The history of direct listings

3, 2, 1.

Per Einar Ellefsen: Hello and welcome to IPO Stories, a podcast that explores the paths to IPOs for companies and their stakeholders. Through interviews with professionals who have led companies to public markets, we learn what it takes to IPO a business—the do’s and don’ts before, during, and after the listing process. I’m Per, co-founder of Amundsen Investment Management, a Europe-based equity manager.

In 2018, Spotify was the first company to do a direct listing instead of a regular IPO, foregoing the usual bookbuilding process in favor of opening the shares directly on the market via auction. In 2021, Wise also did a direct listing in the UK, and we recently hosted Matt Briers, CFO of Wise, to share his experience.

Dakin Campbell is the author of the book Going Public, where he recounts the history and inside stories of major IPOs—from the 1956 Ford IPO to the 2004 Google auction, the 2012 Facebook IPO, and the more recent direct listings. With Dakin, we discuss what led Spotify and others to prefer direct listings and the pros and cons versus traditional IPOs.

Before we start, we remind listeners that this discussion is not financial advice, nor an investment recommendation or solicitation to buy or sell financial instruments. The information contained herein is for informational purposes only. Amundsen Investment Management and the participants in this podcast may have holdings in the companies discussed. Dakin, thank you very much for joining us. Maybe you can start by introducing yourself.

Dakin Campbell: Sure. I’m Chief Correspondent on Insider’s Investigations team. For many years, I covered Wall Street as Chief Finance Correspondent at Insider, and before that, I spent ten years at Bloomberg News.

Per Einar Ellefsen: And you wrote this book, Going Public. What led you to write it?

Dakin Campbell: I’d been covering Wall Street since the global financial crisis, but had never really dug into the IPO market. In the summer of 2019, WeWork, then the most valuable private company, was gearing up for its IPO. My editors asked me to pitch in. We all know what happened—it collapsed.

It struck me that WeWork wasn’t served well by the IPO process. Yes, the founder had his issues, but the bankers didn’t serve the company as well as they could have. That was my first deep interest in the IPO market—how it works, its norms, and how a process could leave a company so exposed. I wrote a feature that caught a book agent’s attention, and instead of writing a book on WeWork, I decided to explore the IPO process itself.

Per Einar Ellefsen: In your book, you go back to the early history of IPOs before exploring recent innovations. You describe the 1956 Ford IPO involving 722 investment banks, raising $658 million. How has the process evolved since then?

Dakin Campbell: The Ford IPO was massive—literally thousands of brokerages were involved. That’s obviously not how it works anymore. Today, you might have ten underwriters, but really only one or two lead the deal. So there’s been huge consolidation in underwriting.

Back then, IPOs were sold to the public—brokers went door-to-door on Main Street selling 100-share lots to doctors, lawyers, and small investors. In the mid-1980s, Goldman Sachs professionalized the process, focusing on big mutual funds like T. Rowe Price and Fidelity, which were just starting to amass major assets.

Per Einar Ellefsen: So Goldman essentially created the modern IPO model.

Dakin Campbell: Exactly. In fact, before Goldman’s innovation, there were no Equity Capital Markets (ECM) desks. They invented syndication as we know it. That model, created in the 1980s, still defines IPOs today—until the direct listings began in 2018.

Per Einar Ellefsen: You also highlight the Google IPO in 2004, which used a Dutch auction. Tell us about that.

Dakin Campbell: It was right after the dot-com crash, when Wall Street was under scrutiny for conflicts of interest. Google, already auctioning ads online, thought: If we can auction ads, why not shares? They held meetings in a Denny’s near their HQ and created a new model from scratch.

CEO Eric Schmidt even challenged bankers directly—famously asking, “By how much are IPOs usually oversubscribed?” When told 20x, he pushed back, realizing how inefficient the process was.

The IPO was rough—they aimed for $132 but priced at $85, after SEC wrangling and tension with investors. The media framed it as a failure, but Google’s shares never traded below $85 and immediately climbed to $100. Still, the traditional players spun it as a flop to deter others.

Per Einar Ellefsen: The next major innovation, then, was Spotify’s 2018 direct listing—14 years later.

Dakin Campbell: That’s right.

Per Einar Ellefsen: How did Spotify’s idea come about?

Dakin Campbell: By 2016, Spotify had over a billion dollars in cash and didn’t need to raise capital. But it needed liquidity for employees and shareholders. CFO Barry McCarthy, formerly of Netflix, led the effort. Drawing on his deep market experience, he explored alternatives and realized that direct listing—used in bankruptcies and spin-offs—could be applied to a tech company.

Convincing the SEC was the real breakthrough: this was the first time a private, high-growth, VC-backed firm would list directly.

