I have to call foul on a surprisingly foolish article in today’s NYT. Less than a month into 2010, it is already a leading candidate for the dumbest article of the year. It reads like it was written by the PR firm for a group of VCs and Palo Alto law firms.
There were numerous ignorant comments in the article, but this is the one that actually made me laugh out loud:
“Newer restrictions, like those on executive compensation, have made I.P.O.'s even less attractive to some entrepreneurs, said Doug Collom, a partner at Wilson Sonsini Goodrich & Rosati, a Silicon Valley law firm. "Lawyers now have a profound significance in the boardroom," he said.”
WTF is this idiot talking about? Last I checked, none of the Silicon Valley tech firms had received TARP money during the bailouts. The exec comp restrictions this dimwitted Wilson Sonsini lawyer mentioned came with the nearly trillion dollar taxpayer bailout/subsidy for insolvent banks and the incompetent execs who ran them into the ground — not dot com start ups.
What a tool.
I cannot figure out who is more responsible for this brain dead exercise in ignorance and spin — the writer who (re)typed it from a press release, or the editor who let this nonsense slide by.
Here’s some more stupidity:
“In the last two years, only 18 tech start-ups have gone public, compared with 143 in the two years prior. The Sarbanes-Oxley Act of 2002, which tightened corporate governance and accounting rules, has taken a lot of the blame.”
Astonishingly, the article fails to note the massive decrease in IPOs across all sectors due to the recent turmoil. Even more amazingly, the author somehow fails to deploy so much as one single word regarding the total collapse in the markets, or the simple fact that investors have seen precisely zero gains over the past 11 years.
Quite bluntly, I am embarrassed that this is what passes for Journalism today.
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UPDATE: January 18, 2010 3:02pm
Here is a chart of IPOs going back about 3 decades. Note after the 1987 and 2000 and 2008 crashes, the IPO numbers plummeted. I do not know what the actual impact of Sarbanes Oxeley was on IPOs, but the data shows that after SARBOX passed, the number of new IPOs actually went up.
I am NOT suggesting there is a correlation between SARBOX and any subsequent increase in IPOs; I am merely pointing out that blatherings of those mentioned above is factually incorrect, and belied by actual data.
Have a look at these two charts, courtesy of Jim Bianco. They show the number, and the dollar amount raised in IPOs; There appears to be no correlation with SARBOX, but a huge correlation with market crashes.
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click for larger chart
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More charts after the jump.
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Source: For Many Start-Ups, a Spot on the Nasdaq Is No Longer the Goal CLAIRE CAIN MILLER NYT, January 17, 2010
http://www.nytimes.com/2010/01/18/technology/start-ups/18venture.html
Excel Spreadsheet for IPOs anbd secondaries, Bianco Research Equity IPO And Secondary
Some Factoids about the 2009 IPO Market Jay R. Ritter, Cordell Professor of Finance University of Florida, Jan. 14, 2010
http://bear.cba.ufl.edu/ritter
Chart courtesy of Prof Jay R. Ritter, University of Florida, Some Factoids about the 2009 IPO Market
Any data on how many new LOCs banks are extending to businesses in existence for less than a year? We’ve heard a lot about established small businesses getting shut off. Availability of credit might factor in also.
Just the simple lack of logic in claiming that Sarbanes-Oxley from 2002 is responsible for something that happens 5-7 years later is unbelievable. Mind-numbingly stupid. Unfortunately with the success of Fox it seems that editors of right wing publications are a lot more worried about making their opinions support the ideology than they are worried about their opinions being in conflict with facts. I guess when you get used to making up your own “facts” you quickly lose your respect for real logic and facts – just spew it out with great conviction and most of the brain dead sheeple will swallow it.
Well… she went to Yale and Berkeley… but her NYT bio doesn’t list her grades… nor does it list her age… but hre photo makes me guess she’s about 25… and doesn’t have a clue about the economy because she still has a job… since… she can bullshit and write articles and fill papers… as you can see most of her other articles are fluff stuff… if you search her name on the NYT page… the question really should be… why would you read that kinda crap anyways Mr. BigPicture?
Barry,
This is the new right talking point. You saw it on a number of weekend talk shows. David Frum used it on CNN as well. They try and tie the economy and American innovation to financial regulation. It doesn’t matter that the regulators are only interested in regulating the insured portion of the financial industry. It is a slippery slope and must be stopped. Such nonsense.
The irony is that if the core banking industry could not participate in deratives and risk markets they would have to return to their traditional businesses and might actually start lending to small business.
Furthermore the venture capital industry would be able to fill their place but obviously do a better job of managing risk in financial instruments – or go under as is appropriate.
Because I want to know what other people are reading / thinking /being misinformed about!
Besides, when any of the major print media — NYT/WSJ/WaPo/LAT etc. opublishes sometihng like this, it is a window into the state of the media today . . .
The NYT writes what Corporate America wants you to think. The NYT hires people from places like Yale where they are indoctrinated to do this. What Corporate America always wants to do is suck up all of the wealth of the economy (most lately in the form of Too Big To Fail bailiuts), thereby starving start-ups, preventing future competition, and maintaining their entrenched position. They don’t give a rats ass about the social costs. And if you the budding entrepreneur are a slave to Corporate America just in order to get health care for you and your family, oh well, sucks to be you!
arcticpup: Also, she used to work at Forbes magazine. Aren’t they one of the house organs for corporate America?
I spent a few years covering start-ups for Inc. magazine and was nauseated every time I heard this kind of anti-SOX blather from the start-up community.
and in other news: http://www.businessinsider.com/jim-rogers-buy-ahead-of-the-food-shortages-2010-1
Do the Razzie awards cover journalism, or just movies and TV shows? If journalism too, BR, you may have found a nominee for the selection committee!
a different slant from Time-
“Did Foreigners Cause America’s Financial Crisis?”
“Much of the fault of the financial crisis has been heaped on Wall Streeters, unscrupulous mortgage lenders and weak regulators. But in a new research paper, economist Ricardo Caballero says there is another major group of contributors to America’s monetary mess who are not getting the blame they deserve: foreigners.”
damn foreigners- knew it couldn’t be our own stupidity- lol
http://www.time.com/time/business/article/0,8599,1954240,00.html
I sent Barry’s article to her at NYT. Actually I think it would be a good idea for a lot of people to send it if possible. What an idiotic piece of work!
I saw the headline and the nerdy vc, I turned the page. I’m too old to waste time filling in the blanks.
BR-
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