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The Do- It- Yourself Public Offering 193
attractive idea,” says Michael, and one he believes will resonate
beyond Brooklyn. (Workingmen of New York, New Jersey, and
Connecticut, unite!)
The shares will be priced at $25, with a four- share minimum,
and will pay a fi xed annual dividend of 3.75 percent over the prime
rate. No voting right is associated with the shares or claims on profits;
that is reserved for the employee- owners. To get the word out
to potential investors, Michael plans an aggressive online campaign
that will lean heavily on Facebook, Twitter, and other social networking
tools. “This will be the fi rst Facebook IPO,” he says excitedly.
At the very least, you could call it a new form of social(ist)
networking.
Other companies have used the Internet to market their
direct offerings. For example, the Saranac Lake Community Store,
a DPO described in Chapter 8, has a web site and a Facebook
page. But to date few direct offerings have really exploited the
potential of online social networks. Only time will tell if Michael—
or another entrepreneur—will pick up where Andy Klein left off.
In Search of Liquidity
As Cutting Edge Capital’s fi rst DPO client, the Workers Diner
will be an important test case. The fi rm—created in 2010 by the
local investing brain trust of Kassan, attorney John Katovich, and
economist and local advocate Michael Shuman—hopes to streamline
the DPO process and bring costs down to a level that is manageable
for small enterprises. The legal work for Workers Diner
was pro bono, but the fi rm’s principals believe they can get the
costs down to as little as $25,000, a modest sum when you consider
that a traditional IPO typically costs at least 30 times that
amount. Another Cutting Edge Capital client, Tangerine Power,
a Seattle- based developer of distributed, community- scale solar
power, is also mulling a DPO as a way to reach out to members
of communities in which it operates and people who care about
renewable energy.
Meanwhile, DPOs are gingerly cropping up across the country.
In Buffalo, CityMade, Inc., is directly selling shares to New York