The Three Doors to Going Public
IPO, direct listing, or SPAC — pick the door that fits your company, not your ego.
- Difficulty
- Moderate
- Time to result
- ~months to results
- Steps
- 5
- Confidence
- 80%
Gerstner frames traditional IPOs, direct listings, and SPACs as three structurally similar exercises: selling a slice of the company to public investors at the right price with the least distraction. Rather than treating one path as inherently superior, founders should evaluate their company's readiness, story clarity, and capital needs, then choose the mechanism — and the sponsor or bank — that will deliver honest price discovery. A 'busted process' can happen in any of the three doors: a bad SPAC sponsor taking an unready company public, a bad bank mispricing a traditional IPO, or a direct listing reference price set too high relative to the business.
Origin
Gerstner spent over 20 years as a securities lawyer and public-market investor working on 100+ IPOs, and used that dual vantage point (buy-side and sell-side) to build Altimeter's capital markets business, anchoring IPOs (Confluent), direct listings (Roblox), and running its own SPAC-to-IPO for Grab.
Core principles
- 01All three public-market paths are fundamentally the same exercise: pricing and selling equity to public investors
- 02Process quality (sponsor, bank, pricing discipline) matters more than which door is chosen
- 03Competition between paths gives founders leverage and improves overall pricing efficiency
- 04Advisors who have sat on the buy-side can give more transparent insight than sell-side bankers alone
How to run it
- 1
Assess company readiness
Evaluate growth stage, financial narrative clarity, and investor story before choosing a path.
- 2
Evaluate the traditional IPO
Consider bank-led book-building, roadshow, and allocation control as a path that offers strong distribution but more friction.
- 3
Evaluate the direct listing
Consider using existing shareholders and a reference price with no forced primary raise, suited to companies with strong existing investor bases.
Watch out Setting the reference price too high relative to the actual business creates a 'busted process.'
- 4
Evaluate the SPAC
Consider a sponsor-led vehicle with negotiated price and terms, useful for companies needing more deal certainty or a structured story.
Watch out A bad or misaligned sponsor taking an unready company public is a busted process regardless of structure.
- 5
Choose based on process quality, not fashion
Select the door with the best-fit sponsor/bank and most honest pricing mechanism for your specific business.
Pro tip Get insight from advisors who have sat on the buy-side (as an investor deciding whether to buy the deal), not just the sell-side.
In the wild
Altimeter anchored Roblox's direct listing, applying its capital markets insight to help price and support the offering.
→ Successful direct listing entry into public markets.
Altimeter ran its own SPAC (branded the 'Altimeter IPO') to take Southeast Asian ride-hailing company Grab public.
→ Grab completed its transition to public markets via the SPAC structure.
Common mistakes
Picking a bad SPAC sponsor
Taking a company public via SPAC when it isn't ready, or with a misaligned sponsor, produces a busted process regardless of the underlying business quality.
Overpricing a direct listing reference price
Setting the reference price too high relative to the business's actual value undermines the direct listing process.
Defaulting to traditional IPO out of habit
Ignoring alternative paths removes competitive pressure that would otherwise improve pricing and terms for the company.
Is it for you?
Best for
Late-stage private company founders and boards evaluating how to enter public markets.
Not ideal for
Early-stage companies far from being ready for any public market process.
From the transcript
“if you really just close your eyes it's just a third door into the public market”
“if you have a bad sponsor if you have a bad bank and an ipo and it goes poorly then like that's a busted process”
From the episode
Altimeter (with Brad Gerstner)
Brad Gerstner