My Book Reviews

The author, Andy Klein, is a Harvard law graduate and a former associate at the law firm of Cravath, Swain & Moore, who left the world of corporate law and founded Spring Street Brewing Company, a microbrewery. He then came up with the innovative idea to bring the company public by offering shares to the public over the internet. Since investment banks don't sell shares directly to individuals, Klein founded Wit Capital in 1996, to underwrite the shares. The offering was successful and Wit Capital created a web-based platform to trade the company's shares. Hence, Wit Capital became the first investment bank to take a startup company public by doing an online offering (essentially an online IPO). Wit Capital grew their business and was later backed by Goldman Sachs, which sold its stake in 2001.

Although this book is not a must-have book, Klein's breezy writing style and energy make it fun to read. There are many interesting anecdotes, like how he convinced Arthur Anderson to do his accounting. There are also aspects of the story which are very educational for business people, including: the sweatshop-like inner workings of a law firm, the behind-the-scenes process of doing an IPO, how to raise money in a private placement, business networking, managing a product launching, and venture capital. These business lessons will appeal mainly to entrepreneurs.

There are times when Klein gets self-congratulatory and vastly overstates his influence on Wall Street (fortunately for Klein, this bragging comes off as child-like excitement rather than ego, so it doesn't infringe on his likability). Although Klein will go down in the record books as the first person to orchestrate an online IPO, Wit Capital didn't go on to become the game-changer that he expected. The story would have obviously been more meaningful if Wit Capital had gone on to challenge the deeply entrenched Wall Street giants like Goldman Sachs and Morgan Stanley. This is shame, since I have long thought that the IPO market is a very inefficient market which is ripe for disruption.