iBankers in Yoga Pants

The usually excellent Program on Negotiation from HBS recently had an unintentionally hysterical post advising negotiators to "Dress the Part" and providing as an example investment bankers wearing form-fitting yoga attire from Lululemon in a failed bid to win their 2007 IPO. Aside from the obvious, um, tension between a company featuring anti-ball crushing pants and underwriters proudly known as the, ahem, bulge bracket, this sort of supplication begs the question of what, really, is the competitive differentiation between investment banks? 

It's a question worth asking as the big tech IPO is back: Lyft, Zoom, and Pinterest already devoured, with Slack, Palantir and Uber on the menu -- the last so delicious that Morgan Stanley's star MD has been moonlighting as an Uber driver. In other industries such gimmicks as wearing the product might be seen as a last ditch attempt to differentiate commodity services, particularly in an industry that has managed to avoid price competition amid accusations of collusion and parallel pricing. While there are a few signs of change -- such as Slack pursuing a direct listing a few months after Spotify did the same -- the IPO process and fee structure has emerged from the wave of financial innovations largely intact. 

The combination of supplicant bankers, huge fees, and a resurgent IPO market beget another new peak: an analysis revealed that the first three quarters of last year saw the highest percentage of IPOs with negative earnings since 1980, even exceeding the irrational exuberance that ushered in the 21st century. Many of the firms lining the IPO entrance this spring have similar financial characteristics. If history is a guide, we may all need the serenity enabled through a whole lot of yoga gear.