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Return of the Jedi

Apr
30
2004

Well, the Geeks won. For those of use who follow the politics of finance, it’s a big deal.
In the decisions about how Google would offer its stock for sale to the public — really a kind of battle for the Geek spirit of Silicon Valley — nerd determinism and the accompanying insistence on clarity, elegance and simplicity to complex problems, carried the day. You can read any of the – count ‘em — ten Wall Street Journal stories on the various aspects of the deal. If you want to buy stock you can read this piece about how the open auction process will work.


Now, we could be very cynical and suggest that the two banks involved, Credit Suisse First Boston and Morgan Stanley,are participating in the auction process as a way to demonstrate their willingness to run cleaner, more open IPOs. See, they’re not all bad; they just got a little carried away. The Google sale is a great way to build a client base – you’ve got to have an account with them to qualify to buy any shares. That means, of course, that the “friends of Frank” are all eligible for Google shares – they may even be near the top of the list, what with their trading histories and all. Still, an open auction process is a nice way to show regulators and others – guilty! – that you’ve seen the error of your ways. All that “friend of Frank” and “friends and family”? Gone! Never happened! That was then! This is the cleaner, neater, more open now!
So, maybe it’s all a brilliant PR strategy. The banks, Google’s backers and Geeks themselves aren’t above a little tactical public relations. In fact, they’re quite good at it. Silicon Valley is a place filled with people who play the kind of games that require strategic thinking: Chess, D&D, those wacky video games where you have to steal the stone, slay the dragon and get the magic key (okay, so that’s Lord of the Rings…). And it’s filled with people who are very smart but have crummy personal skills, often the best observers of human behavior. They really do get what they want because they’re smarter. It does make them better.
The Google IPO is an important psychological moment for the valley. It’s a demonstration that it can change – on its own terms. You wanna know why those guys always think they’re always right? Look at the acclamation they’re getting on this offering. Yeah, Wall Street is upset. Sure they are. Wait till they see the cash. The average stock buyer – that mythical individual investor – is more convinced than ever that they’re doing business with an honest company. Two nice boys have stared down those horrible crooked bankers. Once again, Geeks have changed the world. Or maybe they’ve just saved their own ass. In order for tech — and the valley — to prosper, it has to be able to sell its stock. To sell its stock, it’s got to have a receptive market.
This is interpretation and it may not matter. Google is going to put a lot of money in a lot of pockets. The recovery out here has already started. Traffic is heavier, people are moving back to work and starting companies, PR firms (the first fired) are hiring. Google employees will get houses and new cars (cap gain and sales tax revenue plus a share of the IPO, you know Gov. Terminator is happy). Some will use their Google shares to start new companies. We’re already seeing more start-ups (payroll and corporate tax increases, too! Gov. Terminator is glowing. So is San Francisco Mayor Gavin Newsom). As the bubble crashed, many of the folks who wanted to stay in the valley took shelter and signed up for paychecks from Google, Salesforce (it’s traditionally structured offering should hit in late May) and eBay. With venture capitalists seeing paydays – sale of their stock –their willingness to spend (they like to call it investing) already on the upswing will be renewed. So they’re back. Better? Maybe. Certainly more aware of outside scrutiny. Will it last? Who knows? But they’re back.

Share  Posted by Chris Nolan at 10:03 AM | Permalink

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