today's hearing here at 1 p.m. Eastern.



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People Are Talking

FCC commissioner Geoffrey Starks is worried about undersea cables:

  • "We must take a closer look at cables with landing locations in adversary countries … This includes the four existing submarine cables connecting the U.S. and China, most of which are partially owned by Chinese state-owned companies."

Dick Costolo had a ... take on the Coinbase blog post:

  • "Me-first capitalists who think you can separate society from business are going to be the first people lined up against the wall and shot in the revolution. I'll happily provide video commentary."

A SoftBank investor said the company's reinvention is all down to Masa Son:

  • "A year ago, it was all about the Vision Fund, now I hardly hear about that. Before, it was about Arm and the internet of things. Now it isn't. Then it became about investing like a hedge fund … The decision on what SoftBank is as a company seems to be the whim of Son."

BitTorrent creator Bram Cohen had thoughts on The Verge's profile of Justin Sun's BitTorrent acquisition:

  • "I can confirm that Justin Sun is every bit the scumbag this article paints him to be."

Making Moves

Ross Mason is leaving MuleSoft, the company he founded, two and a half years after Salesforce acquired it. He's focusing on his VC firm now.

Ken Norton is leaving GV, where he was a senior operating partner. He didn't say what his next move is.

Malthe Sigurdsson is out at Stripe, where he was head of design. I assume he'll go on to design more websites that everyone copies.

Chua Sock Koong is leaving Singtel, with Yuen Kuan Moon, head of the company's consumer business, replacing her as CEO.

Luke Schneider is the new CEO of Refraction AI, which makes delivery robots. He was previously COO at Wejo.

Evan Engstrom is joining Milltown Partners to work with tech companies on policy issues. He was previously executive director at Engine.

In Other News

  • The EU may stop Big Tech giving its own services an advantage. Draft documents about the EU's Digital Services Act reportedly propose that companies "shall not provide preferential display in online search engines ... for their own services" and "shall not pre-install exclusively their own applications."
  • Facebook will ban ads that "seek to delegitimize the outcome of an election," Rob Leathern, director of product management, said. That includes anything that suggests voting by mail is inherently fraudulent.
  • Facebook continued its grand unification. Some people can now send messages between Messenger and Instagram, so conversations can be had between apps. Facebook Messenger chief Stan Chudnovsky said the company is considering re-adding a version of Messenger to the main Facebook app, too.
  • More safety concerns were raised about Amazon: The company has reportedly failed to provide officials with data on COVID outbreaks at its warehouses. Kenosha County's health director called the company "less than easy to work with."
  • Twitch streamers now have access to rights-cleared music. A new product called Soundtrack by Twitch lets creators freely access a library of music from partners including Soundcloud and Distrokid. No deals with major record labels yet, though.
  • x64 emulation is coming to Windows 10 for Arm, Microsoft said. That brings Microsoft in line with Apple, and could help spur adoption of Arm-based PCs — but only if the emulation works well.

One More Thing

Put the robots on hold

The best thing Google announced yesterday wasn't a phone, a speaker or a streaming stick. It was "Hold for Me," a new Google Assistant feature that will stay on the line when you're on hold and notify you when it's time to talk. Having spent the last six months stuck on hold waiting for airline refunds, this might be my true pandemic hero.



Introducing QuickBooks Commerce, a new way for small businesses to grow

Small businesses need to attract and sell to new customers, but many worry about adding operational complexity – especially right now. QuickBooks Commerce is a new platform to manage multiple online and in-store sales channels and better maintain inventory while getting profitability insights – all from one central hub.

Learn more

Today's Source Code was written by Shakeel Hashim. Thoughts, questions, tips? Send them to, or our tips line, Enjoy your day, see you tomorrow.

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