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Wall Street banks can be hidebound in their ways: insisting on suits and ties and handing out BlackBerries after everyone else has moved on to the iPhone. But if there is one thing that can push even the most conservative bank into the future, it is the prospect of business.
The latest reminder came this week when JPMorgan Chase announced that it would reimburse all of its employees for rides taken with Uber - offering access to "Uber's expanding presence and seamless experience," the company said in a news release.
JPMorgan made its decision long after other parts of corporate America were already hailing cars through the California start-up. But banks have recently shown a fondness for the service - with Goldman making the company part of its official travel policy in late May and Morgan Stanley putting out its own news release about its Uber use late last year.
Bank experts were quick to note that these moves come as the banks are jockeying to win a coveted spot managing Uber's initial public offering - one that is not yet scheduled but that is assumed to be coming in the not-too-distant future. The IPO for Uber, whose fund-raising so far has pegged its valuation at $50 billion, will most likely be the blockbuster IPO in whatever year it takes place.
A spokeswoman for JPMorgan said that the Uber news release this week had nothing to do with an IPO and was instead part of the bank's broader business relationship with the company. It does, though, fit squarely within a hallowed tradition of banks going to sometimes amusing lengths to secure a prized initial offering and the significant fees and reputational lift that it can provide. "On the margin, sometimes the little incremental thing will make the difference," said Lise Buyer, who advises start-ups looking at initial offerings. "Anything that a bank can do on the margin to improve their odds will probably be useful."
The softer side of the sales pitch has taken on many forms over the years. When Amazon.com was going public, Buyer said that banks presented their pitch books to the company in the form of bound books, to celebrate Amazon's book-selling roots. Other bankers have made humorous videos about the company they were proposing to bring to the stock market.
One of the most storied practitioners of the hard and soft sell of potential clients was the JPMorgan banker Jimmy Lee, who died unexpectedly last month. Lee placed a GM car in the lobby of JPMorgan's headquarters on Park Avenue when General Motors executives came in to consider whether to use the bank for the carmaker's return to the public markets after the financial crisis. (JPMorgan participated.)
A few years later, Lee was in a custom-made Facebook hoodie - a sharp departure from his normal pinstripe suit - when Mark Zuckerberg visited JPMorgan before his company's initial offering. (The bank took part in that one, too.) These sorts of efforts have a well-grounded logic for the companies shopping for a bank. A banker taking a company public has to sell the shares of the company to investors - and thus needs to show an understanding of what the company does.
In some cases, companies going public demand that their bankers demonstrate a more thorough familiarity with their product. One data analytics start-up that Buyer recently represented wanted each bank pitching its services to explain how the bank had used the data analytics software internally.
"The more the bank can understand the value of a company's product, the more compelling they will be in marketing the deal to investors," Buyer said.
But the job of becoming an expert in a company's product has become somewhat more difficult as the companies coming to market are, increasingly, technology start-ups, often involved in new markets that bankers might not otherwise use.
Twitter, for instance, was tricky as many banks prohibited their employees from using the microblogging service because of the difficulty in also adhering to rules that require banks to keep records of all their employee communications.
Some bankers focusing on tech companies were able to receive special dispensations to open Twitter accounts, but some of the bankers competing for the deal did not have Twitter handles, according to people briefed on the deal.
Banks, though, know that much of the future action is likely to come from forward-looking tech companies. Goldman held its annual meeting in San Francisco in May, and the firm's top executives spent their time wining and dining the next generation of start-ups poised to go public within the next few years.
"I'm not going to waste any time telling you why we're here," Goldman's chief executive, Lloyd C Blankfein, told reporters at the annual meeting. "You know why we're here."
Goldman and other banks have rushed to set up private placement teams to help start-ups raise financing from private investors in hope of positioning themselves for the big public offering.
Among coming public offerings, few will be bigger than Uber, which is the largest American start-up since Facebook.
Uber has given mixed signals about its desire to go public and has borrowed several rounds of debt financing so that it does not have to raise money through the stock market. In this process, the banks have been eager participants. Goldman helped Uber raise $1.6 billion from the bank's wealthy clients in January.
Winning the Uber IPO is likely to give a big lift to whatever bank gets it, but there is also a simpler reason for the banks to begin using the service: It is cheaper than the old limos.
© 2015 The New York Times News Service
