Private Equity and the Internet: The Privacy Issue
Am I the only one who got the joke? In Saturday’s Financial Times, two editorials ran one on top of the other:
In each case, one dealing with private equity and its role in the financial markets and the other dealing with issues of transparency and disclosure in a “web 2.0” world, it came to me that each industry is dealing with the same issue: privacy. Private equity firms are in the process of eschewing privacy for the promise of permanent capital and big valuations, taking advantage of strength in both the equity and credit markets to publicly float their shares. Blackstone (done), KKR (in process), Apollo, Carlyle, TPG, etc. It’s happening. And as I noted in a previous post about Blackstone, these are clearly smart and timely moves (at least for the principals) by some of the smartest people on the planet , but it is somewhat ironic that those for whom privacy traded at a premium is now being monetized for their own benefit. Does anyone else see the irony in this?
An then there is privacy and the Internet. Clearly, a hot button issue. Some issues of privacy are largely the choice of the search oligarchs, while others are a function of people’s own (sometimes indiscreet) disclosures on the Web. This is partly an outgrowth of the popularity of MySpace, Facebook, and other social networking sites. And let’s be clear - the web has memory. Oh, does the web have memory. People need to educate themselves as to their rights, i.e., opting out of Google retaining your search queries, as well as use their brains, i.e., not putting incredibly inappropriate stuff on their public MySpace or Facebook profiles that might not look so good to current or prospective employers. That said, we are increasingly living in a fishbowl with absolute privacy a vestige of times long ago.
I am fascinated to see how long the private equity shops remain public. My guess is that they will turn around and privatize themselves once the equity markets hit a speed bump and it becomes economic to reclaim their privacy rights. This private-equity-going-public phenomenon seems like that to me: merely a phenomenon. It may well be transient, just like the private nature of the portfolio companies they lever up and take public as fast as they can. I can’t say the same for privacy and the Internet, however. I think we are in the second inning of an inexorable nine inning march towards way too much information being available. How society and those laying claim to this information handle this responsibility may well be one of the biggest issues of the 21st century, far exceeding the impact of a handful of private equity firms dallying in the public markets while the sun is shining.
