Wednesday, June 15, 2011

The Two Beds of Procrustes

In the Greek myth, Procrustes was a son of Poseidon with a stronghold on Mount Korydallos, on the sacred way between Athens and Eleusis. There, he had an iron bed in which he invited every passer-by to spend the night, and where he set to work on them with his smith's hammer, to stretch them to fit. In later tellings, if the guest proved too tall, Procrustes would amputate the excess length; nobody ever fit the bed exactly because secretly Procrustes had two beds.

— Wikipedia, Procrustes

So, here we go again. Pandora priced its initial public offering well above the upwardly revised indicative price range. Unlike LinkedIn, however, Pandora's stock price spiked up on the day of the offering and then fell, closing modestly above the offer price. In my business, this is generally viewed as a weak but acceptable outcome.

Nevertheless, I fully expect we will be deluged with all sorts of half-baked, idiotic commentary from people who would not recognize a stock certificate at fifty paces about Pandora's underwriters' performance, integrity, motives, and competence. (Note that Morgan Stanley was left bookrunning manager—lead underwriter, to the unwashed among you—on both LinkedIn and Pandora's offerings. It will be amusing to see the critics twist themselves into knots on this one.) Rest assured that the leading conclusions (or, for the more cowardly among the peanut gallery, highly-qualified insinuations) will break down to two alternatives: either the investment bankers were devious scammers, or they are pathetic fuck-ups.

I can't be bothered to reenter the fray on this deal, so I will simply point those readers among you who would like a fact-based education on IPOs to my earlier pieces. In the meantime, I will offer a simple observation, which I think cuts to the heart of the true issue at hand, which is most certainly not whether Pandora was priced correctly:

If your world view depends on believing everyone you disagree with is either corrupt or incompetent, you are not clever.

You are a fool.

© 2011 The Epicurean Dealmaker. All rights reserved.