I think that corresponds to a broader change that's happened in the equity markets which is with Sarbanes-Oxley and lawsuits and liability and Enron and WorldCom and all the rest of it, all the new government regulations and fear and paranoia around investors getting cheated by public company management teams basically. The whole idea of being a public company is much less attractive for anybody than it used to be and it's become much harder, much more expensive.And so the net effect of what's happening is not only are tech companies not going public but also the public equity markets are essentially de-equitizing, they're essentially shrinking. Basically, over time, in the public equity markets, if there are no new offerings, some companies go out of business, which takes companies out of the pool and then other companies merge, which takes companies out of the pool.
Other companies get bought out by private equity, which takes companies out of the pool. And so left on its own, the pool of publicly investable companies will shrink and you can only replenish that through IPOs. And so if there are no IPOs, there it goes. And so essentially, what's happening is there's a two-tier class system that's developed on Wall Street, which is there's the investments for normal people and then there's the investments for, as John McCain might say, "Really fancy rich people," you know, the cosmopolitan types. And specifically, there are hedge funds, private equity funds, private investments, Angel investments, venture capital funds. You know you can typically only legally invest in those if you are a so-called accredited investor, if you have a certain net worth, if you have a certain level of sophistication in the markets and if you have access to those investments. You can just go out into an exchange and buy those things. And so the pool of investments available to sort of super sophisticated people growing very quickly.
The pool investments available to normal people shrinking very fast.
I don't think that was the goal with all the reforms in the last five or ten years but that has certainly been the effect.Is it a crisis in terms of company formation? Not yet. Could it reverse itself? Yes, at any point. Does it -- oh, the other thing that's happening, there's more and more effort being put towards establishing essentially private exchanges. So a number of the investment banks are either looking at doing basically setting up exchanges where you can buy and sell shares in private companies sort of internally to a bank or if you're a client of the bank.In the long run, I think it's a very interesting social and economic and political question of whether we really want to live in a world where public companies of shrinking, the base of public companies are shrinking.
