By the time of Rivian’s IPO, it had only been in business for five years. It had gone from zero sales and profits to achieve a $1.4bn market cap. So, investors were pretty happy about that success. For the firm’s co-founders, though, investors were not. The company was valued at $2.5bn when it went public, and this was despite the very large amount of flop that was recent history from other I.P.O.’s. The company, it seems, was a bit too much of a success.
And then came the hard part. Retail investors who had been ready to love Rivian now had to listen to the firm’s early investors criticize them. They were able to bluster about how there had been huge losses, which had been a result of company management’s greed and hubris, although no matter how big the losses, it was the cost of doing business that shareholders would be hit with. However, being at the helm of a small firm is always exciting, since it is based on your particular skill set and ability. The CEO, however, is inevitably the center of the storm because he or she is responsible for the daily decisions. This doesn’t matter necessarily that much for bigger companies, but with smaller firms, the CEO needs to be cautious. But it didn’t take long for internal critics to be outed as so-called fleecers.
But then came another write-off, another public humiliation. It was reported that Rivian’s appointed managers had just re-invented the financial model of the company, and after keeping it to themselves so far, the new board of directors was now bickering on the boardroom floor. Their quarrel was over what every finance manager has been thinking: how would they ever survive in the cold light of day if they followed the Wall Street model. After all, was this model of shareholder dividends at the forefront of a board’s mind? Well, no, really! You never heard a more pretentious version of “we’re in it for the long haul” than you did from the Rivian Board! And if the accounting manager needs to “correlate the scattergun approach in order to be comfortable with the calculation”, as he claims, then you don’t really have any good reason for believing him. Not exactly a ringing endorsement for ethics and trustworthiness.
And yet Rivian stock continued to go up, despite its founders’ constant harangues against their own employees, clients, and shareholders. Investors were obviously still impressed with the size of their prospective returns, even if only because they were confident that their bank will throw them money if it needs more, as all banks will do with a firm with a positive stock price.