Business Insight Zone

NetSuite is looking good so far in its public debut. Soon we’ll be rolling out our year-end IPO Scorecard for your delectation, which will give me occasion to talk more about the IPO market. (Previous IPO Scorecards here.)

For the moment, though, here’s a crack at my basic philosophy about IPOs:

• Insofar as the IPO market is one slice of the overall financial markets, it makes sense to ask questions like “How’s the IPO market doing?” Because of course the financial climate makes it easier or harder for a given company to go public at a given time.
• Supposed bellwethers of the IPO market often aren’t very good in fulfilling the bellwether’s prime function — i.e., telling you where the overall market is headed. Just like a great musician could shine even in a lousy band, or a great athlete could shine on a weak team (case in point), a good company can shine even in a bad market.
• Many supposed bellwethers are, in actuality, “categories of one” — or at least members of very small clubs. So Blackstone’s mid-2007 IPO was far from indicative of the overall market for IPOs, just as Visa’s IPO (slated for early 2008) won’t be a bellwether for credit cards or financial stocks or whatever. Why? Because we’re not talking about Random Company X; we’re talking about Visa.

I try to keep these things in mind whenever I hear somebody talk about Company X being “the next Google” of the IPO world. There won’t be a “next Google.” Google itself wasn’t a “next Netscape,” because conditions changed so much between those two IPOs. Blockbuster offerings like those are often sui generis — they just are what they are, beyond any categorization.

The larger point: well-grounded companies (like, apparently, NetSuite within its particular niche) can make their own weather. So even when the broader IPO market is weaker — as it is now — it can still be a good time for the right company to go public.