I was the moderator of the San Diego Venture Group event in which I had the privilege of interviewing Frank Quattrone. Regretfully there were a number of instances in the article penned above that were inaccurate and were quite misleading in the impression given, and I want to correct them:

• In reference to Morgan Stanley, Frank said the firm’s mantra, when he was there, was to provide great advice to corporations based on what was in their best interest. Then, not singling out Morgan Stanley, which he said remained a great firm, Wall Street in general had strayed far from that mantra as the firms focused more on lending, trading and principal activities.

• Frank said that in the ‘80s and ‘90s many high quality IPOs were done with a single book runner and a single co-manager, while contrasting that with a few more recent IPOs where there were multiple bookrunners and lead or co-managers.

• In reference to government regulation, Frank was critical in general of overzealous prosecutors and cited the dismissal of the Ruelhe/Broadcom case and reversal of other cases where there was prosecutorial misconduct or a biased judge, as per his own case (where the appellate panel removed the judge from further proceedings).

• Frank never was asked about his role during the Internet “bubble” and the comment here is unfair. What he did do was to cite the poor performance of the 1999-2000 IPOs as one reason that led to the structural damage to the IPO market.

• Frank did not say that he would “short” the venture capital industry if it was a stock. What he did point out is true, namely, that as a generality funds from 1998 and prior had shown very healthy returns, but for every vintage since then the returns had been terrible. Referring to the chart illustrating these historical returns, he commented if the chart were a stock he would short it.

• Regarding today’s requirements to go IPO, Frank said that in the past companies could go public with $30 – $50 million in revenues but now it requires $100 million to $200 million in revenues.

• He said that many of the most successful IPOs in the past had done so while raising only $25 – $50 million in capital, but large underwriters are no longer interested in doing deals of that side. However, he said that he thought with concentrated economics for the underwriters, IPOs of say $60 million would absolutely be possible today – he cited Open Table as an example.

Robert Kibble
Managing Partner
Mission Ventures