Barry McCarthy, the pioneer of a new method of publishing companies, leaves his role as CFO of Spotify. This is a major loss to the streaming audio company.
McCarthy may not be well-known outside of Wall Street and Silicon Valley, but the idea he developed last year to publish Spotify – what is known as a direct listing – is one of the most important recent developments in the financial world. When a company chooses a direct listing instead of a traditional stock exchange listing, it goes public without selling new shares, and basically allows the market to "find out" the prices on the first trading day.
The introduction of direct listings and the momentum they have picked up in recent months has elevated McCarthy to something of an oldest statesman in the world of technology.
"I know of no other CFO who could have published us and guided us equally steadily through an innovative direct listing and the time that has followed," Ek said in a statement to Recode.
McCarthy had credibility from the eight years he had spent as chief financial officer of Netflix under Reed Hastings. He took that company to the public and helped transform the video rental and streaming company into the behemoth it is today.
But when he appeared full-time at Spotify in 2015, he thought of another transformation: replacing the IPO with a direct listing. McCarthy made it more democratic, more transparent and better for Silicon Valley – even worse for Wall Street insiders.
I profiled McCarthy last year at that time and discovered that McCarthy was an unlikely iconoclast for an idea that threatens big bankers' grip on startups & # 39; public dreams of the market. He did not try to start a movement or become a hero. He instead became "brutally logical" and made a case to Ek that this was best for his company.
"I don't think there's a middle finger to Wall Street because he's from Wall Street," Hastings told me at the time. "He's as Wall Street as it gets."
The direct listing was largely regarded as successful, and McCarthy became the ambassador for the idea on the Silicon Valley circuit. Slack followed Spotify this summer with the second major directorial.
Spotify's management has personally beaten executives like Airbnb director Brian Chesky on the idea, announced earlier, and now it is expected that Airbnb will continue with a direct listing of its own early next year. Earlier this month, hundreds of tech founders, investors and academics packed into a ballroom in San Francisco for a day-long direct listing seminar, beginning with an "Interview with Pioneer: Barry McCarthy, CFO Spotify" as a a copy of the agenda described it.
It is worth noting that Spotify is down more than 25% from the opening price after the April 2018 IPO. Those who think traditional IPOs are the way to refer to the stock's current game as evidence of shortlisted listings.
McCarthy's pitch – that Spotify is another Netflix – has obviously not convinced investors. McCarthy has claimed that, like Netflix, a Wall Street darling, Spotify lost money, but that it could eventually make a profit with a high growth business directly to the consumer. That has not happened yet.
Now that the search for profits will fall to McCarthy's successor, Paul Vogel, who is today Spotify's investor relations manager. Spotify needs to make a new, additional step in the company's board of directors to accommodate McCarthy's addition, a change that requires approval from Spotify's shareholders in January. He is not expected to join another company immediately.
And for all of McCarthy's new fans, he will never be able to escape the association with one of Silicon Valley's most extraordinary startup implementations in recent years, Clinkle, where McCarthy served as chief of officer as it flames. McCarthy tried to bring solidity to the once-hot payment company that raised $ 30 million, but things didn't go well, and Clinkle became a Silicon Valley punchline.
"I'm sure he has found Spotify much more satisfying than Clinkle," Hastings said last year.