• Triton

Who is really in charge of the competent world?

Now that Uber is safely at the bottom of a smoking crater, how do we think about Morgan Stanley’s role in putting it there?

On the one hand, Matt Levine nailed it today – like what’s a banker to do if his job is to pitch the business and win it?

On the other hand, this is what happens after the repeal of Glass Steagall and huge consolidation of the securities firms such that there are, what? three or four investment banks on the earth that can lead manage a $10b IPO.

So issuers like Uber don’t have very many options, and now that Morgan Stanley is wiping the extra servings of egg off its face… the next Uber will still have very few choices.

And then there’s the evidence that Morgan Stanley got caught out so badly. It would be one thing if they quoted Uber a stupid valuation and knew it and that’s the game and they were ready for all of this, etc. etc. But it seems like their kool-aid handling procedures might have been inadequate and they got such a heavy dose as to be way out of position on it both as the bookrunner and then again as stabilization agent, getting themselves run over in both directions.

And it’s not like Dara is an idiot, and his brother runs the desk at Allen & Company – so he had access to very high-quality, independent information, solid competence, and aligned interests.

And Goldman will have its own fires to put out after so many of their clients lost money, making it unlikely they watched the thing go over a cliff in knowing silence out of competitive malice.

So that gets us to the same place as Cameron blowing it on Brexit or Hillary whiffing on the election – the truly terrifying truth that the people we most associate with experience and competence, who are supposed to know what they are doing, really don’t have all the answers all the time. Sometimes the experts just get it wrong.

If that risk was priced in to everything, no one would get out of bed in the morning – so cognitive dissonance will get us through.