By Alan Murray and Claire Zillman
January 16, 2018

Good morning.

It’s accepted wisdom that the pace of change in business is accelerating. When we asked Fortune 500 CEOs last year whether their companies would change more in the next five years than in the last five years, 96% agreed. “Disrupt yourself, or be disrupted,” has become standard management advice.

And yet, there are corners of the business world where disruption has been predicted for years—even decades—and still hasn’t arrived. Home real estate is one. In a world of online markets, instant videos and Zillow pricing, why should anyone turn 5% to 6% of the take on a home sale over to a real estate agent? Investment banking is similar. In today’s super-efficient financial markets, is there any reason to pay an investment bank up to 7% for an Initial Public Offering? And yet, companies still do.

Maybe—just maybe—2018 could be the year that last one begins to change. Spotify, the music streaming company, has filed to do a “direct listing” in which it will sell its shares directly to the retail-investing public, without going through the usual process of using underwriters who round up institutional investors. As a result, The Wall Street Journal reports, the company’s three financial advisers—Goldman Sachs, Morgan Stanley, and Allen & Co.—stand to collect only $30 million in fees—less than 1% of the total take, and well below the $100 million, or 2.5%, that Snap paid for a similarly sized IPO last year, or the $300 million record paid by Alibaba in 2014. Bankers fear that if the Spotify issue goes well, other unicorns lined up to go public may follow a similar path. About time.

By the way, here’s another prediction of imminent disruption that’s gone bust: the gig economy. Not long ago, pundits said we were on our way to having more than half the U.S. workforce becoming freelancers. But in fact, Jeff Wald, co-founder of Work Market and one of the smartest people I’ve met on this subject, says the freelance share of the workforce has remained stuck at about 34% for the last few years, and is likely to stay there for the indefinite future. Why? Because regulations make it difficult for big employers to shift to freelancers as much as they, or their employees, might like. So don’t write off your day job yet.

More news below.

Alan Murray


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