Silicon Valley versus ordinary folk: the Snap IPO may symbolise the great political divide of our time.By any standards, the Snap IPO was a massive success – shares surged 44 per cent on the day the company went public, as the loss-making social media platform with ten billion visits a day, saw its valuation climb to $28.3 billion.
Is the company worth it? No one knows the answer to that, it depends on whether the company’s clever founders, Bobby Murphy and Evan Spiegel, can, armed with the money that the IPO has brought into the company, increase traffic even further and turn all those millennial and generation Z visitors into people who also look at advertisements.
Facebook proved to be very good at pulling off that trick, Twitter not so good. Will Snap be like Twitter or Facebook? It all depends on how clever Messrs Murphy and Spiegel can be.
Then again, that maybe the problem, because the Snap IPO comes with a rather obvious whiff of controversy.
We are told that in the US, that ordinary Americans, the folk who voted for President Trump, distrust New York, which they see as culturally closer to Europe than the towns where they live, and California, with their elite Hollywood and Silicon Valley, Trump knocking, liberal agenda.
And the Snap IPO reminds ordinary Americans of elitism for two reasons.
Reason number one is not new. If you had bought shares at the moment that they hit the stock market, and then sold out a few hours later, you would have made a handsome profit. If you had bought shares at the outset, and held onto them, right now you may well be congratulating yourself on having picked up a bargain.
But it is not very likely that you did manage that. If you were a trusted client of Goldman Sachs and Morgan Stanley: If your name was Mr Fund Manager Commanding Billions of Dollars Worth of Assets (which, as an aside is quite a long name), then you may well have pulled off the trick of buying shares at the initial IPO price, but anyone else would have been disappointed.
This is not new: ordinary investors rarely do get hold of shares in the first few minutes of an IPO, and if they do, it means that the IPO has not gone well, and you probably made a loss. It’s a case of heads the big wealthy investors win, tails the small private investors lose.
But Snap has done something different – the shares that have been released onto the market do not carry voting rights.
It is an evolving idea. When Google was floated, there were limitations to the voting rights provided by the shares, when Facebook was floated, Mark Zuckerberg had super voting rights, but Snap has taken the idea a whole lot further.
Investors are being asked to trust Spiegel and Murphy – to take as an article of faith taht these very young billionaires, one with a super-model girlfriend, have the best interests of the shareholders at heart.
And no doubt they do.
But that is hardly the point. Sometimes dictators are kind, nice and care for their people. They are still dictators.
At a time when we are told the elite are lording it over us and that we need to strike back, Silicon Valley is seen as symbolising this elite.
And now Snap has come along and apparently confirmed that this is right.
In the age of technology, are we creating new gods? Instead of sitting on thrones in Asgard or upon Mount Olympus: the likes of Zuckerberg, Page, Brin, Travis Kalamick and the god of Mars – Elon Musk – rule from California, and the ether is their domain. But behold, they are kind gods, and we can thank them for granting us our digital harvest.
But not everyone likes it, and whether you think the above narrative is fair or not, the point is many people do not, and that is becoming a problem.
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