IPO Season Is Back, and I Have Questions

It feels like we’re back in 2018. Suddenly, everyone is going public. What may seem great has many underlying issues. Let’s chat about it.

Sup! 👋

I’m quite locked in at work, so this week’s issue was delayed because of that.

And as the title suggests, the IPO craze we currently see is crazy, but I think there are a lot of things missing from all these filings.

To me, it seems that most of these big names, I will explain which ones shortly, are going public to either hide something or fast-track profitability.

If you have questions or suggestions, feel free to share them in the comments below.

Anyway, let’s get stuck in.

PS: If you enjoy this newsletter and believe your friends or family would too, a recommendation would be greatly appreciated!

Back in 2018, I was at the Slack conference in London. At least I think this is what it was called.

I remember it so well because leading up to it, everyone online was talking about Slack’s upcoming IPO.

This was in November 2018. The company went public in the summer of 2019 under the ticker WORK.

They opted for a direct listing, following the footsteps of Spotify, to bypass Wall Street underwriters and avoid the creation of new shares.

Two years later, Salesforce acquired them for $27.7 billion, and the company no longer trades as an independent entity.

Bro, Where Are My Transformers?

Now, why do I bring this up?

If you worked in a startup or had to deal with some of them in 2018, there was no way around Slack.

And god forbid you worked in an environment where Microsoft Teams was used!

Ironically, Microsoft Teams took over from Slack during the pandemic, but that’s neither here nor there.

Slack was the cool kid in town, and everything else was not on the same “taste” level.

We are seeing the same, even down to the taste question, now with AI companies.

You’re either team Claude, OpenAI, Google, or some of the other more niche LLMs like Perplexity and Notion.

And it’s the first two names we’re going to focus on today!

Anthropic announced its confidential S1-Form draft on 1 June, and OpenAI followed a week later.

This comes after SpaceX’s mega announcement of its own IPO later in June.

Back in the day, it used to be a symbol if you went public through an IPO. Your company stood for solid growth, and it was time to take the next step.

These days, it seems like an insider pump-and-dump.

Now, I don’t say this lightly, and I don’t want to ramble too long. But the ever-so-great Ed Zitron gave a brilliant breakdown in this Bloomberg interview about the matter:

Source: YouTube

In the interview, he highlights something a lot of journalists are missing.

These companies claim to be profitable when, in fact, it’s just regular startup wizardry with cherry-picking dates.

He also argues that SpaceX’s IPO is overvalued and that Elon Musk inflates the numbers.

A claim we have also heard from other sources.

According to an analysis from Prof G, who has been spot on with WeWork as well, SpaceX is actually worth $600 billion, and not $1.73 trillion.

From what I see, both Anthropic and OpenAI are using the SpaceX IPO to justify going public as well.

But neither of them has publicly released their books. According to Zitron, this would show that he’s right with his suggestion that there is just hype and nothing tangible.

And speaking of something being tangible, this seems to be the path IPO companies have been on for the last few years.

We’re ignoring the fact that a lot of SPACs came into existence in 2021 for this argument, although it has to be said that these were the rug pulls of the century.

Whether it was Slack, Figma, WeWork, or any tech company, they all had a common lack of performance.

Source: Me 🙂

As you can see in the image above, of the top 24 IPOs between 2018 and 2024, the majority finished their debut year in the red.

Often, due to being overvalued and not actually delivering any positive returns for shareholders.

Or, because large institutional investors sold after getting in early on the deal.

TL;DR for this: if retail wants to make money with IPOs, it’s gonna lose with a high certainty of at least 36.75% in the first year, based on the last four years.

Expand that time horizon to six years, and the number increases to 48.3%.

The only thing keeping this number below 50 percent is Palantir, CrowdStrike, and Datahog, which were the winners.

If these companies weren’t in the mix, we would look at a loss of north of 80%.

Now, bringing this back to the current IPO hype.

Different from the previous season, we’re currently in one of the most unstable and unpredictable economic times ever.

War, monetary expansion by central banks, and countries with more debt than ever are not a great recipe for a healthy economy.

Deployco, AKA OpenAI’s Master Lease - Genius or the End of the Beginning?

And based on all this, do you think AI companies that rely solely on a master lease deal (I wrote about it, link above) with infrastructure partners and marketing hype would thrive in this environment?

I highly doubt it, and I wouldn’t be surprised if Anthropic and OpenAI pull a “never mind” and delay their IPOs if SpaceX’s is not successful.

The IPO season 2026 will be a crazy one. But that was not the only thing happening this week.

Here are the Tabs Worth Opening:

• Anthropic launched a version of Mythos: The long-awaited supermodel by Anthropic is now available in Claude. However, with a twist. If you want to use it for specific things, it defaults to Opus 4.8, and to use it after 22 June, you need to buy tokens from Anthropic. API billing is here!

• Apple releases new Siri again at WWDC: Siri has been a meme for over 15 years. But, at least according to Apple, this time it won’t be anymore. They showed their recent partnership with Google and the Gemini models at WWDC. Let’s see if it’s really working this time.

• The tech industry is an escort’s dream client: What do employees of successful startups do with the sudden cash injection? Buy a house or a car? No! They hire escorts to accompany them. And for them, it seems to be a great revenue source, according to the New York Post.

• Germany spends $100 billion, but trains are still delayed: German efficiency used to mean something. But for the last 10 years, it seemed to decline. The state is now investing billions to make up for that. So far, it’s not working, as something as simple as a punctual train is an afterthought.

• Bloomberg visits Anthropic: Emily Chang went to Anthropic's offices and interviewed Dario Amodei for over 40 minutes. There were some of the regular AI marketing claims in there again, but Chang pushed back this time. Oh, and the offices look great, so all that money did in fact buy taste…

And that’s a wrap for issue number fourteen of Internet Native Capital.

The IPO season seems exciting on paper, but I suspect that we’re going to be in a lot of trouble in the coming months.

Also, I suspect that neither of the AI companies is actually going public and that it’s just yet another claim to push profitability.

Let’s see if I’m right, six months down the line.

See ya!