Per Einar Ellefsen: Innovation through size seems to be the theme—Ford, Google, Facebook, Spotify. But smaller IPOs, like Criteo’s $2B U.S. listing, rely more on roadshows to build excitement, right?

Dakin Campbell: Exactly. In a traditional IPO, banks market the story. In a direct listing, the company must do that itself. For known brands like Spotify, that’s easier—they even held a packed investor day in Manhattan. But for lesser-known companies, it’s a steep climb.

Per Einar Ellefsen: Beyond marketing, what are the main structural differences between IPOs and direct listings?

Dakin Campbell: In a traditional IPO, the price and allocations are set the night before trading—in a private meeting with bankers and management. In a direct listing, there’s no such meeting. The market itself sets the price through open auction.

Advocates say that’s fairer and more efficient—a true market-clearing price—whereas the traditional process can be more “human” and opaque.

Per Einar Ellefsen: It also appeals to tech founders who see it as just a “conversion” from private to public.

Dakin Campbell: Right. As Matt Briers of Wise put it, “Before, our shares were private; now they’re public—nothing else changes.” But remember: direct listings can’t raise new capital—you can only sell existing shares.

Per Einar Ellefsen: Two features stand out:

1️⃣ Flexibility of size—since shares are freely tradable.

2️⃣ No lockup—allowing early investors and employees to sell anytime.

This can make for fairer price discovery and better liquidity for institutions seeking large positions.

Dakin Campbell: Exactly. Many companies raise a private round right before listing, then follow up with a secondary offering later.

Per Einar Ellefsen: Let’s talk about the banks. You describe the direct listing as born from tension between Wall Street and Silicon Valley founders. But do banks really control the process that much?

Dakin Campbell: They do have influence. While issuers formally make the final call, in practice, many management teams rely heavily on banks. In pricing meetings, bankers bring a spreadsheet of 400+ investor allocations. Management reviews maybe the top 25 names, and the rest is effectively left to the banks. So yes—the process is issuer-led in theory but bank-driven in practice.

Per Einar Ellefsen: I like to see the IPO as a path to build a diversified shareholder base. You start with a few investors, but post-IPO you want thousands. That gives liquidity and fair valuation. But with global asset managers consolidating, maybe direct listings help widen participation?

Dakin Campbell: Absolutely. In a traditional IPO, allocations go only to institutions—retail is excluded. Direct listings open access to everyone, institutional and retail. It’s the full market, a genuine price discovery process.

Any investor—without special bank relationships—can buy in size on day one. That’s a big democratizing shift.

Per Einar Ellefsen: And retail participation has dropped from 50% of IPOs in the 1950s to around 5–10% today. Did companies like Spotify or Slack actually get more retail shareholders through their direct listings?

Dakin Campbell: They wanted to. I haven’t seen hard data, but that was definitely an objective. Some companies—like Airbnb—used directed share programs to allocate IPO shares to loyal users (Airbnb hosts, in that case). Deliveroo did the same for drivers in the UK.

It’s part of a broader move to bring retail and customers back into ownership.

Per Einar Ellefsen: Let’s talk about Direct Listing 2.0—raising capital through the listing itself.

Dakin Campbell: Yes—the SEC now allows primary direct listings, where companies can raise capital at the market-clearing price. The challenge is unpredictability: if the price fluctuates heavily, the proceeds could vary widely. Still, once a large company successfully executes one, it could open the floodgates—just as Spotify did for direct listings in 2018.

Per Einar Ellefsen: So it’s really about finding that pioneer to test it.

Dakin Campbell: Exactly. Once one company does it successfully, others will follow.

Per Einar Ellefsen: Have non-tech companies tried direct listings?

Dakin Campbell: A few. Out of roughly 14 direct listings so far, one was an insurance company and another a cannabis firm. Most have been tech—Spotify, Slack, Warby Parker—because their brands are already well-known, which helps with self-marketing. But the model could work for any sector.

Per Einar Ellefsen: You’ve heard a lot of inside stories. Which one stuck with you most?

Dakin Campbell: I loved the Unity Software story—intense, emotional boardroom moments. But one of my favorites is the Sam Adams IPO in 1995—the first retail-directed share program. The founder literally hung ads on beer bottles, inviting drinkers to call a number for a prospectus. It worked—and many of those investors still hold shares today.

Per Einar Ellefsen: Amazing story! Thank you very much for joining us today.

Dakin Campbell: My pleasure. Thanks a lot.

Per Einar Ellefsen: Thank you for listening to IPO Stories. In future episodes, we’ll host CEOs, CFOs, advisors, and other participants in the IPO process to learn from their experiences—like from Dakin today.

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