The 2012 JOBS Act broke the IPO market. Signed by Obama on April 5, 2012, it raised the shareholder threshold triggering public reporting requirements from 500 to 2,000, and removed employees from the count entirely. That single regulatory change eliminated the primary mechanism forcing fast-growing private companies into public markets. Before 2012, that mechanism pushed both Google and Facebook to IPO. After 2012, it pushed for nothing.
The downstream effect is a private valuation bubble built on invented numbers. Microsoft went public at a $500 million market cap. Google at $23 billion. Facebook at $100 billion. Retail investors who bought those IPOs early captured real multiples because the companies were forced public before peak valuation. Today, zero-revenue AI startups like Instinct carry $10 billion valuations set entirely by venture capitalists negotiating with themselves, no audited financials required, no public market discipline applied. When these companies eventually list, ordinary investors buy the ceiling, not the floor.
Ed Zitron's full piece is worth reading for the mechanism detail, specifically how the JOBS Act's accredited investor carveout and employee share exclusion interact to keep almost any modern startup permanently below the reporting trigger. The piece also traces the political coalition that passed the bill with rare bipartisan support, and what that coalition was actually optimizing for. The conclusion is bleak. The argument getting there is precise.
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