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Why a Big-Shot Banker Thinks He Belongs in Silicon Valley

Plus, are we in a bubble?

Jason Del Rey has been a business journalist for 15 years and has covered Amazon, Walmart, and the e-commerce industry for the last decade. He was a senior correspondent at Vox.

A year ago, the financial services giant Credit Suisse moved its co-head of tech, media and telecom banking, David Wah, to San Francisco. The move underscored the growing focus among many investment banks on building a reputation among the next generation of tech companies.

In the year since, Credit Suisse has scored a lead role advising Alibaba on its record-setting IPO and helped take China’s Twitter-like service Weibo public. But there’s a lot of work left to do. These days, it is not uncommon for giant tech acquisitions — such as Facebook’s purchase of Oculus VR or Google’s acquisition of Waze — to get done without the help of investment banks. There is also the common question in Valley circles of how much value bankers really provide.

We recently spoke to Wah, an 18-year veteran of Credit Suisse’s technology group, about topics including the case for hiring a banker and how the Alibaba IPO impacted the stock market at large. The following interview was edited for length and clarity.

When you talk to people in Silicon Valley, bankers have a very mixed reputation. What’s your case for why a young private company should hire a banker?

I think now more than ever an entrepreneur can really benefit from the help of a really experienced, capable banker. They’re attacking markets that are much more complex than they were 10 years ago in terms of accessing a global market and being smart about developing networks in emerging markets. The needs on the financing side have become more complex and they can benefit from having someone that’s really passionate about helping young companies grow.

More complex how?

The interest in investing in tech has gone global. We have people with access to pockets of capital that entrepreneurs and even venture capitalists haven’t thought about before. When you look at some investments in IPOs and private placements, it’s a different list of investors than it was five or 10 years ago both in terms of geography and the characteristics of the investors. You see everything from sovereign wealth funds to family offices. That’s a whole new world helping finance younger companies.

How do you take it when you hear entrepreneurs with a poor opinion of bankers?

It motivates me and reminds me that I need to be better every day if I’m going to be qualified to work with our technology clients. It comes with the territory and the bar set to advise these companies. It also reminds me I need to be creative to deliver value. That can range from helping an entrepreneur manage his or her personal wealth and structure their personal portfolios, or helping enable them to give their employees more comprehensive advice.

How worrisome is it that we’re seeing some big, big deals — like Facebook’s of Oculus VR — get done without a banker?

You’re always going to read about some companies that are earlier in their business model but highly developed in terms of their opportunity set either because of their number of users or mindshare that becomes attractive and attracts a high valuation. Those companies may well be able to pursue a sale without the help of a banker. Even in those cases, apart from valuation, bankers can help advise on things like how you are treating your existing employees when you structure the deal.

Either way, I like the trend we’re seeing where private companies are becoming much more mature in their business models, which is borne out of the fact that most companies going public are further down the path toward profitability.

Are we in a tech bubble?

I don’t believe so. I think this is very different from last time. The tech trends we are seeing today are much more intuitive and much more powerful than they were 10 or 15 years ago. When we talk about the investment theses of today, it’s something that you and I and everybody else can relate to and evaluate: Talking about mobile, mobile payments, e-commerce, social, cloud, etc. They are much more intuitive ideas even though we may not agree about the valuations.

But if you go back in time to the last bubble, there was some incredible innovation around fundamental technologies, but they were also inaccessible to a broad audience. Stuff like Linux standards around switching. Ideas like that were important and powerful, but they were harder in some ways to evaluate.

What has been the impact of Alibaba’s IPO?

It was an extraordinary event in many respects. It opened the aperture of many investors in how they think about the opportunity of Internet platforms. It was also critical for the IPO market to see a successful offering. I think people have declared the Alibaba IPO something where the execution was successful and proved that large transformative deals can be pulled off where everyone wins.

It’s also generated more interest in the emerging markets. China, in particular, is a beneficiary. That said, even before Alibaba, people have caught on to the IPO opportunity from Chinese companies coming to the U.S. We’ve been involved in most of the deals.

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