Twitter Tries To Avoid Tech IPO Trouble

Facebook, Groupon and Zynga were hot start-ups that went cold when IPO time came. Twitter is trying to avoid the same fate by doing things differently.

"They have the good fortune of seeing what happened to some of the highflying tech IPOs of 2011 and 2012," says Rob Solomon, former chief operating officer of Groupon and a partner at venture-capital firm Accel Partners, an early backer of Facebook. "Twitter knows what can happen if you make certain mistakes, and they will make sure they don't repeat any of those."

Twitter announced Thursday on its own messaging service that it had filed an IPO registration statement confidentially with the Securities and Exchange Commission, using a new law that lets companies with less than $1 billion in annual revenue keep such documents private.

When Groupon launched its IPO in the summer of 2011, this law did not exist and the daily-deal company filed publicly. Soon after, the SEC questioned its accounting, and each subsequent update by the company was picked apart by reporters and commentators. IPO rules prevented Groupon from responding to criticism, and when executives including CEO Andrew Mason tried, they got into trouble.

"What could be wrong with releasing 100s of pages of new financial and strategic co. info to the Internet while gagged?" Mason tweeted Thursday after Twitter announced its plan to file confidentially. "How is the SEC going (to) figure out proper accounting treatment without the help of Techcrunch guest bloggers."

Facebook also filed its IPO registration statement publicly in 2012. The company had to update the document to warn about problems monetizing the growth of its mobile service, casting a pall over its offering right before important investor roadshows started.

Twitter's private filing avoids this because any questions from the SEC and any changes stemming from those inquiries will not be made public...

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