Imran Khan: Why the IPO Market is Not Closed & Lessons From Taking Snap & Alibaba Public | E1194
Imran Khan (guest), Harry Stebbings (host)
In this episode of The Twenty Minute VC, featuring Imran Khan and Harry Stebbings, Imran Khan: Why the IPO Market is Not Closed & Lessons From Taking Snap & Alibaba Public | E1194 explores imran Khan Explains IPO Myths, Valuation Reality, And Public Market Power Imran Khan argues the IPO market is not closed; instead, private companies and their investors are clinging to unrealistic valuations set in the zero‑rate era, making them unwilling to list. He contends that staying private too long creates illiquidity, masks permanent capital loss, and exposes investors to technological regime shifts they can’t easily adapt to. Khan strongly prefers businesses to go public earlier, emphasizing GAAP earnings, cash flow, and gross margins over revenue multiples, and believes public markets make companies better operators through constant feedback and discipline. Drawing on experience with Google, Alibaba, and Snap, he also dissects IPO pricing, M&A dynamics under stricter antitrust scrutiny, AI CapEx versus returns, and the cultural difference between missionary and mercenary employees.
Imran Khan Explains IPO Myths, Valuation Reality, And Public Market Power
Imran Khan argues the IPO market is not closed; instead, private companies and their investors are clinging to unrealistic valuations set in the zero‑rate era, making them unwilling to list. He contends that staying private too long creates illiquidity, masks permanent capital loss, and exposes investors to technological regime shifts they can’t easily adapt to. Khan strongly prefers businesses to go public earlier, emphasizing GAAP earnings, cash flow, and gross margins over revenue multiples, and believes public markets make companies better operators through constant feedback and discipline. Drawing on experience with Google, Alibaba, and Snap, he also dissects IPO pricing, M&A dynamics under stricter antitrust scrutiny, AI CapEx versus returns, and the cultural difference between missionary and mercenary employees.
Key Takeaways
Reset private valuation expectations if you want IPO optionality.
Many companies raised at inflated 2020–2021 valuations that public markets will not support; founders and boards must accept lower prices as a temporary snapshot and focus on building cash‑generative businesses over time.
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Go public earlier to build a stronger, more resilient company.
Public markets provide daily feedback, acquisition currency, and pressure to improve operations; Khan argues founders, employees, and even product innovation (e. ...
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Stop over‑indexing on revenue multiples; prioritize profitability economics.
Khan calls revenue multiples a “BS multiple” except in specific high‑margin, predictable SaaS cases; investors should underwrite to long‑term earnings and cash flow using growth, gross margin, and steady‑state profitability, then back into any revenue multiple.
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Illiquidity and hidden permanent capital loss are building in private portfolios.
Allocators chased low volatility in privates and market‑neutral hedge funds, but many private marks have not been written down; DPI is low and some losses are permanent, which will likely slow new private allocations.
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Culture should be built around missionaries, not mercenaries.
If stock price or IPO valuation swings destroy morale, Khan argues the founder failed culturally; employees who leave when prices dip may not be the right long‑term builders for the company.
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Be realistic about M&A: expectations and cap tables matter more than regulators for most deals.
Khan thinks Lina Khan is over‑blamed; mega‑deals into top‑20 tech firms face scrutiny, but most acquirers can still buy — the real blockers are sellers anchored to old valuations and messy cap tables that make private‑to‑private mergers hard.
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AI’s value will come from productivity, not just flashy tech demos.
He frames AI like the internet: if it boosts productivity 5–15% across a ~$25–30T economy, the value creation easily justifies current CapEx; incumbents must invest or risk becoming the next Yahoo versus Google.
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Notable Quotes
“I don't think the IPO market is closed. I think the issue is companies don't want to go public because their expectations are too high.”
— Imran Khan
“If you're building a company for a long period of time and you generate cash flow, you will create value. What is your IPO price? It doesn't matter.”
— Imran Khan
“No, revenue multiple is a BS multiple. Why would somebody give a shit about revenue multiples?”
— Imran Khan
“When you're not telling your story, somebody else is telling your story.”
— Imran Khan
“Great founders are great at pivoting. A cat never becomes a tiger.”
— Imran Khan
Questions Answered in This Episode
If private valuations reset sharply, how should founders communicate that reality to employees and early investors without destroying trust?
Imran Khan argues the IPO market is not closed; instead, private companies and their investors are clinging to unrealistic valuations set in the zero‑rate era, making them unwilling to list. ...
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For a mid‑stage company today, what concrete signals show it’s truly ready—operationally and culturally—to be a public company?
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How should allocators rethink their private‑equity and venture programs in light of illiquidity, permanent capital loss, and a higher‑rate environment?
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In AI, how can investors distinguish between CapEx that builds durable moats versus spending that will become stranded if demand normalizes?
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What practical steps can founders take to ensure they’re hiring ‘missionaries’ instead of ‘mercenaries,’ especially in compensation and communication around equity value?
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Transcript Preview
(upbeat music) I don't think IPO market is closed. I think the issue is companies don't want to go public because their expectations are too high. If you're building a company for a long period of time, and you have a good business, and you generate cash flow, you will create value. What is your IPO prices? It doesn't matter. I'm a big proponent that companies should go public earlier than later and... No, revenue multiple is a BS multiple. Why would-
Mm-hmm.
... somebody give a shit about revenue multiples?
Ready to go? (upbeat music) Imran, I am so excited for this. I've heard so many good things from Ash for quite a while now. So first, thank you so much for joining me today.
Thank you for having me. You know, it worked out great. I was in London for some meetings, and I always watch your shows, you know, read your tweets, so great to meet you in person and thanks for having me.
Dude, it is so nice seeing this in person. But I wanna start, like, right in the meat of it, which is, like, we look at the IPO windows today, and everyone continues to moan, "They are closed, they are closed." Everyone said H224 they would open. It seems that was not right. How do you analyze the closed IPO window that we have today, Imran?
So, I don't think IPO market is closed. So, I will take that view. I think the issue is companies don't want to go public because they have, uh, their expectations are too high. You know, I think what happened in... A few things happened, right? So when 2020 interest rate was very low during COVID, and 2021, all these companies raised money at a valuation that didn't make sense. If you look at in public market, you know, outside the big cap names, a lot of those names' valuation has corrected.
Mm-hmm.
In the private market, that valuation didn't really correct. And so they want to go up public at a valuation that just doesn't make sense in a public market, right? I can buy, you know, companies that generating tremendous amount of cashflow at 20 to 25 times earnings. Gap earnings, not BS non-GAAP earnings, gap earnings. So, why should I pay for a company 50 times revenue multiple?
Mm-hmm.
So, I think a lot of these private companies, their numbers are not there to justify the valuation that they raised the last round. So, that's problem number one. And so they're not setting, resetting their valuation expectations. I think the second problem is more systemic problem in market. You know, I think if you look at allocators, so that's like universities and pension funds and endowment, they are allocated, allocating a lot of money. And now it will change, and I think it's changing slowly, a lot of money in privates. And I think one of the biggest thing, that's a big trend in asset management in my view, is that allocators, people who are giving moneys, these are big pension funds and endowments, they are trying to reduce volatility of their performance.
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