Private vs Public Dividends

Shaan Puri and Sam Parr discuss the advantages of running a private company that generates large dividends, using OnlyFans as a case study. They explore why some entrepreneurs might prefer keeping their companies private rather than pursuing public offerings.

Key Points:

• OnlyFans Financial Performance:

  • Generated $5.6B in revenue (2022)
  • Company takes 20% ($1.1B in net revenue)
  • $525M in profit
  • $400M after-tax profit
  • Owner Leo took $338M in dividends in one year, $550M over two years

• Private Company Benefits:

  • No pressure from public markets
  • Control over company direction
  • Ability to take large dividends
  • Less scrutiny and reporting requirements
  • More operational freedom

• Income Scale Context:

  • Only 5-10 people in America have higher annual income
  • Comparable to top hedge fund managers
  • Places owner among highest earners in America (top 30)

• Public vs Private Considerations:

  • "You always want the option" of going public
  • Current strategy of taking $100M+ in dividends annually is viable
  • Harder to go public with certain business models
  • Limited buyer pool for acquisition

• Owner's Perspective:

  • Doesn't need external investment due to profitability
  • Can maintain privacy and control
  • Flexibility in operations and strategy
  • Freedom to pursue other interests and investments

• Liquidity Trade-offs:

  • Missing out on potential "several billion dollar liquidity event"
  • Compensated by consistent, large dividend payments
  • More control over timing and amount of personal liquidity