Elon Musk has taken a car company public, and plans on holding another IPO this year that, if all goes well, will be the largest in history. He'll be the second member of that elite club. The first, H. Rowan Gaither, Jr., joined in 1956 when, as head of the Ford Foundation, he agreed to sell 10m of the foundation's Ford shares at $64.50 apiece, raising, after commissions, $642.6m. This was a big deal, financially (the biggest offering in history up to that point had been a GM secondary a year earlier, raising $325m).

Ford, the company, was unusually big for a private business—by assets, it was one of the half-dozen largest non-financial companies in the country. Henry Ford had previously had outside stockholders, but had feuded with them—they ended up suing him, and winning the case, forcing him to pay out higher dividends rather than investing in expansion. But this case was also a landmark of legal realism, because what he did next was to threaten to quit and start a new car company, then use that as leverage to buy out the outside shareholders so they'd keep quiet. Ford had a hard time defending himself because he openly said that he was expanding because he wanted to create more jobs for autoworkers, not because he necessarily thought it was the right business decision. But, it was also the right business decision, and, relieved of the kind of cap table that makes startup life complicated from time to time, he was able to keep growing the business, die a rich man, and leave much of that wealth to his foundation in the form of Ford stock. (The Ford family kept some super-voting stock, and remains in effective control to this day.)

The Ford IPO happened for roughly the same reason Ford's shareholders had sued him long ago: the foundation didn't want the vast majority of its net worth to be in an illiquid, low-yield asset. But selling that much stock was a challenge: in 1956, it had only been two years since the Dow surpassed its 1929 high, and the stock market still struck many investors as a hostile, confusing place. On the other hand, many of those same customers knew and trusted Ford, the product, and had a good feeling about Ford, the company.

The result was an astonishingly widely-distributed IPO. They had to print 1.5 million copies of the prospectus, and mail them around the country. Basically every broker in the US participated, except for Morgan Stanley and Dillon Read, who had existing relationships with the other two of the Big Three. The total underwriting commission was $14.3m, a huge absolute  number at the time but a relatively small percentage commission (2.17%), at a time when standard IPO commissions were much higher (this SEC report mentions a $230m offering where the fee was 5.5%, with smaller deals taking place at 15%, and often including warrant kickers, and expenses charged to the IPOing company that could put the total over 25%.)

But the brokers, all 722 of them, knew that the economics of this deal weren't contained entirely in the day-one revenue:

1. It was what we'd call a brand collaboration, between the beloved Ford brand and the somewhat tarnished Wall Street. It's a bit like the first minor podcast a celebrity goes on a couple years after they get canceled.

2. Brokers couldn't really afford not to be on the underwriter list, both because customers would expect to be able to get some Ford stock and because every firm without a good excuse had already signed on.

3. Within the underwriting, it was a chance for brokers at smaller firms to strut their stuff among the bigger banks, and big clients. Goldman Sachs's CEO had closely consulted with the Ford family and the Ford Foundation to make the IPO happen, and Goldman co-led the deal.¹

Ford shares were the right product for the right moment. If the Model T represented membership in the solid, respectable middle class a generation earlier, a brokerage account and the ability to learnedly skim the stock quotes section of the newspaper was becoming a new middle-class signifier. So, if the outbreak of the Second World War was the end of the economic side of the Great Depression, Ford's successful IPO—complete with a modest but not scandalous first-day pop—was when financial markets finally emerged from the shadow of 1929.

There's a lot we can't learn from this deal as we once again approach the biggest IPO ever. The entire financial services industry has completely changed, a SpaceX IPO isn't the same kind of cultural event Ford's was (unless you live in Atherton), and the last thing retail investors need right now is someone telling them that putting all of their money into individual stocks is a good way to get rich.² On the other hand, there are some surprising similarities. At the time of the IPO, the US was being pulled out of a mild recession by a big capex splurge from the automakers, and something similar is happening in AI today. Big deals are a big deal; they shifted the American balance sheet so more of Ford was owned by households and more cash was held by foundations, and since pensions and endowments are such a big category of limited partners in venture funds, that's going to happen again, too. But the only way for the deals to be similar in retrospect is for the IPO Class of '26 to bookend a period of high retail participation in markets, the way Ford's did, but in the opposite direction.

Big IPOs are a big deal, and come up often in The Diff. We've covered:

• Palantir

• Snowflake ($)

• Airbnb

• Coinbase

• And more obscure ones like Waterbridge ($) and the abortive Steinway IPO ($).

• Outside of The Diff, for much more on the Ford IPO, the definitive piece is this one from John Brooks.

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1  Another incentive they had at the time was that Wall Street was still fairly segregated by religious affiliation, and that affected which deals firms got. The Ford IPO happened a decade before the wonderful incident where Morgan Stanley's CEO proudly informed Goldman's that Morgan Stanley had just promoted their first Jewish partner, to which Goldman's CEO responded "That's nothing. We've had them here for years!"

2  It's a dangerous thing to hear because it's true, in retrospect, for skilled investors, but after commissions and taxes the median investor is necessarily unskilled.